Motorola Solutions Reports First-Quarter 2013 Financial Results

• Sales up 1 percent driven by 3 percent growth in Government
• GAAP earnings per share (EPS) from continuing operations* up 36 percent from a year ago
• Non-GAAP** EPS from continuing operations up 12 percent from a year ago
• Repurchased $357 million of shares in the quarter

Click here for printable press release and financial tables.

SCHAUMBURG, Ill. – April 24, 2013 – Motorola Solutions, Inc. (NYSE: MSI) announced today first-quarter 2013 sales of $2 billion, up 1 percent from the first quarter of 2012. Government sales were up 3 percent while Enterprise sales were down 4 percent.

“Despite a challenging enterprise market and modest revenue growth in the first quarter, our disciplined focus on cost management and return of capital to shareholders delivered double-digit growth in earnings per share,” said Greg Brown, chairman and CEO of Motorola Solutions. “We remain confident in the fundamental drivers of the business and our ability to drive improved operating earnings for the year.”

GAAP operating earnings in the first quarter of 2013 were $216 million or 10.9 percent of sales, compared to $232 million or 11.9 percent of sales in the first quarter of 2012. GAAP earnings per share from continuing operations were $0.68, compared to $0.50 in the first quarter of 2012.

Non-GAAP operating earnings in the first quarter of 2013 were $278 million or 14.1 percent of sales, compared to $290 million or 14.8 percent of sales in the first quarter of 2012. Non-GAAP earnings per share from continuing operations were $0.66, compared to $0.59 in the first quarter of 2012. Non-GAAP financial information excludes after-tax net loss of approximately $0.02 per diluted share related to stock-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.

During the quarter, the company used $31 million in operating cash flow from continuing operations. The company ended the quarter with total cash*** of $3.7 billion while returning $429 million to shareholders through share repurchases and cash dividends.

Government segment sales were $1.3 billion, up 3 percent from the year-ago quarter. GAAP operating earnings were $180 million or 13.4 percent of sales compared to $150 million or 11.5 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $217 million or 16.1 percent of sales compared to $184 million or 14.1 percent of sales in the year-ago quarter.

Government highlights:

• Secured multimillion-dollar contracts with strategic customers such as Las Vegas Metropolitan Police Department; State of Tennessee; Wyandotte County in Kansas; Butler County in Ohio; Houston Airport; SIBUR in Russia; Medellín Metro in Colombia; Colombia Ministry of Defense; Queensland Gas Company in Australia; Macau Light Rail in China; and Klang Valley Mass Rail Transit System in Malaysia
• Introduced Real-Time Crime Center solution, incorporating input from multiple data sources such as video, sensors, alarms, computer-aided dispatch and records to deliver one operational view and help public safety stay one step ahead of criminals through proactive policing
• Launched the new MTP6750 handheld, the world´s first TETRA radio with a 5 megapixel camera that embeds a special encrypted marking to validate metadata and ensure images have not been tampered with before presentation in court
• Introduced AME 2000 Secure Mobile Solution based on Motorola’s Assured Mobile Environment, providing end-to-end encrypted voice and data communications through private or public wireless networks to support the missions of federal agencies

Enterprise segment sales were $627 million, down 4 percent from the year-ago quarter. Excluding Psion, sales were down 12 percent. GAAP operating earnings were $36 million or 5.7 percent of sales compared to $82 million or 12.5 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $61 million or 9.7 percent of sales compared to $106 million or 16.2 percent of sales in the year-ago quarter.

Enterprise highlights:

• Secured contracts with key customers such as Tesco in the U.K., Macy’s, District of Carpenters, OnTrac shipping, Universal Hospital Services, Sligro food wholesaler in the Netherlands, GEPP bottling in Mexico, and Federation of Coffee Growers of Colombia
• Launched MC45 mobile computer, the company’s first WAN-based solution that addresses the needs of field-based mobile workers in cost-sensitive enterprises
• Introduced the company’s first-ever bioptic scanner, the MP6000 multi-plane scanner embedded in point-of-sale terminals for retailers
• Honored with prestigious Red Dot Product Design Awards for MC40 mobile computer and HC1 headset computer for excellence in product design quality

Second-Quarter Outlook

Motorola Solutions’ outlook for the second quarter of 2013 is for revenues that are flat to down 2 percent compared with the second quarter of 2012 and Non-GAAP earnings per share from continuing operations of $0.66 to $0.71 per share. For the full-year 2013, the company now expects revenue growth of approximately 3 to 4 percent compared with 2012 and Non-GAAP operating margins of approximately 18 percent of sales. This outlook excludes stock-based compensation, intangible amortization and charges associated with items typically highlighted by the company in its quarterly earnings releases.

Consolidated GAAP Results

A comparison of results from operations is as follows:

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 first quarter of 2013.

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 Wednesday, April 24. 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 gen

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