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Other Financial Data | 3 Months Ended
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Mar. 30, 2024
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
| March 30, 2024 |  | April 1, 2023
Other charges: |  |  |
Intangibles amortization (Note 15) | $ | 39 |  |  | $ | 55 |
Reorganization of business (Note 14) | 7 |  |  | 7 |
Operating lease asset impairments | 3 |  |  | 3 |
Acquisition-related transaction fees | 4 |  |  | 2 |
Legal settlements | 6 |  |  | — |
Fixed asset impairments | — |  |  | 2 |
Other | (1) |  |  | — |
| $ | 58 |  |  | $ | 69 |
Other Income (Expense) Interest expense, net, and Other both included in Other income (expense), consist of the following:
| Three Months Ended
| March 30, 2024 |  | April 1, 2023
Interest income (expense), net: |  |  |
Interest expense | $ | (61) |  |  | $ | (63) |
Interest income | 17 |  |  | 9 |
| $ | (44) |  |  | $ | (54) |
Other, net: |  |  |
Net periodic pension and postretirement benefit (Note 8) | $ | 32 |  |  | $ | 25 |
Loss from the extinguishment of Silver Lake Convertible Debt (Note 5) | (585) |  |  | — |
Investment impairments | (3) |  |  | (6) |
Foreign currency gain (loss) | 1 |  |  | (19) |
Gain (loss) on derivative instruments (Note 6) | (10) |  |  | 7 |
Fair value adjustments to equity investments | (2) |  |  | 3 |
Other | 2 |  |  | 2 |
| $ | (565) |  |  | $ | 12 |
Earnings (Loss) Per Common Share Basic and diluted earnings (loss) per common share from net earnings (loss) attributable to Motorola Solutions, Inc. are computed as follows:
| Amounts attributable to Motorola Solutions, Inc. common stockholders
| Three Months Ended
| March 30, 2024 |  | April 1, 2023
Basic earnings (loss) per common share: |  |  |
Earnings (loss) | $ | (39) |  |  | $ | 278 |
Weighted average common shares outstanding | 166.3 |  |  | 167.4 |
Per share amount | $ | (0.23) |  |  | $ | 1.66 |
Diluted earnings (loss) per common share: |  |  |
Earnings (loss) | $ | (39) |  |  | $ | 278 |
Weighted average common shares outstanding | 166.3 |  |  | 167.4 |
Add effect of dilutive securities: |  |  |
Share-based awards | — |  |  | 4.0 |
Silver Lake Convertible Debt | — |  |  | 1.2 |
Diluted weighted average common shares outstanding | 166.3 |  |  | 172.6 |
Per share amount | $ | (0.23) |  |  | $ | 1.61 |
In the three months ended March 30, 2024, the Company recorded a net loss from continuing operations, which resulted in the presentation of diluted earnings (loss) per common share to be equal to basic earnings (loss) per common share, as any increase to the basic shares would be antidilutive. A total of 5.0 million shares outstanding were excluded from the computation of diluted earnings per common share for three months ended March 30, 2024, because their inclusion would have been antidilutive; these shares included the assumed exercise of 2.7 million options, the assumed vesting of 1.2 million restricted stock units (RSUs), the assumed vesting of 0.2 million related to the Long Range Incentive Plan (LRIP), and 0.9 million shares related to the Silver Lake Convertible Debt (as defined in Note 5, "Debt and Credit Facilities" in this "Part 1 - Financial Information" of this Form 10-Q). With respect to the Silver Lake Convertible Debt, on February 14, 2024, the Company agreed with Silver Lake Partners to repurchase $1.0 billion aggregate principal amount of the Silver Lake Convertible Debt for aggregate consideration of $1.59 billion in cash, inclusive of the conversion premium. The Company paid the cash consideration during the first quarter of 2024. A total of 0.9 million shares were potentially issuable under the terms of the Silver Lake Convertible Debt based on the Company's option to settle the conversion premium in shares through February 14, 2024. However, as stated above, in the computation of diluted earnings per common share for the three months ended March 30, 2024, the 0.9 million of shares were excluded because their inclusion would have been antidilutive. Refer to Note 5, "Debt and Credit Facilities" in this “Part 1 — Financial Information” of this Form 10-Q for a further discussion of the Silver Lake Convertible Debt. 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. Balance Sheet Information Accounts Receivable, Net Accounts receivable, net, consists of the following:
| March 30, 2024 |  | December 31, 2023
Accounts receivable | $ | 1,666 |  |  | $ | 1,779 |
Less allowance for credit losses | (74) |  |  | (69) |
| $ | 1,592 |  |  | $ | 1,710 |
Inventories, Net Inventories, net, consist of the following:
| March 30, 2024 |  | December 31, 2023
Finished goods | $ | 347 |  |  | $ | 328 |
Work-in-process and production materials | 641 |  |  | 640 |
| 988 |  |  | 968 |
Less inventory reserves | (148) |  |  | (141) |
| $ | 840 |  |  | $ | 827 |
Other Current Assets Other current assets consist of the following:
| March 30, 2024 |  | December 31, 2023
Current contract cost assets (Note 2) | $ | 65 |  |  | $ | 56 |
Contractor receivables | 60 |  |  | 40 |
Tax-related deposits | 35 |  |  | 32 |
Other | 290 |  |  | 229 |
