SCHAUMBURG, Ill. – Jan. 27, 2011 – Motorola Solutions, Inc. (NYSE: MSI), formerly Motorola, Inc., today announced its fourth-quarter and full-year 2010 financial results.
The following are pro forma* financial highlights for Motorola Solutions, which primarily represented the continuing operations of the former Enterprise Mobility Solutions segment of Motorola, Inc. These results have been adjusted for the impact of the separation of Motorola Mobility Holdings, Inc. as a discontinued operation.
Fourth-quarter financial highlights:
- Pro forma sales of $2.2 billion, up 13% from fourth-quarter 2009
- Pro forma operating earnings of $279 million compared to pro forma operating earnings of $250 million in fourth-quarter 2009
- Pro forma non-GAAP operating earnings** of $352 million compared to $351 million in fourth-quarter 2009
- Government sales of $1.5 billion, an increase of 9% from fourth-quarter 2009
- Enterprise sales of $772 million, an increase of 23% from fourth-quarter 2009
- Total cash of $5.7 billion and net cash of $3.0 billion as of the Jan. 4 separation***
|Fourth Quarter||Full Year|
|Pro forma sales||$2,246||$1,983||13%||$7,871||$7,180||10%|
|Pro forma operating earnings||$279||$250||12%||$778||$570||36%|
|Pro forma non-GAAP operating earnings**||$352||$351||0%||$1,090||$976||12%|
Click here for printable press release and financial tables. For consolidated Motorola, Inc. fourth-quarter financial results, click here.
"With our separation completed, Motorola Solutions has embarked on a new and independent future with an even more sharpened strategic and operational focus that is both clear and purpose-driven," said Greg Brown, president and CEO of Motorola Solutions. "We are committed to driving profitable growth, optimizing our cost structure, improving cash flow and creating greater shareholder value. Our time, talent and resources are fully dedicated to executing on our financial plan and delivering mission- and business-critical solutions to government and enterprise customers throughout the world."
Government business highlights:
- Secured multi-million dollar contracts from the states of Maryland, New Jersey, Louisiana, Mississippi and Minnesota; the counties of Charleston in South Carolina, DuPage in Illinois, Escambia in Florida, Harris in Texas, Lapeer in Michigan, Orange in Florida and York in Virginia; the Los Angeles Unified School District; Queensland Gas in Australia; the Brazilian Army; and SAIC to service U.S. Customs and Border Protection
- Deployed AirDefense Security & Compliance solution for the Federal Aviation Administration to prevent unauthorized wireless access to its critical core network at 66 locations across the United States
Enterprise business highlights:
- Secured multi-million dollar contracts with TNT Express in Holland, Bergendahls in the Nordics, Stockholm City in the Nordics and Hermes in Germany
- Announced the industry’s most comprehensive service device management platform that helps maximize uptime, increase mobile worker productivity and reduce IT expenditures
Networks Financial Results
Financial results related to the portion of the company’s Networks business expected to be acquired by Nokia Siemens Networks in the first quarter of 2011 are reported as discontinued operations. For the Networks discontinued operations, sales were $939 million in the fourth quarter of 2010 and $3.4 billion for full-year 2010. GAAP earnings from discontinued operations totaled $86 million in the fourth quarter of 2010 and $379 million for full-year 2010.
First-Quarter 2011 Outlook
Motorola Solutions’ outlook for the first quarter of 2011 is for sales growth of 3-4 percent over the first quarter of 2010 and earnings per share from continuing operations of $0.29 to $0.34 per share. Earnings per share is based on approximately 340 million diluted shares outstanding. This outlook excludes the portion of the Networks business expected to be acquired by Nokia Siemens Networks in the first quarter of 2011, the Motorola Mobility business that was separated from Motorola Solutions on Jan. 4, 2011, as well as stock-based compensation expense, intangible assets amortization expense and charges associated with items of the variety typically highlighted by the company in its quarterly earnings releases.
Motorola, Inc. Consolidated GAAP Results
The following results reflect Motorola, Inc.’s consolidated fourth-quarter results prior to its Jan. 4, 2011 distribution of Motorola Mobility Holdings, Inc. and its name change to Motorola Solutions, Inc.
|(In millions, except per share amounts)||Fourth Quarter||Full Year|
|Operating earnings (loss)||378||88||789||(492)|
|Earnings (loss) from continuing operations†||
|Earnings from discontinued operations||
|Net earnings (loss) †||293||142||633||(51)|
Diluted earnings (loss) per common share: †
|Weighted average diluted common shares outstanding||
† Amounts attributable to Motorola Solutions, Inc. common shareholders
Motorola, Inc. Highlighted Items, Stock-Based Compensation Expense and Intangible Assets Amortization Expense
The table below includes highlighted items, stock-based compensation expense and intangible assets amortization expense for the fourth quarter of 2010.
