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Motorola Solutions Reports Second-Quarter 2020 Financial Results

·31 min read
  • Revenue of $1.6 billion, down 13% versus a year ago

  • Software and Services segment grew 5% and expanded operating margins by 260 bps

  • GAAP earnings per share (EPS) of $0.78

  • Non-GAAP EPS* of $1.39

  • Generated $209 million of operating cash flow and $155 million of free cash flow

  • Subsequent to quarter end, acquired Pelco Inc., a global provider of video security solutions for $110 million

Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings results for the second quarter of 2020. Click here for a printable news release and financial tables.

"I’m proud of our solid execution in Q2, led by software & services, in the face of this global pandemic. And, I'm even more impressed with our employees' resilience and unwavering commitment to our customers and to our business," said Greg Brown, chairman and CEO, Motorola Solutions. "Demand for video security, software & services and increased customer engagements are driving our expectations for improvement in the second half of the year."

KEY FINANCIAL RESULTS (presented in millions, except per share data and percentages)

Q2 2020

Q2 2019

% Change

Sales

$1,618

$1,860

(13)%

GAAP

Operating Earnings

$218

$349

(38)%

% of Sales

13.5 %

18.8%

EPS

$0.78

$1.18

(34)%

Non-GAAP*

Operating Earnings

$359

$444

(19)%

% of Sales

22.2 %

23.9%

EPS

$1.39

$1.69

(18)%

Products and Systems Integration Segment

Sales

$968

$1,238

(22)%

GAAP Operating Earnings

$49

$201

(76)%

% of Sales

5.1 %

16.2%

Non-GAAP Operating Earnings*

$131

$242

(46)%

% of Sales

13.5 %

19.5%

Software and Services Segment

Sales

$650

$622

5%

GAAP Operating Earnings

$169

$148

14%

% of Sales

26.0 %

23.8%

Non-GAAP Operating Earnings*

$228

$202

13%

% of Sales

35.1 %

32.5%

*Non-GAAP financial information excludes the after-tax impact of approximately $0.61 per diluted share related to share-based compensation, intangible assets amortization expense and highlighted items. Details on these non-GAAP adjustments and the use of non-GAAP measures are included later in this news release.

OTHER SELECTED FINANCIAL RESULTS

  • Revenue - Sales were $1.6 billion, down 13% from the year-ago quarter driven by declines in North America and International. Revenue from acquisitions was $40 million, and currency headwinds were $30 million in the quarter. The Products and Systems Integration segment declined 22% primarily due to lower sales of professional and commercial radio (PCR) and public safety LMR products. The Software and Services segment grew 5%, driven by growth in North America services and software.

  • Operating margin - GAAP operating margin was 13.5% of sales, down from 18.8% in the year-ago quarter primarily due to lower sales in the Products and System Integration segment, partially offset by higher sales and gross margin in the Software and Services segment. Non-GAAP operating margin was 22.2% of sales, down from 23.9% in the year-ago quarter primarily due to lower sales in the Products and System Integration segment, partially offset by higher sales and gross margin in the Software and Services segment.

  • Taxes - The GAAP effective tax rate was 23%, compared with 24% in the year-ago quarter. The non-GAAP effective tax rate was 23%, compared with 24% in the year-ago quarter. Both the GAAP and non-GAAP tax rates were lower in the current quarter primarily due to higher research and development credits.

  • Cash flow - Operating cash flow was $209 million, compared with $251 million in the year-ago quarter. Free cash flow was $155 million, compared with $188 million in the year-ago quarter. Cash flow for the quarter decreased due to lower sales and net income, partially offset by improved working capital.

  • Capital allocation - During the quarter, the company paid $109 million in cash dividends, repurchased $83 million of shares, used $65 million for acquisitions, and incurred $54 million of capital expenditures. Additionally, the company repaid $500 million of its revolving credit facility borrowing, of which $300 million was repaid during the quarter and $200 million was repaid subsequently. The remaining outstanding amount of the facility borrowing was $300 million as of Aug. 6, 2020.

  • Backlog - The company ended the quarter with backlog of $10.5 billion, down $376 million from the year-ago quarter, inclusive of $126 million of unfavorable currency adjustments. Software and Services segment backlog was down 2% or $148 million, inclusive of $116 million of unfavorable currency rates. The decline was primarily related to revenue recognized for the Airwave and ESN contracts, partially offset by growth in North America. Products and Systems Integration segment backlog was down 7% or $228 million, inclusive of $10 million of unfavorable currency adjustments, driven by large International deployments and lower orders due to the delay in sales engagements from COVID-19.

NOTABLE WINS AND ACHIEVEMENTS

Software and Services

  • $37 million P25 multi-year services contract with the State of Louisiana

  • $26 million Next Generation 911 services contract with the State of Utah

  • $10 million P25 statewide multi-year services contract in North America

  • $8 million multi-year computer aided dispatch contract with Baltimore County

Products and Systems Integration

  • $24 million P25 order for State of Alaska

  • $20 million P25 order for Newton County, Georgia

  • $17 million P25 order for State of South Dakota

  • Launched the V300 continuous-operation body-worn camera

  • Closed acquisition of IndigoVision in Q2 and subsequent to quarter end announced the acquisition of Pelco Inc.

BUSINESS OUTLOOK

  • Third-quarter 2020 - Motorola Solutions expects revenue decline of (9%) to (8%) compared with the third quarter of 2019. The company expects non-GAAP earnings per share in the range of $1.72 to $1.78. This assumes current foreign exchange rates, approximately 174 million fully diluted shares, and an effective tax rate of approximately 23%.

  • Full-year 2020 - Motorola Solutions expects revenue decline of approximately (7%) and non-GAAP earnings per share in the range of $7.40 to $7.52. This assumes current foreign exchange rates, approximately 175 million fully diluted shares, and an effective tax rate of 21% to 22%.

