FOURTH-QUARTER HIGHLIGHTS
- Fourth-quarter sales flat from a year
ago, including $27 million of unfavorable foreign currency
impact
- North America sales grew 4 percent from
a year ago, driven by record Product sales
- Completed $4.2 billion U.S. pension
de-risking transaction, including a $1.9 billion non-recurring
charge, resulting in fourth-quarter GAAP loss per share from
continuing operations* of $4.02
- Non-GAAP** earnings per share (EPS)
from continuing operations of $1.25 driven by North America sales
growth and lower overall operating expenses
- Returned $1.5 billion to shareholders
in share repurchases and dividends in the quarter; $2.9 billion for
the full year
Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings
results for the fourth quarter and full year of 2014. Click here
for a printable news release and financial tables.
SUPPORTING QUOTE
“Our fourth-quarter results demonstrate a solid finish to a
transformational year,” said Greg Brown, chairman and CEO of
Motorola Solutions. “The business continues to show signs of
improvement, driven by growth in North America and significantly
higher backlog. Our ongoing progress to simplify our organization
and rationalize our cost structure will further position us for
long-term success.”
KEY FINANCIAL RESULTS
Fourth Quarter
Full Year 2014
2013 Change 2014
2013 Change Motorola Solutions, Inc.
Sales ($M)
$1,823
$1,817 0%
$5,881 $6,227
-6% GAAP
Operating earnings (loss)
($M)
-$1,459 $325 -549%
-$1,006 $947 -206% Percent of
sales
-80.0% 17.9%
-17.1% 15.2% EPS from
continuing operations
-$4.02 $1.12
-459%
-$2.84 $3.45 -182% Non-GAAP
Operating earnings ($M)
$483 $396 22%
$1,069
$1,156 -8% Percent of sales
26.5% 21.8%
18.2%
18.6% EPS from continuing operations
$1.25 $1.37 -9%
$2.58
$3.86 -33%
Segments
Products
Sales ($M)
$1,246 $1,212 3%
$3,807 $4,109 -7% GAAP operating
earnings (loss) ($M)
-$944 $237 -498%
-$667 $639 -204% Percent
of sales
-75.8% 19.6%
-17.5% 15.6% Non-GAAP
operating earnings ($M)
$394 $283 39%
$754 $775 -3% Percent of
sales
31.6% 23.3%
19.8% 18.9%
Services
Sales ($M)
$577 $605 -5%
$2,074
$2,118 -2% GAAP operating earnings (loss) ($M)
-$515 $88 -685%
-$339
$308 -210% Percent of sales
-89.3% 14.5%
-16.3%
14.5% Non-GAAP operating
earnings ($M)
$89 $113 -21%
$315 $381 -17% Percent of sales
15.4% 18.7%
15.2%
18.0%
Non-GAAP financial information excludes after-tax charges of
approximately $5.27 per diluted share related to share-based
compensation and highlighted items. Details on these non-GAAP
adjustments and the use of non-GAAP measures are included later in
this news release.
OTHER SELECTED FOURTH-QUARTER FINANCIAL RESULTS
- Revenue – Fourth-quarter sales
were flat, including $27 million of unfavorable foreign currency
impact, primarily reflecting growth in North America.
Fourth-quarter Product sales grew 3 percent driven primarily by an
improvement in devices, while Services declined 5 percent driven by
lower iDEN and system integration sales.
- Operating margin –
Fourth-quarter GAAP operating margin was -80 percent of sales. GAAP
operating earnings were impacted by a $1.9 billion non-recurring
charge related to the U.S. pension de-risking activity. Non-GAAP
operating margin was 26.5 percent of sales reflecting $86 million
in lower operating expenses compared with the fourth quarter of
2013, primarily due to staff reductions across all functions and
lower pension and variable compensation expense.
- Taxes – The
fourth-quarter 2014 GAAP effective tax rate from continuing
operations resulted in a benefit of 38 percent, driven by the loss
from continuing operations, as well as other benefits recorded
throughout the year. The fourth quarter 2014 non-GAAP tax rate from
continuing operations was 35 percent. This compares with a negative
GAAP effective tax rate of 7 percent and a non-GAAP tax rate of 5
percent in the fourth quarter of 2013. The GAAP and non-GAAP tax
rates in the fourth quarter of 2013 include the favorable impact of
$113 million or $0.42 per share of net tax benefits associated with
the recognition of certain foreign tax credits as a result of the
implementation of a holding company structure for certain non-U.S.
subsidiaries.
- Cash flow – The company
used $700 million in operating cash from continuing operations
during the quarter largely driven by incremental pension
contributions of $846 million.
