Motorola Solutions Reports Third-Quarter 2013 Financial Results

• Sales of $2.1 billion, down 2 percent from a year ago
• GAAP earnings per share (EPS)* of $1.16, up 61 percent from a year ago
• Non-GAAP** EPS of $1.32, up 57 percent from a year ago
• Returned $494 million to shareholders through share repurchase, dividends

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SCHAUMBURG, Ill. – Oct. 23, 2013 – Motorola Solutions, Inc. (NYSE: MSI) announced today third-quarter 2013 sales of $2.1 billion, down 2 percent from the third quarter of 2012. Government sales were down 4 percent, while Enterprise sales grew 2 percent.

“In the third quarter, we expanded operating margins, reduced costs and delivered double-digit EPS growth,” said Greg Brown, chairman and CEO, Motorola Solutions. “In addition, we are on track to achieve 18 percent operating margin for the full year.”

GAAP operating earnings in the third quarter of 2013 were $320 million or 15.2 percent of sales, compared to $324 million or 15.0 percent of sales in the third quarter of 2012. GAAP earnings per share were $1.16, compared to $0.72 in the third quarter of 2012.

Non-GAAP operating earnings in the third quarter of 2013 were $397 million or 18.8 percent of sales, compared to $387 million or 18.0 percent of sales in the third quarter of 2012. Non-GAAP earnings per share were $1.32, compared to $0.84 in the third quarter of 2012. These earnings results reflect lower incentive payments and structural cost improvements. A tax benefit of $96 million in the quarter for both GAAP and Non-GAAP earnings was associated with excess foreign tax credits. Non-GAAP financial information excludes after-tax net charges of approximately $0.16 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 generated $152 million in operating cash flow. The company ended the quarter with total cash*** of $2.9 billion while returning $494 million to shareholders through share repurchases and dividends.

Government segment sales were $1.5 billion, down 4 percent from the year-ago quarter. GAAP operating earnings were $252 million or 17.2 percent of sales compared to $273 million or 17.9 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $299 million or 20.4 percent of sales compared to $310 million or 20.4 percent of sales in the year-ago quarter.

Government highlights:

• Secured multimillion dollar contracts with U.S. customers such as Los Angeles Regional Interoperable Communications System Authority; the cities of Arlington, Texas, Indianapolis, Ind., Phoenix, Ariz., Portland, Ore., and Midland, Mich.; Fulton County in Georgia; Prince George's County in Maryland; Franklin County in Ohio; El Paso County in Texas; state of Maryland; and Colorado / Pikes Peak Regional Communication Network
• Secured multimillion dollar contracts with international customers such as Queensland, Australia, government; Brazilian Army; city of Montreal and Quebec Government in Canada; Guangdong Province Police, Chengdu Metro, Dalian Metro, Shanxi Police and Wuxi Metro Police in China; Delhi Metro in India; and Seoul Metro in Korea
• Continued leadership in public safety LTE technology with the new LEX 700 Mission Critical Handheld with Android 4.2.2 operating system and collaboration with Verizon to deliver the VML 700 LTE Vehicle Modem R1.1, which also can serve as a mobile Wi-Fi hot spot

Enterprise segment sales were $647 million, up 2 percent from the year-ago quarter. Excluding Psion, sales were down 5 percent. GAAP operating earnings were $68 million or 10.5 percent of sales compared to $51 million or 8.1 percent of sales in the year-ago quarter. Non-GAAP operating earnings were $98 million or 15.1 percent of sales compared to $77 million or 12.2 percent of sales in the year-ago quarter.

Enterprise highlights:

• Secured contracts with key customers such as Jumbo Supermarkets in the Netherlands; courier companies TNT Global Express in Italy, TNT Express and Mondial Relay in France, Yodel in the UK and Blue Dart in India; State Grid Corporation of China; Haier Group electronics in China; Reject Shop variety stores in Australia; and Ministry of Environment and Public Space in Buenos Aires, Argentina
• Positioned in Gartner’s new Magic Quadrant for Managed Mobility Services†
• Introduced LI2208 linear imager that captures virtually every 1D bar code, enabling workers to scan faster and farther to improve productivity and reduce customer wait times

Full-Year Outlook

Motorola Solutions’ outlook for full-year 2013 is for revenues to be approximately flat compared with full-year 2012 and Non-GAAP earnings per share from continuing operations of $4.63 to $4.70. The company expects to achieve 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.

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) Wednesday, Oct. 23. 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 earnings 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 earnings 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 earnings measurements, primarily because it represents a significant non-cash expense and because the c

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