Motorola Solutions, Inc 10-Q for FY2024 Q2
Motorola Solutions, Inc. (MSI)
10-Q
2024-08-01
For: 2024-06-29
View Original
Added on
April 03, 2026
About this 10-Q
Motorola Solutions, Inc filed this 10-Q on August 1, 2024, covering the quarter ended June 29, 2024 (FY2024 Q2).
Headline figures
Quarter ended June 29, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.63B
- up 9.4% from $2.4B a year earlier
- Net income
- $443M
- up 19.4% from net income of $371M a year earlier
- Diluted EPS
- $2.60
- up 20.9% from $2.15 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________
Form 10-Q
____________________________________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 29, 2024
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number: 1-7221
___________________________________________
(Exact Name of Registrant as Specified in Its Charter)
____________________________________________
| (State of Incorporation) | (I.R.S. Employer Identification No.) | |||||||
(Address of Principal Executive Offices, Zip Code)
(847 ) 576-5000
(Registrant’s Telephone Number, Including Area Code)
Not applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||||||||
| $0.01 | Par Value | |||||||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
| ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the registrant's Common Stock, $0.01 par value per share, outstanding as of July 26, 2024 was 166,840,999 .
| TABLE OF CONTENTS | |||||||||||
For the Quarter Ended June 29, 2024 | |||||||||||
PART I. FINANCIAL INFORMATION | Page No. | ||||||||||
| Item 1. | |||||||||||
| Item 2. | |||||||||||
| Item 3. | |||||||||||
| Item 4. | |||||||||||
PART II. OTHER INFORMATION | |||||||||||
| Item 1. | |||||||||||
| Item 1A. | |||||||||||
| Item 2. | |||||||||||
| Item 3. | |||||||||||
| Item 4. | |||||||||||
| Item 5. | |||||||||||
| Item 6. | |||||||||||
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations (Unaudited)
| (In millions, except per share amounts) | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Net sales from products | $ | $ | $ | $ | |||||||||||||||||||
| Net sales from services | |||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||
| Costs of products sales | |||||||||||||||||||||||
| Costs of services sales | |||||||||||||||||||||||
| Costs of sales | |||||||||||||||||||||||
| Gross margin | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Research and development expenditures | |||||||||||||||||||||||
| Other charges | |||||||||||||||||||||||
| Operating earnings | |||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Gain on sales of investments and businesses, net | |||||||||||||||||||||||
| Other, net | ( | ||||||||||||||||||||||
| Total other expense | ( | ( | ( | ( | |||||||||||||||||||
| Net earnings before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||
| Less: Earnings attributable to non-controlling interests | |||||||||||||||||||||||
| Net earnings attributable to Motorola Solutions, Inc. | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
1
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | |||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
| Derivative instruments | |||||||||||||||||||||||
| Defined benefit plans | |||||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | ( | ||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Less: Earnings attributable to non-controlling interests | |||||||||||||||||||||||
| Comprehensive income attributable to Motorola Solutions, Inc. common shareholders | $ | $ | $ | $ | |||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
2
Condensed Consolidated Balance Sheets (Unaudited)
| (In millions, except par value) | June 29, 2024 | December 31, 2023 | |||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Contract assets | |||||||||||
| Inventories, net | |||||||||||
| Other current assets | |||||||||||
| Current assets held for disposition | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease assets | |||||||||||
| Investments | |||||||||||
| Deferred income taxes | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Non-current assets held for disposition | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Contract liabilities | |||||||||||
| Accrued liabilities | |||||||||||
| Current liabilities held for disposition | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Operating lease liabilities | |||||||||||
| Other liabilities | |||||||||||
| Non-current liabilities held for disposition | |||||||||||
| Stockholders’ Equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Authorized shares: | |||||||||||
Issued shares: 6/29/24— | |||||||||||
Outstanding shares: 6/29/24— | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Motorola Solutions, Inc. stockholders’ equity | |||||||||||
| Non-controlling interests | |||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
3
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
| (In millions) | Shares | Common Stock and Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interests | ||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Net earnings (loss) | ( | ||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ||||||||||||||||||||||||||||
| Issuance of common stock and stock options exercised | ( | ||||||||||||||||||||||||||||
| Share repurchase program | ( | ( | |||||||||||||||||||||||||||
| Share-based compensation expenses | |||||||||||||||||||||||||||||
Dividends declared $ | ( | ||||||||||||||||||||||||||||
| Balance as of March 30, 2024 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||
| Issuance of common stock and stock options exercised | |||||||||||||||||||||||||||||
| Share repurchase program | ( | ( | |||||||||||||||||||||||||||
| Share-based compensation expenses | |||||||||||||||||||||||||||||
Dividends declared $ | ( | ||||||||||||||||||||||||||||
| Dividends paid to non-controlling interest on subsidiary common stock | ( | ||||||||||||||||||||||||||||
| Balance as of June 29, 2024 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| (In millions) | Shares | Common Stock and Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interests | ||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||
| Issuance of common stock and stock options exercised | |||||||||||||||||||||||||||||
| Share repurchase program | ( | ( | |||||||||||||||||||||||||||
| Share-based compensation expenses | |||||||||||||||||||||||||||||
Dividends declared $ | ( | ||||||||||||||||||||||||||||
| Dividends paid to non-controlling interest on subsidiary common stock | ( | ||||||||||||||||||||||||||||
| Balance as of April 1, 2023 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
| Net earnings | |||||||||||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||||||||
| Issuance of common stock and stock options exercised | |||||||||||||||||||||||||||||
| Share repurchase program | ( | ( | |||||||||||||||||||||||||||
| Share-based compensation expenses | |||||||||||||||||||||||||||||
Dividends declared $ | ( | ||||||||||||||||||||||||||||
| Dividends paid to non-controlling interest on subsidiary common stock | ( | ||||||||||||||||||||||||||||
| Balance as of July 1, 2023 | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
4
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Six Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Operating | |||||||||||
| Net earnings | $ | $ | |||||||||
| Adjustments to reconcile Net earnings to Net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Non-cash other charges (income) | ( | ||||||||||
| Share-based compensation expenses | |||||||||||
| Gain on sales of investments and businesses, net | ( | ||||||||||
| Loss from the extinguishment of Silver Lake Convertible Debt (Note 5) | |||||||||||
| Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Inventories | |||||||||||
| Other current assets and contract assets | ( | ( | |||||||||
| Accounts payable, accrued liabilities and contract liabilities | ( | ( | |||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Deferred income taxes | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Investing | |||||||||||
| Acquisitions and investments, net | ( | ( | |||||||||
| Proceeds from sales of investments and businesses, net | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Net cash used for investing activities | ( | ( | |||||||||
| Financing | |||||||||||
| Repayments of debt | ( | ( | |||||||||
| Net proceeds from issuance of debt | |||||||||||
| Issuances of common stock | |||||||||||
| Purchases of common stock | ( | ( | |||||||||
| Payments of dividends | ( | ( | |||||||||
| Payments of dividends to non-controlling interests | ( | ( | |||||||||
| Net cash used for financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on total cash and cash equivalents | ( | ||||||||||
| Net decrease in total cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
| Supplemental Cash Flow Information | |||||||||||
| Cash paid during the period for: | |||||||||||
| Interest paid | $ | $ | |||||||||
| Income and withholding taxes, net of refunds | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
5
| INDEX FOR NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | ||||||||
| Page No. | ||||||||
| Note 1 | ||||||||
| Note 2 | ||||||||
| Note 3 | ||||||||
| Note 4 | ||||||||
| Note 5 | ||||||||
| Note 6 | ||||||||
| Note 7 | ||||||||
| Note 8 | ||||||||
| Note 9 | ||||||||
| Note 10 | ||||||||
| Note 11 | ||||||||
| Note 12 | ||||||||
| Note 13 | ||||||||
| Note 14 | ||||||||
| Note 15 | ||||||||
6
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in millions, except as noted)
1.Basis of Presentation
The condensed consolidated financial statements as of June 29, 2024 and for the three and six months ended June 29, 2024 and July 1, 2023 include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to state fairly the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholders' Equity, and Statements of Cash Flows of Motorola Solutions, Inc. (“Motorola Solutions” or the “Company”) for all periods presented.
The Company operates on a 52-week fiscal year, with each fiscal year ending on December 31. With respect to each fiscal quarter, the Company operates on a 13-week fiscal quarter, with all fiscal quarters ending on a Saturday.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2023 (the "Form 10-K"). The results of operations for the three and six months ended June 29, 2024 are not necessarily indicative of the operating results to be expected for the full year.
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Business Overview
The Company manages the business organizationally through two segments: “Products and Systems Integration” and “Software and Services". Within these segments the Company has three principal product lines in which the Company reports net sales: Land Mobile Radio Communications (“LMR” or “LMR Communications”), Video Security and Access Control ("Video"), and Command Center.
•LMR Communications: Infrastructure, devices (two-way radio and broadband, including both for public safety and professional and commercial radio (PCR)) and software that enable communications, inclusive of installation and integration, backed by services, to assure availability, security and resiliency.
•Video: Cameras (fixed, body-worn, in-vehicle), access control, infrastructure, video management, software and artificial intelligence (AI)-powered analytics that help enable visibility and bring attention to what’s important.
•Command Center: Command center solutions and software applications that unify voice, video and data analytics from public safety agencies, enterprises and the community to create a broad informational view to help simplify workflows and improve the accuracy and speed of decisions.
Recent Acquisitions
Subsequent to the quarter end, on July 1, 2024, the Company acquired Noggin, a global provider of critical event management ("CEM") software for $91 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $19 million to certain key employees that will be expensed over a service period of three years . This acquisition enhances the Company's portfolio by adding operational resilience and CEM capabilities, which help enterprises and critical infrastructure anticipate, prepare for and efficiently respond to incidents. The business is part of the Software and Services segment.
Subsequent to the quarter end, on July 1, 2024, the Company acquired a company that provides vehicle location and management solutions for $132 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $3 million to certain key employees that will be expensed over a service period of three years . The acquisition expands the Company's video solutions within the Software and Services segment.
On February 13, 2024, the Company acquired Silent Sentinel, a provider of specialized, long-range cameras, for $37 million, net of cash acquired. This acquisition complements the Company's portfolio of fixed video cameras, expanding its footprint with government and critical infrastructure customers and strengthens the Company's position as a global leader in end-to-end video security solutions. The business is part of the Products and System Integration segment.
On December 15, 2023, the Company acquired IPVideo, the creator of the HALO Smart Sensor, for $170 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $5 million to certain key employees that will be expensed over a service period of one year . The HALO Smart Sensor is a multifunctional safety and security device with built-in vape detection and air quality monitoring, gunshot detection, abnormal noise and motion detection and emergency keyword detection. This acquisition adds sensor technology to the Company's physical security portfolio. The business is part of the Products and Systems Integration segment.
7
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning in 2025, with early adoption permitted. The ASU will require the Company to disclose additional expense categories at the segment level including Cost of sales, Selling, general and administrative expenses, Research and development expenditures and Other charges once it adopts this ASU. The Company is still evaluating the complete impact of the adoption of this ASU on its disclosures.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which expands disclosures in an entity's income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company anticipates that it will have additional disclosures regarding cash taxes and the income tax rate reconciliation once it adopts this ASU.
2. Revenue from Contracts with Customers
Disaggregation of Revenue
The following table summarizes the disaggregation of the Company's revenue by segment, region, major products and services and customer type for the three and six months ended June 29, 2024 and July 1, 2023, consistent with the information reviewed by the Company's chief operating decision maker for evaluating the financial performance of the Company's reportable segments:
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | ||||||||||||||||||||||||||||||||||
| (In millions) | Products and Systems Integration | Software and Services | Total | Products and Systems Integration | Software and Services | Total | |||||||||||||||||||||||||||||
| Regions: | |||||||||||||||||||||||||||||||||||
| North America | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| International | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Major Products and Services: | |||||||||||||||||||||||||||||||||||
| LMR Communications | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Video | |||||||||||||||||||||||||||||||||||
| Command Center | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Customer Types: | |||||||||||||||||||||||||||||||||||
| Direct | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Indirect | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
8
| Six Months Ended | |||||||||||||||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | ||||||||||||||||||||||||||||||||||
| (In millions) | Products and Systems Integration | Software and Services | Total | Products and Systems Integration | Software and Services | Total | |||||||||||||||||||||||||||||
| Regions: | |||||||||||||||||||||||||||||||||||
| North America | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| International | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Major Products and Services: | |||||||||||||||||||||||||||||||||||
| LMR Communications | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Video | |||||||||||||||||||||||||||||||||||
| Command Center | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Customer Types: | |||||||||||||||||||||||||||||||||||
| Direct | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Indirect | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Remaining Performance Obligations
Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations that are unsatisfied, or partially unsatisfied, as of the end of a period. The transaction value associated with remaining performance obligations which were not yet satisfied as of June 29, 2024 was $9.1 billion. A total of $4.3 billion was from Products and Systems Integration performance obligations that were not yet satisfied as of June 29, 2024, of which $2.6 billion is expected to be recognized in the next twelve months . The remaining amounts will generally be satisfied over time as systems are implemented. Remaining performance obligations from the Products and Systems Integration segment are equal to disclosed backlog for the segment. A total of $4.8 billion was from Software and Services performance obligations that were not yet satisfied as of June 29, 2024. The determination of Software and Services performance obligations that are not satisfied takes into account a contract term that may be limited by the customer’s ability to terminate for convenience. Where termination for convenience exists in the Company's service contracts, its disclosure of the remaining performance obligations that are unsatisfied assumes the contract term is limited until renewal. As a result, remaining performance obligations from the Software and Services segment may be less than disclosed backlog in the Software and Services segment due to multi-year service contracts with termination for convenience clauses. The Company expects to recognize $1.6 billion from unsatisfied Software and Services performance obligations over the next twelve months , with the remaining performance obligations generally to be recognized over time as services are performed and software is implemented.
On March 13, 2024, the Company received a notice of contract extension (the “Deferred National Shutdown Notice”) from the UK Home Office. The Deferred National Shutdown Notice seeks to extend the “national shutdown target date” of the Airwave service from December 31, 2026 to December 31, 2029, at the rates implemented by a prospective price control on Airwave imposed by the Competition and Markets Authority (the "Charge Control"). In the first half of 2024, as a result of the UK Home Office's notice of a contract extension pursuant to their Deferred National Shutdown Notice, the Company recorded additional Software and Services performance obligations of $748 million to reflect the incremental three-years of services.
Payment terms on system contracts are typically tied to implementation milestones associated with progress on contracts, while revenue recognition is over time based on a cost-to-cost method of measuring performance. The Company may recognize a Contract asset or Contract liability, depending on whether revenue has been recognized in excess of billings or billings in excess of revenue. Services contracts are typically billed in advance, generating Contract liabilities until the Company has performed the services. The Company does not record a financing component to contracts when it expects, at contract inception, that the period between the transfer of a promised good or service and related payment terms are less than a year.