- Cash and cash equivalents – The
company completed the sale of its Enterprise business to Zebra
Technologies for $3.45 billion and ended the year with total cash
of $4 billion. The company returned $1.5 billion to shareholders
through share repurchases and cash dividends during the quarter and
$2.9 billion for the full year.
OTHER SELECTED FULL-YEAR FINANCIAL RESULTS
- Revenue – Full-year sales
declined 6 percent to $5.9 billion. The decrease in sales reflects
a $302 million, or 7 percent, decrease in the Products segment
driven by first-half declines in North America and lower Asia
Pacific results.
- Operating margin – For
the full year, GAAP operating margin was -17.1 percent of sales,
driven by a $1.9 billion non-recurring charge related to the U.S.
pension de-risking activities. Non-GAAP operating margin was 18.2
percent of sales, driven by $208 million in operating expense
reductions for the full year. Pension expense and variable
compensation were lower compared to the previous year.
- Taxes – The 2014 non-GAAP
effective tax rate from continuing operations was 32 percent,
compared with a non-GAAP effective tax rate from continuing
operations of 2 percent in the fourth quarter of 2013. The 2013
GAAP and non-GAAP full-year tax rates 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
the implementation of a holding company structure for certain
non-U.S. subsidiaries.
- Cash flow – The company
used $685 million in operating cash from continuing operations
during the year largely driven by pension contributions of $1.3
billion.
KEY HIGHLIGHTS
Sales Growth
- Secured significant projects that
demonstrate strength in core products and services, including a
$148 million statewide public safety network, radios and services
agreement with the state of Michigan
- Demonstrated growing demand for
services offerings with a 10-year, $62 million services agreement
with Prince George’s County in Maryland; a two-year, $36 million
managed services contract extension with the Victorian Mobile Data
Network in Australia; a 10-year, $31 million lifecycle services
agreement with Las Vegas Metropolitan Police Department in Nevada;
and a multi-year, $15 million managed services contract with
Forestal Mininco in Chile
- Showed strength in commercial markets
with a multimillion dollar TETRA digital radio system for Dow
Chemical Netherlands, a $12 million ASTRO® digital radio system for
a U.S. chemical company, and a $2 million WAVE® push-to-talk over
broadband contract with a Mexico petroleum company
Innovation and Product
Growth
- Expanded Public Safety LTE portfolio
with LEX L10 mission-critical handheld device, which comes equipped
with Motorola Solutions’ new Public Safety Experience that provides
first responders with the right information at their
fingertips
- Introduced ASTRO 25 Cloud Core Managed
Service offering, which enables public safety agencies to access
the latest Project 25 land mobile radio technology as well as
provide a communications platform for long-term growth and new
capabilities
- Expanded MOTOTRBO™ digital portable
radio portfolio with slim, lightweight SL300 and SL1600 models
ideal for everyday use in industries such as education, retail,
hospitality, event management and private security
BUSINESS OUTLOOK***
- First quarter 2015 – Motorola
Solutions expects a revenue decline of 2 to 4 percent compared with
the first quarter of 2014. This assumes a $40 million****
unfavorable currency impact, which translates to revenue growth of
-1 to 1 percent in constant currency. The company’s outlook assumes
growth in North America, contraction in Europe and a decline in
iDEN revenues. The company expects non-GAAP earnings per share from
continuing operations in the range of $0.22 to $0.27 per
share.
- Full-year 2015 – The company
expects revenue to be flat to down 2 percent compared to 2014. This
assumes a $160 million**** unfavorable currency impact, which
translates to revenue growth of 1 to 3 percent in constant
currency. The company’s outlook assumes growth in North America,
contraction in Europe and a decline in iDEN revenues. The company
expects non-GAAP earnings per share from continuing operations in
the range of $3.15 to $3.35 per share.
****Based on currency rates as of Feb. 2, 2015.
CONFERENCE CALL AND WEBCAST
Motorola Solutions will host its quarterly conference call
beginning at 7 a.m. U.S. Central Standard Time (8 a.m. U.S. Eastern
Standard Time) Wednesday, Feb. 4. The conference call will be
webcast live with audio and slides at
www.motorolasolutions.com/investor.
CONSOLIDATED GAAP RESULTS
A comparison of results from operations is as follows:
Fourth
Quarter
Full
Year
2014
2013
2014
2013
Net sales ($M) $1,823 $1,817 $5,881
$6,227 Gross margin ($M) 912 901 2,831
3,109 Operating earnings (loss) ($M) -1,459 325
-1,006 947 Earnings (loss) from continuing operations
($M) -926 293 -696 939 Net earnings
($M) 201 343 1,299 1,099
Diluted EPS from
continuing operations -$4.02 $1.12 -$2.84
$3.45
Weighted average diluted common shares outstanding
230.5 261.2 245.6 270.5
HIGHLIGHTED ITEMS AND SHARE-BASED COMPENSATION
EXPENSE
The table below includes highlighted items and share-based
compensation expense for the fourth quarter of 2014.
