Motorola Solutions Reports First-Quarter 2014 Financial Results

  Motorola Solutions Reports First-Quarter 2014 Financial Results    *Sales of $1.8 billion, down 9 percent from a year ago   *GAAP earnings per share (EPS)* of $0.49   *Non-GAAP** EPS of $0.50   *Generated $46 million in operating cash flow  Business Wire  SCHAUMBURG, Ill. -- May 1, 2014  Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings results for the first quarter of 2014. Click here for printable press release and financial tables.  REVENUE    *Government segment sales declined 11 percent to $1.2 billion reflecting     lower aged backlog in the quarter and a challenging year-ago comparison in     the Federal business. In addition, North America sales were weaker than     expected due to lower ASTRO and professional commercial radio subscriber     volume. Global sales were strong in TETRA, and the Services business grew     single-digits for the quarter.   *Enterprise segment sales declined 4 percent to $600 million primarily due     to the expected decline in iDEN. Excluding the impact of iDEN, Enterprise     revenues declined less than 1 percent primarily driven by the delay of     several deals late in the quarter, primarily in North America.  SUPPORTING QUOTE  Greg Brown, chairman and CEO, Motorola Solutions  “First quarter sales results were below expectations due to lower order volume in both Enterprise and North America Government,” said Greg Brown, chairman and CEO, Motorola Solutions. “The long-term fundamentals of our Government business remain solid and, with the announced sale of the Enterprise business, we will accelerate ongoing cost actions to improve our competitiveness and operating leverage going forward.”  KEY FINANCIAL RESULTS                                                                                      First Quarter    Change                                  2014    2013    Motorola Solutions, Inc.                         Sales ($M)                        $1,801  $1,973  -9% GAAP                                             Operating earnings ($M)           $170    $216    -21% Percent of sales                  9.4%    10.9%    Earnings per share                $0.49   $0.68   -28% Non-GAAP                                         Operating earnings ($M)           $212    $278    -24% Percent of sales                  11.8%   14.1%    Earnings per share                $0.50   $0.66   -24%                                                 Segments                                         Government                                       Revenue ($M)                      $1,201  $1,346  -11% GAAP operating earnings ($M)      $113    $180    -37% Percent of sales                  9.4%    13.4%    Non-GAAP operating earnings ($M)  $140    $217    -35% Percent of sales                  11.7%   16.1%                                                    Enterprise                                       Revenue ($M)                      $600    $627    -4% GAAP operating earnings ($M)      $57     $36     58% Percent of sales                  9.5%    5.7%     Non-GAAP operating earnings ($M)  $72     $61     18% Percent of sales                  12.0%   9.7%                                                 Non-GAAP financial information excludes after-tax net loss of approximately $0.01 per diluted share related to share-based compensation, intangible amortization and highlighted items. Details on these non-GAAP adjustments and the use of non-GAAP measures are included later in this press release.  OTHER SELECTED FINANCIAL RESULTS    *Operating margin — GAAP operating margin was 9.4 percent of sales;     non-GAAP operating margin decreased to 11.8 percent. These results include     $45 million in lower expenses compared to the first quarter of 2013     primarily due to cost initiatives undertaken in late 2013.   *Taxes — The GAAP effective tax rate was 16 percent, compared to 6 percent     for the first quarter of 2013. The non-GAAP effective tax rate was 33     percent, compared to 30 percent for the first quarter of 2013. The     increase in the non-GAAP effective tax rate is due to the expiration of     2013 research and development credits.   *Cash flow — The company generated $46 million in operating cash flow     during the quarter. This is a $77 million improvement from the first     quarter of 2013 primarily driven by the timing of long-term contract     milestone billings and return of cash that was seized by India tax     authorities in the first quarter of 2013.   *Cash and cash equivalents —  The company ended the quarter with cash and     cash equivalents of $3.1 billion while returning $136 million to     shareholders through share repurchases and cash dividends.   *Share repurchase program — The company repurchased $57 million of its     common stock in the first quarter reflecting lower activity as a result of     the discussions leading to the Enterprise sale announced on April 15.  KEY HIGHLIGHTS    *Secured $175 million contract with the Los Angeles Regional Interoperable     Communications System Authority to provide a public safety LTE network.   *Secured $113 million contract with the state of Indiana to upgrade its     statewide infrastructure system including $78 million for 20 years of     services.   *Introduced three new model families to industry-leading APX P25 portfolio.   *Continued to demonstrate leadership in retail and transportation and     logistics by securing contracts with key customers such as retailers CVS     and Tesco (UK) and couriers FedEx, Correos (Spain) and GLS (Germany).   *Introduced DS4800 series of 2D array imagers offering enterprise-class     scanning capabilities in a modern industrial design that enhances the     ambiance of the retail point of sale (POS) environment.  BUSINESS OUTLOOK***    *Second quarter 2014 — Motorola Solutions expects a revenue decline of 5 to     8 percent compared with the second quarter of 2013, with non-GAAP earnings     per share in the range of $0.58 to $0.64 per share.   *Full year 2014 — The company expects a revenue decline of low single     digits compared with 2013, with non-GAAP operating margins of     approximately 18.5 percent of sales, consistent with the previous outlook.  CONFERENCE CALL AND WEBCAST  Motorola Solutions will host its quarterly conference call beginning at 7 a.m. U.S. Central Daylight Time (8 a.m. U.S. Eastern Daylight Time) on Thursday, May 1. The conference call will be webcast live with audio and slides at www.motorolasolutions.com/investor.  