9
Contract Balances
| (In millions) | June 29, 2024 | December 31, 2023 | |||||||||||||||||||||
| Accounts receivable, net | $ | $ | |||||||||||||||||||||
| Contract assets | |||||||||||||||||||||||
| Contract liabilities | |||||||||||||||||||||||
| Non-current contract liabilities | |||||||||||||||||||||||
Revenue recognized during the three months ended June 29, 2024 which was previously included in Contract liabilities as of March 30, 2024 was $553 million, compared to $502 million of revenue recognized during the three months ended July 1, 2023 which was previously included in Contract liabilities as of April 1, 2023. Revenue recognized during the six months ended June 29, 2024 which was previously included in Contract liabilities as of December 31, 2023 was $908 million, compared to $824 million recognized during the six months ended July 1, 2023 which was previously included in Contract liabilities as of December 31, 2022. Revenue of $11 million was reversed during the three months ended June 29, 2024 related to performance obligations satisfied, or partially satisfied, in previous periods, compared to $10 million of reversals for the three months ended July 1, 2023, primarily driven by changes in the estimates of progress on system contracts. Revenue of $18 million was reversed during the six months ended June 29, 2024 related to performance obligations satisfied or partially satisfied, in previous periods, primarily driven by changes in the estimates of progress on system contracts, compared to $15 million of reversals for the six months ended July 1, 2023.
There were no
Contract Cost Balances
| (In millions) | June 29, 2024 | December 31, 2023 | |||||||||||||||||||||
| Current contract cost assets | $ | $ | |||||||||||||||||||||
| Non-current contract cost assets | |||||||||||||||||||||||
Amortization of contract cost assets was $12 million and $25 million for the three and six months ended June 29, 2024, respectively, and $16 million and $35 million for the three and six months ended July 1, 2023, respectively.
3. Leases
Components of Lease Expense
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (in millions) | June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | |||||||||||||||||||
| Lease expense: | |||||||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||
| Variable cost | |||||||||||||||||||||||
| Sublease income | ( | ( | ( | ( | |||||||||||||||||||
| Net lease expense from operating leases | $ | $ | $ | $ | |||||||||||||||||||
Lease Assets and Liabilities
| (in millions) | Statement Line Classification | June 29, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Right-of-use lease assets | Operating lease assets | $ | $ | |||||||||||||||||||||||
| Accrued liabilities | ||||||||||||||||||||||||||
| Operating lease liabilities | Operating lease liabilities | |||||||||||||||||||||||||
10
Other Information Related to Leases
| Six Months Ended | |||||||||||||||||
| (in millions) | June 29, 2024 | July 1, 2023 | |||||||||||||||
| Supplemental cash flow information: | |||||||||||||||||
| Net cash used for operating activities related to operating leases | $ | $ | |||||||||||||||
| Right-of-use assets obtained in exchange for lease liabilities | |||||||||||||||||
During the six months ended June 29, 2024, the Company recorded $80 million of assets obtained in exchange for lease liabilities due to an assumption that it is reasonably certain that renewal options will be extended on its radio tower site leases operated within the Airwave radio network, consistent with the UK Home Office's notice of contract extension pursuant to their Deferred National Shutdown Notice through December 31, 2029.
| June 29, 2024 | December 31, 2023 | ||||||||||
| Weighted average remaining lease terms (years) | |||||||||||
| Weighted average discount rate: | % | % | |||||||||
Future Lease Payments
| June 29, 2024 | |||||||||||||||||
| (in millions) | Operating Leases | ||||||||||||||||
| Remainder of 2024 | $ | ||||||||||||||||
| 2025 | |||||||||||||||||
| 2026 | |||||||||||||||||
| 2027 | |||||||||||||||||
| 2028 | |||||||||||||||||
| Thereafter | |||||||||||||||||
| Total lease payments | |||||||||||||||||
| Less: interest | |||||||||||||||||
| Present value of lease liabilities | $ | ||||||||||||||||
4. Other Financial Data
Statements of Operations Information
Other Charges
Other charges included in Operating earnings consist of the following:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Other charges: | |||||||||||||||||||||||
| Intangibles amortization (Note 15) | $ | $ | $ | $ | |||||||||||||||||||
| Reorganization of business (Note 14) | |||||||||||||||||||||||
| Operating lease asset impairments | |||||||||||||||||||||||
| Acquisition-related transaction fees | |||||||||||||||||||||||
| Environmental reserve expense | |||||||||||||||||||||||
| Legal settlements | |||||||||||||||||||||||
| Fixed asset impairments | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| $ | $ | $ | |||||||||||||||||||||
11
Other Income (Expense)
Interest expense, net, and Other both included in Other income (expense), consist of the following:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Interest income (expense), net: | |||||||||||||||||||||||
| Interest expense | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Interest income | |||||||||||||||||||||||
| $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Other, net: | |||||||||||||||||||||||
| Net periodic pension and postretirement benefit (Note 8) | $ | $ | $ | $ | |||||||||||||||||||
| Loss from the extinguishment of Silver Lake Convertible Debt (Note 5) | ( | ||||||||||||||||||||||
| Investment impairments | ( | ( | ( | ||||||||||||||||||||
| Foreign currency gain (loss) | ( | ( | |||||||||||||||||||||
| Gain (loss) on derivative instruments (Note 6) | ( | ( | |||||||||||||||||||||
| Gain on equity method investments | |||||||||||||||||||||||
| Fair value adjustments to equity investments | ( | ( | |||||||||||||||||||||
| Assessments on uncertain tax positions | ( | ( | |||||||||||||||||||||
| Other | ( | ||||||||||||||||||||||
| $ | $ | ( | |||||||||||||||||||||
Earnings Per Common Share
Basic and diluted earnings per common share from net earnings attributable to Motorola Solutions, Inc. are computed as follows:
| Amounts attributable to Motorola Solutions, Inc. common stockholders | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
Basic earnings per common share: | |||||||||||||||||||||||
Earnings | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Per share amount | $ | $ | $ | $ | |||||||||||||||||||
Diluted earnings per common share: | |||||||||||||||||||||||
Earnings | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Add effect of dilutive securities: | |||||||||||||||||||||||
| Share-based awards | |||||||||||||||||||||||
Silver Lake Convertible Debt | |||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||
| Per share amount | $ | $ | $ | $ | |||||||||||||||||||
12
In the computation of diluted earnings per common share for the three months ended June 29, 2024, 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 six months ended June 29, 2024, a total of 0.5 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) were excluded from the computation of diluted earnings per common share because their inclusion would have been antidilutive. In addition, 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 and six months ended July 1, 2023, the assumed exercise of 0.3 0.2
Balance Sheet Information
Accounts Receivable, Net
Accounts receivable, net, consists of the following:
| June 29, 2024 | December 31, 2023 | ||||||||||
| Accounts receivable | $ | $ | |||||||||
| Less allowance for credit losses | ( | ( | |||||||||
| $ | $ | ||||||||||
Inventories, Net
Inventories, net, consist of the following:
| June 29, 2024 | December 31, 2023 | ||||||||||
| Finished goods | $ | $ | |||||||||
| Work-in-process and production materials | |||||||||||
| Less inventory reserves | ( | ( | |||||||||
| $ | $ | ||||||||||
Other Current Assets
Other current assets consist of the following:
| June 29, 2024 | December 31, 2023 | ||||||||||
| Current contract cost assets (Note 2) | $ | $ | |||||||||
| Contractor receivables | |||||||||||
| Tax-related deposits | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
13
Property, Plant and Equipment, Net
Property, plant and equipment, net, consist of the following:
| June 29, 2024 | December 31, 2023 | ||||||||||
| Land | $ | $ | |||||||||
| Leasehold improvements | |||||||||||
| Machinery and equipment | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| $ | $ | ||||||||||
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 Sheet and recognized an impairment loss of $24 million on the exit of these video manufacturing operations within Other charges in the Consolidated Statement 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 June 29, 2024 and July 1, 2023 was $47 million and $44 million, respectively. Depreciation expense for the six months ended June 29, 2024 and July 1, 2023 was $90 million and $87 million, respectively.
Investments
Investments consist of the following:
| June 29, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Common stock | $ | $ | |||||||||||||||||||||
| Strategic investments | |||||||||||||||||||||||
| Company-owned life insurance policies | |||||||||||||||||||||||
| Equity method investments | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
During the six months ended June 29, 2024, the Company recognized a loss of $13 million in Other income (expense) within the Condensed Consolidated Statement of Operations related to a decrease in the fair value of its investment in Evolv Technologies, Inc. During the six months ended June 29, 2024, the Company recorded a $3 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
| June 29, 2024 | December 31, 2023 | ||||||||||
| Defined benefit plan assets | $ | $ | |||||||||
| Non-current contract cost assets (Note 2) | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
14
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 $30 million and $35 million as of June 29, 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:
| June 29, 2024 | December 31, 2023 | ||||||||||
| Compensation | $ | $ | |||||||||
| Tax liabilities | |||||||||||
| Dividend payable | |||||||||||
| Trade liabilities | |||||||||||
| Operating lease liabilities (Note 3) | |||||||||||
| Customer reserves | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
Other Liabilities
Other liabilities consist of the following:
| June 29, 2024 | December 31, 2023 | ||||||||||
| Defined benefit plans (Note 8) | $ | $ | |||||||||
| Non-current contract liabilities (Note 2) | |||||||||||
| Unrecognized tax benefits (Note 7) | |||||||||||
| Deferred income taxes (Note 7) | |||||||||||
| Environmental reserve | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
Stockholders’ Equity
Share Repurchase Program: During the three and six months ended June 29, 2024, the Company repurchased approximately 0.2 million and 0.3 million shares at an average price of $348.19 and $336.57 per share for an aggregate amount of $71 million and $110 million, respectively.
Payment of Dividends: During the three months ended June 29, 2024 and July 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 $164 million in cash dividends to holders of its common stock. During the six months ended June 29, 2024 and July 1, 2023, the Company paid $326 million and $296 million, respectively, in cash dividends to holders of its common stock.
15
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 six months ended June 29, 2024 and July 1, 2023:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Foreign Currency Translation Adjustments: | |||||||||||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Other comprehensive income (loss) before reclassification adjustment | ( | ( | |||||||||||||||||||||
| Tax benefit (expense) | ( | ||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | ( | ( | |||||||||||||||||||||
| Other comprehensive income attributable to noncontrolling interests, net of tax | — | — | |||||||||||||||||||||
| Balance at end of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Derivative instruments: | |||||||||||||||||||||||
| Balance at beginning of period | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Other comprehensive income before reclassification adjustment | |||||||||||||||||||||||
| Other comprehensive income before reclassification adjustment, net of tax | |||||||||||||||||||||||
| Other comprehensive income, net of tax | $ | $ | $ | $ | |||||||||||||||||||
| Balance at end of period | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Defined Benefit Plans: | |||||||||||||||||||||||
| Balance at beginning of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Reclassification adjustment - Actuarial net losses into Other income (Note 8) | |||||||||||||||||||||||
| Reclassification adjustment - Prior service benefits into Other income (Note 8) | |||||||||||||||||||||||
| Tax expense | ( | ( | ( | ( | |||||||||||||||||||
| Reclassification adjustments into Net earnings, net of tax | |||||||||||||||||||||||
| Other comprehensive income, net of tax | |||||||||||||||||||||||
| Balance at end of period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Total Accumulated other comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
16
5. Debt and Credit Facilities
| June 29, 2024 | December 31, 2023 | ||||||||||
| $ | $ | ||||||||||
| Adjustments for unamortized gains on interest rate swap terminations | ( | ( | |||||||||
| Less: current portion | ( | ( | |||||||||
| Long-term debt | $ | $ | |||||||||
On September 5, 2019, the Company entered into an agreement with Silver Lake Partners to issue $1.0 billion of 1.75 % senior convertible notes which were scheduled to mature in September 2024 (the "Silver Lake Convertible Debt"), which became fully convertible on September 5, 2021. 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. The repurchase of the Silver Lake Convertible Debt was accounted for as an extinguishment of debt, as the repurchase was negotiated under economically favorable terms outside of the original contractual conversion rate. A loss on the extinguishment of $585 million was recorded, representing the excess of amounts repurchased over the carrying value of debt of $593 million, offset by accrued interest of $8 million. The loss on the extinguishment of debt was recorded within Other Income (Expense) in the Condensed Consolidated Statements of Operations during the six months ended June 29, 2024.
On March 25, 2024, the Company issued $400 million of 5.0 % senior notes due 2029 and $900 million of 5.4 % senior notes due 2034. The Company recognized net proceeds of $1.3 billion after debt issuance costs and discounts. A portion of proceeds from the issuance of these notes was used to repurchase the $1.0 billion aggregate principal amount of the Silver Lake Convertible Debt in the first quarter of 2024.
As of June 29, 2024, $252 million of 7.5 % debentures due 2025, which mature in May 2025, were reclassified from Long-term debt to the Current portion of long-term debt statement line within the Company's Condensed Consolidated Balance Sheets, as the debentures mature within the next twelve months.
As of June 29, 2024, the Company had a $2.25 billion syndicated, unsecured revolving credit facility scheduled to mature in March 2026 (the "2021 Motorola Solutions Credit Agreement"). The 2021 Motorola Solutions Credit Agreement includes a letter of credit sub-limit and fronting commitments of $450 million. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the Secured Overnight Financing Rate (SOFR), at the Company's option. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if the Company's credit rating changes. The Company must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2021 Motorola Solutions Credit Agreement. The Company was in compliance with its financial covenants as of June 29, 2024.
The Company has an unsecured commercial paper program, backed by the 2021 Motorola Solutions Credit Agreement, under which the Company may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $2.2 billion outstanding at any one time. Proceeds from the issuances of the notes are expected to be used for general corporate purposes. The notes are issued at a zero-coupon rate and are issued at a discount which reflects the interest component. At maturity, the notes are paid back in full including the interest component. The notes are not redeemable prior to maturity. As of June 29, 2024 the Company had no outstanding debt under the commercial paper program.
17
6. Risk Management
Foreign Currency Risk
The Company had outstanding foreign exchange contracts with notional amounts totaling $1.2 billion and $1.3 billion for the periods ended June 29, 2024 and December 31, 2023, respectively. The Company does not believe these financial instruments should subject it to undue risk due to foreign exchange movements because gains and losses on these contracts should generally offset gains and losses on the underlying assets, liabilities and transactions.
The following table shows the five
| Notional Amount | |||||||||||
| Net Buy (Sell) by Currency | June 29, 2024 | December 31, 2023 | |||||||||
| Euro | $ | $ | |||||||||
| Australian dollar | ( | ( | |||||||||
| British pound | |||||||||||
| Canadian dollar | |||||||||||
| Chinese renminbi | ( | ( | |||||||||
Counterparty Risk
The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of non-performance by counterparties. However, the Company’s risk is limited to the fair value of the instruments when the derivative is in an asset position. The Company actively monitors its exposure to credit risk. As of June 29, 2024, all of the counterparties had investment grade credit ratings. As of June 29, 2024, the Company had $5 million of exposure to aggregate credit risk with all counterparties.
