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Other Financial Data | 3 Months Ended
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Apr. 01, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Other Financial Data | Other Financial Data Statements of Operations Information Other Charges Other charges (income) included in Operating earnings consist of the following:
| Three Months Ended |  |
| April 1, 2023 |  | April 2, 2022 |  |  |  |
Other charges (income): |  |  |  |  |  |  |
Intangibles amortization (Note 15) | $ | 55 |  |  | $ | 66 |  |  |  |  |
Reorganization of business (Note 14) | 7 |  |  | 7 |  |  |  |  |
Operating lease asset impairments | 3 |  |  | 9 |  |  |  |  |
Acquisition-related transaction fees | 2 |  |  | 10 |  |  |  |  |
Legal settlements | — |  |  | 11 |  |  |  |  |
Fixed asset impairments | 2 |  |  | 3 |  |  |  |  |
Gain on Hytera legal settlement | — |  |  | (13) |  |  |  |  |
Other | — |  |  | (1) |  |  |  |  |
| $ | 69 |  |  | $ | 92 |  |  |  |  |
Other Income (Expense) Interest expense, net, and Other, net, both included in Other income (expense), consist of the following:
| Three Months Ended |  |
| April 1, 2023 |  | April 2, 2022 |  |  |  |
Interest income (expense), net: |  |  |  |  |  |  |
Interest expense | $ | (63) |  |  | $ | (58) |  |  |  |  |
Interest income | 9 |  |  | 2 |  |  |  |  |
| $ | (54) |  |  | $ | (56) |  |  |  |  |
Other, net: |  |  |  |  |  |  |
Net periodic pension and postretirement benefit (Note 8) | $ | 25 |  |  | $ | 32 |  |  |  |  |
Investment impairments | (6) |  |  | (1) |  |  |  |  |
Foreign currency gain (loss) | (19) |  |  | 23 |  |  |  |  |
Gain (loss) on derivative instruments (Note 6) | 7 |  |  | (23) |  |  |  |  |
Fair value adjustments to equity investments | 3 |  |  | (18) |  |  |  |  |
Gain on TETRA Ireland equity method investment | — |  |  | 21 |  |  |  |  |
Other | 2 |  |  | — |  |  |  |  |
| $ | 12 |  |  | $ | 34 |  |  |  |  |
Earnings Per Common Share The computation of basic and diluted earnings per common share is as follows:
| Amounts attributable to Motorola Solutions, Inc. common stockholders
| Three Months Ended |  |
| April 1, 2023 |  | April 2, 2022 |  |  |  |
Basic earnings per common share: |  |  |  |  |  |  |
Earnings | $ | 278 |  |  | $ | 267 |  |  |  |  |
Weighted average common shares outstanding | 167.4 |  |  | 168.0 |  |  |  |  |
Per share amount | $ | 1.66 |  |  | $ | 1.59 |  |  |  |  |
Diluted earnings per common share: |  |  |  |  |  |  |
Earnings | $ | 278 |  |  | $ | 267 |  |  |  |  |
Weighted average common shares outstanding | 167.4 |  |  | 168.0 |  |  |  |  |
Add effect of dilutive securities: |  |  |  |  |  |  |
Share-based awards | 4.0 |  |  | 4.5 |  |  |  |  |
1.75% senior convertible notes | 1.2 |  |  | 0.6 |  |  |  |  |
Diluted weighted average common shares outstanding | 172.6 |  |  | 173.1 |  |  |  |  |
Per share amount | $ | 1.61 |  |  | $ | 1.54 |  |  |  |  |
In the computation of diluted earnings per common share for the three months ended April 1, 2023, the assumed exercise of 0.2 million options, inclusive of 0.1 million options subject to market based contingent option agreements, were excluded from the computation of diluted earnings per common share because their inclusion would have been antidilutive. In the computation of diluted earnings per common share for the three months ended April 2, 2022, the assumed exercise of 0.2 million options were excluded because their inclusion would have been antidilutive. As of April 1, 2023, the Company had $1.0 billion of the Senior Convertible Notes outstanding, which mature on September 15, 2024. The notes are convertible based on a conversion rate of 4.9670 per $1,000 principal amount (which is equal to a conversion price of $201.33 per share), adjusted for dividends declared through the date of settlement. The notes became fully convertible as of September 5, 2021, when the average stock price exceeded the contractual