CONSOLIDATED GAAP RESULTS  A comparison of results from operations is as follows:                                                                                                          First Quarter                                                    2014    2013 Net sales ($M)                                      $1,801  $1,973 Gross margin ($M)                                   845     955 Operating earnings ($M)                             170     216 Net earnings ($M)                                   127     192                                                            Diluted EPS                                         $0.49   $0.68                                                            Weighted average diluted common shares outstanding  258.3   280.7                                                               HIGHLIGHTED ITEMS, SHARE-BASED COMPENSATION EXPENSE AND INTANGIBLE ASSETS AMORTIZATION EXPENSE  The table below includes highlighted items, share-based compensation expense and intangible assets amortization expense for the first quarter of 2014.                                                                  First Quarter (per diluted common share)                                       2014                                                                 GAAP Net Earnings                                               $0.49                                                                   Highlighted Items: Reorganization of business charges                               0.06 Gain on sale of building and land                                (0.05) Recognition of previously unrecognized income tax benefits      (0.12) Total Highlighted Items                                         (0.11)                                                                   Share-based compensation expense                                 0.10 Intangible assets amortization expense                          0.02 Share-Based Compensation Expense and Intangible Assets          0.12 Amortization Expense                                                                 Total Non-GAAP Adjustments                                      0.01                                                                 Non-GAAP Diluted Earnings per Common Share                      $0.50                                                                    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 GAAP.  Highlighted items: The company has excluded the effects of highlighted items (and any reversals of highlighted items recorded in prior periods) from its non-GAAP operating expenses and net income measurements because the company believes that these historical items do not reflect expected future operating earnings or expenses and do not contribute to a meaningful evaluation of the company’s current operating performance or comparisons to the company’s past operating performance.  Share-based compensation expense: The company has excluded share-based compensation expense from its non-GAAP operating expenses and net income measurements. Although share-based compensation is a key incentive offered to the company’s employees and the company believes such compensation contributed to the revenue earned during the periods presented and also believes it will contribute to the generation of future period revenues, the company continues to evaluate its performance excluding share-based compensation expense primarily because it represents a significant non-cash expense. Share-based compensation expense will recur in future periods.  Intangible assets amortization expense: The company has excluded intangible assets amortization expense from its non-GAAP operating expenses and net income measurements, primarily because it represents a significant non-cash expense and because the company evaluates its performance excluding intangible assets amortization expense. Amortization of intangible assets is consistent in amount and frequency but is significantly affected by the timing and size of the company’s acquisitions. Investors should note that the use of intangible assets contributed to the company’s revenues earned during the periods presented and will contribute to the company’s future period revenues as well. Intangible assets amortization expense will recur in future periods.  Details of the above items and reconciliations of the non-GAAP measurements to the corresponding GAAP measurements can be found at the end of this press release.  BUSINESS RISKS  This press release contains "forward-looking statements" within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions. The company can give no assurance that any actual or future results or events discussed in these statements will be achieved. Any forward-looking statements represent the company’s views only as of today and should not be relied upon as representing the company’s views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause the company’s actual results to differ materially from the statements contained in this release. Such forward-looking statements include, but are not limited to, Motorola Solutions’ financial outlook for the second quarter and full year of 2014 and statements regarding the proposed transaction to sell the Enterprise business to Zebra Technologies. 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 and in its other SEC filings available for free on the SEC’s website at www.sec.gov and on Motorola Solutions’ website at www.motorolasolutions.com, could cause Motorola Solutions’ actual results to differ materially from those estimated or predicted in the forward-looking statements.Many of these risks and uncertainties cannot be controlled by Motorola Solutions and factors that may impact forward-looking statements include, but are not limited to: (1) the economic outlook for the government and enterprise communications industries; (2) the level of demand for the company's products, particularly if businesses and governments defer or cancel purchases in response to tighter credit or as a result of the pending transaction to sell the Enterprise business to Zebra Technologies; (3) the company's ability to introduce new products and technologies in a timely manner; (4) negative impact on the company's business from global economic conditions, which may include: (i) continued deferment or cancellation of purchase orders by customers; (ii) the inability of customers to obtain financing for purchases of the company's products; (iii) increased demand to provide vendor financing to customers; (iv) increased financial pressures on third-party dealers, distributors and retailers; (v) the viability of the company's suppliers that may no longer have access to necessary financing; (vi) counterparty failures negatively