COVID-19

In response to the evolving COVID-19 pandemic, the company continues to adhere to its plans to keep its employees and customers healthy and safe, as well as ensuring continued operations and business continuity. Safety measures during this outbreak include having the vast majority of employees work remotely, suspending employee travel, withdrawing from certain industry events, increasing cleaning services, encouraging face coverings and using thermal scanning. The company continues to ensure customer continuity by fulfilling several emergency orders, completing remote software maintenance where possible, and continuing to service mission-critical networks on-site as needed to ensure seamless operations. In addition, our supply chain partners remain supportive and continue to do their part to ensure that service levels to the company and its customers remain fulfilled.

The sales teams’ engagement with customers, both virtual and in-person, has improved throughout the second quarter. The expectation is for improvement to continue throughout the second half of 2020. Additionally, the company’s engineering teams have adapted its solutions offerings to equip customers with the latest technology in the fight to protect their workplace from the spread of COVID-19. Specifically, in the video security business, the company has adapted its software and hardware offerings to provide analytics for occupancy counting, face mask detection and thermal detection capabilities.

The company has also taken actions in a number of areas to reduce its operating expenses, mostly driven by lower variable compensation, travel costs, contractor spend and reduced real estate footprint to limit the negative effect on operating margins for the year despite the expected reduction of revenue.

CONFERENCE CALL AND WEBCAST Motorola Solutions will host its quarterly conference call beginning at 4 p.m. U.S. Central Time (5 p.m. U.S. Eastern Time) on Thursday, Aug. 6. The conference call will be webcast live at www.motorolasolutions.com/investor.

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

A comparison of results from operations is as follows:

Q2 2020

Q2 2019

Net sales

$1,618

$1,860

Gross margin

766

931

Operating earnings

218

349

Amounts attributable to Motorola Solutions, Inc. common stockholders

Net earnings

135

207

Diluted EPS

$0.78

$1.18

Weighted average diluted common shares outstanding

173.6

176.1

HIGHLIGHTED ITEMS

The table below includes highlighted items, share-based compensation expenses and intangible amortization for the second quarter of 2020.

(per diluted common share)

Q2 2020

GAAP Earnings

$0.78

Highlighted Items:

Intangibles amortization expense

0.22

Reorganization of business charges

0.18

Share-based compensation expenses

0.14

Legal settlements

0.03

Hytera-related legal expenses

0.02

Fixed asset impairment

0.02

Acquisition-related transaction fees

0.01

Release of uncertain tax positions

0.01

Fair value adjustments to equity investments

(0.02)

Non-GAAP Diluted EPS

$1.39

USE OF NON-GAAP FINANCIAL INFORMATION

In addition to the GAAP results included in this presentation, Motorola Solutions also has included non-GAAP measurements of results. The company has provided these non-GAAP measurements to help investors better understand its core operating performance, enhance comparisons of core operating performance from period to period and allow better comparisons of operating performance to its competitors. Among other things, management uses these operating results, excluding the identified items, to evaluate performance of the businesses and to evaluate results relative to certain incentive compensation targets. Management uses operating results excluding these items because it believes this measurement enables it to make better period-to-period evaluations of the financial performance of core business operations. The non-GAAP measurements are intended only as a supplement to the comparable GAAP measurements and the company compensates for the limitations inherent in the use of non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurements. As a result, investors should consider these non-GAAP measurements in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with generally accepted accounting principles.

Highlighted items: The company has excluded the effects of highlighted items including, but not limited to, acquisition-related transaction costs, tangible and intangible asset impairments, restructuring charges, certain non-cash pension adjustments, legal settlements and other contingencies, gains and losses on investments and businesses, Hytera-related legal expenses, and the income tax effects of significant tax matters, from its non-GAAP operating expenses and net income measurements because the company believes that these historical items do not reflect expected future operating earnings or expenses and do not contribute to a meaningful evaluation of the company's current operating performance or comparisons to the company's past operating performance. For the purposes of management's internal analysis over operating performance, the company uses financial statements that exclude highlighted items, as these charges do not contribute to a meaningful evaluation of the company's current operating performance or comparisons to the company's past operating performance.

Hytera-Related Legal Expenses: On February 14, 2020, we announced that a jury in the U.S. District Court for the Northern District of Illinois decided in our favor in our trade secret theft and copyright infringement case against Hytera Communications Corporation Limited of Shenzhen, China; Hytera America, Inc.; and Hytera Communications America (West), Inc. (collectively, “Hytera”). In connection with this verdict, the jury awarded Motorola Solutions $345.8 million in compensatory damages and $418.8 million in punitive damages, for a total of $764.6 million. In the first quarter of 2020, we revised our definition of non-GAAP operating income to exclude the impact of Hytera-related legal expenses. The $5 million of Hytera-related legal expense incurred in the second quarter of 2020 reflects costs primarily associated with this jury trial. During the second quarter of 2020, Hytera filed a motion for a new trial and Hytera America, Inc. and Hytera Communications America (West) both filed for chapter 11 bankruptcy protection. Subsequent to quarter end, the company filed motions to dismiss the bankruptcy proceedings. Given our inability to predict the timing and outcome of these motions, together with the uncertainty of our ability to ultimately collect amounts awarded, at this time we have not recognized in our financial statements any gain related to the Hytera litigation.

Management typically considers legal expenses associated with defending our intellectual property as “normal and recurring” and accordingly, Hytera-related legal expenses were included in both our GAAP and non-GAAP operating income for fiscal years 2017, 2018 and 2019. We anticipate further expenses associated with Hytera-related litigation; however, we believe that these expenses are no longer a part of the “normal and recurring” legal expenses incurred to operate our business. In addition, if any contingent or actual gain associated with the Hytera litigation is recognized in the future, it will be similarly excluded from our non-GAAP operating income. We believe after the jury award, the presentation of excluding both Hytera-related legal expenses and gains related to awards better aligns with how management evaluates our ongoing underlying business performance.