conversion price, providing the holders the option to convert all or any portion of their Senior Convertible Notes. In November 2021, the Company's Board of Directors approved an irrevocable determination requiring the future settlement of the principal amount of the Senior Convertible Notes to be settled in cash. Because the Company has irrevocably decided to settle the principal amount of the Senior Convertible Notes in cash, the Company did not reflect any shares underlying the Senior Convertible Notes in its diluted weighted average shares outstanding until the average stock price per share for the period exceeded the conversion price, which first occurred for the quarter ended October 2, 2021. Upon conversion of the Senior Convertible Notes, the Company has the option to settle the conversion spread in cash or shares. The Company included the number of shares that would be issuable upon conversion in the Company’s computation of diluted earnings per share, based on the amount by which the average stock price exceeded the conversion price for the period ended April 1, 2023. The value by which the Senior Convertible Notes exceeded their principal amount if converted as of April 1, 2023 was $332 million. Balance Sheet Information Accounts Receivable, Net Accounts receivable, net, consists of the following:
| April 1, 2023 |  | December 31, 2022
Accounts receivable | $ | 1,403 |  |  | $ | 1,579 |
Less allowance for credit losses | (63) |  |  | (61) |
| $ | 1,340 |  |  | $ | 1,518 |
Inventories, Net Inventories, net, consist of the following:
| April 1, 2023 |  | December 31, 2022
Finished goods | $ | 365 |  |  | $ | 354 |
Work-in-process and production materials | 852 |  |  | 829 |
| 1,217 |  |  | 1,183 |
Less inventory reserves | (135) |  |  | (128) |
| $ | 1,082 |  |  | $ | 1,055 |
Other Current Assets Other current assets consist of the following:
| April 1, 2023 |  | December 31, 2022
Current contract cost assets (Note 2) | $ | 69 |  |  | $ | 61 |
Contractor receivables | 4 |  |  | 47 |
Tax-related deposits | 38 |  |  | 33 |
Other | 247 |  |  | 242 |
| $ | 358 |  |  | $ | 383 |
Property, Plant and Equipment, Net Property, plant and equipment, net, consist of the following:
| April 1, 2023 |  | December 31, 2022
Land | $ | 5 |  |  | $ | 5 |
Leasehold improvements | 463 |  |  | 456 |
Machinery and equipment | 2,224 |  |  | 2,303 |
| 2,692 |  |  | 2,764 |
Less accumulated depreciation | (1,765) |  |  | (1,837) |
| $ | 927 |  |  | $ | 927 |
Depreciation expense for the three months ended April 1, 2023 and April 2, 2022 was $43 million and $45 million, respectively. Investments Investments consist of the following:
| April 1, 2023 |  | December 31, 2022 |  |  |  |
Common stock | $ | 22 |  |  | $ | 21 |  |  |  |  |
Strategic investments | 38 |  |  | 45 |  |  |  |  |
Company-owned life insurance policies | 71 |  |  | 69 |  |  |  |  |
Equity method investments | 13 |  |  | 12 |  |  |  |  |
| $ | 144 |  |  | $ | 147 |  |  |  |  |
During the three months ended April 1, 2023, the Company recorded a $6 million investment impairment charge, representing an other-than-temporary decline in the value of the Company's strategic equity investment portfolio. The investment impairment charge is classified as Other, net within the Condensed Consolidated Statement of Operations. Other Assets Other assets consist of the following:
| April 1, 2023 |  | December 31, 2022
Defined benefit plan assets | $ | 128 |  |  | $ | 164 |
Non-current contract cost assets (Note 2) | 119 |  |  | 130 |
Other | 75 |  |  | 16 |
| $ | 322 |  |  | $ | 310 |