impacting the company’s financial position; (vii) changes in the value of investments held by the company's pension plan and other defined benefit plans, which could impact future required or voluntary pension contributions; and (viii) the company’s ability to access the capital markets on acceptable terms and conditions; (5) the impact of foreign currency fluctuations on the company when competing for business in foreign markets; (6) the outcome of currently ongoing and future tax matters; (7) the company's ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (8) risks related to dependence on certain key suppliers, subcontractors, third-party distributors and other representatives; (9) the impact on the company's performance and financial results from strategic acquisitions or divestitures, including the sale of the Enterprise business and those that may occur in the future; (10) risks related to the company's manufacturing and business operations in foreign countries; (11) the creditworthiness of the company's customers and distributors, particularly purchasers of large infrastructure systems; (12) exposure under large systems and managed services contracts, including risks related to the fact that certain customers require that the company build, own and operate their systems, often over a multi-year period; (13) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (14) variability in income received from licensing the company's intellectual property to others, as well as expenses incurred when the company licenses intellectual property from others; (15) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (16) the impact of the percentage of cash and cash equivalents held outside of the United States; (17) the ability of the company to pay future dividends due to possible adverse market conditions or adverse impacts on the company’s cash flow; (18) the ability of the company to repurchase shares under its repurchase program due to possible adverse market conditions or adverse impacts on the company’s cash flow; (19) the impact of changes in governmental policies, laws or regulations; (20) negative consequences from the company's outsourcing of various activities, including certain business operations, information technology and administrative functions; (21) the impact of the company’s multi-year phased upgrade and consolidation of its enterprise resource planning systems into a single global platform; (22) the satisfaction of the conditions to closing (including receipt of regulatory approvals) the transaction to sell the Enterprise business to Zebra Technologies; (23) the expected timeline for completing such transaction; and (24) the ability of Motorola Solutions to return proceeds of the transaction to its 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 is a leading provider of mission-critical communication solutions and services for enterprise and government customers. Through leading-edge innovation and communications technology, it is a global leader that enables its customers to be their best in the moments that matter. Motorola Solutions trades on the New York Stock Exchange under the ticker “MSI.” To learn more, visit www.motorolasolutions.com. For ongoing news, please visit our newsroom or subscribe to our news feed.  MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2014 Motorola Solutions, Inc. All rights reserved.                                                                                                                                 GAAP-1 Motorola Solutions, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In millions, except per share amounts)                                                                                                               Three Months Ended                                                March 29, 2014   March 30, 2013 Net sales from products                        $   1,211        $   1,381 Net sales from services                           590            592      Net sales                                          1,801            1,973                                                                  Costs of products sales                            583              651 Costs of services sales                           373            367      Costs of sales                                     956              1,018                                                                 Gross margin                                      845            955                                                                       Selling, general and administrative expenses       427              460 Research and development expenditures              243              262 Other charges                                      -                11 Intangibles amortization                          5              6        Operating earnings                                170            216                                                                       Other income (expense): Interest expense, net:                             (25     )        (25     ) Gains on sales of investments and                  7                7 businesses, net Other                                             (1      )       7        Total other expense                               (19     )       (11     ) Earnings before income taxes                       151              205 Income tax expense                                24             13       Net earnings                                   $   127         $   192                                                                       Earnings per common share Basic                                          $   0.50         $   0.70 Diluted                                            0.49             0.68                                                                  Weighted average common shares outstanding Basic                                              254.1            274.5 Diluted                                           258.3          280.7                                                                                                                                                                                   Percentage of Net Sales* Net sales from products                            67.2    %        70.0    % Net sales from services                           32.8    %       30.0    % Net sales                                         100     %       100     %                                                                  Costs of products sales                            48.1    %        47.1    % Costs of services sales                           