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Other Financial Data | 9 Months Ended
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Sep. 30, 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 |  | Nine Months Ended
| September 30, 2023 |  | October 1, 2022 |  | September 30, 2023 |  | October 1, 2022
Other charges: |  |  |  |  |  |  |
Intangibles amortization (Note 15) | $ | 39 |  |  | $ | 63 |  |  | $ | 137 |  |  | $ | 194 |
Environmental reserve expense | — |  |  | — |  |  | 15 |  |  | — |
Reorganization of business (Note 14) | 4 |  |  | 2 |  |  | 16 |  |  | 14 |
Operating lease asset impairments | — |  |  | 4 |  |  | 4 |  |  | 16 |
Acquisition-related transaction fees | 1 |  |  | 2 |  |  | 3 |  |  | 16 |
Legal settlements | 1 |  |  | 12 |  |  | 1 |  |  | 23 |
Fixed asset impairments | — |  |  | 1 |  |  | 3 |  |  | 12 |
Gain on Hytera legal settlement | — |  |  | — |  |  | — |  |  | (13) |
Other | 1 |  |  | (1) |  |  | 2 |  |  | — |
| $ | 46 |  |  | $ | 83 |  |  | $ | 181 |  |  | $ | 262 |
During the nine months ended September 30, 2023, the Company revised the estimate for its liability related to ongoing remediation efforts of environmental media such as groundwater, soil, and soil vapor, as well as related legal fees for a designated Superfund site under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the "Superfund Act") incurred by a legacy business. It is the Company's policy to re-evaluate the reserve when certain events become known that will impact the future cash payments. During the nine months ended September 30, 2023, the Company became aware of incremental costs required in its remediation of the Superfund site. As such, the Company recorded a charge of $15 million, increasing the reserve balance to $127 million. The Company discounted the cash flows used in estimating this accrual using a risk-free treasury rate. The current portion of the estimated environmental liability is $4 million and is included in the Accrued liabilities statement line and the non-current portion is included in the "Other liabilities" statement line within the Company's Condensed Consolidated Balance Sheets. Other Income (Expense) Interest expense, net, and Other, net, both included in Other income (expense), consist of the following:
| Three Months Ended |  | Nine Months Ended
| September 30, 2023 |  | October 1, 2022 |  | September 30, 2023 |  | October 1, 2022
Interest income (expense), net: |  |  |  |  |  |  |
Interest expense | $ | (60) |  |  | $ | (62) |  |  | $ | (186) |  |  | $ | (179) |
Interest income | 7 |  |  | 2 |  |  | 22 |  |  | 8 |
| $ | (53) |  |  | $ | (60) |  |  | $ | (164) |  |  | (171) |
Other, net: |  |  |  |  |  |  |
Net periodic pension and postretirement benefit (Note 8) | $ | 24 |  |  | $ | 28 |  |  | $ | 73 |  |  | $ | 91 |
Loss from the extinguishment of long-term debt (Note 5) | — |  |  | — |  |  | — |  |  | (6) |
Investment impairments | (7) |  |  | — |  |  | (16) |  |  | (1) |
Foreign currency gain (loss) | 23 |  |  | 45 |  |  | (16) |  |  | 95 |
Loss on derivative instruments (Note 6) | (26) |  |  | (54) |  |  | (9) |  |  | (111) |
Loss on equity method investments | — |  |  | — |  |  | — |  |  | (2) |
Fair value adjustments to equity investments | (7) |  |  | (5) |  |  | 12 |  |  | (35) |
Gain on TETRA Ireland equity method investment | — |  |  | — |  |  | — |  |  | 21 |
Other | — |  |  | 5 |  |  | 2 |  |  | (2) |
| $ | 7 |  |  | $ | 19 |  |  | $ | 46 |  |  | $ | 50 |
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 |  | Nine Months Ended
| September 30, 2023 |  | October 1, 2022 |  | September 30, 2023 |  | October 1, 2022
Basic earnings per common share: |  |  |  |  |  |  |
Earnings | $ | 464 |  |  | $ | 279 |  |  | $ | 1,113 |  |  | $ | 774 |
Weighted average common shares outstanding | 166.7 |  |  | 167.2 |  |  | 167.2 |  |  | 167.5 |
Per share amount | $ | 2.78 |  |  | $ | 1.67 |  |  | $ | 6.66 |  |  | $ | 4.62 |
Diluted earnings per common share: |  |  |  |  |  |  |
Earnings | $ | 464 |  |  | $ | 279 |  |  | $ | 1,113 |  |  | $ | 774 |
Weighted average common shares outstanding | 166.7 |  |  | 167.2 |  |  | 167.2 |  |  | 167.5 |
Add effect of dilutive securities: |  |  |  |  |  |  |
Share-based awards | 3.5 |  |  | 3.6 |  |  | 3.6 |  |  | 3.8 |