| $ | 450 |  |  | $ | 357 |
Property, Plant and Equipment, Net Property, plant and equipment, net, consist of the following:
| March 30, 2024 |  | December 31, 2023
Land | $ | 5 |  |  | $ | 5 |
Leasehold improvements | 433 |  |  | 448 |
Machinery and equipment | 2,428 |  |  | 2,396 |
| 2,866 |  |  | 2,849 |
Less accumulated depreciation | (1,909) |  |  | (1,885) |
| $ | 957 |  |  | $ | 964 |
During the year ended December 31, 2023, the Company entered into an arrangement to sell its Richmond, British Columbia and Richardson, Texas video manufacturing operations, including the machinery and equipment, inventory, transfer of employees and related facility lease to a contract manufacturer. During the year ended December 31, 2023, the Company presented the assets and liabilities as held for sale in its Consolidated Balance Sheets and recognized an impairment loss of $24 million on the exit of these video manufacturing operations within Other charges in the Consolidated Statements of Operations, as the carrying value of the asset group was below the expected selling price. The transaction closed on February 1, 2024 resulting in a gain on the sale of these video manufacturing operations, which was de minimis. Depreciation expense for the three months ended March 30, 2024 and April 1, 2023 was $44 million and $43 million, respectively. Investments Investments consist of the following:
| March 30, 2024 |  | December 31, 2023 |  |  |  |
Common stock | $ | 26 |  |  | $ | 28 |  |  |  |  |
Strategic investments | 27 |  |  | 28 |  |  |  |  |
Company-owned life insurance policies | 76 |  |  | 74 |  |  |  |  |
Equity method investments | 12 |  |  | 13 |  |  |  |  |
| $ | 141 |  |  | $ | 143 |  |  |  |  |
Other Assets Other assets consist of the following:
| March 30, 2024 |  | December 31, 2023
Defined benefit plan assets | $ | 113 |  |  | $ | 98 |
Non-current contract cost assets (Note 2) | 116 |  |  | 119 |
Other | 58 |  |  | 57 |
| $ | 287 |  |  | $ | 274 |
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 their 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 $27 million and $35 million as of March 30, 2024 and December 31, 2023, respectively. Supplier finance program obligations are classified as Accounts payable within the Condensed Consolidated Balance Sheets. Accrued Liabilities Accrued liabilities consist of the following:
| March 30, 2024 |  | December 31, 2023
Compensation | $ | 365 |  |  | $ | 407 |
Tax liabilities | 325 |  |  | 231 |
Dividend payable | 163 |  |  | 163 |
Trade liabilities | 141 |  |  | 140 |
Operating lease liabilities (Note 3) | 122 |  |  | 125 |
Customer reserves | 77 |  |  | 89 |
Other | 408 |  |  | 349 |
| $ | 1,601 |  |  | $ | 1,504 |
Other Liabilities Other liabilities consist of the following:
| March 30, 2024 |  | December 31, 2023
Defined benefit plans (Note 8) | $ | 906 |  |  | $ | 939 |
Non-current contract liabilities (Note 2) | 430 |  |  | 424 |
Unrecognized tax benefits (Note 7) | 26 |  |  | 26 |
Deferred income taxes (Note 7) | 59 |  |  | 55 |
Environmental reserve | 119 |  |  | 119 |
Other | 182 |  |  | 178 |
| $ | 1,722 |  |  | $ | 1,741 |
Stockholders’ Equity Share Repurchase Program: During the three months ended March 30, 2024, the Company repurchased approximately 0.1 million shares at an average price of $317.45 per share for an aggregate amount of $39 million, excluding transaction costs and excise tax. Payment of Dividends: During the three months ended March 30, 2024 and April 1, 2023, the Company paid $163 million and $148 million, respectively, in cash dividends to holders of its common stock. Subsequent to the quarter, the Company paid an additional $163 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 March 30, 2024 and April 1, 2023:
| Three Months Ended
| March 30, 2024 |  | April 1, 2023
Foreign Currency Translation Adjustments: |  |  |
Balance at beginning of period | $ | (482) |  |  | $ | (539) |
Other comprehensive income (loss) before reclassification adjustment | (27) |  |  | 27 |
Tax benefit | 3 |  |  | 9 |
Other comprehensive income (loss), net of tax | (24) |  |  | 36 |
Balance at end of period | $ | (506) |  |  | $ | (503) |
Derivative instruments: |  |  |
Balance at beginning of period | $ | (12) |  |  | $ | — |
Other comprehensive income before reclassification adjustment | 4 |  |  | — |
Other comprehensive income, net of tax | 4 |  |  | — |
Balance at end of period | $ | (8) |  |  | $ | — |
Defined Benefit Plans: |  |  |
Balance at beginning of period | $ | (2,046) |  |  | $ | (1,996) |
Reclassification adjustment - Actuarial net losses into Other income (Note 8) | 9 |  |  | 15 |
Reclassification adjustment - Prior service benefits into Other income (Note 8) | — |  |  | 1 |
Tax expense | (2) |  |  | (4) |
Reclassification adjustments into Net earnings, net of tax | 7 |  |  | 12 |
Other comprehensive income, net of tax | 7 |  |  | 12 |
Balance at end of period | $ | (2,039) |  |  | $ | (1,984) |
Total Accumulated other comprehensive loss | $ | (2,553) |  |  | $ | (2,487) |

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