Fourth
Quarter
(per diluted common share)
2014
GAAP Earnings from Continuing
Operations -$4.02
Highlighted Items:
Share-based compensation expense 0.05 Reorganization of business
charges 0.04 Tax expense on legal entity reorganization 0.04
Reduction in net deferred tax liability for undistributed earnings
(0.06) Revaluation of deferred taxes for change in effective state
tax rates 0.05 Pension settlement loss, including related expenses
5.15
Total Highlighted Items 5.27
Non-GAAP Diluted EPS from Continuing
Operations $1.25
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 (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.
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.
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. The company can give no
assurance that any actual or future results or events discussed in
these statements will be achieved. Any forward-looking statements
represent the company’s views only as of today and should not be
relied upon as representing the company’s views as of any
subsequent date. Readers are cautioned that such forward-looking
statements are subject to a variety of risks and uncertainties that
could cause the company’s actual results to differ materially from
the statements contained in this release. Such forward-looking
statements include, but are not limited to, Motorola Solutions’
financial outlook for the first quarter and full year of 2015, the
impact of currency rates, regional growth or contraction, iDEN
revenues, and the impact of simplifying our organization and
rationalizing our cost structure. Motorola Solutions cautions the
reader that the risk factors below, as well as those on pages 10
through 21 in Item 1A of Motorola Solutions, Inc.'s 2013 Annual
Report on Form 10-K, on Page 31 in Part II, Item 1A of
Motorola Solutions, Inc.’s Quarterly Report on Form 10-Q for the
period ended March 29, 2014, 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 level of demand for the
company's products; (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 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; (5) the
impact of foreign currency fluctuations on the company; (6) the
impact of a security breach or other significant disruption in the
company’s IT systems, those of our partners or suppliers or those
we sell to or operate or maintain for our 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; (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
outsourcing of various activities, including certain business
operations, information technology and administrative functions;
(22) the impact of the sale of the company’s enterprise 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 return proceeds of the
sale of the Enterprise business to shareholders and the timing
thereof. 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 share-based compensation expense, intangible assets
amortization expense and highlighted items.
*** Business outlook excludes share-based compensation,
intangible amortization and charges associated with items typically
highlighted by the company in its quarterly earnings releases.
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. ©2015 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,
2014 December 31, 2013 Net sales from products $ 1,246 $
1,212 Net sales from services 577 605
Net sales 1,823 1,817 Costs of products sales 513 529 Costs
of services sales 398 387 Costs of
sales 911 916 Gross margin 912
901 Selling, general and administrative expenses 283
346 Research and development expenditures 165 196 Other charges
1,922 34 Intangibles amortization 1 -
Operating earnings (loss) (1,459 ) 325
Other income (expense): Interest expense, net: (41 ) (28 ) Gains on
sales of investments and businesses, net 2 3 Other -
6 Total other expense (39 ) (19 )
Earnings (loss) from continuing operations before income taxes
(1,498 ) 306 Income tax expense (benefit) (572 ) 13
Earnings (loss) from continuing operations (926 ) 293
Earnings from discontinued operations, net of tax 1,127
50 Net earnings attributable to Motorola
Solutions, Inc. $ 201 $ 343 Amounts
attributable to Motorola Solutions, Inc. common shareholders