(Per diluted common share)
|GAAP Earnings from Continuing Operations||$0.61|
|Separation-related transaction costs||0.17|
|Reorganization of business charges||0.09|
|Total Highlighted Items||0.09|
|Stock-based compensation expense||0.14|
|Intangible assets amortization expense||0.12|
|Stock-Based Compensation Expense and Intangible Assets Amortization Expense||
|Total Non-GAAP Adjustments||0.34|
|Non-GAAP Earnings from Continuing Operations||$0.95|
†† Earnings per share amount does not add up due to rounding
Conference Call and Webcast
Motorola Solutions will host its quarterly conference call beginning at 8 a.m. (U.S. Eastern Time) on Thursday, Jan. 27. The conference call will be webcast live with audio and slides at www.motorolasolutions.com/investor.
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. We have provided these non-GAAP measurements to help investors better understand our core operating performance, enhance comparisons of core operating performance from period to period and allow better comparisons of operating performance to our 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.
Stock-based compensation expense: The Company has excluded stock-based compensation expense from its non-GAAP operating expenses and net income measurements. Although stock-based compensation is a key incentive offered to our 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 stock-based compensation expense primarily because it represents a significant non-cash expense. Stock-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.
* Pro forma results: Consistent with the Report on Form 8-K furnished with the Securities and Exchange Commission on Jan. 10, 2011, the Motorola Solutions pro forma information presented in this release reflects the adjustment of Motorola’s GAAP results for: (i) the removal of the results of the Motorola Mobility business (which excludes certain corporate overhead costs that were previously allocated to the business) as a result of the Company’s completed separation of Motorola Mobility Holdings, Inc. (ii) the removal of the Company’s costs of separating into two separate, publicly traded companies, along with the corresponding tax impact, (iii) the removal of the historical Earnings from discontinued operations, and (iv) the pro forma Motorola Solutions effective tax rate at the historical Motorola effective tax rate. The pro forma effective tax rate may differ from the actual effective tax rate used in the calculation of the discontinued operations of Motorola Mobility in subsequent filings. Because this revised financial data was made on a pro forma basis, the discontinued operations of Motorola Mobility and the financial results of Motorola Solutions may differ from what is provided above. A reconciliation of Motorola’s GAAP results to the Motorola Solutions pro forma results can be found at the end of this press release.
** Pro forma non-GAAP operating earnings excludes from pro forma operating earnings the effects of stock-based compensation expense, intangible asset amortization expense and highlighted items
*** Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) and short-term investments – cash contributed to Motorola Mobility at separation. Net cash = total cash - Total debt (Notes payable and current portion of long-term debt + Long-term debt)
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. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our 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 our actual results to differ materially from the statements contained in this release. Such forward-looking statements include, but are not limited to, statements about the timing and financial impact of the launch of new products, the impact of the separation of Motorola, Inc. into two independent, public companies, and Motorola Solutions’ financial outlook for the first quarter of 2011. Motorola Solutions cautions the reader that the risk factors below, as well as those on pages 17 through 29 in Item 1A of Motorola Inc.'s 2009 Annual Report on Form 10-K, pages 58 through 62 in Part II, Item 1A of Motorola, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2010, 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) possible negative effects on the Company's business operations, financial performance or assets as a result of the separation into two independent, publicly traded companies, which may include: (i) diminished purchasing leverage and increased exposure to market fluctuations as a result of being a smaller, more focused company, (ii) ongoing obligations relating to certain debt and pension liabilities and certain corporate litigation matters retained by Motorola Solutions after the separation, (iii) the increased percentage of cash and cash equivalents retained by Motorola Solutions after the separation being held outside of the U.S., and (iv) the ownership of certain logos, trademarks, trade names and service marks including “MOTOROLA” by Motorola Mobility Holdings, Inc.; (2) the economic outlook for the government and enterprise communications industries; (3) the level of demand for the Company's products, particularly if businesses and governments defer purchases in response to tighter credit; (4) the Company's ability to introduce new products and technologies in a timely manner; (5) unexpected negative consequences from the Company's restructuring and cost reduction activities; (6) negative impact on the Company's business from global economic conditions, which may include: (i) the inability of customers to obtain financing for purchases of the Company's products; (ii) the viability of the Company's suppliers that may no longer have access to necessary financing; (iii) changes in the value of investments held by the Company's pension plan and other defined benefit plans; (iv) fair and/or actual value of the Company's debt and equity investments differing significantly from the fair values currently assigned to them; (v) counterparty failures negatively impacting the Company's financial position; and (vi) difficulties or increased costs for the Company in obtaining financing; (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; (9) the impact on the Company's performance and financial results from strategic acquisitions or divestitures, including 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) 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) 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; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (15) the impact of foreign currency fluctuations, including the negative impact of a strengthening U.S. dollar on the Company when competing for business in foreign markets; (16) the impact of changes in governmental policies, laws or regulations; (17) the outcome of currently ongoing and future tax matters; and (18) negative consequences from the Company's outsourcing of various activities, including certain manufacturing, information technology and administrative functions. 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 leading provider of business- and mission-critical communication products 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.
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