For comparative purposes, $6 million, or $0.03 of earnings per share, net of tax, of Hytera-related legal expense was included in our second quarter 2019 Non-GAAP operating earnings.

Share-based compensation expenses: The company has excluded share-based compensation expenses 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 expenses primarily because it represents a significant non-cash expense. Share-based compensation expenses will recur in future periods.

Intangible assets amortization expense: The company has excluded intangible assets amortization expense from its non-GAAP operating expenses and net earnings measurements, primarily because it represents a non-cash expense and because the company evaluates its performance excluding intangible assets amortization expense. Amortization of intangible assets is consistent in amount and frequency but is significantly affected by the timing and size of the company’s acquisitions. Investors should note that the use of intangible assets contributed to the company’s revenues earned during the periods presented and will contribute to the company’s future period revenues as well. Intangible assets amortization expense will recur in future periods.

Free cash flow: Free cash flow represents operating cash flow less capital expenditures. We believe that free cash flow is also useful to investors as the basis for comparing our performance and coverage ratios with other companies in our industries, although our measure of free cash flow may not be directly comparable to similar measures used by other companies.

Organic Revenue: Organic revenue reflects net sales calculated under GAAP excluding net sales from acquired business owned for less than four full quarters. The company believes non-GAAP organic revenue growth provides useful information for evaluating the periodic growth of the business on a consistent basis and provides for a meaningful period-to-period comparison and analysis of trends in the business.

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.

The company has not quantitatively reconciled its guidance for non-GAAP metrics to their most comparable GAAP measure because the company does not provide specific guidance for the various reconciling items as certain items that impact these measures have not occurred, are out of the company’s control, or cannot be reasonably predicted. Accordingly, a reconciliation to the most comparable GAAP financial metric is not available without unreasonable effort. Please note that the unavailable reconciling items could significantly impact the company’s results.

BUSINESS RISKS

This news release contains "forward-looking statements" within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions. The company can give no assurance that any actual or future results or events discussed in these statements will be achieved. Any forward-looking statements represent the company’s views only as of today and should not be relied upon as representing the company’s views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause the company’s actual results to differ materially from the statements contained in this release. Such forward-looking statements include, but are not limited to, Motorola Solutions’ financial outlook for the third quarter and full-year 2020. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 10 through 22 in Item 1A of Motorola Solutions’ 2019 Annual Report on Form 10-K, on page 34 of Motorola Solutions’ 2020 first quarterly report on Form 10-Q, and in its other SEC filings available for free on the SEC’s website at www.sec.gov and on Motorola Solutions’ website at www.motorolasolutions.com, could cause Motorola Solutions’ actual results to differ materially from those estimated or predicted in the forward-looking statements. Many of these risks and uncertainties cannot be controlled by Motorola Solutions, and factors that may impact forward-looking statements include, but are not limited to: (1) the economic outlook for the government communications industry; (2) the impact of foreign currency fluctuations on the company; (3) the level of demand for the company's products; (4) the company's ability to refresh existing and introduce new products and technologies in a timely manner; (5) 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; (6) 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; (viii) the company’s ability to access the capital markets on acceptable terms and conditions; and (ix) the ongoing COVID-19 pandemic and governmental and societal responses thereto; (7) the impact of a security breach or other significant disruption in the company’s IT systems, those of its partners or suppliers or those it sells to or operates or maintains for its customers; (8) the outcome of ongoing and future tax matters; (9) 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; (10) risks related to dependence on certain key suppliers, subcontractors, third-party distributors and other representatives; (11) the impact on the company's performance and financial results from strategic acquisitions or divestitures; (12) risks related to the company's manufacturing and business operations in foreign countries; (13) the creditworthiness of the company's customers and distributors, particularly purchasers of large infrastructure systems; (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 complete acquisitions or repurchase shares under its repurchase program due to possible adverse market conditions or adverse impacts on the company’s cash flow; (20) the impact of changes in governmental policies, laws or regulations; (21) negative consequences from the company's use of third party vendors for various activities, including certain manufacturing operations, information technology and administrative functions; and (22) the company’s ability to settle the par value of its 1.75% senior convertible notes in cash. Motorola Solutions undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

ABOUT MOTOROLA SOLUTIONS

Motorola Solutions is a global leader in mission-critical communications and analytics. Our technology platforms in mission-critical communications, command center software and video security & analytics, bolstered by managed & support services, make cities safer and help communities and businesses thrive. At Motorola Solutions, we are ushering in a new era in public safety and security. Learn more at www.motorolasolutions.com.

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. ©2020 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 27, 2020

June 29, 2019

Net sales from products

$

877

$

1,118

Net sales from services

741

742

Net sales

1,618

1,860

Costs of products sales

413

490

Costs of services sales

439

439

Costs of sales

852

929

Gross margin

766

931

Selling, general and administrative expenses

297

351

Research and development expenditures

161

170

Other charges

39

9

Intangibles amortization

51

52

Operating earnings

218

349

Other income (expense):

Interest expense, net

(58

)

(56

)

Gains on sales of investments and businesses, net

-

3

Other, net

16

(21

)

Total other expense

(42

)

(74

)

Net earnings before income taxes

176

275

Income tax expense

40

67

Net earnings

136

208

Less: Earnings attributable to non-controlling interests

1

1

Net earnings attributable to Motorola Solutions, Inc.