Earnings (loss) from continuing operations, net of tax $ (926 ) $
293 Earnings from discontinued operations, net of tax 1,127
50 Net earnings attributable to Motorola
Solutions, Inc. $ 201 $ 343
Earnings per common
share
Basic: Continuing operations $ (4.02 ) $ 1.14 Discontinued
operations 4.89 0.19 $ 0.87 $
1.33 Diluted: Continuing operations $ (4.02 ) $ 1.12
Discontinued operations 4.89 0.19 $
0.87 $ 1.31
Weighted average
common shares outstanding
Basic 230.5 257.5 Diluted 230.5 261.2
Percentage of Net Sales* Net
sales from products 68.3 % 66.7 % Net sales from services
31.7 % 33.3 % Net sales 100 % 100 %
Costs of products sales 41.2 % 43.6 % Costs of services sales
69.0 % 64.0 % Costs of sales 50.0 % 50.4 %
Gross margin 50.0 % 49.6 % Selling,
general and administrative expenses 15.5 % 19.0 % Research and
development expenditures 9.1 % 10.8 % Other charges 105.4 % 1.9 %
Intangibles amortization 0.1 % 0.0 % Operating
earnings (loss) -80.0 % 17.9 % Other income
(expense): Interest expense, net: -2.2 % -1.5 % Gains on sales of
investments and businesses, net 0.1 % 0.2 % Other 0.0 %
0.3 % Total other expense -2.1 % -1.0 %
Earnings (loss) from continuing operations before income taxes
-82.2 % 16.8 % Income tax expense (benefit) -31.4 %
0.7 % Earnings from continuing operations -50.8 % 16.1 % Earnings
from discontinued operations, net of tax 61.8 % 2.8 %
Net earnings 11.0 % 18.9 % Less: Earnings attributable to
noncontrolling interests 0.0 % 0.0 % Net earnings
attributable to Motorola Solutions, Inc. 11.0 % 18.9
% * Percentages may not add up due to rounding
GAAP-2 Motorola Solutions, Inc. and
Subsidiaries Consolidated Statements of Operations
(In millions, except per share amounts)
Years Ended December 31, 2014
December 31, 2013 December 31, 2012 Net sales from
products $ 3,807 $ 4,109 $ 4,236 Net sales from services
2,074 2,118 2,033 Net sales
5,881 6,227 6,269 Costs of products sales 1,678 1,808 1,795
Costs of services sales 1,372 1,310
1,280 Costs of sales 3,050 3,118 3,075
Gross margin 2,831 3,109
3,194 Selling, general and administrative expenses
1,184 1,330 1,472 Research and development expenditures 681 761 790
Other charges 1,968 70 11 Intangibles amortization 4
1 1 Operating earnings (loss)
(1,006 ) 947 920 Other income
(expense): Interest expense, net: (126 ) (113 ) (66 ) Gains on
sales of investments and businesses, net 5 37 26 Other (34 )
9 1 Total other expense (155 )
(67 ) (39 ) Earnings (loss) from continuing
operations before income taxes (1,161 ) 880 881 Income tax expense
(benefit) (465 ) (59 ) 211 Earnings
(loss) from continuing operations (696 ) 939 670 Earnings
from discontinued operations, net of tax 1,996
166 211 Net earnings 1,300 1,105 881
Less: Earnings attributable to noncontrolling interests 1
6 - Net earnings attributable to
Motorola Solutions, Inc. $ 1,299 $ 1,099 $ 881
Amounts attributable to Motorola Solutions, Inc. common
shareholders Earnings (loss) from continuing operations, net of tax
$ (697 ) $ 933 $ 670 Earnings from discontinued operations, net of
tax 1,996 166 211 Net
earnings attributable to Motorola Solutions, Inc. $ 1,299 $
1,099 $ 881
Earnings (loss) per
common share
Basic: Continuing operations $ (2.84 ) $ 3.51 $ 2.29 Discontinued
operations 8.13 0.62 0.73
$ 5.29 $ 4.13 $ 3.02 Diluted:
Continuing operations $ (2.84 ) $ 3.45 $ 2.25 Discontinued
operations 8.13 0.61 0.71
$ 5.29 $ 4.06 $ 2.96
Weighted average
common shares outstanding
Basic 245.6 266.0 292.1 Diluted 245.6 270.5
297.4
Percentage of Net Sales* Net sales from products 64.7
% 66.0 % 67.6 % Net sales from services 35.3 % 34.0 %
32.4 % Net sales 100 % 100 % 100 %
Costs of products sales 44.1 % 44.0 % 42.4 % Costs of
services sales 66.2 % 61.9 % 63.0 % Costs of
sales 51.9 % 50.1 % 49.1 % Gross margin
48.1 % 49.9 % 50.9 % Selling, general and
administrative expenses 20.1 % 21.4 % 23.5 % Research and
development expenditures 11.6 % 12.2 % 12.6 % Other charges 33.5 %
1.1 % 0.2 % Intangibles amortization 0.1 % 0.0 %
0.0 % Operating earnings (loss) -17.1 % 15.2 %
14.7 % Other income (expense): Interest expense, net:
-2.1 % -1.8 % -1.1 % Gains on sales of investments and businesses,