1.75% senior convertible notes | 1.5 |  |  | 0.7 |  |  | 1.4 |  |  | 0.6 |
Diluted weighted average common shares outstanding | 171.7 |  |  | 171.5 |  |  | 172.2 |  |  | 171.9 |
Per share amount | $ | 2.70 |  |  | $ | 1.63 |  |  | $ | 6.46 |  |  | $ | 4.50 |
In the computation of diluted earnings per common share for the three months ended and nine months ended September 30, 2023, the assumed exercise of 0.3 million options, inclusive of 0.2 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 October 1, 2022, the assumed exercise of 0.4 million options, inclusive of 0.2 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 nine months ended October 1, 2022, the assumed exercise of 0.2 million options, inclusive of 0.1 million options subject to market based contingent option agreements, were excluded because their inclusion would have been antidilutive. As of September 30, 2023, the Company had $1.0 billion of 1.75% senior convertible notes outstanding, which mature on September 15, 2024 (the "Senior Convertible Notes"). 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 September 30, 2023. The value by which the Senior Convertible Notes exceeded their principal amount if converted as of September 30, 2023 was $398 million. Balance Sheet Information Accounts Receivable, Net Accounts receivable, net, consists of the following:
| September 30, 2023 |  | December 31, 2022
Accounts receivable | $ | 1,728 |  |  | $ | 1,579 |
Less allowance for credit losses | (61) |  |  | (61) |
| $ | 1,667 |  |  | $ | 1,518 |
Inventories, Net Inventories, net, consist of the following:
| September 30, 2023 |  | December 31, 2022
Finished goods | $ | 337 |  |  | $ | 354 |
Work-in-process and production materials | 763 |  |  | 829 |
| 1,100 |  |  | 1,183 |
Less inventory reserves | (141) |  |  | (128) |
| $ | 959 |  |  | $ | 1,055 |
Other Current Assets Other current assets consist of the following:
| September 30, 2023 |  | December 31, 2022
Current contract cost assets (Note 2) | $ | 89 |  |  | $ | 61 |
Contractor receivables | 38 |  |  | 47 |
Tax-related deposits | 32 |  |  | 33 |
Other | 245 |  |  | 242 |
| $ | 404 |  |  | $ | 383 |
Property, Plant and Equipment, Net Property, plant and equipment, net, consist of the following:
| September 30, 2023 |  | December 31, 2022
Land | $ | 5 |  |  | $ | 5 |
Leasehold improvements | 459 |  |  | 456 |
Machinery and equipment | 2,295 |  |  | 2,303 |
| 2,759 |  |  | 2,764 |
Less accumulated depreciation | (1,828) |  |  | (1,837) |
| $ | 931 |  |  | $ | 927 |
During the three months ended October 1, 2022, the Company recorded a fixed asset impairment loss of $147 million related to assets constructed and used in the deployment of the Emergency Services Network ("ESN") service contract with the Home Office of the United Kingdom (the "Home Office"). The recognized impairment was based on the Company's expectation that, more likely than not, the ESN long-lived asset group will be disposed of significantly before the end of its previously estimated useful life as a result of the Company's early exit from its ESN contract with the Home Office. The impairment loss was recorded in the Software and Services segment within cost of sales in the Condensed Consolidated Statements of Operations. Depreciation expense for the three months ended September 30, 2023 and October 1, 2022 was $47 million and $45 million, respectively. Depreciation expense for the nine months ended September 30, 2023 and October 1, 2022 was $134 million and $137 million, respectively. Investments Investments consist of the following:
| September 30, 2023 |  | December 31, 2022 |  |  |  |
Common stock | $ | 30 |  |  | $ | 21 |  |  |  |  |
Strategic investments | 28 |  |  | 45 |  |  |  |  |
Company-owned life insurance policies | 71 |  |  | 69 |  |  |  |  |
Equity method investments | 13 |  |  | 12 |  |  |  |  |
| $ | 142 |  |  | $ | 147 |  |  |  |  |
During the nine months ended September 30, 2023, the Company recognized a gain of $13 million in Other income (expense) within the Condensed Consolidated Statement of Operations related to an increase in the fair value of its investment in Evolv Technologies, Inc. During the nine months ended September 30, 2023, the Company recorded a $16 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 within Other income (expense) within the Condensed Consolidated Statement of Operations. Other Assets Other assets consist of the following:
| September 30, 2023 |  | December 31, 2022
Defined benefit plan assets | $ | 168 |  |  | $ | 164 |
Non-current contract cost assets (Note 2) | 109 |  |  | 130 |
Other | 59 |  |  | 16 |
| $ | 336 |  |  | $ | 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 $31 million and $37 million as of September 30, 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:
| September 30, 2023 |  | December 31, 2022
Compensation | $ | 299 |  |  | $ | 374 |
Tax liabilities | 208 |  |  | 367 |
Dividend payable | 146 |  |  | 148 |
Trade liabilities | 137 |  |  | 145 |
Operating lease liabilities (Note 3) | 118 |  |  | 118 |
Customer reserves | 83 |  |  | 78 |
Other | 364 |  |  | 408 |
| $ | 1,355 |  |  | $ | 1,638 |
Other Liabilities Other liabilities consist of the following:
| September 30, 2023 |  | December 31, 2022
Defined benefit plans | $ | 915 |  |  | $ | 1,004 |
Non-current contract liabilities (Note 2) | 394 |  |  | 363 |
Unrecognized tax benefits (Note 7) | 29 |  |  | 29 |
Deferred income taxes (Note 7) | 72 |  |  | 73 |
Environmental reserve | 123 |  |  | 108 |
Other | 167 |  |  | 114 |
| $ | 1,700 |  |  | $ | 1,691 |
Stockholders’ Equity Share Repurchase Program: During the three and nine months ended September 30, 2023, the Company repurchased approximately 1.1 million and 2.5 million shares at an average price of $281.79 and $277.96 per share for an aggregate amount of $322 million and $686 million, respectively, excluding transaction costs and excise tax. The Company paid $306 million and $670 million to settle share repurchases during the three and nine months ended September 30, 2023, respectively. As of January 1, 2023, the Company's share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act of 2022, which was $3 million as of September 30, 2023. Payment of Dividends: During the three months ended September 30, 2023 and October 1, 2022, the Company paid $147 million and $132 million, respectively, in cash dividends to holders of its common stock. During the nine months ended September 30, 2023 and October 1, 2022, the Company paid $443 million and $398 million, respectively, in cash dividends to holders of its common stock. Subsequent to the quarter, the Company paid an additional $146 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 and nine months ended September 30, 2023 and October 1, 2022:
| Three Months Ended |  | Nine Months Ended
| September 30, 2023 |  | October 1, 2022 |  | September 30, 2023 |  | October 1, 2022
Foreign Currency Translation Adjustments: |  |  |  |  |  |  |
Balance at beginning of period | $ | (476) |  |  | $ | (539) |  |  | $ | (539) |  |  | $ | (384) |
Other comprehensive income (loss) before reclassification adjustment | (62) |  |  | (153) |  |  | (8) |  |  | (304) |
Tax benefit (expense) | (8) |  |  | (9) |  |  | 1 |  |  | (13) |
Other comprehensive income (loss), net of tax | (70) |  |  | (162) |  |  | (7) |  |  | (317) |
Balance at end of period | $ | (546) |  |  | $ | (701) |  |  | $ | (546) |  |  | $ | (701) |
Defined Benefit Plans: |  |  |  |  |  |  |
Balance at beginning of period | $ | (1,971) |  |  | $ | (1,952) |  |  | $ | (1,996) |  |  | $ | (1,995) |
Other comprehensive income before reclassification adjustment | — |  |  | — |  |  | — |  |  | 17 |
Tax expense | — |  |  | — |  |  | — |  |  | (3) |
Other comprehensive income before reclassification adjustment, net of tax | — |  |  | — |  |  | — |  |  | 14 |
Reclassification adjustment - Actuarial net losses into Other income (Note 8) | 15 |  |  | 20 |  |  | 45 |  |  | 60 |
Reclassification adjustment - Prior service benefits into Other income (Note 8) | 1 |  |  | (1) |  |  | 3 |  |  | (3) |
Tax expense | (4) |  |  | (4) |  |  | (11) |  |  | (13) |
Reclassification adjustments into Net earnings, net of tax | 12 |  |  | 15 |  |  | 37 |  |  | 44 |
Other comprehensive income, net of tax | 12 |  |  | 15 |  |  | 37 |  |  | 58 |
Balance at end of period | $ | (1,959) |  |  | $ | (1,937) |  |  | $ | (1,959) |  |  | $ | (1,937) |
Total Accumulated other comprehensive loss | $ | (2,505) |  |  | $ | (2,638) |  |  | $ | (2,505) |  |  | $ | (2,638) |

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