Accounts Payable The Company utilizes a supplier finance program which provides our suppliers the ability to accelerate payment on the Company's invoices beyond the stated payment terms. Under the terms of this program, the Company agrees to pay an intermediary the stated amount of confirmed invoices on the stated maturity dates of the invoices, and the supplier is able to negotiate earlier payment terms with the intermediary. The Company or the intermediary may terminate our agreement at any time upon 60 days' notice. The Company does not provide any forms of guarantees under this arrangement. Supplier participation in the program is solely at the supplier's discretion, and the participating suppliers negotiate their arrangements directly with the intermediary. The Company has no economic interest in a supplier's decision to participate in the program, and their participation has no bearing on our payment terms or amounts due. The stated invoice payment terms range from 75 to 120 days from the invoice date and are considered commercially reasonable. The Company's outstanding amounts related to the suppliers participating in this program was $36 million and $37 million as of April 1, 2023 and December 31, 2022, respectively. Supplier finance program obligations are classified as Accounts payable within the Condensed Consolidated Balance Sheets. Accrued Liabilities Accrued liabilities consist of the following:
| April 1, 2023 |  | December 31, 2022
Compensation | $ | 329 |  |  | $ | 374 |
Tax liabilities | 349 |  |  | 367 |
Dividend payable | 148 |  |  | 148 |
Trade liabilities | 138 |  |  | 145 |
Operating lease liabilities (Note 3) | 108 |  |  | 118 |
Customer reserves | 56 |  |  | 78 |
Other | 325 |  |  | 408 |
| $ | 1,453 |  |  | $ | 1,638 |
Other Liabilities Other liabilities consist of the following:
| April 1, 2023 |  | December 31, 2022
Defined benefit plans | $ | 974 |  |  | $ | 1,004 |
Non-current contract liabilities (Note 2) | 378 |  |  | 363 |
Unrecognized tax benefits (Note 7) | 29 |  |  | 29 |
Deferred income taxes (Note 7) | 74 |  |  | 73 |
Environmental reserve | 108 |  |  | 108 |
Other | 163 |  |  | 114 |
| $ | 1,726 |  |  | $ | 1,691 |
Stockholders’ Equity Share Repurchase Program: During the three months ended April 1, 2023, the Company paid an aggregate of $140 million to repurchase approximately 0.5 million shares at an average price of $261.75. per share. As of April 1, 2023, the Company had $1.1 billion of authority available for future repurchases. Payment of Dividends: During the three months ended April 1, 2023 and April 2, 2022, the Company paid $148 million and $134 million, respectively, in cash dividends to holders of its common stock. Subsequent to the quarter, the Company paid an additional $148 million in cash dividends to holders of its common stock. Accumulated Other Comprehensive Loss The following table displays the changes in Accumulated other comprehensive loss, including amounts reclassified into income, and the affected line items in the Condensed Consolidated Statements of Operations during the three months ended April 1, 2023 and April 2, 2022:
| Three Months Ended |  |
| April 1, 2023 |  | April 2, 2022 |  |  |  |
Foreign Currency Translation Adjustments: |  |  |  |  |  |  |
Balance at beginning of period | $ | (539) |  |  | $ | (384) |  |  |  |  |
Other comprehensive income (loss) before reclassification adjustment | 27 |  |  | (18) |  |  |  |  |
Tax benefit (expense) | 9 |  |  | (2) |  |  |  |  |
Other comprehensive income (loss), net of tax | 36 |  |  | (20) |  |  |  |  |
Balance at end of period | $ | (503) |  |  | $ | (404) |  |  |  |  |
Defined Benefit Plans: |  |  |  |  |  |  |
Balance at beginning of period | $ | (1,996) |  |  | $ | (1,995) |  |  |  |  |
Reclassification adjustment - Actuarial net losses into Other income (Note 8) | 15 |  |  | 20 |  |  |  |  |
Reclassification adjustment - Prior service benefits into Other income (Note 8) | 1 |  |  | (1) |  |  |  |  |
Tax expense | (4) |  |  | (4) |  |  |  |  |
Other comprehensive income, net of tax | 12 |  |  | 15 |  |  |  |  |
Balance at end of period | $ | (1,984) |  |  | $ | (1,980) |  |  |  |  |
Total Accumulated other comprehensive loss | $ | (2,487) |  |  | $ | (2,384) |  |  |  |  |

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