Derivative Financial Instruments
The following tables summarize the fair values and locations in the Condensed Consolidated Balance Sheets of all derivative financial instruments held by the Company as of June 29, 2024 and December 31, 2023:
| Fair Values of Derivative Instruments | |||||||||||
| June 29, 2024 | Other Current Assets | Accrued Liabilities | |||||||||
| Derivatives designated as hedging instruments: | |||||||||||
| Foreign exchange contracts | $ | $ | |||||||||
| Derivatives not designated as hedging instruments: | |||||||||||
| Foreign exchange contracts | |||||||||||
| Equity swap contracts | |||||||||||
| Total derivatives | $ | $ | |||||||||
| Fair Values of Derivative Instruments | |||||||||||
| December 31, 2023 | Other Current Assets | Accrued Liabilities | |||||||||
| Derivatives designated as hedging instruments: | |||||||||||
| Foreign exchange contracts | $ | $ | |||||||||
| Treasury rate lock | |||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||
| Foreign exchange contracts | |||||||||||
| Equity swap contracts | |||||||||||
| Total derivatives | $ | $ | |||||||||
18
The following table summarizes the effect of derivatives on the Company's condensed consolidated financial statements for the three and six months ended June 29, 2024 and July 1, 2023:
| Financial Statement Location | Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
| Foreign Exchange Contracts | June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||||
| Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
| Foreign exchange contracts | Accumulated other comprehensive income (loss) | $ | $ | ( | $ | $ | ( | |||||||||||||||||||
| Forward points recognized | Other income (expense) | |||||||||||||||||||||||||
| Treasury rate lock | Accumulated other comprehensive income (loss) | |||||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||||
| Foreign exchange contracts | Other income (expense) | $ | ( | $ | $ | ( | $ | |||||||||||||||||||
| Equity swap contracts | Selling, general and administrative expenses | |||||||||||||||||||||||||
Net Investment Hedges
The Company uses foreign exchange forward contracts to hedge against the effect of the British pound and the Euro exchange rate fluctuations against the U.S. dollar on a portion of its net investments in certain European operations. The Company recognizes changes in the fair value of the net investment hedges as a component of foreign currency translation adjustments within other comprehensive income to offset a portion of the change in translated value of the net investments being hedged, until the investments are sold or liquidated. As of June 29, 2024, the Company had €100 million of net investment hedges in certain Euro functional subsidiaries and £60 million of net investment hedges in a British pound functional subsidiary.
The Company excludes the difference between the spot rate and the forward rate of the forward contract from its assessment of hedge effectiveness. The effect of the forward points recognized will be amortized on a straight-line basis and recognized through interest expense within Other income (expense) in the Condensed Consolidated Statement of Operations.
Equity Swap Contracts
The Company uses equity swap contracts which serve as economic hedges against volatility within the equity markets, impacting the Company's deferred compensation plan obligations. These contracts are not designated as hedges for accounting purposes. Unrealized gains and losses on these contracts are included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. The notional amount of these contracts as of June 29, 2024 was $18 million.
Treasury Rate Lock
In 2023, the Company entered into treasury rate agreements which locked in the interest rate for $200 million in future debt issuances. The treasury rate lock agreements were designated and qualified as cash flow hedges. During the six months ended June 29, 2024, the Company issued $900 million of 5.4 % senior notes due 2034 (the "2034 notes"). The treasury rate lock agreements were terminated upon the issuance of the 2034 notes for a net settlement loss of $8 million. The accumulated loss recorded in Accumulated Other Comprehensive Income (AOCI) will be reclassified to interest expense on a straight-line basis over the 10-year term of such senior notes.
19
7. Income Taxes
At the end of each interim reporting period, the Company makes an estimate of its annual effective income tax rate. Tax expense in interim periods is calculated at the estimated annual effective tax rate plus or minus the tax effects of items of income and expense that are discrete to the period. The estimate used in providing for income taxes on a year-to-date basis may change in subsequent interim periods.
The following table provides details of income taxes:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Net earnings before income taxes | $ | $ | $ | $ | |||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Effective tax rate | % | % | % | % | |||||||||||||||||||
The effective tax rate for the three months ended June 29, 2024 of 23 % was higher than the U.S. federal statutory tax rate of 21% primarily due to state tax expense, offset by tax benefits recognized upon settlement of audits with taxing authorities in foreign jurisdictions and excess tax benefits of share-based compensation. The effective tax rate for the six months ended June 29, 2024 of 17 % was lower than the U.S. federal statutory tax rate of 21% primarily due to the tax benefit recognized upon the Company's decision to implement a business initiative in 2024 which allows for additional utilization of foreign tax credit carryforwards and a higher foreign derived intangible income deduction on its 2023 U.S. tax return, and excess tax benefits of share-based compensation, offset by the non-tax deductible loss on the extinguishment of the Silver Lake Convertible Debt in the first quarter of 2024 and state tax expense.
The effective tax rate for each of the three and six months ended July 1, 2023 of 23
The effective tax rate for the three months ended June 29, 2024 of 23 % was equal to the effective tax rate for the three months ended July 1, 2023 of 23 %, primarily due to tax benefits recognized upon settlement of audits with taxing authorities in foreign jurisdictions in 2024, offset by lower excess tax benefits of share-based compensation in 2024. The effective tax rate for the six months ended June 29, 2024 of 17 % was lower than the effective tax rate for the six months ended July 1, 2023 of 23 %, primarily due to the tax benefit recognized upon the Company's decision to implement a business initiative in 2024 which allows for additional utilization of additional foreign tax credit carryforwards and a higher foreign derived intangible income deduction on its 2023 U.S. tax return as a result of the Company's decision to implement a business initiative in 2024, offset by the non-tax deductible loss on the extinguishment of Silver Lake Convertible Debt in 2024.
8. Retirement and Other Employee Benefits
Pension and Postretirement Health Care Benefits Plans
The net periodic benefits for Pension and Postretirement Health Care Benefits Plans were as follows:
| U.S. Pension Benefit Plans | Non-U.S. Pension Benefit Plans | Postretirement Health Care Benefits Plan | |||||||||||||||||||||||||||||||||
| Three Months Ended | June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | |||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Amortization of: | |||||||||||||||||||||||||||||||||||
| Unrecognized net loss | |||||||||||||||||||||||||||||||||||
| Unrecognized prior service cost | |||||||||||||||||||||||||||||||||||
| Net periodic pension cost (benefits) | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||
20
| U.S. Pension Benefit Plans | Non-U.S. Pension Benefit Plans | Postretirement Health Care Benefits Plan | |||||||||||||||||||||||||||||||||
| Six Months Ended | June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | |||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Amortization of: | |||||||||||||||||||||||||||||||||||
| Unrecognized net loss | |||||||||||||||||||||||||||||||||||
| Unrecognized prior service cost (benefit) | ( | ||||||||||||||||||||||||||||||||||
| Net periodic pension cost (benefits) | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||
9. Share-Based Compensation Plans
Compensation expense for the Company’s share-based plans was as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Share-based compensation expense included in: | |||||||||||||||||||||||
| Costs of sales | $ | $ | $ | $ | |||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Research and development expenditures | |||||||||||||||||||||||
| Share-based compensation expense included in Operating earnings | |||||||||||||||||||||||
| Tax benefit | ( | ( | ( | ( | |||||||||||||||||||
| Share-based compensation expense, net of tax | $ | $ | $ | $ | |||||||||||||||||||
| Decrease in basic earnings per share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Decrease in diluted earnings per share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
During the six months ended June 29, 2024, the Company granted 0.5 million RSUs, 0.1 million performance stock units (PSUs) and 0.04 million market stock units (MSUs) with an aggregate grant-date fair value of $174 million, $25 million and $14 million, respectively, and 0.1 million stock options and 0.1 million performance options (POs) with an aggregate grant-date fair value of $8 million and $14 million, respectively. The share-based compensation expense will generally be recognized over the vesting period of three years .
10. Fair Value Measurements
The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of June 29, 2024 and December 31, 2023 were as follows:
| June 29, 2024 | Level 1 | Level 2 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Foreign exchange derivative contracts | $ | $ | $ | ||||||||||||||||||||
| Equity swap contracts | |||||||||||||||||||||||
| Common stock | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign exchange derivative contracts | $ | $ | $ | ||||||||||||||||||||
21
| December 31, 2023 | Level 1 | Level 2 | Total | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Foreign exchange derivative contracts | $ | $ | $ | ||||||||||||||||||||
| Equity swap contracts | |||||||||||||||||||||||
| Common stock | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign exchange derivative contracts | $ | $ | $ | ||||||||||||||||||||
| Treasury rate lock | |||||||||||||||||||||||
The Company had no
At June 29, 2024 and December 31, 2023, the Company had $577 million and $863 million, respectively, of investments in money market government and U.S. treasury funds classified (Level 1) as Cash and cash equivalents in its Condensed Consolidated Balance Sheets. The money market funds had quoted market prices that are equivalent to par.
Using quoted market prices and market interest rates, the fair value of the Company's long-term debt as of June 29, 2024 was $6.0 billion. The fair value of long-term debt at December 31, 2023 was $6.4 billion, of which the Silver Lake Convertible Debt was $1.6 billion (Level 2).
All other financial instruments are carried at cost, which is not materially different from the instruments’ fair values.
11. Sales of Receivables
Sales of Receivables
The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three and six months ended June 29, 2024 and July 1, 2023:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Long-term receivables sales proceeds | |||||||||||||||||||||||
22
12. Commitments and Contingencies
Legal Matters
Hytera Litigation
On March 14, 2017, the Company filed a complaint in the U.S. District Court for the Northern District of Illinois (the "District Court") against Hytera Communications Corporation Limited of Shenzhen, China; Hytera America, Inc.; and Hytera Communications America (West), Inc. (collectively, "Hytera"), alleging trade secret theft and copyright infringement and seeking, among other things, injunctive relief, compensatory damages and punitive damages. On February 14, 2020, the Company announced that a jury decided in the Company's favor in its trade secret theft and copyright infringement case. In connection with this verdict, the jury awarded the Company $345.8 million in compensatory damages and $418.8 million in punitive damages, for a total of $764.6 million. In a series of post-trial rulings in 2021, the District Court subsequently reduced the judgment to $543.7 million, but also ordered Hytera to pay the Company $51.1 million in pre-judgment interest and $2.6 million in costs, as well as $34.2 million in attorneys fees. The Company continues to seek collection of the judgment through the ongoing legal process.
On December 17, 2020, the District Court held that Hytera must pay the Company a forward-looking reasonable royalty on products that use the Company’s stolen trade secrets, and on December 15, 2021, set royalty rates for Hytera's sale of relevant products from July 1, 2019 forward. On July 5, 2022, the District Court ordered that Hytera pay into a third-party escrow on July 31, 2022, the royalties owed to the Company based on the sale of relevant products from July 1, 2019 to June 30, 2022. Hytera failed to make the required royalty payment on July 31, 2022. On August 1, 2022, Hytera filed a motion to modify or stay the District Court's previous July 5, 2022 royalty order, which the District Court denied on July 11, 2023. On August 3, 2022, the Company filed a motion seeking to hold Hytera in civil contempt for violating the royalty order by not making the required royalty payment on July 31, 2022. On August 26, 2023, the District Court granted the Company's contempt motion. As a result, on September 1, 2023, Hytera made a payment of $56 million into the third-party escrow. In addition to the September 1, 2023 payment of $56 million, Hytera has made de minimis regular quarterly royalty payments into the third-party escrow from October 2022 through July 2024. The aggregate amount paid into escrow will not be recognized until all contingencies are resolved and such amount is released from escrow.
Following the February 14, 2020 verdict and judgment in the Company's favor, Hytera appealed to the U.S. Court of Appeals for the Seventh Circuit (the "Court of Appeals"), seeking review of the orders related to the jury's verdict as well as the District Court's royalty order. The Company filed its cross-appeal on August 5, 2022. The Court of Appeals heard oral arguments on December 5, 2023, and issued its decision on July 2, 2024. The Court of Appeals affirmed the District Court's award of $407.4 million in damages, including exemplary damages, under the Defend Trade Secrets Act. The Court of Appeals also directed the District Court to recalculate and reduce its award of $136.3 million in copyright infringement damages, and instructed the District Court to reconsider its denial of the Company's request for an injunction. In all other respects, the Court of Appeals affirmed the judgment of the District Court.
In the first half of 2024, the parties engaged in competing litigation in the District Court and a court in Shenzhen, China (originally filed by Hytera in June 2022 and not served upon the Company until November 2023) related to the possible continued use by Hytera of the Company’s trade secrets in Hytera’s currently shipping products. On April 2, 2024, the District Court held Hytera in civil contempt, and issued a worldwide sales injunction of certain Hytera products and a daily fine, for Hytera's failure to withdraw its competing litigation in China. On April 16, 2024, the Court of Appeals granted Hytera's motion for an emergency stay of the contempt sanctions, to allow the Court of Appeals to review the District Court's various orders related to the competing litigation and contempt sanctions. The District Court has scheduled hearings in August 2024 concerning whether Hytera's currently shipping products continue to misuse the Company's trade secrets and copyrighted source code.
23
13. Segment Information
Net Sales by Segment
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Products and Systems Integration | $ | $ | $ | $ | |||||||||||||||||||
| Software and Services | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
Operating Earnings by Segment
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Products and Systems Integration | $ | $ | $ | $ | |||||||||||||||||||
| Software and Services | |||||||||||||||||||||||
| Operating earnings | |||||||||||||||||||||||
| Total other expense | ( | ( | ( | ( | |||||||||||||||||||
| Earnings before income taxes | $ | $ | $ | $ | |||||||||||||||||||
14. Reorganization of Business
2024 Charges
During the three months ended June 29, 2024, the Company recorded net reorganization of business charges of $4 million, consisting of $4 million of charges in Other charges in the Company's Condensed Consolidated Statements of Operations. Included in the $4 million were charges of $10 million related to employee separation costs, partially offset by $2 million of reversals for employee separation accruals and $4 million of reversals for exit cost accruals that are no longer needed.
During the six months ended June 29, 2024, the Company recorded net reorganization of business charges of $14 million, including $11 million of charges in Other charges and $3 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $14 million were charges of $22 million related to employee separation costs, partially offset by $4 million of reversals for exit cost accruals no longer needed and $4 million of reversals for employee separation accruals no longer needed.
The following table displays the net charges incurred by segment:
| June 29, 2024 | Three Months Ended | Six Months Ended | |||||||||
| Products and Systems Integration | $ | $ | |||||||||
| Software and Services | ( | ||||||||||
| $ | $ | ||||||||||
Reorganization of Businesses Accruals
| January 1, 2024 | Additional Charges | Adjustments | Amount Used | June 29, 2024 | |||||||||||||||||||||||||
| Employee separation costs | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
| Exit costs | ( | ||||||||||||||||||||||||||||
| $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
Exit Costs
At January 1, 2024, the Company had an accrual of $5 million for exit costs, related to the Company's exit of the Emergency Service Network contract with the UK Home Office. During the three months ended June 29, 2024, the Company recorded a $4 million reversal for accruals no longer needed. The $1 million of exit costs are recorded in Accrued liabilities in the Company's Condensed Consolidated Balance Sheets at June 29, 2024, and are expected to be paid within one year.
24
Employee Separation Costs
At January 1, 2024, the Company had an accrual of $23 million for employee separation costs. The 2024 additional charges of $22 million represent severance costs for approximately 315 employees. The adjustment of $4 million reflects reversals for accruals no longer needed. The $17 million used reflects cash payments to severed employees. The remaining accrual of $24 million, which is included in Accrued liabilities in the Company’s Condensed Consolidated Balance Sheets at June 29, 2024, is expected to be paid, primarily within one year, to approximately 530 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments.
2023 Charges
During the three months ended July 1, 2023, the Company recorded net reorganization of business charges of $3 million, including $5 million of charges in Other charges and $2 million of reversals in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $3 million were charges of $9 million related to employee separation costs, partially offset by $5 million of reversals for exit cost accruals no longer needed and $1 million of reversals for employee separation accruals no longer needed.
During the six months ended July 1, 2023, the Company recorded net reorganization of business charges of $16 million, including $12 million of charges in Other charges and $4 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $16 million were charges of $24 million related to employee separation costs, partially offset by $5 million of reversals for exit cost accruals no longer needed and $3 million of reversals for employee separation accruals no longer needed.