$

135

$

207

Earnings per common share:

Basic

$

0.79

$

1.25

Diluted

$

0.78

$

1.18

Weighted average common shares outstanding:

Basic

170.0

164.9

Diluted

173.6

176.1

Percentage of Net Sales*

Net sales from products

54.2

%

60.1

%

Net sales from services

45.8

%

39.9

%

Net sales

100.0

%

100.0

%

Costs of products sales

47.1

%

43.8

%

Costs of services sales

59.2

%

59.2

%

Costs of sales

52.7

%

49.9

%

Gross margin

47.3

%

50.1

%

Selling, general and administrative expenses

18.4

%

18.9

%

Research and development expenditures

10.0

%

9.1

%

Other charges

2.4

%

0.5

%

Intangibles amortization

3.2

%

2.8

%

Operating earnings

13.5

%

18.8

%

Other income (expense):

Interest expense, net

(3.6

)%

(3.0

)%

Gains on sales of investments and businesses, net

-

%

0.2

%

Other, net

1.0

%

(1.1

)%

Total other expense

(2.6

)%

(4.0

)%

Net earnings before income taxes

10.9

%

14.8

%

Income tax expense

2.5

%

3.6

%

Net earnings

8.4

%

11.2

%

Less: Earnings attributable to non-controlling interests

0.1

%

0.1

%

Net earnings attributable to Motorola Solutions, Inc.

8.3

%

11.1

%

* 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 27, 2020

June 29, 2019

Net sales from products

$

1,764

$

2,063

Net sales from services

1,509

1,454

Net sales

3,273

3,517

Costs of products sales

812

934

Costs of services sales

908

879

Costs of sales

1,720

1,813

Gross margin

1,553

1,704

Selling, general and administrative expenses

638

676

Research and development expenditures

330

333

Other charges

5

14

Intangibles amortization

104

102

Operating earnings

476

579

Other income (expense):

Interest expense, net

(109

)

(111

)

Gains on sales of investments and businesses, net

-

4

Other, net

34

(12

)

Total other expense

(75

)

(119

)

Net earnings before income taxes

401

460

Income tax expense

67

100

Net earnings

334

360

Less: Earnings attributable to non-controlling interests

2

2

Net earnings attributable to Motorola Solutions, Inc.

$

332

$

358

Earnings per common share:

Basic

$

1.95

$

2.18

Diluted

$

1.90

$

2.04

Weighted average common shares outstanding:

Basic

170.3

164.4

Diluted

174.8

175.3

Percentage of Net Sales*

Net sales from products

53.9

%

58.7

%

Net sales from services

46.1

%

41.3

%

Net sales

100.0

%

100.0

%

Costs of products sales

46.0

%

45.3

%

Costs of services sales

60.2

%

60.5

%

Costs of sales

52.6

%

51.5

%

Gross margin

47.4

%

48.5

%

Selling, general and administrative expenses

19.5

%

19.2

%

Research and development expenditures

10.1

%

9.5

%

Other charges

0.2

%

0.4

%

Intangibles amortization

3.2

%

2.9

%

Operating earnings

14.5

%

16.5

%

Other income (expense):

Interest expense, net

(3.3

)%

(3.2

)%

Gains on sales of investments and businesses, net

-

%

0.1

%

Other, net

1.0

%

(0.3

)%

Total other expense

(2.3

)%

(3.4

)%

Net earnings before income taxes

12.3

%

13.1

%

Income tax expense

2.0

%

2.8

%

Net earnings

10.2

%

10.2

%

Less: Earnings attributable to non-controlling interests

0.1

%

0.1

%

Net earnings attributable to Motorola Solutions, Inc.

10.1

%

10.2

%

* Percentages may not add up due to rounding

GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

June 27, 2020

December 31, 2019

Assets

Cash and cash equivalents

$

1,341

$

1,001

Accounts receivable, net

1,134

1,412

Contract assets

937

1046

Inventories, net

449

447

Other current assets

225

272

Total current assets

4,086

4,178

Property, plant and equipment, net

965

992

Operating lease assets

462

554

Investments

157

159

Deferred income taxes

922

943

Goodwill

2,123

2,067

Intangible assets, net

1,242

1,327

Other assets

417

422

Total assets

$

10,374

$

10,642

Liabilities and Stockholders' Equity (Deficit)

Current portion of long-term debt

$

517

$

16

Accounts payable

498

618

Contract liabilities

1,294

1,449

Accrued liabilities

1,171

1,356

Total current liabilities

3,480

3,439

Long-term debt

5,111

5,113

Operating lease liabilities

385

497

Other liabilities

2,213

2,276

Total Motorola Solutions, Inc. stockholders’ equity (deficit)

(830

)

(700

)

Non-controlling interests

15

17

Total liabilities and stockholders’ equity (deficit)

$

10,374

$

10,642

GAAP-4

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

Three Months Ended

June 27, 2020

June 29, 2019

Operating

Net earnings attributable to Motorola Solutions, Inc.

$

135

$

207

Earnings attributable to non-controlling interests

1

1

Net earnings

136

208

Adjustments to reconcile Net earnings to Net cash provided by operating activities:

Depreciation and amortization

98

96

Non-cash other (income) charges

11

(6

)

Share-based compensation expenses

31

30

Gain on sales of investments and businesses, net

-

(3

)

Losses from the extinguishment of long term debt

-

43

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:

Accounts receivable

11

(58

)

Inventories

1

2

Other current assets and contract assets

88

(8

)

Accounts payable, accrued liabilities, and contract liabilities

(153

)

(84

)

Other assets and liabilities

(11

)

8

Deferred income taxes

(3

)

23

Net cash provided by operating activities

209

251

Investing

Acquisitions and investments, net

(65

)

(3

)

Proceeds from sales of investments and businesses, net

4

8

Capital expenditures

(54

)

(63

)

Net cash used for investing activities

(115

)

(58

)

Financing

Repayments of debt

(4

)

(658

)

Repayment of revolver draw

(300

)

-

Net proceeds from issuance of debt

-

645

Issuances of common stock

44

25

Purchases of common stock

(83

)

(25

)

Payments of dividends

(109

)

(94

)

Payments of dividends to non-controlling interests

(4

)

(3

)

Net cash used for financing activities

(456

)

(110

)

Effect of exchange rate changes on total cash and cash equivalents

31

(16

)

Net increase (decrease) in total cash and cash equivalents

(331

)

67

Cash and cash equivalents, beginning of period

1672

897

Cash and cash equivalents, end of period

$

1341

$

964

Financial Ratios:

Free cash flow*

$

155

$

188

*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 27, 2020

June 29, 2019

Operating

Net earnings attributable to Motorola Solutions, Inc.