net 0.1 % 0.6 % 0.4 % Other -0.6 % 0.1 % 0.0 %
Total other expense -2.6 % -1.1 % -0.6 %
Earnings (loss) from continuing operations before income taxes
-19.7 % 14.1 % 14.1 % Income tax expense (benefit) -7.9 %
-0.9 % 3.4 % Earnings (loss) from continuing
operations -11.8 % 15.1 % 10.7 % Earnings from discontinued
operations, net of tax 33.9 % 2.7 % 3.4 % Net
earnings 22.1 % 17.7 % 14.1 % Less: Earnings attributable to
noncontrolling interests 0.0 % 0.1 % 0.0 % Net
earnings attributable to Motorola Solutions, Inc. 22.1 %
17.6 % 14.1 % * Percentages may not add up due
to rounding
GAAP-3 Motorola
Solutions, Inc. and Subsidiaries Consolidated Balance
Sheets (In millions) December 31,
December 31, 2014 2013 Assets Cash and cash
equivalents $ 3,954 $ 3,225 Accounts receivable, net 1,409 1,369
Inventories, net 345 347 Deferred income taxes 431 451 Other
current assets 740 635 Current assets held for disposition -
993 Total current assets 6,879 7,020
Property, plant and equipment, net 549 610 Investments 316 232
Deferred income taxes 2,151 1,990 Goodwill 383 361 Other assets 145
89 Non-current assets held for disposition - 1,549
Total assets $ 10,423 $ 11,851
Liabilities and Stockholders' Equity Current portion of
long-term debt $ 4 $ 4 Accounts payable 540 583 Accrued liabilities
1,706 1,763 Current liabilities held for disposition -
870 Total current liabilities 2,250 3,220
Long-term debt 3,396 2,457 Other liabilities 2,011 2,314
Non-current liabilities held for disposition - 171 Total
Motorola Solutions, Inc. stockholders' equity 2,735 3,659
Noncontrolling interests 31 30
Total
liabilities and stockholders' equity $ 10,423
$ 11,851 Financial Ratios: Net cash** $
554 $ 764 *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,
2014 December 31, 2013 Operating Net earnings $
201 $ 343 Earnings from discontinued operations, net of tax
1,127 50 Earnings (loss) from continuing
operations, net of tax (926 ) 293 Adjustments to reconcile Earnings
to Net cash provided by operating activities: Depreciation and
amortization 42 43 Non-cash other charges (income) 2 (3 ) Loss on
pension settlement 1,883 - Gains on sales of investments and
businesses, net (2 ) (3 ) Share-based compensation expense 20 29
Deferred income taxes (626 ) (25 ) Changes in assets and
liabilities, net of effects of acquisitions and dispositions:
Accounts receivable (264 ) (55 ) Inventories (17 ) 1 Other current
assets (38 ) 38 Accounts payable and accrued liabilities 50 269
Other assets and liabilities (824 ) (7 ) Net cash
provided by (used for) operating activities (700 )
580
Investing Acquisitions and investments, net (26 )
(37 ) Proceeds from sales of investments and businesses, net 3,380
13 Capital expenditures (51 ) (59 ) Proceeds from sales of
property, plant and equipment 3 51 Proceeds from sales of Sigma
Fund and short-term investments, net - 1,167
Net cash provided by investing activities 3,306
1,135
Financing Repayment of debt (4 )
(1 ) Issuance of common stock 41 56 Repurchase of common stock
(1,423 ) (362 ) Excess tax benefit from share-based compensation -
5 Payments of dividends (82 ) (80 ) Distributions from discontinued
operations 27 153 Net cash used for
financing activities (1,441 ) (229 )
Discontinued
Operations Net cash provided by operating activities from
discontinued operations 32 162 Net cash used for investing
activities from discontinued operations (1 ) (8 ) Net cash used for
financing activities from discontinued operations (27 ) (153 )
Effect of exchange rate changes on cash and cash equivalents from
discontinued operations (4 ) (1 ) Net cash provided
by discontinued operations - -
Effect of exchange rate changes on cash and cash equivalents
(56 ) 18 Net increase in cash and cash equivalents
1,109 1,504 Cash and cash equivalents, beginning of period
2,845 1,721 Cash and cash equivalents, end of
period $ 3,954 $ 3,225
Financial
Ratios: Free cash flow* $ (751 ) $ 521 *Free cash flow =
Net cash provided by operating activities - Capital expenditures
GAAP-5 Motorola Solutions,
Inc. and Subsidiaries Consolidated Statements of Cash
Flows (In millions)
Years Ended December 31, 2014 December 31,