The following table displays the net charges incurred by segment:
| July 1, 2023 | Three Months Ended | Six Months Ended | |||||||||
| Products and Systems Integration | $ | $ | |||||||||
| Software and Services | ( | ( | |||||||||
| $ | $ | ||||||||||
15. Intangible Assets and Goodwill
Subsequent to the quarter end, on July 1, 2024, the Company acquired Noggin, a global provider of CEM software for $91 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $19 million to certain key employees that will be expensed over a service period of three years . This acquisition enhances the Company's portfolio by adding operational resilience and CEM capabilities, which helps enterprises and critical infrastructure anticipate, prepare for and efficiently respond to incidents. The business is part of the Software and Services segment. Due to the timing of the acquisition, the initial accounting for the acquisition is incomplete. As such, the Company is not able to disclose certain information relating to the acquisition, including the preliminary fair value of assets acquired and liabilities assumed.
Subsequent to the quarter end, on July 1, 2024, the Company acquired a company that provides vehicle location and management solutions for $132 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $3 million to certain key employees that will be expensed over a service period of three years . The acquisition expands the Company's video solutions within the Software and Services segment. Due to the timing of the acquisition, the initial accounting for the acquisition is incomplete. As such, the Company is not able to disclose certain information relating to the acquisition, including the preliminary fair value of assets acquired and liabilities assumed.
On February 13, 2024, the Company acquired Silent Sentinel, a provider of specialized, long-range cameras, for $37 million, net of cash acquired. This acquisition complements the Company's portfolio of fixed video cameras, expanding its footprint with government and critical infrastructure customers, and strengthens the Company's position as a global leader in end-to-end video security solutions. The Company recognized $15 million of goodwill and $22 million of identifiable intangible assets. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $1 million of trade names, $10 million of customer relationships and $11 million of developed technology and will be amortized over a period of , and ten years , respectively. The business is a part of the Products and Systems Integration segment. The purchase accounting is not yet complete and as such, the final allocation among income tax accounts, intangible assets and goodwill may be subject to change.
25
On December 15, 2023, the Company acquired IPVideo, the creator of the HALO Smart Sensor, for $170 million, net of cash acquired. The transaction also includes the potential for the Company to make contingent earn-out payments of up to $15 million based on IPVideo's achievement of certain financial targets from January 1, 2024 through December 31, 2024. As of the acquisition date, the Company estimated the fair value of the contingent earn-out to be $2 million, which is included in the purchase price. In addition, the Company issued restricted stock at a fair value of $5 million to certain key employees that will be expensed over a service period of one year . The HALO Smart Sensor is a multifunctional safety and security device with built-in vape detection and air quality monitoring, gunshot detection, abnormal noise and motion detection and emergency keyword detection. This acquisition adds sensor technology to the Company's physical security portfolio. The Company recognized $98 million of goodwill, $83 million of identifiable intangible assets and $11 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $8 million of trade names, $6 million of customer relationships and $69 million of developed technology and will be amortized over a period of , and fifteen years , respectively. The business is part of the Products and Systems Integration segment. The purchase accounting is not yet complete and as such, the final allocation among income tax accounts, intangible assets, net liabilities and goodwill may be subject to change.
Intangible Assets
| June 29, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||
| Developed technology | $ | $ | $ | $ | |||||||||||||||||||
| Customer-related | |||||||||||||||||||||||
| Other intangibles | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
Amortization expense on intangible assets was $36 million and $76 million for the three and six months ended June 29, 2024, respectively. Amortization expense on intangible assets was $43 million and $98 million for the three and six months ended July 1, 2023, respectively. As of June 29, 2024, annual amortization expense is estimated to be $147 million in 2024, $134 million in 2025, $125 million in 2026, $115 million in 2027, $114 million in 2028 and $103 million in 2029.
Amortized intangible assets were comprised of the following by segment:
| June 29, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||
| Products and Systems Integration | $ | $ | $ | $ | |||||||||||||||||||
| Software and Services | |||||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
Goodwill
The Company performed its annual assessment of goodwill for impairment as of the last day of the third quarter. The following table displays a roll-forward of the carrying amount of goodwill by segment from January 1, 2024 to June 29, 2024:
| Products and Systems Integration | Software and Services | Total | |||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | ||||||||||||||
| Goodwill acquired | |||||||||||||||||
| Purchase accounting adjustments | ( | ( | |||||||||||||||
| Foreign currency | ( | ( | |||||||||||||||
| Balance as of June 29, 2024 | $ | $ | $ | ||||||||||||||
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This commentary should be read in conjunction with the condensed consolidated financial statements and related notes thereto of Motorola Solutions, Inc. (“Motorola Solutions,” the “Company,” “we,” “our,” or “us”) for the three and six months ended June 29, 2024 and July 1, 2023, as well as our consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "Form 10-K").
Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q for the quarter ended June 29, 2024 (this “Form 10-Q”) which are not historical in nature are 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,” “aims,” “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 Form 10-Q. Some of these risks and uncertainties include, but are not limited to, those discussed in Part I, Item 1A “Risk Factors” of the Form 10-K, and those described elsewhere in our other SEC filings. Forward-looking statements include, but are not limited to, statements included in: (1) “Management's Discussion and Analysis of Financial Condition and Results of Operations,” about: (a) the impact of the United Kingdom's Competition and Markets Authority's legal order regarding Airwave (including our actions in response); (b) the impact of our proceedings in the UK High Court regarding the notice of contract extension from the UK Home Office relating to Airwave; (c) the impact of acquisitions on our business; (d) the return of capital to shareholders through dividends and/or repurchasing shares; (e) the impact and success of our business strategy and portfolio; (f) future payments, charges, and use of accruals associated with our reorganization of business programs and employee separation costs; (g) expected payments of exit costs related to our exit of the Emergency Services Network ("ESN") contract with the UK Home Office; (h) our ability and cost to repatriate funds; (i) the liquidity of our investments; (j) our ability and cost to access the capital markets; (k) our ability to borrow under our credit facilities; (l) adequacy of internal resources to generate an adequate amount of cash to meet expected working capital, capital expenditure and cash requirements; (m) future cash flows generated from operations, and future uses of such cash; and (n) the impact of the adoption of accounting pronouncements on our financial results; (2) “Quantitative and Qualitative Disclosures about Market Risk,” about: (a) the impact of foreign currency risk; (b) the impact of interest rate risk; and (c) future hedging activity and expectations of the Company; and (3) “Legal Proceedings,” about the ultimate disposition of legal matters and timing. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except as legally required.
Executive Overview
Business Overview
The Company manages the business organizationally through two segments: “Products and Systems Integration” and “Software and Services." Within these segments the Company has three principal product lines in which the Company reports net sales: Land Mobile Radio Communications (“LMR” or “LMR Communications”), Video Security and Access Control ("Video") and Command Center.
•LMR Communications: Infrastructure, devices (two-way radio and broadband, including both for public safety and professional and commercial radio (PCR)) and software that enable communications, inclusive of installation and integration, backed by services, to assure availability, security and resiliency.
•Video: Cameras (fixed, body-worn, in-vehicle), access control, infrastructure, video management, software and artificial intelligence (AI)-powered analytics that help enable visibility “on scene” and bring attention to what’s important.
•Command Center: Command center solutions and software applications that unify voice, video, data and analytics from public safety agencies, enterprises and the community to create a broad informational view to help simplify workflows and improve the accuracy and speed of decisions.
27
Second Quarter Financial Results
•Net sales were $2.6 billion in the second quarter of 2024 compared to $2.4 billion in the second quarter of 2023.
•Operating earnings were $644 million in the second quarter of 2024 compared to $518 million in the second quarter of 2023.
•Net earnings attributable to Motorola Solutions, Inc. was $443 million, or $2.60 per diluted common share, in the second quarter of 2024, compared to net earnings of $371 million, or $2.15 per diluted common share, in the second quarter of 2023.
•Operating cash flow increased $477 million to $562 million in the first half of 2024 compared to $85 million in the first half of 2023.
•We repurchased $110 million of common stock and paid $326 million in dividends in the first half of 2024.
Recent Events
UK Home Office Update
In October 2021, the Competition and Markets Authority ("CMA") opened a market investigation into the Mobile Radio Network Services market. This investigation included Airwave, our private mobile radio communications network that we acquired in 2016. Airwave provides mission-critical voice and data communications to emergency services and other agencies in Great Britain.
In 2023, the CMA imposed a legal order on Airwave which implemented a prospective price control on Airwave (the "Charge Control"). After the Competition Appeal Tribunal ("CAT") dismissed our appeal of the CMA's final decision on December 22, 2023, we filed an application with the United Kingdom Court of Appeal on February 13, 2024, requesting that it hear our appeal of the CAT judgment. On June 21, 2024, the United Kingdom Court of Appeal ordered a hearing on our application to be held later this year; which was subsequently set for November 11 and 12, 2024. Since August 1, 2023, revenue under the Airwave contract has been recognized in accordance with the Charge Control, and will continue to be unless the United Kingdom Court of Appeal were to reverse the CAT's judgment and overturn the Charge Control.
On March 13, 2024, we received a notice of contract extension (the “Deferred National Shutdown Notice”) from the UK Home Office. The Deferred National Shutdown Notice extends the “national shutdown target date” of the Airwave service from December 31, 2026 to December 31, 2029, at the Charge Control rates.
Our backlog for Airwave services contracted with the UK Home Office through December 31, 2026 was previously reduced by $777 million to align with the Charge Control. In the first quarter of 2024, as a result of the UK Home Office's notice of a contract extension pursuant to their Deferred National Shutdown Notice, we have recorded additional backlog of $748 million to reflect the incremental three years of services. On April 11, 2024, we filed proceedings in the UK High Court challenging the decision of the UK Home Office to issue the Deferred National Shutdown Notice as being in breach of applicable UK procurement and public law. The hearing on this matter has been set to commence on April 22, 2025. The backlog related to the incremental years of service contemplated in the Deferred National Shutdown Notice could change depending on the outcome of the proceedings.
Recent Acquisitions
| Technology | Segment | Acquisition | Description | Purchase Price | Date of Acquisition | ||||||||||||
| Video Security and Access Control | Products and Systems Integration | Silent Sentinel | Provider of specialized, long-range cameras. | $37 million | February 13, 2024 | ||||||||||||
| Video Security and Access Control | Products and Systems Integration | IPVideo | Creator of a multifunctional safety and security device. | $170 million and share-based compensation of $5 million | December 15, 2023 | ||||||||||||
28
Results of Operations
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts) | June 29, 2024 | % of Sales* | July 1, 2023 | % of Sales* | June 29, 2024 | % of Sales* | July 1, 2023 | % of Sales* | |||||||||||||||||||||||||||||||||||||||
| Net sales from products | $ | 1,563 | $ | 1,349 | $ | 2,968 | $ | 2,573 | |||||||||||||||||||||||||||||||||||||||
| Net sales from services | 1,065 | 1,054 | 2,049 | 2,001 | |||||||||||||||||||||||||||||||||||||||||||
| Net sales | 2,628 | 2,403 | 5,017 | 4,574 | |||||||||||||||||||||||||||||||||||||||||||
| Costs of products sales | 653 | 41.8 | % | 636 | 47.1 | % | 1,252 | 42.2 | % | 1,209 | 47.0 | % | |||||||||||||||||||||||||||||||||||
| Costs of services sales | 636 | 59.7 | % | 578 | 54.8 | % | 1,234 | 60.2 | % | 1,130 | 56.5 | % | |||||||||||||||||||||||||||||||||||
| Costs of sales | 1,289 | 1,214 | 2,486 | 2,339 | |||||||||||||||||||||||||||||||||||||||||||
| Gross margin | 1,339 | 51.0 | % | 1,189 | 49.5 | % | 2,531 | 50.4 | % | 2,235 | 48.9 | % | |||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 430 | 16.4 | % | 390 | 16.2 | % | 827 | 16.5 | % | 757 | 16.6 | % | |||||||||||||||||||||||||||||||||||
| Research and development expenditures | 220 | 8.4 | % | 215 | 8.9 | % | 437 | 8.7 | % | 426 | 9.3 | % | |||||||||||||||||||||||||||||||||||
| Other charges | 45 | 1.7 | % | 66 | 2.7 | % | 104 | 2.1 | % | 135 | 3.0 | % | |||||||||||||||||||||||||||||||||||
| Operating earnings | 644 | 24.5 | % | 518 | 21.6 | % | 1,163 | 23.2 | % | 917 | 20.0 | % | |||||||||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | (69) | (2.6) | % | (57) | (2.4) | % | (113) | (2.3) | % | (111) | (2.4) | % | |||||||||||||||||||||||||||||||||||
| Gains on sales of investments and businesses, net | — | — | % | — | — | % | — | — | % | 1 | — | % | |||||||||||||||||||||||||||||||||||
| Other, net | 5 | 0.2 | % | 26 | 1.1 | % | (560) | (11.2) | % | 39 | 0.9 | % | |||||||||||||||||||||||||||||||||||
| Total other expense | (64) | (2.4) | % | (31) | (1.3) | % | (673) | (13.4) | % | (71) | (1.6) | % | |||||||||||||||||||||||||||||||||||
| Net earnings before income taxes | 580 | 22.1 | % | 487 | 20.3 | % | 490 | 9.8 | % | 846 | 18.5 | % | |||||||||||||||||||||||||||||||||||
| Income tax expense | 135 | 5.1 | % | 114 | 4.7 | % | 83 | 1.7 | % | 194 | 4.2 | % | |||||||||||||||||||||||||||||||||||
| Net earnings | 445 | 16.9 | % | 373 | 15.5 | % | 407 | 8.1 | % | 652 | 14.3 | % | |||||||||||||||||||||||||||||||||||
| Less: Earnings attributable to non-controlling interests | 2 | 0.1 | % | 2 | 0.1 | % | 3 | 0.1 | % | 3 | 0.1 | % | |||||||||||||||||||||||||||||||||||
| Net earnings attributable to Motorola Solutions, Inc. | $ | 443 | 16.8 | % | $ | 371 | 15.4 | % | $ | 404 | 8.0 | % | $ | 649 | 14.2 | % | |||||||||||||||||||||||||||||||
| Earnings per diluted common share | $ | 2.60 | $ | 2.15 | $ | 2.37 | $ | 3.76 | |||||||||||||||||||||||||||||||||||||||
* Percentages may not add due to rounding
29
Results of Operations—Three months ended June 29, 2024 compared to three months ended July 1, 2023
The results of operations for the second quarter of 2024 are not necessarily indicative of the operating results to be expected for the full year. Historically, we have experienced higher revenues in the fourth quarter as compared to the rest of the quarters of our fiscal year as a result of the purchasing patterns of our customers.
We use the following U.S. GAAP key financial performance measures to manage our business on a consolidated basis and by reporting segment, and to monitor and assess our results of operations:
•Net sales: a measure of our revenue for the current period.
•Operating earnings: a measure of our earnings from operations, before non-operating expenses and income taxes.
•Operating margins: a measure of our operating earnings as a percentage of total net sales.
Considered together, we believe these measures are strong indicators of our overall performance and our ability to create shareholder value. A discussion of our results of operations and financial condition follows.