63.2    %       62.0    % Costs of sales                                     53.1    %        51.6    %                                                                 Gross margin                                      46.9    %       48.4    %                                                                  Selling, general and administrative expenses       23.7    %        23.3    % Research and development expenditures              13.5    %        13.3    % Other charges                                      0.0     %        0.6     % Intangibles amortization                          0.3     %       0.3     % Operating earnings                                9.4     %       10.9    %                                                                  Other income (expense): Interest expense, net:                             -1.4    %        -1.3    % Gains on sales of investments and                  0.4     %        0.4     % businesses, net Other                                             -0.1    %       0.4     % Total other expense                               -1.1    %       -0.6    % Earnings before income taxes                       8.4     %        10.4    % Income tax expense                                1.3     %       0.7     % Net earnings attributable to Motorola             7.1     %       9.7     % Solutions, Inc.                                                                  * Percentages may not add up due to rounding                                                                                                                                     GAAP-2 Motorola Solutions, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In millions)                                                                                                                         March 29,   December 31,                                                       2014        2013 Assets Cash and cash equivalents                             $  3,141    $   3,225 Accounts receivable, net                                 1,727        1,920 Inventories, net                                         576          522 Deferred income taxes                                    624          584 Other current assets                                    713         769 Total current assets                                    6,781       7,020                                                                    Property, plant and equipment, net                       795          810 Investments                                              260          251 Deferred income taxes                                    2,004        2,076 Goodwill                                                 1,531        1,509 Other assets                                            244         185 Total assets                                          $  11,615   $   11,851                                                                    Liabilities and Stockholders' Equity Current portion of long-term debt                     $  4        $   4 Accounts payable                                         655          814 Accrued liabilities                                     2,367       2,402 Total current liabilities                               3,026       3,220                                                                    Long-term debt                                           2,462        2,457 Other liabilities                                        2,380        2,485                                                                    Total Motorola Solutions, Inc. stockholders' equity      3,717        3,659                                                                    Noncontrolling interests                                30          30                                                                    Total liabilities and stockholders' equity            $  11,615  $   11,851                                                                    Financial Ratios: Net cash*                                                675          764                                                                    *Net cash = Total cash - Current portion of long-term debt - Long-term debt                                                                                                                                 GAAP-3 Motorola Solutions, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In millions)                                                                                                               Three Months Ended                                                March 29, 2014   March 30, 2013 Operating Net earnings                                   $   127          $   192 Adjustments to reconcile Net earnings to Net cash provided by (used for) operating activities: Depreciation and amortization                      55               52 Gain on sale of building and land                  (21     )        - Non-cash other charges (income)                    3                (1      ) Share-based compensation expense                   36               45 Gains on sales of investments and                  (7      )        (7      ) businesses, net Deferred income taxes                              41               (11     ) Changes in assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable                                191              200 Inventories                                        (54     )        (5      ) Other current assets                               24               (75     ) Accounts payable and accrued liabilities           (216    )        (417    ) Other assets and liabilities                      (133    )       (4      ) Net cash provided by (used for) operating         46             (31     ) activities Investing Acquisitions and investments, net                  (10     )        (4      ) Proceeds from sales of investments and             13               19 businesses, net Capital expenditures                               (45     )        (46     ) Proceeds from sales of property, plant and         24               - equipment Purchases of Sigma Fund and short-term            -              (113    ) investments, net Net cash used for investing activities            (18     )       (144    ) Financing Repayment of debt                                  (1      )        (1      ) Net proceeds from issuance of debt                 4                593 Issuance of common stock                           14               40 Repurchase of common stock                         (57     )        (357    ) Excess tax benefit from share-based                5                