2013 December 31, 2012 Operating Net earnings
attributable to Motorola Solutions, Inc. $ 1,299 $ 1,099 $ 881
Earnings attributable to noncontrolling interests 1
6 - Net earnings 1,300 1,105 881
Earnings from discontinued operations, net of tax 1,996
166 211 Earnings (loss) from
continuing operations, net of tax (696 ) 939 670 Adjustments to
reconcile Earnings from continuing operations to Net cash provided
by operating activities: Depreciation and amortization 173 158 151
Non-cash other income - (14 ) - Gain on sale of building and land
(21 ) - - Loss on pension settlement 1,883 - - Loss from the
extinguishment of long term debt 37 - 6 Share-based compensation
expense 94 120 146 Gains on sales of investments and businesses,
net (5 ) (37 ) (26 ) Deferred income taxes (557 ) (334 ) 114
Changes in assets and liabilities, net of effects of acquisitions
and dispositions: Accounts receivable (62 ) (36 ) 81 Inventories (5
) (8 ) (2 ) Other current assets (47 ) 50 (112 ) Accounts payable
and accrued liabilities (120 ) (232 ) (106 ) Other assets and
liabilities (1,359 ) (51 ) (248 ) Net cash
provided by (used for) operating activities from continuing
operations (685 ) 555 674
Investing Acquisitions and investments, net (47 ) (57 ) 83
Proceeds from (used for) sales of investments and businesses, net
3,403 61 (58 ) Capital expenditures (181 ) (169 ) (170 ) Proceeds
from sales of property, plant and equipment 33 66 40 Proceeds from
sales of Sigma Fund and short-term investments, net -
2,133 1,075 Net cash provided by
investing activities from continuing operations 3,208
2,034 970
Financing Repayment of
debt (465 ) (4 ) (413 ) Net proceeds from issuance of debt 1,375
593 747 Issuance of common stock 135 165 133 Repurchase of common
stock (2,546 ) (1,694 ) (2,438 ) Excess tax benefit from
share-based compensation 11 25 20 Payments of dividends (318 ) (292
) (270 ) Contributions to Motorola Mobility - - (73 ) Distributions
from discontinued operations 93 365
217 Net cash used for financing activities from
continuing operations (1,715 ) (842 ) (2,077 )
Discontinued Operations Net cash provided by operating
activities from discontinued operations 95 389 396 Net cash
provided by (used for) investing activities from discontinued
operations 4 (24 ) (173 ) Net cash used for financing activities
from discontinued operations (93 ) (365 ) (217 ) Effect of exchange
rate changes on cash and cash equivalents from discontinued
operations (6 ) - (6 ) Net cash
provided by discontinued operations - -
- Effect of exchange rate changes on cash and
cash equivalents from continuing operations (79 ) 10
20 Net increase (decrease) in cash and cash
equivalents 729 1,757 (413 ) Cash and cash equivalents, beginning
of period 3,225 1,468 1,881
Cash and cash equivalents, end of period $ 3,954 $
3,225 $ 1,468
Financial Ratios: Free
cash flow* $ (866 ) $ 386 $ 504 *Free cash flow = Net cash
provided by operating activities - Capital expenditures
GAAP-6 Motorola Solutions,
Inc. and Subsidiaries Segment Information (In
millions)
Net Sales Three Months
Ended December 31, December 31,
2014 2013 % Change Products $ 1,246 $
1,212 3 % Services 577 605 -5 % Total
Motorola Solutions $ 1,823 $ 1,817 0 %
Year Ended December 31,
December 31, 2014 2013 % Change
Products $ 3,807 $ 4,109 -7 % Services 2,074
2,118 -2 % Total Motorola Solutions $ 5,881 $ 6,227
-6 %
Operating Earnings (loss)
Three Months Ended December 31,
December 31, 2014 2013 % Change
Products $ (944 ) $ 237 -498 % Services (515 ) 88
-685 % Total Motorola Solutions $ (1,459 ) $ 325 -549
%
Year Ended December
31, December 31, 2014 2013 %
Change Products $ (667 ) $ 639 -204 % Services (339 )
308 -210 % Total Motorola Solutions $ (1,006 ) $ 947
-206 %
Operating Earnings %
Three Months Ended December 31,
December 31, 2014 2013 Products -75.8 % 19.6 %
Services -89.3 % 14.5 % Total Motorola Solutions -80.0 %
17.9 %
Year Ended
December 31, December 31, 2014 2013
Products -17.5 % 15.6 % Services -16.3 % 14.5 % Total Motorola
Solutions -17.1 % 15.2 %
Non-GAAP-1 Motorola Solutions, Inc. and
Subsidiaries Non-GAAP Adjustments (Intangibles Amortization