$

332

$

358

Earnings attributable to non-controlling interests

2

2

Net earnings

334

360

Adjustments to reconcile Net earnings to Net cash provided by operating activities:

Depreciation and amortization

197

191

Non-cash other charges (income)

(40

)

4

Share-based compensation expenses

69

57

Gain on sales of investments and businesses, net

-

(4

)

Losses from the extinguishment of long term debt

-

43

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:

Accounts receivable

286

110

Inventories

3

(61

)

Other current assets and contract assets

136

128

Accounts payable, accrued liabilities, and contract liabilities

(454

)

(345

)

Other assets and liabilities

(15

)

2

Deferred income taxes

1

17

Net cash provided by operating activities

517

502

Investing

Acquisitions and investments, net

(102

)

(371

)

Proceeds from sales of investments and businesses, net

7

10

Capital expenditures

(102

)

(129

)

Proceeds from sales of property, plant and equipment

56

-

Net cash used for investing activities

(141

)

(490

)

Financing

Net proceeds from issuance of debt

-

645

Repayments of debt

(8

)

(666

)

Net proceeds from revolver draw

800

-

Repayment of revolver draw

(300

)

-

Issuances of common stock

49

70

Purchases of common stock

(336

)

(170

)

Payments of dividends

(218

)

(187

)

Payments of dividends to non-controlling interests

(4

)

(3

)

Net cash used for financing activities

(17

)

(311

)

Effect of exchange rate changes on total cash and cash equivalents

(19

)

6

Net increase (decrease) in total cash and cash equivalents

340

(293

)

Cash and cash equivalents, beginning of period

1,001

1,257

Cash and cash equivalents, end of period

$

1341

$

964

Financial Ratios:

Free cash flow*

$

415

$

373

*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

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

968

$

1,238

(22

)%

Software and Services

650

622

5

%

Total Motorola Solutions

$

1,618

$

1,860

(13

)%

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

1,961

$

2,307

(15

)%

Software and Services

1,312

1,210

8

%

Total Motorola Solutions

$

3,273

$

3,517

(7

)%

Operating Earnings

Three Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

49

$

201

(76

)%

Software and Services

169

148

14

%

Total Motorola Solutions

$

218

$

349

(38

)%

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

141

$

310

(55

)%

Software and Services

335

269

25

%

Total Motorola Solutions

$

476

$

579

(18

)%

Operating Earnings %

Three Months Ended

June 27, 2020

June 29, 2019

Products and Systems Integration

5.1

%

16.2

%

Software and Services

26.0

%

23.8

%

Total Motorola Solutions

13.5

%

18.8

%

Six Months Ended

June 27, 2020

June 29, 2019

Products and Systems Integration

7.2

%

13.4

%

Software and Services

25.5

%

22.2

%

Total Motorola Solutions

14.5

%

16.5

%

Non-GAAP-1

Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Adjustments (Intangibles Amortization Expense, Share-Based Compensation Expense and Highlighted Items)

(In millions)

Q1 2020

Non-GAAP Adjustments

Statement Line

PBT
(Inc)/Exp

Tax
Inc/(Exp)

PAT
(Inc)/Exp

EPS impact

Intangibles amortization expense

Intangibles amortization

$

53

$

13

$

40

$

0.23

Share-based compensation expenses

Cost of sales, SG&A and R&D

38

9

29

0.17

Hytera-related legal expenses

SG&A

25

6

19

0.11

Reorganization of business charges

Cost of sales and Other charges (income)

18

4

14

0.08

Acquisition-related transaction fees

Other charges (income)

2

-

2

0.01

Legal settlements

Other charges (income)

2

-

2

0.01

Fair value adjustments to equity investments

Other income

(1

)

-

(1

)

(0.01

)

Release of uncertain tax positions

Income tax expense

-

1

(1

)

(0.01

)

Gain on sale of property, plant, and equipment

Other charges (income)

(50

)

(12

)

(38

)

(0.22

)

Total impact on Net earnings

$

87

$

21

$

66

$

0.37

Q1 2020

Non-GAAP Adjustments

Statement Line

PBT
(Inc)/Exp

Tax
Inc/(Exp)

PAT
(Inc)/Exp

EPS impact

Intangibles amortization expense

Intangibles amortization

$

51

$

12

$

39

$

0.22

Reorganization of business charges

Cost of sales and Other charges (income)

41

10

31

0.18

Share-based compensation expenses

Cost of sales, SG&A and R&D

31

7

24

0.14

Legal settlements

Other charges (income)

7

2

5

0.03

Hytera-related legal expenses

SG&A

5

1

4

0.02

Fixed asset impairment

Other charges (income)

5

1

4

0.02

Acquisition-related transaction fees

Other charges (income)

1

-

1

0.01

Release of uncertain tax positions

Income tax expense

-

(1

)

1

0.01

Fair value adjustments to equity investments

Other income

(4

)

(1

)

(3

)

(0.02

)

Total impact on Net earnings

$

137

$

31

$

106

$

0.61

Non-GAAP-2

Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Segment Information

(In millions)