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | ||||||||||||||||||||||||||||||||||
| (In millions) | Products and Systems Integration | Software and Services | Total | Products and Systems Integration | Software and Services | Total | |||||||||||||||||||||||||||||
| Net sales by region: | |||||||||||||||||||||||||||||||||||
| North America | $ | 1,245 | $ | 672 | $ | 1,917 | $ | 1,025 | $ | 616 | $ | 1,641 | |||||||||||||||||||||||
| International | 413 | 298 | 711 | 412 | 350 | 762 | |||||||||||||||||||||||||||||
| $ | 1,658 | $ | 970 | $ | 2,628 | $ | 1,437 | $ | 966 | $ | 2,403 | ||||||||||||||||||||||||
Net sales by major products and services: | |||||||||||||||||||||||||||||||||||
| LMR Communications | $ | 1,363 | $ | 578 | $ | 1,941 | $ | 1,150 | $ | 626 | $ | 1,776 | |||||||||||||||||||||||
| Video | 295 | 181 | 476 | 287 | 146 | 433 | |||||||||||||||||||||||||||||
| Command Center | — | 211 | 211 | — | 194 | 194 | |||||||||||||||||||||||||||||
| Total | $ | 1,658 | $ | 970 | $ | 2,628 | $ | 1,437 | $ | 966 | $ | 2,403 | |||||||||||||||||||||||
| Operating earnings | $ | 379 | $ | 265 | $ | 644 | $ | 212 | $ | 306 | $ | 518 | |||||||||||||||||||||||
| Operating margins | 22.9 | % | 27.3 | % | 24.5 | % | 14.8 | % | 31.7 | % | 21.6 | % | |||||||||||||||||||||||
Net Sales
The Products and Systems Integration segment’s net sales represented 63% of our net sales in the second quarter of 2024 and 60% in the second quarter of 2023. The Software and Services segment’s net sales represented 37% of our net sales in the second quarter of 2024 and 40% in the second quarter of 2023.
Net sales increased $225 million, or 9%, in the second quarter of 2024 compared to the second quarter of 2023. The $221 million, or 15%, increase in net sales within the Products and Systems Integration segment was driven by an increase of 21% in the North America region. The $4 million increase in net sales within the Software and Services segment was driven by an increase of 9% in the North America region and partially offset by a decrease of 15% in the International region. Net sales includes:
•an increase in the Products and Systems Integration segment, inclusive of $12 million of revenue from acquisitions, driven by an increase in LMR and Video;
•an increase in the Software and Services segment, inclusive of $1 million of revenue from acquisitions, driven by an increase in Video and Command Center, partially offset by a decrease LMR services due to the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN; and
•inclusive of $5 million from unfavorable currency rates.
Regional results include:
•a 17% increase in the North America region, inclusive of revenue from acquisitions, driven by an increase in LMR, Video and Command Center; and
•a 7% decrease in the International region, inclusive of revenue from acquisitions, driven by a decrease in LMR due to the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN, partially offset by an increase in Video and Command Center.
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Products and Systems Integration
The 15% increase in the Products and Systems Integration segment was driven by the following:
•$213 million, or 19% growth in LMR, driven by the North America and International regions, primarily due to an increase in devices;
•$8 million, or 3% growth in Video, inclusive of revenue from acquisitions, driven by the North America and International regions; and
•inclusive of $2 million from unfavorable currency rates.
Software and Services
The Software and Services segment was flat driven by the following:
•$35 million, or 24% growth in Video, driven by the North America and International regions; and
•$17 million, or 9% growth in Command Center, driven by the North America and International regions; partially offset by
•$48 million, or 8% decrease in LMR, driven by the International region, the revenue reduction on Airwave services in accordance with the Charge Control, and the exit of ESN, partially offset by growth in the North America region; and
•inclusive of $3 million from unfavorable currency rates.
Gross Margin
| Three Months Ended | |||||||||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | % Change | ||||||||||||||
| Gross margin | $ | 1,339 | $ | 1,189 | 13 | % | |||||||||||
Gross margin was 51.0% of net sales in the second quarter of 2024 compared to 49.5% in the second quarter of 2023. The primary drivers of this increase in gross margin as a percentage of net sales were:
•higher gross margin as a percentage of net sales in the Products and Systems Integration segment, inclusive of acquisitions, primarily driven by higher sales and favorable mix; partially offset by
•lower gross margin as a percentage of net sales in the Software and Services segment, inclusive of acquisitions, primarily driven by the revenue reduction on Airwave services in accordance with the Charge Control.
Selling, General and Administrative Expenses
| Three Months Ended | |||||||||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | % Change | ||||||||||||||
| Selling, general and administrative expenses | $ | 430 | $ | 390 | 10 | % | |||||||||||
SG&A expenses increased 10% in the second quarter of 2024 compared to the second quarter of 2023. The increase in SG&A expenses was primarily due to higher employee incentive costs and an expansion of headcount in the sales force. SG&A expenses were 16.4% of net sales in the second quarter of 2024 compared to 16.2% of net sales in the second quarter of 2023.
Research and Development Expenditures
| Three Months Ended | |||||||||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | % Change | ||||||||||||||
| Research and development expenditures | $ | 220 | $ | 215 | 2 | % | |||||||||||
R&D expenditures increased 2% in the second quarter of 2024 compared to the second quarter of 2023 primarily due to higher employee incentive costs including share-based compensation. R&D expenditures were 8.4% of net sales in the second quarter of 2024 compared to 8.9% of net sales in the second quarter of 2023.
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Other Charges
| Three Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Other charges | $ | 45 | $ | 66 | |||||||
Other charges decreased by $21 million in the second quarter of 2024 compared to the second quarter of 2023. The change was driven primarily by the following:
•$15 million of environmental reserve expense in the second quarter of 2023 that did not occur in the second quarter of 2024; and
•$36 million of intangible asset amortization expense in the second quarter of 2024 compared to $43 million of intangible asset amortization expense in the second quarter of 2023; partially offset by
•$4 million of acquisition-related transaction fees in the second quarter of 2024 that did not occur in the second quarter of 2023.
Operating Earnings
| Three Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Operating earnings from Products and Systems Integration | $ | 379 | $ | 212 | |||||||
| Operating earnings from Software and Services | 265 | 306 | |||||||||
| Operating earnings | $ | 644 | $ | 518 | |||||||
Operating earnings increased $126 million, or 24%, in the second quarter of 2024 compared to the second quarter of 2023. The increase in Operating earnings was due to:
•$167 million increase in the Products and Systems Integration segment, primarily driven by higher sales, favorable change in year-over-year mix, and improved operating leverage, partially offset by higher employee incentive costs; partially offset by
•$41 million decrease in the Software and Services segment, driven by the revenue reduction on Airwave services in accordance with the Charge Control, partially offset by improved operating leverage.
Interest Expense, net
| Three Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Interest expense, net | $ | (69) | $ | (57) | |||||||
The $12 million increase in Interest expense, net in the second quarter of 2024 compared to the second quarter of 2023 was primarily driven by higher outstanding debt and an interest accrual related to audits with taxing authorities in foreign jurisdictions, partially offset by higher interest income.
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Other, net
| Three Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Other, net | $ | 5 | $ | 26 | |||||||
The $21 million decrease in Other, net in the second quarter of 2024 compared to the second quarter of 2023 was primarily driven by:
•$11 million loss on fair value adjustments to equity investments in the second quarter of 2024 compared to a $16 million gain on fair value adjustments to equity investments in the second quarter of 2023;
•$5 million loss on derivatives in the second quarter of 2024 compared to a $9 million gain on derivatives in the second quarter of 2023; and
•$11 million loss on assessments of uncertain tax positions in the second quarter of 2024 that did not occur in the second quarter of 2023; partially offset by
•$3 million of foreign currency gains in the second quarter of 2024 compared to $21 million of foreign currency losses in the second quarter of 2023;
•$31 million of net periodic pension and postretirement benefit in the second quarter of 2024 compared to $24 million of net periodic pension and postretirement benefit in the second quarter of 2023; and
•$3 million loss on investment impairments in the second quarter of 2023 that did not occur in the second quarter of 2024.
Effective Tax Rate
| Three Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Income tax expense | $ | 135 | $ | 114 | |||||||
Income tax expense increased by $21 million in the second quarter of 2024 compared to the second quarter of 2023, resulting in an effective tax rate of 23%. Our effective tax rate for the three months ended June 29, 2024 of 23% was equal to the effective tax rate for the three months ended July 1, 2023 of 23%, primarily due to tax benefits recognized upon settlement of audits with taxing authorities in foreign jurisdictions in 2024, offset by lower excess tax benefits of share-based compensation in 2024.
Results of Operations—Six months ended June 29, 2024 compared to Six months ended July 1, 2023
| Six Months Ended | |||||||||||||||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | ||||||||||||||||||||||||||||||||||
| (In millions) | Products and Systems Integration | Software and Services | Total | Products and Systems Integration | Software and Services | Total | |||||||||||||||||||||||||||||
Net sales by region: | |||||||||||||||||||||||||||||||||||
| North America | $ | 2,328 | $ | 1,282 | $ | 3,610 | $ | 1,975 | $ | 1,158 | $ | 3,133 | |||||||||||||||||||||||
| International | 821 | 586 | 1,407 | 765 | 676 | 1,441 | |||||||||||||||||||||||||||||
| $ | 3,149 | $ | 1,868 | $ | 5,017 | $ | 2,740 | $ | 1,834 | $ | 4,574 | ||||||||||||||||||||||||
| Net sales by major products and services: | |||||||||||||||||||||||||||||||||||
| LMR Communications | $ | 2,620 | $ | 1,144 | $ | 3,764 | $ | 2,230 | $ | 1,203 | $ | 3,433 | |||||||||||||||||||||||
| Video | 529 | 345 | 874 | 510 | 282 | 792 | |||||||||||||||||||||||||||||
| Command Center | — | 379 | 379 | — | 349 | 349 | |||||||||||||||||||||||||||||
| Total | $ | 3,149 | $ | 1,868 | $ | 5,017 | $ | 2,740 | $ | 1,834 | $ | 4,574 | |||||||||||||||||||||||
| Operating earnings | $ | 689 | $ | 474 | $ | 1,163 | $ | 388 | $ | 529 | $ | 917 | |||||||||||||||||||||||
| Operating margins | 21.9 | % | 25.4 | % | 23.2 | % | 14.2 | % | 28.8 | % | 20.0 | % | |||||||||||||||||||||||
33
Net Sales
The Products and Systems Integration segment's net sales represented 63% of our net sales in the first half of 2024 and 60% in the first half of 2023. Net sales from the Software and Services segment represented 37% of our net sales in the first half of 2024 and 40% in the first half of 2023.
Net sales increased $443 million, or 10%, in the first half of 2024 compared to the first half of 2023. The $409 million, or 15%, increase in net sales within the Products and Systems Integration segment was driven by an increase of 18% in the North America region and an increase of 7% in the International region. The $34 million, or 2%, increase in net sales within the Software and Services segment was driven by an increase of 11% in the North America region, partially offset by a decrease of 13% in the International region. Net sales includes:
•an increase in the Products and Systems Integration segment, inclusive of $21 million of revenue from acquisitions, driven by an increase in LMR and Video;
•an increase in Software and Services, inclusive of $1 million of revenue from acquisitions, driven by an increase in Video and Command Center, partially offset by a decrease in LMR driven by the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN; and
•inclusive of $4 million from unfavorable currency rates.
Regional results include:
•a 15% increase in the North America region, inclusive of revenue from acquisitions, driven by an increase in LMR, Video and Command Center; and
•a 2% decrease in the International region, inclusive of revenue from acquisitions, driven by a decrease in LMR due to the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN, partially offset by an increase in Video and Command Center.
Products and Systems Integration
The 15% increase in the Products and Systems Integration segment was driven by the following:
•$390 million, or 17% growth in LMR, driven by both the North America and International regions, primarily due to an increase in devices;
•$19 million, or 4% growth in Video, inclusive of revenue from acquisitions, driven by both the North America and International regions; and
•inclusive of $2 million from unfavorable currency rates.
Software and Services
The 2% increase in the Software and Services segment was driven by the following:
•$63 million, or 22% growth in Video, inclusive of revenue from acquisitions, driven by the North America and International regions; and
•$30 million, or 9% growth in Command Center, driven by the North America and International regions; partially offset by
•$59 million, or 5% decrease in LMR, driven by the International region due to the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN, partially offset by the North America region; and
•inclusive of $2 million from unfavorable currency rates.
Gross Margin
| Six Months Ended | |||||||||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | % Change | ||||||||||||||
| Gross margin | $ | 2,531 | $ | 2,235 | 13 | % | |||||||||||
Gross margin was 50.4% of net sales in the first half of 2024 compared to 48.9% in the first half of 2023. The primary drivers of this increase in gross margin as a percentage of net sales were:
•higher gross margin as a percentage of net sales in the Products and Systems Integration segment, inclusive of acquisitions, primarily driven by higher sales and favorable mix; partially offset by
•lower gross margin as a percentage of net sales in the Software and Services segment, inclusive of acquisitions, driven by the revenue reduction on Airwave services in accordance with the Charge Control.
34
Selling, General and Administrative Expenses
| Six Months Ended | |||||||||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | % Change | ||||||||||||||
| Selling, general and administrative expenses | $ | 827 | $ | 757 | 9 | % | |||||||||||
SG&A expenses increased 9% in the first half of 2024 compared to the first half of 2023. The increase in SG&A expenses was primarily due to higher employee incentive costs, including share-based compensation, higher legal costs, including settlements, and higher expenses associated with acquired businesses. SG&A expenses were 16.5% of net sales in the first half of 2024 compared to 16.6% of net sales in the first half of 2023.
Research and Development Expenditures
| Six Months Ended | |||||||||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | % Change | ||||||||||||||
| Research and development expenditures | $ | 437 | $ | 426 | 3 | % | |||||||||||
R&D expenditures increased 3% in the first half of 2024 compared to the first half of 2023 primarily due to higher employee incentive costs, including share-based compensation. R&D expenditures were 8.7% of net sales in the first half of 2024 compared to 9.3% of net sales in the first half of 2023.
Other Charges
| Six Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Other charges | $ | 104 | $ | 135 | |||||||
Other charges decreased by $31 million in the first half of 2024 compared to the first half of 2023. The change was driven primarily by the following:
•$76 million of intangible asset amortization expense in the first half of 2024 compared to $98 million of intangible asset amortization expense in the first half of 2023;
•$15 million of environmental reserve expense in the first half of 2023 that did not occur in the first half of 2024; and
•$3 million of fixed asset impairments in the first half of 2023 that did not occur in the first half of 2024; partially offset by
•$6 million of legal settlement charges in the first half of 2024 that did not occur in the first half of 2023; and
•$7 million of acquisition-related transaction fees in the first half of 2024 compared to $2 million of acquisition-related transaction fees in the first half of 2023.
Operating Earnings
| Six Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Operating earnings from Products and Systems Integration | $ | 689 | $ | 388 | |||||||
| Operating earnings from Software and Services | 474 | 529 | |||||||||
| Operating earnings | $ | 1,163 | $ | 917 | |||||||
Operating earnings increased $246 million, or 27%, in the first half of 2024 compared to the first half of 2023. The increase in Operating earnings was due to:
•$301 million increase in the Products and Systems Integration segment, primarily driven by higher sales, favorable mix, and a reduction in intangible asset amortization, partially offset by higher employee incentive costs and higher expenses associated with acquired businesses; partially offset by
•$55 million decrease in the Software and Services segment, primarily driven by the revenue reduction on Airwave services in accordance with the Charge Control and higher employee incentive costs, partially offset by a reduction in intangible amortization expenses.