9 compensation Payments of dividends                             (79     )       (72     ) Net cash provided by (used for) financing         (114    )       212      activities                                                                  Effect of exchange rate changes on cash and       2              (35     ) cash equivalents Net increase (decrease) in cash and cash           (84     )        2 equivalents Cash and cash equivalents, beginning of           3,225          1,468    period Cash and cash equivalents, end of period       $   3,141       $   1,470                                                                     Financial Ratios: Free cash flow*                                $   1            $   (77     )                                                                  *Free cash flow = Net cash provided by operating activities - Capital expenditures                                                                                                     GAAP-4 Motorola Solutions, Inc. and Subsidiaries Segment Information (In millions)                                             Net Sales                                            Three Months Ended                                             March 29,   March 30,                    2014        2013        % Change                                                     Government      $ 1,201     $ 1,346     -11   % Enterprise       600       627      -4    % Company Total   $ 1,801    $ 1,973    -9    %                                                                                                 Operating Earnings                                            Three Months Ended                                             March 29,   March 30,                    2014        2013        % Change                                                     Government      $ 113       $ 180       -37   % Enterprise       57        36       58    % Company Total   $ 170      $ 216      -21   %                                                                                                 Operating Earnings %                                            Three Months Ended                                             March 29,   March 30,                 2014        2013                                                     Government        9.4   %     13.4  % Enterprise        9.5   %     5.7   % Company Total    9.4   %    10.9  %                                                                                                                                      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      Statement      (Inc)/Exp   Inc/(Exp)   (Inc)/Exp   EPS   Items            Line                                               impact                                                                          Intangibles      Intangibles   amortization     amortization   $  5        $  1        $  4        $ 0.02   expense   Share-based      Cost of   compensation     sales, SG&A       36          11          25         0.10   expense          and R&D   Reorganization   Cost of   of business      sales and         22          6           16         0.06   charges          Other                    charges   Gain on sale     Other   of building      charges           (21  )      (8  )       (13  )     (0.05 )   and land   Recognition of   previously       Income tax   unrecognized     expense           -           30          (30  )     (0.12 )   income tax   benefits                                                                       Total impact   on Net                          $  42       $  40       $  2        $ 0.01   earnings                                                                                                     Non-GAAP-2 Motorola Solutions, Inc. and Subsidiaries Non-GAAP Segment Information (In millions)                                             Net Sales                                            Three Months Ended                                             March 29,   March 30,                    2014        2013        % Change                                                     Government      $ 1,201     $ 1,346     -11   % Enterprise       600       627      -4    % Company Total   $ 1,801    $ 1,973    -9    %                                                                                                 Non-GAAP Operating Earnings                                            Three Months Ended                                             March 29,   March 30,                    2014        2013        % Change                                                     Government      $ 140       $ 217       -35   % Enterprise       72        61       18    % Company Total   $ 212      $ 278      -24   %                                                                                                 Non-GAAP Operating Earnings %                                            Three Months Ended                                             March 29,   March 30,                 2014        2013                                                     Government        11.7  %     16.1  % Enterprise        12.0  %     9.7   % Company Total    11.8  %    14.1  %                                                                                                                                     Non-GAAP-3 Motorola Solutions, Inc. and Subsidiaries Operating Earnings after Non-GAAP Adjustments                                                                Q1 2014                                                                                                            TOTAL       Government   Enterprise Net sales                                  $ 1,801     $  1,201     $  600 Operating earnings ("OE")                 $ 170      $  113      $  57                                                                          Above-OE non-GAAP adjustments: Share-based compensation expense             36           25           11 Reorganization of business charges           22           15           7 Intangibles amortization expense             5            1            4 Gain on sale of building and land           (21   )     (14   )     (7    ) Total above-OE non-GAAP adjustments          42           27           15                                                                  Operating earnings after non-GAAP         $ 212      $  140      $  72     adjustments                                                                    Operating earnings as a percentage of        9.4   %      9.4   %      9.5   % net sales - GAAP Operating earnings as a percentage of       11.8  %     11.7  %     12.0  % net sales - after non-GAAP adjustments                                                                                              Non-GAAP-1 Motorola Solutions, Inc. and Subsidiaries Pro forma Non-GAAP Adjustments Bridge (In millions)                                              Q1 2012                                                                                            TOTAL Net sales                                     $         1,387 Operating earnings ("OE")                    $         151                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        34 Reorganization of business charges                     7              Total above-OE non-GAAP adjustments                     41                                              Operating earnings after non-GAAP            $         192            adjustments                                                Operating earnings as a percentage                      10.9          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          13.8          % adjustments                                                                                             Q2 2012                                                                                            TOTAL Net sales                                     $         1,537 Operating earnings                           $         190                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        42 Reorganization of business charges                     9              Total above-OE non-GAAP adjustments                     51                                              Operating earnings after non-GAAP            $         241            adjustments                                                Operating earnings as a percentage                      12.4          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          15.7          % adjustments                                                                                             Q3 2012                                                                                            TOTAL Net sales                                     $         1,580 Operating earnings                           $         252                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        35 Reorganization of business charges                     8              Total above-OE non-GAAP adjustments                     43                                              Operating earnings after non-GAAP            $         295            adjustments                                                Operating earnings as a percentage                      15.9          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          18.7          % adjustments                                                                                             Q4 2012                                                                                            TOTAL Net sales                                     $         1,764 Operating earnings                           $         327                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        36 Reorganization of business charges                      9 Legal matter                                           (16           ) Total above-OE non-GAAP adjustments                     29                                              Operating earnings after non-GAAP            $         356            adjustments                                                Operating earnings as a percentage                      18.5          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          20.2          % adjustments                                                                                             FY 2012                                                                                            TOTAL Net sales                                     $         6,269 Operating earnings                           $         920                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        147 Reorganization of business charges                      33 Intangibles amortization expense                        1 Legal matter                                           (16           ) Total above-OE non-GAAP adjustments                     165                                              Operating earnings after non-GAAP            $         1,085          adjustments                                                Operating earnings as a percentage                      14.7          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          17.3          % adjustments                                                The pro forma financial data presented above reflects the removal of: (i) the pro forma results of the Enterprise business as a result of the Company’s anticipated sale of its Enterprise business, excluding the iDEN business and other specific assets and liabilities, as discussed in the Report on Form 8-K furnished with the Securities and Exchange Commission on April 15, 2014, and (ii) certain estimated costs previously allocated to the Enterprise business which will remain with Motorola Solutions, Inc. after the anticipated sale. This financial data was prepared on a pro forma basis and, accordingly, the discontinued operations of the Enterprise business and the financial results of Motorola Solutions’ continuing operations may differ from what is provided above.                                                                                              Non-GAAP-2 Motorola Solutions, Inc. and Subsidiaries Pro forma Non-GAAP Adjustments Bridge (In millions)                                              Q1 2013                                                                                            TOTAL Net sales                                     $         1,396 Operating earnings ("OE")                    $         173                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        36 Reorganization of business charges                     7              Total above-OE non-GAAP adjustments                     43                                              Operating earnings after non-GAAP            $         216            adjustments                                                Operating earnings as a percentage                      12.4          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          15.5          % adjustments                                                                                             Q2 2013                                                                                            