Expense, Share-Based Compensation Expense and Highlighted
Items)
Q1 2014 PBT Tax
PAT Highlighted Items Statement Line
(Inc)/Exp Inc/(Exp) (Inc)/Exp EPS
impact Intangibles amortization expense Intangibles
amortization $ 1 $ - $ 1 $ - Share-based compensation expense Cost
of sales, SG&A and R&D 29 9 20 0.08 Reorganization of
business charges Cost of sales and Other charges 10 2 8 0.03 Gain
on sale of building and land Other charges (21 ) (8 ) (13 ) (0.05 )
Recognition of previously unrecognized income tax benefits Income
tax expense - 29 (29 ) (0.11 ) Total
impact on Net earnings $ 19 $ 32 $ (13 ) $ (0.05 )
Q2 2014 PBT Tax PAT
Highlighted Items Statement Line (Inc)/Exp
Inc/(Exp) (Inc)/Exp EPS impact
Intangibles amortization expense Intangibles amortization $ 1 $ - $
1 $ - Share-based compensation expense Cost of sales, SG&A and
R&D 26 9 17 0.07 Reorganization of business charges Cost of
sales and Other charges 28 8 20 0.08 Legal settlement Other charges
8 3 5 0.02 Total impact on Net earnings
$ 63 $ 20 $ 43 $ 0.17
Q3 2014 PBT
Tax PAT Highlighted Items Statement
Line (Inc)/Exp Inc/(Exp) (Inc)/Exp EPS
impact Intangibles amortization expense Intangibles
amortization $ 1 $ - $ 1 $ - Share-based compensation expense Cost
of sales, SG&A and R&D 20 6 14 0.06 Reorganization of
business charges Cost of sales and Other charges 20 6 14 0.06
Pension settlement related expenses Other charges 11 4 7 0.03 Loss
from the extinguishment of long-term debt Other expense (income) 37
14 23 0.09 Gain on investment Other expense (income) (10 ) - (10 )
(0.04 ) Tax expense to establish foreign valuation allowance Income
tax expense - (55 ) 55 0.22 Revaluation of deferred taxes for
change in effective state tax rates Income tax expense - 16 (16 )
(0.07 ) Total impact on Net earnings $
79 $ (9 ) $ 88 $ 0.35
Q4 2014 PBT
Tax PAT Highlighted Items Statement
Line (Inc)/Exp Inc/(Exp) (Inc)/Exp EPS
impact Intangibles amortization expense Intangibles
amortization $ 1 $ - $ 1 - Stock-based compensation expense Cost of
sales, SG&A and R&D 20 8 12 0.05 Reorganization of business
charges Cost of sales and Other charges 15 5 10 0.04 Tax expense on
legal entity reorganization Income tax expense - (8 ) 8 0.04
Reduction in net deferred tax liability for undistributed earnings
Income tax expense - 14 (14 ) (0.06 ) Revaluation of deferred taxes
for change in effective state tax rates Income tax expense - (12 )
12 0.05 Pension settlement loss, including related expenses Other
charges 1,906 721 1,185 5.15 Total
impact on Net earnings $ 1,942 $ 728 $ 1,214 $ 5.27
FY 2014 PBT Tax PAT
Highlighted Items Statement Line (Inc)/Exp
Inc/(Exp) (Inc)/Exp EPS impact
Intangibles amortization expense Intangibles amortization $ 4 $ - 4
0.02 Stock-based compensation expense Cost of sales, SG&A and
R&D 94 32 62 0.26 Reorganization of business charges Cost of
sales and Other charges 73 21 52 0.21 Gain on sale of building and
land Other charges (21 ) (8 ) (13 ) (0.05 ) Recognition of
previously unrecognized income tax benefits Income tax expense - 29
(29 ) (0.12 ) Legal settlement Other charges 8 3 5 0.02 Loss from
the extinguishment of long-term debt Other expense (income) 37 14
23 0.09 Gain on investment Other expense (income) (10 ) - (10 )
(0.04 ) Tax expense to establish foreign valuation allowance Income
tax expense - (55 ) 55 0.22 Tax expense on legal entity
reorganization Income tax expense - (8 ) 8 0.03 Reduction in net
deferred tax liability for undistributed earnings Income tax
expense - 14 (14 ) (0.06 ) Revaluation of deferred taxes for change
in effective state tax rates Income tax expense - 4 (4 ) (0.02 )
Pension settlement loss, including related expenses Other charges
1,917 725 1,192 4.86 Total impact on
Net earnings $ 2,102 $ 771 $ 1,331 $ 5.42
Non-GAAP-2 Motorola Solutions, Inc. and
Subsidiaries Non-GAAP Segment Information (In
millions)
Net Sales Three Months
Ended December 31, December 31,
2014 2013 % Change Products $ 1,246 $
1,212 3 % Services 577 605 -5 % Total
Motorola Solutions $ 1,823 $ 1,817 0 %
Year Ended December 31,
December 31, 2014 2013 % Change
Products $ 3,807 $ 4,109 -7 % Services 2,074
2,118 -2 % Total Motorola Solutions $ 5,881 $ 6,227