35
Interest Expense, net
| Six Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Interest expense, net | $ | (113) | $ | (111) | |||||||
The $2 million increase in net interest expense in the first half of 2024 compared to the first half of 2023 was primarily driven by higher outstanding debt and an interest accrual related to the settlement of audits with taxing authorities in foreign jurisdictions, partially offset by higher interest income earned on cash.
Other, net
| Six Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Other, net | $ | (560) | $ | 39 | |||||||
The $599 million decrease in Other, net in the first half of 2024 compared to the first half of 2023 was primarily driven by:
•$585 million loss from the extinguishment of the $1.0 billion of 1.75% senior convertible notes issued to Silver Lake Partners and scheduled to mature in September 2024 (the "Silver Lake Convertible Debt") in the first half of 2024;
•$15 million of losses on derivative instruments in the first half of 2024 compared to $17 million of gains on derivative instruments in the first half of 2023;
•$13 million loss on fair value adjustments to equity investments in the first half of 2024 compared to a $19 million gain on fair value adjustments to equity investments in the first half of 2023; and
•$11 million loss on assessments of uncertain tax positions in the first half of 2024 that did not occur in the first half 2023; of partially offset by
•$4 million of foreign currency gains in the first half of 2024 compared to $40 million of foreign currency losses in the first half of 2023;
•$63 million of net periodic pension and postretirement benefit in the first half of 2024 compared to $49 million of net periodic pension and postretirement benefit in the first half 2023; and
•$3 million of investment impairments in the first half of 2024 compared to $9 million of investment impairments in the first half of 2023.
Effective Tax Rate
| Six Months Ended | |||||||||||
| (In millions) | June 29, 2024 | July 1, 2023 | |||||||||
| Income tax expense | $ | 83 | $ | 194 | |||||||
Income tax expense decreased by $111 million in the first half of 2024 compared to the first half of 2023, resulting in an effective tax rate of 17%. Our effective tax rate of 17% for the six months ended June 29, 2024 was lower than the effective tax rate for the six months ended July 1, 2023 of 23%, primarily due to the tax benefit recognized upon the Company's decision to implement a business initiative in 2024 which allows for additional utilization of foreign tax credit carryforwards and a higher foreign derived intangible income deduction on its 2023 U.S. tax return, offset by the non-tax deductible loss on the extinguishment of Silver Lake Convertible Debt in 2024.
Reorganization of Business
During the second quarter of 2024, we recorded net reorganization of business charges of $4 million, including $4 million of charges recorded within Other charges in our Condensed Consolidated Statements of Operations. Included in the $4 million were charges of $10 million related to employee separation costs, partially offset by $2 million of reversals for employee separation accruals and $4 million of reversals for exit costs that are no longer needed.
During the first half of 2024, we recorded net reorganization of business charges of $14 million, including $11 million of charges recorded within Other charges and $3 million of charges in Costs of sales in our Condensed Consolidated Statements of Operations. Included in the $14 million were charges of $22 million related to employee separation costs, partially offset by $4 million of reversals for exit cost accruals no longer needed and $4 million of reversals for employee separation accruals no longer needed.
36
During the second quarter of 2023, we recorded net reorganization of business charges of $3 million, including $5 million of charges in Other charges and $2 million of reversals in Costs of sales in our Condensed Consolidated Statements of Operations. Included in the $3 million were charges of $9 million related to employee separation costs, partially offset by $5 million of reversals for exit cost accruals no longer needed and $1 million of reversals for employee separation accruals no longer needed.
During the first half of 2023, we recorded net reorganization of business charges of $16 million, including $12 million of charges recorded in Other charges and $4 million of charges in Costs of sales in our Condensed Consolidated Statements of Operations. Included in the $16 million were charges of $24 million related to employee separation costs, partially offset by $5 million of reversals for exit cost accruals no longer needed and $3 million of reversals for employee separation accruals no longer needed.
The following table displays the net charges incurred by segment:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Products and Systems Integration | $ | 6 | $ | 6 | $ | 14 | $ | 17 | |||||||||||||||
| Software and Services | (2) | (3) | — | (1) | |||||||||||||||||||
| $ | 4 | $ | 3 | $ | 14 | $ | 16 | ||||||||||||||||
Cash payments for employee severance in connection with the reorganization of business plans were $17 million in the first half of 2024 and $19 million in the first half of 2023. The reorganization of business accrual at June 29, 2024 was $24 million related to employee separation costs that are expected to be paid within one year.
At January 1, 2024, we had an accrual of $5 million for exit costs related to our exit of the ESN contract with the UK Home Office. The $1 million of exit costs are recorded in Accrued liabilities in our Condensed Consolidated Balance Sheets at June 29, 2024, and are expected to be paid within one year.
Liquidity and Capital Resources
| Six Months Ended | |||||||||||
| June 29, 2024 | July 1, 2023 | ||||||||||
| Cash flows provided by (used for): | |||||||||||
| Operating activities | $ | 562 | $ | 85 | |||||||
| Investing activities | (118) | (111) | |||||||||
| Financing activities | (743) | (629) | |||||||||
| Effect of exchange rates on cash and cash equivalents | (25) | 40 | |||||||||
| Increase (decrease) in cash and cash equivalents | $ | (324) | $ | (615) | |||||||
Cash and Cash Equivalents
At June 29, 2024, $1.0 billion of the $1.4 billion cash and cash equivalents balance was held in the U.S. and $403 million was held in other countries.
Operating Activities
The increase in cash flows provided by operating activities from the first half of 2023 to the first half of 2024 was driven primarily by higher earnings, net of non-cash adjustments, and improved working capital, offset by higher incentive payments.
Investing Activities
The increase in cash flows used for investing activities in the first half of 2024 compared to the first half of 2023 was primarily due to an increase in cash used for acquisitions and investments, offset by proceeds from the sale of our Richmond, British Columbia and Richardson, Texas video manufacturing operations.
37
Financing Activities
The increase in cash flows used for financing activities in the first half of 2024 compared to the first half of 2023 was primarily driven by (see also further discussion in the "Debt," "Share Repurchase Program" and "Dividends" sections below in this Part I, Item 2 of this Form 10-Q):
•$1.59 billion increase in repayments of debt driven by the repurchase of the Silver Lake Convertible Debt in the first half of 2024;
•$35 million decrease in net proceeds from the issuance of common stock in connection with our employee stock option and employee stock purchase plans in the first half of 2024 compared to the first half of 2023; and
•$30 million increase in the payment of dividends in the first half of 2024 compared to the first half of 2023; partially offset by
•$1.3 billion increase in net proceeds in the first half of 2024 driven the issuance of our 5.0% senior notes due 2029 and 5.4% senior notes due 2034; and
•$254 million decrease in share repurchases in the first half of 2024 compared to the first half of 2023.
Sales of Receivables
The following table summarizes the proceeds received from sales of accounts receivable and long-term customer financing receivables for the three and six months ended June 29, 2024 and July 1, 2023:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 29, 2024 | July 1, 2023 | June 29, 2024 | July 1, 2023 | ||||||||||||||||||||
| Accounts receivable sales proceeds | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Long-term receivables sales proceeds | 17 | 26 | 27 | 58 | |||||||||||||||||||
| Total proceeds from receivable sales | $ | 17 | $ | 26 | $ | 27 | $ | 58 | |||||||||||||||
Debt
We had outstanding debt of $6.3 billion at June 29, 2024, of which $565 million was current. We had outstanding debt of $6.0 billion at December 31, 2023, of which $1.3 billion was current.
As of June 29, 2024, $252 million of 7.5% debentures due 2025, which mature in May 2025, were classified within the Current portion of long-term debt within the Company's Condensed Consolidated Balance Sheets, as the debentures mature within the next twelve months.
On September 5, 2019, we entered into an agreement with Silver Lake Partners to issue the Silver Lake Convertible Debt, which became fully convertible on September 5, 2021. On February 14, 2024, we 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 cash consideration was paid during the first quarter of 2024. The repurchase of the Silver Lake Convertible Debt was accounted for as an extinguishment of debt, as the repurchase was negotiated under economically favorable terms outside of the original contractual conversion rate. A loss on the extinguishment of $585 million was recorded, representing the excess of amounts repurchased over the carrying value of debt of $593 million, offset by accrued interest of $8 million. The loss on the extinguishment of debt was recorded within Other Income (Expense) in the Condensed Consolidated Statements of Operations during the three months ended March 30, 2024.
On March 25, 2024, we issued $400 million of 5.0% senior notes due 2029 and $900 million of 5.4% senior notes due 2034. We recognized net proceeds of $1.3 billion after debt issuance costs and discounts. A portion of proceeds from the issuance was used to repurchase the $1.0 billion aggregate principal amount of the Silver Lake Convertible Debt.
We have a $2.25 billion syndicated, unsecured revolving credit facility scheduled to mature in March 2026 (the "2021 Motorola Solutions Credit Agreement"). The 2021 Motorola Solutions Credit Agreement includes a letter of credit sub-limit and fronting commitments of $450 million. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the Secured Overnight Financing Rate (SOFR), at our option. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if our credit rating changes. We must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2021 Motorola Solutions Credit Agreement. We were in compliance with our financial covenants as of June 29, 2024.
We have an unsecured commercial paper program, backed by the 2021 Motorola Solutions Credit Agreement, under which we may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $2.2 billion outstanding at any one time. Proceeds from the issuances of the notes are expected to be used for general corporate purposes. As of June 29, 2024 we had no outstanding debt under the commercial paper program.
We have investment grade ratings on our senior unsecured long-term debt. During the first quarter of 2024, S&P Global Ratings and Fitch Ratings upgraded our credit rating to BBB from BBB-. We continue to believe that we will be able to maintain sufficient access to the capital markets in the next twelve months and the foreseeable future.
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Share Repurchase Program
During the three and six months ended June 29, 2024, we repurchased approximately 0.2 million and 0.3 million shares at an average price of $348.19 and $336.57 per share for an aggregate amount of $71 million and $110 million. As of June 29, 2024, we had used approximately $15.6 billion of the share repurchase authority to repurchase shares, leaving $2.4 billion of authority available for future repurchases.
Dividends
During the second quarter of 2024 we paid $163 million in cash dividends to holders of our common stock. Subsequent to the quarter, we paid an additional $164 million in cash dividends to holders of our common stock.
Adequate Internal Funding Resources
We believe that we have adequate internal resources available to generate adequate amounts of cash to meet our expected working capital, capital expenditure and cash requirements for the next twelve months and the foreseeable future, as supported by the level of cash and cash equivalents in the U.S., the ability to repatriate funds from foreign jurisdictions, cash provided by operations, as well as liquidity provided by our commercial paper program backed by the 2021 Motorola Solutions Credit Agreement.
We do not anticipate a material decrease to net future cash flows generated from operations. We expect to use our available cash, investments, and debt facilities to support and invest in our business. This includes investing in our existing products and technologies, seeking new acquisition opportunities related to our strategic growth initiatives and returning cash to shareholders through common stock cash dividend payments (subject to the discretion of our Board of Directors) and share repurchases.
Long-Term Customer Financing Commitments
We had outstanding commitments to provide long-term financing to third parties totaling $73 million at June 29, 2024, compared to $103 million at December 31, 2023.
Recent Accounting Pronouncements
See “Recent Accounting Pronouncements” in Note 1, “Basis of Presentation” to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to our interest rate risk or foreign currency risk during the six months ended June 29, 2024. For a discussion of our exposure to interest rate risk and foreign currency risk, refer to our disclosures set forth in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” of the Form 10-K.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Form 10-Q (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to Motorola Solutions, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to Motorola Solutions’ management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 29, 2024 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
In addition to the matter referenced below, the Company is subject to legal proceedings and claims that have not been fully resolved and which have arisen in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's condensed consolidated financial position, liquidity, or results of operations. However, an unfavorable resolution could have a material adverse effect on the Company's condensed consolidated financial position, liquidity, or results of operations in the periods in which the matters are ultimately resolved, or in the periods in which more information is obtained that changes management's opinion of the ultimate disposition.
Refer to the description of "Hytera Litigation" in Note 12, “Commitments and Contingencies,” to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for information regarding our legal proceedings.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in the Form 10-K.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table provides information with respect to acquisitions by the Company of shares of its common stock during the quarter ended June 29, 2024.
| Period | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share (1) | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program (2) | (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Program(2) | |||||||||||||||||||
| 3/27/2024 to 4/24/2024 | 95,769 | $ | 344.92 | 95,769 | $ | 2,409,304,466 | |||||||||||||||||
| 4/25/2024 to 5/22/2024 | 55,716 | $ | 343.28 | 55,716 | $ | 2,390,178,226 | |||||||||||||||||
| 5/23/2024 to 6/27/2024 | 51,347 | $ | 359.63 | 51,347 | $ | 2,371,712,306 | |||||||||||||||||
| Total | 202,832 | $ | 348.19 | 202,832 | |||||||||||||||||||
(1)Average price paid per share of common stock repurchased excludes commissions paid to brokers and excise tax. 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. The amount of excise tax incurred is included in the Company's Condensed Consolidated Statement of Stockholders' Equity for the quarter ended June 29, 2024.
(2)As originally announced on July 28, 2011, and subsequently amended, the Board of Directors has authorized the Company to repurchase an aggregate amount of up to $18.0 billion of its outstanding shares of common stock (the “share repurchase program”). The share repurchase program does not have an expiration date. As of June 29, 2024, the Company had used approximately $15.6 billion, to repurchase shares, leaving $2.4 billion of authority available for future repurchases.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
During the three months ended June 29, 2024, no director or officer of the Company adopted terminated
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Item 6. Exhibits
| Exhibit No. | Exhibit | |||||||
*3.1 | ||||||||
*10.1 | Description of insurance covering non-employee directors and their spouses (including a description incorporated by reference from the information under the caption "How our Directors are Compensated" of the Motorola Solutions' Proxy Statement on Schedule 14A for the 2024 Annual Meeting of Shareholders filed on March 28, 2024). | |||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Scheme Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||
___________________________________
| * | Filed herewith | ||||
| ** | Furnished herewith | ||||
MOTOROLA, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. ©2024 Motorola Solutions, Inc. All rights reserved. | |||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MOTOROLA SOLUTIONS, INC. | |||||||||||
| By: | /S/ KATHERINE MAHER | ||||||||||
Katherine Maher Corporate Vice President and Chief Accounting Officer (Principal Accounting Officer & Duly Authorized Officer) | |||||||||||
August 1, 2024
43
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
MOTOROLA SOLUTIONS, INC.
DATED MAY 15, 2024
Motorola Solutions, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:
(1)The name of the Corporation is Motorola Solutions, Inc. The Corporation was originally incorporated under the name Motorola Delaware, Inc. The original certificate of incorporation of the Corporation was filed with the office of the Secretary of State of the State of Delaware on March 9, 1973.
(2)This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on February 6, 2024, as amended by the Certificate of Amendment filed with the Secretary of State of the State of Delaware on May 15, 2024 (the “Prior Restated Certificate of Incorporation”). There is no discrepancy between the provisions of this Restated Certificate of Incorporation and the provisions of the Prior Restated Certificate of Incorporation, as theretofore amended or supplemented. This Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation in accordance with the provisions of Section 245 of the DGCL.
(3)The text of the Prior Restated Certificate of Incorporation is hereby restated and integrated in its entirety as follows:
ARTICLE 1
The name of the corporation is
MOTOROLA SOLUTIONS, INC.
ARTICLE 2
The address of the corporation's registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle Zip Code 19801. The name of the corporation's registered agent at such address is The Corporation Trust Company.