TOTAL Net sales                                     $         1,497 Operating earnings                           $         203                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        27 Reorganization of business charges                     18             Total above-OE non-GAAP adjustments                     45                                              Operating earnings after non-GAAP            $         248            adjustments                                                Operating earnings as a percentage                      13.6          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          16.6          % adjustments                                                                                             Q3 2013                                                                                            TOTAL Net sales                                     $         1,517 Operating earnings                           $         244                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        30 Reorganization of business charges                      21 Intangibles amortization expense                       1              Total above-OE non-GAAP adjustments                     52                                              Operating earnings after non-GAAP            $         296            adjustments                                                Operating earnings as a percentage                      16.1          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          19.5          % adjustments                                                                                             Q4 2013                                                                                            TOTAL Net sales                                     $         1,817 Operating earnings                           $         325                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        30 Reorganization of business charges                     41             Total above-OE non-GAAP adjustments                     71                                              Operating earnings after non-GAAP            $         396            adjustments                                                Operating earnings as a percentage                      17.9          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          21.8          % adjustments                                                                                             FY 2013                                                                                            TOTAL Net sales                                     $         6,227 Operating earnings                           $         946                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        123 Reorganization of business charges                      86 Intangibles amortization expense                       1              Total above-OE non-GAAP adjustments                     210                                              Operating earnings after non-GAAP            $         1,156          adjustments                                                Operating earnings as a percentage                      15.2          % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          18.6          % adjustments                                                The pro forma financial data presented above reflects the removal of: (i) the pro forma results of the Enterprise business as a result of the Company’s anticipated sale of its Enterprise business, excluding the iDEN business and other specific assets and liabilities, as discussed in the Report on Form 8-K furnished with the Securities and Exchange Commission on April 15, 2014, and (ii) certain estimated costs previously allocated to the Enterprise business which will remain with Motorola Solutions, Inc. after the anticipated sale. This financial data was prepared on a pro forma basis and, accordingly, the discontinued operations of the Enterprise business and the financial results of Motorola Solutions’ continuing operations may differ from what is provided above.                                                                                              Non-GAAP-3 Motorola Solutions, Inc. and Subsidiaries Pro forma Non-GAAP Adjustments Bridge (In millions)                                              Q1 2014                                                                                            TOTAL Net sales                                     $         1,228 Operating earnings ("OE")                    $         102                                                           Above-OE non-GAAP adjustments: Share-based compensation expense                        29 Reorganization of business charges                      15 Intangibles amortization expense                        1 Gain on sale of building and land                      (21           ) Total above-OE non-GAAP adjustments                     24                                              Operating earnings after non-GAAP            $         126            adjustments                                                Operating earnings as a percentage                      8.3           % of net sales - GAAP Operating earnings as a percentage of net sales - after non-GAAP                          10.3          % adjustments                                                The pro forma financial data presented above reflects the removal of: (i) the pro forma results of the Enterprise business as a result of the Company’s anticipated sale of its Enterprise business, excluding the iDEN business and other specific assets and liabilities, as discussed in the Report on Form 8-K furnished with the Securities and Exchange Commission on April 15, 2014, and (ii) certain estimated costs previously allocated to the Enterprise business which will remain with Motorola Solutions, Inc. after the anticipated sale. This financial data was prepared on a pro forma basis and, accordingly, the discontinued operations of the Enterprise business and the financial results of Motorola Solutions’ continuing operations may differ from what is provided above.  Contact:  MEDIA CONTACTS Nick Sweers Motorola Solutions +1 847-576-2462 nicholas.sweers@motorolasolutions.com or Kurt Ebenhoch Motorola Solutions +1 847-576-1341 kurt.ebenhoch@motorolasolutions.com or INVESTOR CONTACTS Shep Dunlap Motorola Solutions +1 847-576-6899 shep.dunlap@motorolasolutions.com or Chris Kutsor Motorola Solutions +1 847-576-4995 chris.kutsor@motorolasolutions.com