-6 %
Non-GAAP Operating Earnings
Three Months Ended December 31,
December 31, 2014 2013 % Change
Products $ 394 $ 283 39 % Services 89 113
-21 % Total Motorola Solutions $ 483 $ 396 22
%
Year Ended December
31, December 31, 2014 2013 %
Change Products $ 754 $ 775 -3 % Services 315
381 -17 % Total Motorola Solutions $ 1,069 $
1,156 -8 %
Non-GAAP Operating Earnings %
Three Months Ended December
31, December 31, 2014 2013 Products 31.6 %
23.3 % Services 15.4 % 18.7 % Total Motorola Solutions 26.5
% 21.8 %
Year Ended
December 31, December 31, 2014
2013 Products 19.8 % 18.9 % Services 15.2 % 18.0 %
Total Motorola Solutions 18.2 % 18.6 %
Non-GAAP-3 Motorola Solutions, Inc. and
Subsidiaries Operating Earnings after Non-GAAP
Adjustments
Q1 2014
TOTAL Products Services Net sales $ 1,228 $
753 $ 475 Operating earnings ("OE") $ 107 $ 39
$ 68 Above-OE non-GAAP adjustments: Share-based
compensation expense 29 19 10 Reorganization of business charges 10
6 4 Intangibles amortization expense 1 1 - Gain on sale of building
and land (21 ) (14 ) (7 ) Total above-OE
non-GAAP adjustments 19 12 7
Operating earnings after non-GAAP adjustments $ 126 $
51 $ 75 Operating earnings as a
percentage of net sales - GAAP 8.7 % 5.2 % 14.3 % Operating
earnings as a percentage of net sales - after non-GAAP adjustments
10.3 % 6.8 % 15.8 %
Q2 2014
TOTAL Products Services Net
sales $ 1,393 $ 887 $ 506 Operating earnings ("OE") $ 138
$ 95 $ 43 Above-OE non-GAAP
adjustments: Share-based compensation expense 26 14 12
Reorganization of business charges 28 18 10 Intangibles
amortization expense 1 1 - Legal settlement 8
5 3 Total above-OE non-GAAP adjustments 63 38
25 Operating earnings after
non-GAAP adjustments $ 201 $ 133 $ 68
Operating earnings as a percentage of net
sales - GAAP 9.9 % 10.7 % 8.5 % Operating earnings as a percentage
of net sales - after non-GAAP adjustments 14.4 % 15.0
% 13.4 %
Q3 2014 TOTAL
Products Services Net sales $ 1,436 $ 921 $ 515
Operating earnings ("OE") $ 207 $ 141 $ 66
Above-OE non-GAAP adjustments: Share-based
compensation expense 20 11 9 Reorganization of business charges 20
14 6 Intangibles amortization expense 1 1 - Pension settlement
related expenses 11 8 3
Total above-OE non-GAAP adjustments 52 34 18
Operating earnings after non-GAAP adjustments
$ 259 $ 175 $ 84
Operating earnings as a percentage of net sales - GAAP 14.4 % 15.3
% 12.8 % Operating earnings as a percentage of net sales - after
non-GAAP adjustments 18.8 % 19.4 % 17.7 %
Q4 2014
TOTAL Products
Services Net sales $ 1,823 $ 1,246 $ 577 Operating earnings
$ (1,459 ) $ (944 ) $ (515 ) Above-OE non-GAAP
adjustments: Stock-based compensation expense 20 12 8
Reorganization of business charges 15 10 5 Intangibles amortization
expense 1 1 - Pension settlement loss, including related expenses
1,906 1,315 591 Total
above-OE non-GAAP adjustments 1,942 1,338 604
Operating earnings after non-GAAP adjustments
$ 483 $ 394 $ 89
Operating earnings as a percentage of net sales - GAAP -80.0 %
-75.8 % -89.3 % Operating earnings as a percentage of net sales -
after non-GAAP adjustments 26.5 % 31.6 % 15.4
%
FY
2014 TOTAL
Products Services Net sales $ 5,881 $ 3,807 $ 2,074
Operating earnings $ (1,006 ) $ (667 ) $ (339 )
Above-OE non-GAAP adjustments: Stock-based compensation expense 94
55 39 Reorganization of business charges 73 48 25 Intangibles
amortization expense 4 4 - Gain on sale of building and land (21 )
(14 ) (7 ) Legal settlement 8 5 3 Pension settlement loss,
including related expenses 1,917 1,323
594 Total above-OE non-GAAP adjustments 2,075 1,421
654 Operating earnings after
non-GAAP adjustments $ 1,069 $ 754 $ 315
Operating earnings as a percentage of
net sales - GAAP -17.1 % -17.5 % -16.3 % Operating earnings as a
percentage of net sales - after non-GAAP adjustments 18.2 %
19.8 % 15.2 %
MEDIA CONTACTKurt EbenhochMotorola Solutions+1
847-576-1341kurt.ebenhoch@motorolasolutions.comorINVESTOR
CONTACTSShep DunlapMotorola Solutions+1
847-576-6899shep.dunlap@motorolasolutions.comorChris KutsorMotorola
Solutions+1 847-576-4995chris.kutsor@motorolasolutions.com
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