ARTICLE 3
The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
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ARTICLE 4
The number of shares which the corporation shall have authority to issue, itemized by classes, par value of shares, and series, if any within a class, is:
| Class | Series | Number of Shares | Par Value Per Share | ||||||||
| Preferred | To be issued in series | 500,000 | $100 | ||||||||
| Common | None | 600,000,000 | $0.01 | ||||||||
Effective as of 6:00 a.m., Eastern time, on January 4, 2011 (the “Effective Time”), each seven (7) shares of the corporation’s Common Stock, par value $0.01 per share, issued and outstanding or held by the corporation as treasury stock shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one share of Common Stock, par value $0.01 per share, of the corporation. No fractional shares shall be issued and, in lieu thereof, the corporation’s transfer agent shall aggregate all fractional shares and sell them as soon as practicable after the Effective Time at the then prevailing prices on the open market, on behalf of those stockholders who would otherwise be entitled to receive a fractional share. After the transfer agent’s completion of such sale, stockholders shall receive a cash payment from the transfer agent in an amount equal to their respective pro rata shares of the total net proceeds of that sale.
The powers, preferences and rights, and the qualifications, limitations or restrictions thereof relating to the Preferred Stock and the Common Stock are:
The Preferred Stock:
(1) The Preferred Stock may be issued from time to time in one or more series and with such designation for each such series as shall be stated and expressed in the resolution or resolutions providing for the issue of each such series adopted by the Board of Directors. The Board of Directors in any such resolution or resolutions is expressly authorized to state and express for each such series:
(i) The voting powers, if any, of the holders of stock of such series;
(ii) The rate per annum and the times at and conditions upon which the holders of stock of such series shall be entitled to receive dividends, and whether such dividends shall be cumulative or noncumulative and if cumulative the terms upon which such dividends shall be cumulative;
(iii) The price or prices and the time or times at and the manner in which the stock of such series shall be redeemable;
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(iv) The right to which the holders of the shares of stock of such series shall be entitled upon any voluntary or involuntary liquidation, dissolution or winding up of the corporation;
(v) The terms, if any, upon which shares of stock of such series shall be convertible into, or exchangeable for, shares of stock of any other class or classes or of any other series of the same or any other class or classes, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any; and
(vi) Any other designations, preferences, and relative, participating, optional or other special rights, and qualification, limitations or restrictions thereof so far as they are not inconsistent with the provisions of the Certificate of Incorporation, as amended, and to the full extent now or hereafter permitted by the laws of Delaware.
(2) All shares of the Preferred Stock of any one series shall be identical to each other in all respects, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon, if cumulative, shall be cumulative.
The Common Stock:
(1) The Common Stock may be issued by the corporation from time to time for such consideration and upon such terms as may be fixed from time to time by the Board of Directors and as may be permitted by law, without action by any stockholders.
(2) The holders of Common Stock shall be entitled to dividends only if, when and as the same shall be declared by the Board of Directors and as may be permitted by law.
(3) Each share of the Common Stock shall entitle the holder thereof to one vote, in person or by proxy, at any and all meetings of the stockholders of the corporation on all propositions before such meetings and on all elections of Directors of the corporation.
ARTICLE 5
The number of directors of the corporation shall be fixed by the bylaws and may be altered from time to time as may be provided therein, but in no event shall the number of directors of the corporation be less than three.
ARTICLE 6
The following provisions are inserted for the regulation of the business and for the conduct of the affairs of the corporation.
Section 1. The Board of Directors is expressly authorized to make, alter, amend, or repeal the bylaws of the corporation and to adopt new bylaws.
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Section 2. The stockholders and directors shall have power to hold their meetings as the bylaws so provide, and keep books, documents and papers of the corporation, outside of the State of Delaware, except as otherwise required by the laws of Delaware.
Section 3. The corporation reserves the right to amend, alter or repeal any provision contained in its Certificate of Incorporation in the manner now or hereafter prescribed by the Statutes of Delaware, and all rights and powers conferred on directors and stockholders herein are granted subject to this reservation.
ARTICLE 7
Section 1. Elimination of Certain Liability of Directors and Officers. No director or officer of the corporation shall be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, as applicable, except for liability (i) for any breach of the director's or officer’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) with respect to directors only, under Section 174 of the Delaware General Corporation Law as the same exists or hereafter may be amended, (iv) for any transaction from which the director or officer derived an improper personal benefit, or (v) with respect to officers only, in any action by or in the right of the corporation.
If the Delaware General Corporation Law hereafter is amended to further eliminate or limit the liability of a director or officer, then a director or officer of the corporation, in addition to the circumstances in which a director or officer is not personally liable as set forth in the preceding paragraph, shall not be liable to the fullest extent permitted by the amended Delaware General Corporation Law.
Any repeal or modification of the foregoing two paragraphs by the stockholders of the corporation shall not adversely affect any right or protection of a director or officer of the corporation existing at the time of such repeal or modification. For purposes of this Article 7, “officer” shall have the meaning provided in Section 102(b)(7) of the Delaware General Corporation Law as the same exists or hereafter may be amended.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving (at such time as such person is or was a director or officer of the corporation) at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity
4
while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof with respect to proceedings to enforce rights to indemnification, the corporation shall indemnify any such indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter "advances"); provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such indemnitee, to repay all advances if it shall ultimately be determined by final judicial decision that such indemnitee is not entitled to be indemnified under this Section or otherwise. The corporation may, by action of its Board of Directors or by action of any person to whom the Board of Directors has delegated such authority, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the corporation within thirty days after a written claim has been received by the corporation, the indemnitee may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit or in a suit brought by the corporation to recover advances, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such claim. In any action brought by the indemnitee to enforce a right hereunder (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to the corporation) it shall be a defense that, and in any action brought by the corporation to recover advances the corporation shall be entitled to recover such advances if, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the indemnitee is proper in the circumstances
5
because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall be a defense to an action brought by the indemnitee or create a presumption that the indemnitee has not met the applicable standard of conduct. In any action brought by the indemnitee to enforce a right hereunder or by the corporation to recover payments by the corporation of advances, the burden of proof shall be on the corporation.
(c) Non-Exclusivity of Rights. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise.
(d) Insurance. The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.
* * * * *
6
IN WITNESS WHEREOF, Motorola Solutions, Inc. has caused this Restated Certificate of Incorporation to be executed on its behalf this 15th day of May, 2024.
MOTOROLA SOLUTIONS, INC.
By: /s/ Kristin L. Kruska
Name: Kristin L. Kruska
Title: Corporate Vice President, Transactions, Corporate & Securities Law and Secretary
Name: Kristin L. Kruska
Title: Corporate Vice President, Transactions, Corporate & Securities Law and Secretary
Exhibit 10.1
Summary of BenefitsAccident Benefits for Motorola Solutions, Inc.
You are a Covered Person and eligible for coverage under the plan, if you are in the eligible class defined below. For benefits to be payable the Policy must be in force, the required premium must be paid and you must be engaging in one of the Covered Activities described below. If you are not in Active Service on the date your insurance would otherwise be effective, it will go into effect on the date you return to Active Service.
Class Description: All non-employee directors of the Policyholder who are in Active Service
Your Dependents (your lawful spouse and unmarried children, subject to the age limits shown in the Policy) are also covered, if they are traveling with you.
Period of Coverage: You will be insured on the later of the Policy Effective Date or the date that you become eligible. Your coverage will end on the earliest of the date: 1) the Policy terminates; 2) you are no longer eligible; or 3) the period ends for which the required premium is paid. Dependents coverage will end on the earliest of the date: 1) he or she is no longer a Dependent; 2) your coverage ends; or 3) the period ends for which the required premium is paid.
Covered Activities
Exposure & Disappearance - Coverage includes exposure to the elements after the forced landing, stranding, sinking, or wrecking of a vehicle in which you were traveling. You are presumed dead if you are in a vehicle that disappears, sinks, or is stranded or wrecked on a trip covered by the Policy; and the body is not found within one year of the Covered Accident.
24-Hour Coverage - We will pay the benefits described in the Policy when you suffer a Covered Accident any time while insured by the Policy. Unless otherwise specified, We will pay benefits only once for a Covered Accident.
Business Travel - The Covered Accident must take place while traveling: 1) on business for the Policyholder; and 2) in the course of the Policyholder’s business. This coverage does not include commuting between home and the place of work.
This coverage will start at the actual start of the trip. It does not matter whether the trip starts at your home, place of work, or other place. It will end on the first of the following dates to occur: 1) the date you return to your home; 2) the date you return to your place of work; or 3) the date your Personal Deviation is more than 14 day(s). “Personal Deviation” means: 1) an activity that is not reasonably related to the Policyholder’s business; and 2) not incidental to the purpose of the trip.
Hijacking and Air Piracy - The Covered Accident must: 1) take place during the: a) hijacking of an Aircraft; b) air piracy; or
c) unlawful seizure or attempted seizure of an Aircraft; and 2) take place while you are in the course of the Policyholder’s business. Coverage begins with the onset of the hijacking or air piracy and continues while you are subject to the control of the person or persons responsible for the hijacking/air piracy and during travel directly to your home or scheduled destinations. “Hijacking” or “Air Piracy,” as used here, means the unlawful seizure or wrongful exercise of control of an aircraft or conveyance, or the crew thereof, in which you are traveling solely as a passenger.
Owned, Leased, or Controlled Aircraft - The Covered Accident must take place while: 1) you are riding in, or getting on or off of, a covered aircraft; or 2) as a result of you being struck by a covered aircraft. 3) away from the Policyholder's premises in your city of permanent assignment; 4) on business for the Policyholder; and 5) in the course of the Policyholder's business.
This coverage will start at the actual start of the trip. It does not matter whether the trip starts at your home, place of work, or other place. It will end on the first of the following dates to occur: 1) the date you return to your home; 2) the date you return to your place of work; or 3) the date your Personal Deviation is more than 14 day(s). “Personal Deviation” means: 1) an activity that is not reasonably related to the Policyholder's business; and 2) not incidental to the purpose of the trip. An aircraft will be deemed “controlled” by the Policyholder if the Policyholder may use it for more than 10 straight days, or more than 15 days in any year.
Aircraft Restrictions - If the Covered Accident happens while you are riding in, or getting on or off of, an aircraft, We will pay benefits, but only if: 1) you are riding as a passenger only, and not as a pilot or member of the crew (except as provided by the Policy); and 2) the aircraft has a valid certificate of airworthiness; and 3) the aircraft is flown by a pilot with a valid license; and 4) the aircraft is not being used for: (i) crop dusting, spraying, or seeding; firefighting; skywriting; skydiving or hang
CL 2 Page 1
gliding; pipeline or power line inspection; aerial photography or exploration; racing, endurance tests, stunt or acrobatic flying; or (ii) any operation which requires a special permit from the FAA, even if it is granted (this does not apply if the permit is required only because of the territory flown over or landed on). 5) the aircraft is a military transport aircraft flown by the U.S. Military Airlift Command (MAC), or similar air transport service of another country.
Description of Benefits
Aggregate Limit - We will not pay more than $15,000,000 per Covered Accident for all losses. If, in the absence of this provision, We would pay more than this amount for all losses under the policy, then the benefits payable to each person with a valid claim will be reduced proportionately.
Accidental Death and Dismemberment Benefits - If your Injury results, within 365 days from the date of a Covered Accident, in any one of the losses shown below, We will pay the Benefit Amount shown below for that loss. Your Principal Sum is $500,000. Your spouse’s Principal Sum is $50,000. Your child’s Principal Sum is $25,000. If multiple losses occur, only one Benefit Amount, the largest, will be paid for all losses due to the same Covered Accident.
Schedule of Covered Losses
Covered Loss Benefit Amount
Life 100% of the Principal Sum
Two or more Members 100% of the Principal Sum
Quadriplegia 100% of the Principal Sum
One Member 50% of the Principal Sum
Hemiplegia 75% of the Principal Sum
Paraplegia 75% of the Principal Sum
Thumb and Index Finger of the Same Hand 25% of the Principal Sum
“Quadriplegia” means total Paralysis of both upper and lower limbs. “Hemiplegia” means total Paralysis of the upper and lower limbs on one side of the body. “Paraplegia” means total Paralysis of both lower limbs or both upper limbs. “Paralysis” means total loss of use. A Doctor must determine the loss of use to be complete and not reversible at the time the claim is submitted.
“Member” means Loss of Hand or Foot, Loss of Sight, Loss of Speech and Loss of Hearing. “Loss of Hand or Foot” means complete Severance through or above the wrist or ankle joint. “Loss of Sight” means the total, permanent Loss of Sight of one eye. “Loss of Speech” means total and permanent loss of audible communication that is irrecoverable by natural, surgical or artificial means. “Loss of Hearing” means total and permanent Loss of Hearing in both ears that is irrecoverable and cannot be corrected by any means. “Loss of a Thumb and Index Finger of the Same Hand” means complete Severance through or above the metacarpophalangeal joints of the same hand (the joints between the fingers and the hand). “Severance” means the complete separation and dismemberment of the part from the body.
Coma Benefit - We will pay 1% of the Principal Sum per month up to 11 months and thereafter in a lump sum of 100% of the Principal Sum if you become Comatose within 31 days of a Covered Accident and remain in a Coma for at least 31 days. We reserve the right, at the end of the first 31 days of Coma, to require proof that you remain Comatose. This proof may include, but is not limited to, requiring an independent medical examination at Our expense. Monthly payments will end on the first of the following dates: 1) the end of the month in which you die; 2) the end of the 11th month for which this benefit is payable; 3) the end of the month in which you recover from the Coma.
You are deemed “Comatose” or in a “Coma” if you are in a profound stupor or state of complete and total unconsciousness, as the result of a Covered Accident.
Disability Benefit (Permanent Total Disability) - We will pay 100% of the Principal Sum if you are under age 70 and Permanently Totally Disabled as a direct result of, and from no other cause but, a Covered Accident. Permanent Total Disability must begin within 365 days from the date of your Covered Accident. Disability Benefits will begin when: 1) the applicable Benefit Waiting Period of 365 days is satisfied; and 2) you provide satisfactory proof of Permanent Total Disability to Us.
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“Total Disability” or “Totally Disabled” means, due to an Injury from a Covered Accident, you: 1) if employed, cannot do any work for which you are, or may become, qualified by reason of education, experience or training; and 2) if not employed, cannot perform the normal and customary activities of a healthy person of like age and sex. “Permanent Total Disability” or “Permanently Totally Disabled” means you are Totally Disabled and are expected to remain so disabled, as certified by a Doctor, for the rest of your life. Permanent Total Disability must be the result of the same Covered Accident that caused the Total Disability.
Emergency Medical Benefits - We will pay up to $10,000 for Covered Expenses incurred for emergency medical services to treat you if you: 1) suffer a Medical Emergency during the course of a Trip; and 2) are traveling 100 miles or more away from your place of permanent residence. Covered Expenses include expenses for guarantee of payment to a medical provider, Hospital or treatment facility. Benefits for these Covered Expenses will not be payable unless the charges incurred: 1) are Medically Necessary and do not exceed the charges for similar treatment, services or supplies in the locality where the expense is incurred; and 2) do not include charges that would not have been made if there were no insurance. Benefits will not be payable unless We authorize in writing, or by an authorized electronic or telephonic means, all expenses in advance, and services are rendered by Our assistance provider.