Net Sales

Three Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

968

$

1,238

(22

)%

Software and Services

650

622

5

%

Total Motorola Solutions

$

1,618

$

1,860

(13

)%

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

1,961

$

2,307

(15

)%

Software and Services

1,312

1,210

8

%

Total Motorola Solutions

$

3,273

$

3,517

(7

)%

Non-GAAP Operating Earnings

Three Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

131

$

242

(46

)%

Software and Services

228

202

13

%

Total Motorola Solutions

$

359

$

444

(19

)%

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

253

$

389

(35

)%

Software and Services

452

370

22

%

Total Motorola Solutions

$

705

$

759

(7

)%

Non-GAAP Operating Earnings %

Three Months Ended

June 27, 2020

June 29, 2019

Products and Systems Integration

13.5

%

19.5

%

Software and Services

35.1

%

32.5

%

Total Motorola Solutions

22.2

%

23.9

%

Six Months Ended

June 27, 2020

June 29, 2019

Products and Systems Integration

12.9

%

16.9

%

Software and Services

34.5

%

30.6

%

Total Motorola Solutions

21.5

%

21.6

%

Non-GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Operating Earnings after Non-GAAP Adjustments

(In millions)

Q1 2020

TOTAL

Products and Systems
Integration

Software and Services

Net sales

$

1,655

$

993

$

662

Operating earnings ("OE")

$

259

$

92

$

167

Above-OE non-GAAP adjustments:

Intangibles amortization expense

53

12

41

Share-based compensation expenses

38

27

11

Hytera-related legal expenses

25

25

-

Reorganization of business charges

18

14

4

Acquisition-related transaction fees

2

1

1

Legal settlements

2

2

-

Gain on sale of property, plant, and equipment

(50

)

(50

)

-

Total above-OE non-GAAP adjustments

88

31

57

Operating earnings after non-GAAP adjustments

$

347

$

123

$

224

Operating earnings as a percentage of net sales - GAAP

15.6

%

9.3

%

25.2

%

Operating earnings as a percentage of net sales - after non-GAAP adjustments

21.0

%

12.4

%

33.8

%

Q2 2020

TOTAL

Products and Systems
Integration

Software and Services

Net sales

$

1,618

$

968

$

650

Operating earnings ("OE")

$

218

$

49

$

169

Above-OE non-GAAP adjustments:

Intangibles amortization expense

51

12

39

Reorganization of business charges

41

33

8

Share-based compensation expenses

31

22

9

Legal settlements

7

7

-

Hytera-related legal expenses

5

5

-

Fixed asset impairment

5

3

2

Acquisition-related transaction fees

1

-

1

Total above-OE non-GAAP adjustments

141

82

59

Operating earnings after non-GAAP adjustments

$

359

$

131

$

228

Operating earnings as a percentage of net sales - GAAP

13.5

%

5.1

%

26.0

%

Operating earnings as a percentage of net sales - after non-GAAP adjustments

22.2

%

13.5

%

35.1

%

Non-GAAP-4

Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Organic Revenue

(In millions)

Total Motorola Solutions

Three Months Ended

June 27, 2020

June 29, 2019

% Change

Net sales

$

1,618

$

1,860

(13

)%

Non-GAAP adjustments:

Sales from acquisitions

40

-

Organic revenue

$

1,578

$

1,860

(15

)%

Total Motorola Solutions

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Net sales

$

3,273

$

3,517

(7

)%

Non-GAAP adjustments:

Sales from acquisitions

91

3

Organic revenue

$

3,182

$

3,514

(9

)%

Contacts

MEDIA CONTACT
Alexandra Reynolds
Motorola Solutions
+1 312-965-3968
Alexandra.Reynolds@motorolasolutions.com

INVESTOR CONTACT
Tim Yocum
Motorola Solutions
+1 847-576-6899
Tim.Yocum@motorolasolutions.com

1.95

$

2.18

Diluted

$

1.90

$

2.04

Weighted average common shares outstanding:Basic

170.3

164.4

Diluted

174.8

175.3

Percentage of Net Sales*Net sales from products

53.9

%

58.7

%

Net sales from services

46.1

%

41.3

%

Net sales

100.0

%

100.0

%

Costs of products sales

46.0

%

45.3

%

Costs of services sales

60.2

%

60.5

%

Costs of sales

52.6

%

51.5

%

Gross margin

47.4

%

48.5

%

Selling, general and administrative expenses

19.5

%

19.2

%

Research and development expenditures

10.1

%

9.5

%

Other charges

0.2

%

0.4

%

Intangibles amortization

3.2

%

2.9

%

Operating earnings

14.5

%

16.5

%

Other income (expense):Interest expense, net

(3.3

)%

(3.2

)%

Gains on sales of investments and businesses, net

-

%

0.1

%

Other, net

1.0

%

(0.3

)%

Total other expense

(2.3

)%

(3.4

)%

Net earnings before income taxes

12.3

%

13.1

%

Income tax expense

2.0

%

2.8

%

Net earnings

10.2

%

10.2

%

Less: Earnings attributable to non-controlling interests

0.1

%

0.1

%

Net earnings attributable to Motorola Solutions, Inc.

10.1

%

10.2

%

* Percentages may not add up due to rounding

GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In millions)

June 27, 2020

December 31, 2019

Assets

Cash and cash equivalents

$

1,341

$

1,001

Accounts receivable, net

1,134

1,412

Contract assets

937

1046

Inventories, net

449

447

Other current assets

225

272

Total current assets

4,086

4,178

Property, plant and equipment, net

965

992

Operating lease assets

462

554

Investments

157

159

Deferred income taxes

922

943

Goodwill

2,123

2,067

Intangible assets, net

1,242

1,327

Other assets

417

422

Total assets

$

10,374

$

10,642

Liabilities and Stockholders' Equity (Deficit)

Current portion of long-term debt

$

517

$

16

Accounts payable

498

618

Contract liabilities

1,294

1,449

Accrued liabilities

1,171

1,356

Total current liabilities

3,480

3,439

Long-term debt

5,111

5,113

Operating lease liabilities

385

497

Other liabilities

2,213

2,276

Total Motorola Solutions, Inc. stockholders’ equity (deficit)

(830

)

(700

)

Non-controlling interests

15

17

Total liabilities and stockholders’ equity (deficit)

$

10,374

$

10,642

GAAP-4

Motorola Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In millions)

Three Months Ended

June 27, 2020

June 29, 2019

Operating

Net earnings attributable to Motorola Solutions, Inc.

$

135

$

207

Earnings attributable to non-controlling interests

1

1

Net earnings

136

208

Adjustments to reconcile Net earnings to Net cash provided by operating activities:

Depreciation and amortization

98

96

Non-cash other (income) charges

11

(6

)

Share-based compensation expenses

31

30

Gain on sales of investments and businesses, net

-

(3

)

Losses from the extinguishment of long term debt

-

43

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:

Accounts receivable

11

(58

)

Inventories

1

2

Other current assets and contract assets

88

(8

)

Accounts payable, accrued liabilities, and contract liabilities

(153

)

(84

)

Other assets and liabilities

(11

)

8

Deferred income taxes

(3

)

23

Net cash provided by operating activities

209

251

Investing

Acquisitions and investments, net

(65

)

(3

)

Proceeds from sales of investments and businesses, net

4

8

Capital expenditures

(54

)

(63

)

Net cash used for investing activities

(115

)

(58

)

Financing

Repayments of debt

(4

)

(658

)

Repayment of revolver draw

(300

)

-

Net proceeds from issuance of debt

-

645

Issuances of common stock

44

25

Purchases of common stock

(83

)

(25

)

Payments of dividends

(109

)

(94

)

Payments of dividends to non-controlling interests

(4

)

(3

)

Net cash used for financing activities

(456

)

(110

)

Effect of exchange rate changes on total cash and cash equivalents

31

(16

)

Net increase (decrease) in total cash and cash equivalents

(331

)

67

Cash and cash equivalents, beginning of period

1672

897

Cash and cash equivalents, end of period

$

1341

$

964

Financial Ratios:

Free cash flow*

$

155

$

188

*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 27, 2020

June 29, 2019

Operating

Net earnings attributable to Motorola Solutions, Inc.

$

332

$

358

Earnings attributable to non-controlling interests

2

2

Net earnings

334

360

Adjustments to reconcile Net earnings to Net cash provided by operating activities:

Depreciation and amortization

197

191

Non-cash other charges (income)

(40

)

4

Share-based compensation expenses

69

57

Gain on sales of investments and businesses, net

-

(4

)

Losses from the extinguishment of long term debt

-

43

Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:

Accounts receivable

286

110

Inventories

3

(61

)

Other current assets and contract assets

136

128

Accounts payable, accrued liabilities, and contract liabilities

(454

)

(345

)

Other assets and liabilities

(15

)

2

Deferred income taxes

1

17

Net cash provided by operating activities

517

502

Investing

Acquisitions and investments, net

(102

)

(371

)

Proceeds from sales of investments and businesses, net

7

10

Capital expenditures

(102

)

(129

)

Proceeds from sales of property, plant and equipment

56

-

Net cash used for investing activities

(141

)

(490

)

Financing

Net proceeds from issuance of debt

-

645

Repayments of debt

(8

)

(666

)

Net proceeds from revolver draw

800

-

Repayment of revolver draw

(300

)

-

Issuances of common stock

49

70

Purchases of common stock

(336

)

(170

)

Payments of dividends

(218

)

(187

)

Payments of dividends to non-controlling interests

(4

)

(3

)

Net cash used for financing activities

(17

)

(311

)

Effect of exchange rate changes on total cash and cash equivalents

(19

)

6

Net increase (decrease) in total cash and cash equivalents

340

(293

)

Cash and cash equivalents, beginning of period

1,001

1,257

Cash and cash equivalents, end of period

$

1341

$

964

Financial Ratios:

Free cash flow*

$

415

$

373

*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

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

968

$

1,238

(22

)%

Software and Services

650

622

5

%

Total Motorola Solutions

$

1,618

$

1,860

(13

)%

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

1,961

$

2,307

(15

)%

Software and Services

1,312

1,210

8

%

Total Motorola Solutions

$

3,273

$

3,517

(7

)%

Operating Earnings

Three Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

49

$

201

(76

)%

Software and Services

169

148

14

%

Total Motorola Solutions

$

218

$

349

(38

)%

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

141

$

310

(55

)%

Software and Services

335

269

25

%

Total Motorola Solutions

$

476

$

579

(18

)%

Operating Earnings %

Three Months Ended

June 27, 2020

June 29, 2019

Products and Systems Integration

5.1

%

16.2

%

Software and Services

26.0

%

23.8

%

Total Motorola Solutions

13.5

%

18.8

%

Six Months Ended

June 27, 2020

June 29, 2019

Products and Systems Integration

7.2

%

13.4

%

Software and Services

25.5

%

22.2

%

Total Motorola Solutions

14.5

%

16.5

%

Non-GAAP-1

Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Adjustments (Intangibles Amortization Expense, Share-Based Compensation Expense and Highlighted Items)

(In millions)

Q1 2020

Non-GAAP Adjustments

Statement Line

PBT
(Inc)/Exp

Tax
Inc/(Exp)

PAT
(Inc)/Exp

EPS impact

Intangibles amortization expense

Intangibles amortization

$

53

$

13

$

40

$

0.23

Share-based compensation expenses

Cost of sales, SG&A and R&D

38

9

29

0.17

Hytera-related legal expenses

SG&A

25

6

19

0.11

Reorganization of business charges

Cost of sales and Other charges (income)