Emergency Medical Evacuation Benefit - We will pay 100% of Covered Expenses incurred for your medical evacuation if you: 1) suffer a Medical Emergency during the course of the Trip; 2) require Emergency Medical Evacuation; and 3) are traveling 100 miles or more away from your place of permanent residence. Covered Expenses; 1) Medical Transport: expenses for transportation under medical supervision to a different hospital, treatment facility or to your place of residence for Medically Necessary treatment in the event of your Medical Emergency and upon the request of the Doctor designated by Our assistance provider in consultation with the local attending Doctor. 2) Dispatch of a Doctor or Specialist: the Doctor’s or specialist’s travel expenses and the medical services provided on location, if, based on the information available, your condition cannot be adequately assessed to evaluate the need for transport or evacuation and a doctor or specialist is dispatched by Our service provider to your location to make the assessment. 3) Return of Dependent Child(ren): expenses to return each Dependent child who is under age 18 to his or her principal residence if a) you are age 18 or older; and b) you are the only person traveling with the minor Dependent child(ren); and c) you suffer a Medical Emergency and must be confined in a Hospital. 4) Escort Services: expenses for an Immediate Family Member or companion who is traveling with you to join you during your emergency medical evacuation to a different hospital, treatment facility or your place of residence.
Benefits for these Covered Expenses will not be payable unless: 1) the Doctor ordering the Emergency Medical Evacuation certifies the severity of your Medical Emergency requires an Emergency Medical Evacuation; 2) all transportation arrangements made for the Emergency Medical Evacuation are by the most direct and economical conveyance and route possible; 3) the charges incurred are Medically Necessary and do not exceed the Usual and Customary Charges for similar transportation, treatment, services or supplies in the locality where the expense is incurred; and 4) do not include charges that would not have been made if there were no insurance.
Benefits will not be payable unless We authorize in writing, or by an authorized electronic or telephonic means, all expenses in advance, and services are rendered by Our assistance provider. In the event you refuse to be medically evacuated, we will not be liable for any medical expenses incurred after the date medical evacuation is recommended.
Rehabilitation Benefit - We will pay $50,000 if you suffer an Accidental Dismemberment covered under the Policy and you are participating in a Rehabilitation Program that is prescribed by a Doctor. Benefits are payable for: 1) the facility providing the Rehabilitation Program in which you are participating; and 2) Immediate Family Members who incur expenses for travel to and from the location at which you are participating in a Rehabilitation Program provided actual receipts are submitted with the claim.
Benefits will end when the first of the following events occur: 1) the date you complete the Rehabilitation Program; and 2) the date you die.
“Immediate Family Member” means your parent, grandparent, spouse, child, brother, sister, or in-laws. “Rehabilitation Program” means a specialized, intensive program for rehabilitation or assimilation at an accredited medical facility specializing in research, surgery, and training of persons with Accidental Dismemberment Covered Losses as outlined in the Schedule of Covered Losses.
Repatriation of Remains Benefit - We will pay 100% of Covered Expenses for preparation and return of your body to your home if you die as a result of a Medical Emergency while traveling 100 miles or more away from your place of permanent residence. Covered expenses include: 1) expenses for embalming or cremation; 2) the least costly coffin or receptacle adequate for transporting the remains; 3) transporting the remains; and 4) Escort Services which include expenses for an
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Immediate Family Member or companion who is traveling with you to join your body during the repatriation to your place of residence.
All transportation arrangements must be made by the most direct and economical route and conveyance possible and may not exceed the Usual and Customary Charges for similar transportation in the locality where the expense is incurred. Benefits will not be payable unless We authorize in writing, or by an authorized electronic or telephonic means, all expenses in advance, and services are rendered by Our assistance provider.
Seatbelt and Airbag Benefit - We will pay $25,000 when you die or are dismembered directly and independently from Injuries sustained while wearing a seatbelt and operating or riding as a passenger in an Automobile. An additional $10,000 if you were also positioned in a seat protected by a properly-functioning and properly deployed Supplemental Restraint System (Airbag). Verification of proper use of the seatbelt at the time of the Covered Accident and that the Supplemental Restraint System properly inflated upon impact must be a part of an official police report of the Covered Accident or be certified, in writing, by the investigating officer(s) and submitted with your claim to Us. If such certification or police report is not available or it is unclear whether you were wearing a seatbelt or positioned in a seat protected by a properly functioning and properly deployed Supplemental Restraint System, We will pay $1,000 to your beneficiary.
In the case of a child, seatbelt means a child restraint, as required by state law and approved by the National Highway Traffic Safety Administration, properly secured and being used as recommended by its manufacturer for children of like age and weight at the time of the Covered Accident. "Supplemental Restraint System" means an airbag that inflates upon impact for added protection to the head and chest areas. "Automobile" means a self-propelled, private passenger motor vehicle with four or more wheels that is a type both designed and required to be licensed for use on the highway of any state or country. Automobile includes, but is not limited to, a sedan, station wagon, sport utility vehicle, or a motor vehicle of the pickup, van, camper, or motor-home type. Automobile does not include a mobile home or any motor vehicle that is used in mass or public transit.
Special Adaptation Benefit - We will pay 10% of the Principal Sum up to $10,000, if you suffer a “Presumptive Disability” and require a special housing adaptation or a special Vehicle to accommodate the disability. Benefits will not be payable unless your Doctor certifies them as necessary. “Presumptive Disability” means We will presume you are Totally Disabled if you suffer the complete and irrecoverable loss of sight of both eyes, speech, hearing in both ears, or of any two limbs, hands or feet, provided the loss occurs within one year of the Covered Accident. “Vehicle” means a private passenger land motor vehicle. It includes automobiles, vans, and four wheel drive vehicles. It does not include a vehicle used for farming, commercial business, racing or any type of competitive speed event.
Special Counseling Benefit - We will pay $100 per session for up to 10 counseling sessions for mental health counseling to assist you in dealing with a Covered Loss, if you suffer an Injury that results in a loss as outlined in the Schedule of Covered Losses for which the Accidental Death and Dismemberment Benefit is payable; and obtain mental health counseling. The Maximum Amount for this benefit is $1,000 per Covered Loss.
Exclusions and Limitations: We will not pay benefits for any loss or Injury that is caused by, or results from:
•intentionally self-inflicted Injury.
•suicide or attempted suicide.
•war or any act of war, whether declared or not (except as provided by the Policy).
•a Covered Accident that occurs while on active duty service in the military, naval or air force of any country or international organization. Upon Our receipt of proof of service, We will refund any premium paid for this time. Reserve or National Guard active duty training is not excluded unless it extends beyond 31 days.
•sickness, disease, bodily or mental infirmity, bacterial infections, except infections which occur as a result of accidental injury or accidental involuntary or unintentional ingestion of a contaminated substance.
•piloting or serving as a crewmember in any aircraft (except as provided by the Policy).
•commission of, or attempt to commit, a felony.
This insurance does not apply to the extent that trade or economic sanctions or other laws or regulations prohibit Us from providing insurance, including, but not limited to, the payment of claims.
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War Risk Coverage: We will pay benefits for Covered Losses due to Covered Accidents resulting from war or acts of war anywhere in the world, except the following countries:
•the United States
•The Covered Person’s Home Country
•The Covered Person’s Country of Permanent Assignment
•Specified countries: Russia, Ukraine, Belarus, Israel (including West Bank and Gaza), and Lebanon.
The war exclusion is deleted to the extent coverage is provide by the terms and conditions of War Risk Coverage.
“Home Country” means a country from which you hold a passport. If you hold passports from more than one Country, your Home Country will be the country that you declared to Us in writing as your Home Country.
“Country of Permanent Assignment” means a country, other than your Home Country, in which the Policyholder requires you to work for a period of time that exceeds 180 continuous days.
We will not pay more than $15,000,000 per occurrence for war risk benefits. This limit shall apply to Injuries sustained from all acts of war in a consecutive 72-hour period. If but for this limit We would pay more than $15,000,000, then the benefits We will pay to each Covered Person will be reduced in the same proportion, so that the total amount We will pay for war risk coverage is $15,000,000.
Out-of-Country Medical Expense Benefit
In addition to the accident benefits provided by your business travel plan, we will pay the additional benefits listed below if you are injured as the result of a Covered Accident or become sick while traveling on business outside your Home Country or Country of Permanent Assignment provided the trip does not exceed 180 days.
This coverage will begin on the later of the scheduled departure date or the date you leave your Home Country or Country of Permanent Assignment on a trip authorized by the Participating Organization. Coverage will end on the earliest of your scheduled return date, the date you return to your Home Country or Country of Permanent Assignment, or the date your Personal Deviation is more than 14 days.
Medical Expense Benefits - We will pay for Covered Expenses that result directly from a Covered Accident or Sickness. These benefits are payable to the earlier of the date you return to your Home Country or Country of Permanent Assignment, or 26 weeks from the date of a Covered Accident or Sickness provided the first Covered Expense was incurred within 30 days after the date of Covered Accident or Sickness.
The Maximum Benefit for all Accident and Sickness benefits for you is $250,000; for your spouse is $250,000; and for your children is $250,000, subject to a Deductible of $0 per Covered Accident or Sickness.
The following limits also apply: The maximum for Dental Treatment (Injury only) is $1,000. The maximum for Emergency Medical Treatment of Pregnancy is treated as any other medical condition. The maximum for Room & Board charges is the average semi-private room rate. The maximum for ICU Room & Board Charges is two (2) times the average semi-private room rate.
Medical Expense Benefits are only payable: 1) for 100% of the Usual and Customary Charges incurred after the Deductible, if any, has been met; 2) for those Medically Necessary Covered Expenses that the Covered Person incurs; and 3) for charges incurred for services rendered to you while traveling outside of your Home Country or Country of Permanent Assignment.
Emergency Medical, Emergency Medical Evacuation and Repatriation of Remains Benefits are extended to include travel outside of your Home Country or Country of Permanent Assignment.
In addition to the exclusions above, We will not pay benefits for any loss, treatment, or services resulting from:
•Routine physicals and care of any kind.
•Routine dental care and treatment.
•Cosmetic surgery, except for reconstructive surgery needed as the result of an Injury.
•Routine nursery care.
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•Eye refractions or eye examinations for the purpose of prescribing corrective lenses or for the fitting thereof; eyeglasses, contact lenses, and hearing aids.
•Services, supplies, or treatment including any period of Hospital confinement which is not recommended, approved, and certified as medically necessary and reasonable by a Doctor, or expenses which are non-medical in nature.
•Treatment or service provided by a private duty nurse.
•Treatment by any Immediate Family Member or member of the Insured’s household.
•Expenses incurred during holiday travel, or travel for purposes of seeking medical care or treatment, or for any other travel that is not in the course of the Policyholder’s business (unless Personal Deviations are specifically covered).
•Covered medical expenses for which the Covered Person would not be responsible for in the absence of the Policy.
•Any expense paid or payable by any other valid and collectible group insurance plan.
•Injury or sickness for which benefits are paid or payable under any workers’ compensation or occupational disease law or act, or similar legislation, whether United States federal or foreign law.
If we determine the benefits paid under the Out-of-Country Medical Plan are eligible benefits under any other benefit plan, We may seek to recover any expenses covered by another plan to the extent that the Insured is eligible for reimbursement.
IMPORTANT NOTICE | ||
This policy provides travel insurance benefits for individuals traveling outside of their home country. This policy does not constitute comprehensive health insurance coverage (often referred to as “major medical coverage”) and does not satisfy a person’s individual obligation to secure the requirement of minimum essential coverage under the Affordable Care Act (ACA). For more information about the ACA, please refer to www.HealthCare.gov. | ||
Definitions: “Covered Accident” means an accident that occurs while coverage is in force for you and results directly in a loss or Injury covered by the Policy for which benefits are payable. “Covered Person” means any eligible person for whom the required premium is paid. “Injury” means accidental bodily harm sustained by you that results directly from a Covered Accident. All injuries sustained by one person in any one Accident, including all related conditions and recurrent symptoms of these injuries, are considered a single Injury. Medical Emergency” means a condition caused by an Injury or Sickness that manifests itself by symptoms of sufficient severity that a prudent lay person possessing an average knowledge of health and medicine would reasonably expect that failure to receive immediate medical attention would place the health of the person in serious jeopardy. “Sickness” means an illness, disease or condition that causes a loss for which you incur medical expenses while covered under this Policy. All related conditions and recurrent symptoms of the same or similar condition will be considered one Sickness. “Trip” means travel by air, land, or sea from your Home Country. “We, Our, Us” means the insurance company underwriting this insurance or its authorized agent.
You must provide notification of a claim within 90 days of an Accident or Loss. If notice cannot be given within that time, it must be given as soon as reasonably possible. This notice should identify you, the Policyholder, and the Policy Number.
Policy Number: ADD N04156870, Underwritten by ACE American Insurance Company, 436 Walnut Street, Philadelphia, PA 19106
Contact Information: For customer service, eligibility verification, plan information, or to file a claim, contact: Chubb NA at 800-336-0627 (from inside the U.S.) or 302-476-6194 (from outside the U.S.); fax 302-476-6154 for claims or inquiries or e-mail diane.basa@chubb.com or aceaandhclaims@chubb.com. Mail claims to: Chubb Accident & Health, PO Box 5124, Scranton, PA 18505-0556.
Travel Assistance Services: Please contact the Policyholder for information about your travel assistance services and how to contact the assistance provider when you are traveling.
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This Description of Coverage is a brief description of the important features of the insurance plan. It is not a contract of insurance. The terms and conditions of coverage are set forth in the Policy issued to your employer. The Policy is subject to the laws of the state in which it was issued. Coverage may not be available in all states or certain terms or conditions may be different if required by state law. Please keep this information as a reference.
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Exhibit 31.1
CERTIFICATION
I, Gregory Q. Brown, Chairman and Chief Executive Officer, Motorola Solutions, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Motorola Solutions, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 1, 2024
| /s/ GREGORY Q. BROWN | |||||
| Gregory Q. Brown | |||||
| Chairman and Chief Executive Officer | |||||
| Motorola Solutions, Inc. | |||||
Exhibit 31.2
CERTIFICATION
I, Jason J. Winkler, Executive Vice President and Chief Financial Officer, Motorola Solutions, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Motorola Solutions, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 1, 2024
| /s/ JASON J. WINKLER | |||||
| Jason J. Winkler | |||||
| Executive Vice President and Chief Financial Officer | |||||
| Motorola Solutions, Inc. | |||||
Exhibit 32.1
CERTIFICATION
I, Gregory Q. Brown, Chairman and Chief Executive Officer, Motorola Solutions, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:
(1)the quarterly report on Form 10-Q for the period ended June 29, 2024 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola Solutions, Inc.
This certificate is being furnished solely for purposes of Section 906.
Dated: August 1, 2024
| /s/ GREGORY Q. BROWN | |||||
| Gregory Q. Brown | |||||
| Chairman and Chief Executive Officer | |||||
| Motorola Solutions, Inc. | |||||
Exhibit 32.2
CERTIFICATION
I, Jason J. Winkler, Executive Vice President and Chief Financial Officer, Motorola Solutions, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:
(1)the quarterly report on Form 10-Q for the period ended June 29, 2024 (the “Quarterly Report”), which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Motorola Solutions, Inc.
This certificate is being furnished solely for purposes of Section 906.
Dated: August 1, 2024
| /s/ JASON J. WINKLER | |||||
| Jason J. Winkler | |||||
| Executive Vice President and Chief Financial Officer | |||||
| Motorola Solutions, Inc. | |||||