18

4

14

0.08

Acquisition-related transaction fees

Other charges (income)

2

-

2

0.01

Legal settlements

Other charges (income)

2

-

2

0.01

Fair value adjustments to equity investments

Other income

(1

)

-

(1

)

(0.01

)

Release of uncertain tax positions

Income tax expense

-

1

(1

)

(0.01

)

Gain on sale of property, plant, and equipment

Other charges (income)

(50

)

(12

)

(38

)

(0.22

)

Total impact on Net earnings

$

87

$

21

$

66

$

0.37

Q1 2020

Non-GAAP Adjustments

Statement Line

PBT
(Inc)/Exp

Tax
Inc/(Exp)

PAT
(Inc)/Exp

EPS impact

Intangibles amortization expense

Intangibles amortization

$

51

$

12

$

39

$

0.22

Reorganization of business charges

Cost of sales and Other charges (income)

41

10

31

0.18

Share-based compensation expenses

Cost of sales, SG&A and R&D

31

7

24

0.14

Legal settlements

Other charges (income)

7

2

5

0.03

Hytera-related legal expenses

SG&A

5

1

4

0.02

Fixed asset impairment

Other charges (income)

5

1

4

0.02

Acquisition-related transaction fees

Other charges (income)

1

-

1

0.01

Release of uncertain tax positions

Income tax expense

-

(1

)

1

0.01

Fair value adjustments to equity investments

Other income

(4

)

(1

)

(3

)

(0.02

)

Total impact on Net earnings

$

137

$

31

$

106

$

0.61

Non-GAAP-2

Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Segment Information

(In millions)

Net Sales

Three Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

968

$

1,238

(22

)%

Software and Services

650

622

5

%

Total Motorola Solutions

$

1,618

$

1,860

(13

)%

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

1,961

$

2,307

(15

)%

Software and Services

1,312

1,210

8

%

Total Motorola Solutions

$

3,273

$

3,517

(7

)%

Non-GAAP Operating Earnings

Three Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

131

$

242

(46

)%

Software and Services

228

202

13

%

Total Motorola Solutions

$

359

$

444

(19

)%

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Products and Systems Integration

$

253

$

389

(35

)%

Software and Services

452

370

22

%

Total Motorola Solutions

$

705

$

759

(7

)%

Non-GAAP Operating Earnings %

Three Months Ended

June 27, 2020

June 29, 2019

Products and Systems Integration

13.5

%

19.5

%

Software and Services

35.1

%

32.5

%

Total Motorola Solutions

22.2

%

23.9

%

Six Months Ended

June 27, 2020

June 29, 2019

Products and Systems Integration

12.9

%

16.9

%

Software and Services

34.5

%

30.6

%

Total Motorola Solutions

21.5

%

21.6

%

Non-GAAP-3

Motorola Solutions, Inc. and Subsidiaries

Operating Earnings after Non-GAAP Adjustments

(In millions)

Q1 2020

TOTAL

Products and Systems
Integration

Software and Services

Net sales

$

1,655

$

993

$

662

Operating earnings ("OE")

$

259

$

92

$

167

Above-OE non-GAAP adjustments:

Intangibles amortization expense

53

12

41

Share-based compensation expenses

38

27

11

Hytera-related legal expenses

25

25

-

Reorganization of business charges

18

14

4

Acquisition-related transaction fees

2

1

1

Legal settlements

2

2

-

Gain on sale of property, plant, and equipment

(50

)

(50

)

-

Total above-OE non-GAAP adjustments

88

31

57

Operating earnings after non-GAAP adjustments

$

347

$

123

$

224

Operating earnings as a percentage of net sales - GAAP

15.6

%

9.3

%

25.2

%

Operating earnings as a percentage of net sales - after non-GAAP adjustments

21.0

%

12.4

%

33.8

%

Q2 2020

TOTAL

Products and Systems
Integration

Software and Services

Net sales

$

1,618

$

968

$

650

Operating earnings ("OE")

$

218

$

49

$

169

Above-OE non-GAAP adjustments:

Intangibles amortization expense

51

12

39

Reorganization of business charges

41

33

8

Share-based compensation expenses

31

22

9

Legal settlements

7

7

-

Hytera-related legal expenses

5

5

-

Fixed asset impairment

5

3

2

Acquisition-related transaction fees

1

-

1

Total above-OE non-GAAP adjustments

141

82

59

Operating earnings after non-GAAP adjustments

$

359

$

131

$

228

Operating earnings as a percentage of net sales - GAAP

13.5

%

5.1

%

26.0

%

Operating earnings as a percentage of net sales - after non-GAAP adjustments

22.2

%

13.5

%

35.1

%

Non-GAAP-4

Motorola Solutions, Inc. and Subsidiaries

Non-GAAP Organic Revenue

(In millions)

Total Motorola Solutions

Three Months Ended

June 27, 2020

June 29, 2019

% Change

Net sales

$

1,618

$

1,860

(13

)%

Non-GAAP adjustments:

Sales from acquisitions

40

-

Organic revenue

$

1,578

$

1,860

(15

)%

Total Motorola Solutions

Six Months Ended

June 27, 2020

June 29, 2019

% Change

Net sales

$

3,273

$

3,517

(7

)%

Non-GAAP adjustments:

Sales from acquisitions

91

3

Organic revenue

$

3,182

$

3,514

(9

)%

View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005992/en/

Contacts

MEDIA CONTACT
Alexandra Reynolds
Motorola Solutions
+1 312-965-3968
Alexandra.Reynolds@motorolasolutions.com

INVESTOR CONTACT
Tim Yocum
Motorola Solutions
+1 847-576-6899
Tim.Yocum@motorolasolutions.com