Motorola 2011 Annual Report Download

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2011
ANNUAL
REPORT

Table of contents

  • Page 1
    2011 ANNUAL REPORT

  • Page 2
    OUR PURPOSE HELPING PEOPLE BE THEIR BEST IN THE MOMENTS THAT MATTER GOVERNMENT ENTERPRISE OUR COMMUNICATION SOLUTIONS SPAN INFRASTRUCTURE, DEVICES, SERVICES AND SOFTWARE TO HELP OUR GOVERNMENT AND ENTERPRISE CUSTOMERS BE MORE EFFICIENT AND MORE EFFECTIVE.

  • Page 3
    ... economy. • Sales grew in all of our regions. • We took two important actions to return capital to our shareholders by initiating a quarterly cash dividend of $0.22 per share and approving what is now a $3 billion share repurchase program through the end of 2012. • We retired approximately...

  • Page 4
    ... rugged ET1 tablet for enterprise customers. • In response to our customers, we expanded our professional, integration, support and managed services so our customers can focus on their core mission. • The value of our stock grew by approximately 24 percent* in 2011. We reported record sales and...

  • Page 5
    ...-1115800 (I.R.S. Employer Identification No.) (Address of principal executive offices) 1303 East Algonquin Road, Schaumburg, Illinois 60196 (847) 576-5000 (Registrant's telephone number) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which...

  • Page 6
    ... Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Item 9A. Controls and Procedures ...Item 9B. Other Information ...PART III ...Item 10. Directors, Executive Officers and Corporate Governance ...Item 11. Executive Compensation ...Item 12. Security Ownership of...

  • Page 7
    ... mobile workforces. Our customers benefit from our global footprint and thought leadership. We are positioned for success with sales in more than 100 countries, an industry leadership position, an unmatched portfolio of products and services and a strong patent portfolio. We report financial results...

  • Page 8
    ...model includes both direct-sales by our in-house sales force, which tends to focus on our largest accounts, and sales through our channel partner program. Our channel partners include distributors, value added resellers and independent software vendors. Resellers and distributors each have their own...

  • Page 9
    ... $2.0 billion as of December 31, 2011 and 2010. The 2011 order backlog is believed to be generally firm and only includes received product and system installation labor orders from customers. Service orders such as maintenance and extended warranty contracts are excluded from backlog. Approximately...

  • Page 10
    ... 31, 2011, was approximately $480 million, compared to $570 million at December 31, 2010. Our order backlog is believed to be generally firm and only includes received product and system installation labor orders from customers. Service orders such as maintenance and extended warranty contracts are...

  • Page 11
    ...-2010 Compared to 2009" sections of Part II, "Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 1A: Risk Factors" of this document. Payment Terms Payment terms vary worldwide, depending on the arrangement. Generally, contract payment terms...

  • Page 12
    ... grantees also benefit from federal Broadband Technology Opportunity Policy ("BTOP") Grant Funds issued by the NTIA during 2010. In 2010, we were awarded a $50.6 million BTOP grant to deploy a broadband system in the greater San Francisco Bay area. We are also working with a number of customers in...

  • Page 13
    ... custom products which require the stocking of inventories and large varieties of piece parts and replacement parts in order to meet delivery and warranty requirements. To the extent our suppliers' product life cycles are shorter than ours, stocking of lifetime-buy inventories is required to meet...

  • Page 14
    ...contacting Investor Relations, Motorola Solutions, Inc., Corporate Offices, 1303 East Algonquin Road, Schaumburg, Illinois 60196, E-mail: [email protected]. Our Annual Report on Form 10-K and Definitive Proxy Statement may also be requested in hardcopy by clicking on "Printed Materials...

  • Page 15
    ... markets, as many economies and financial markets remain in a recession resulting from a number of factors, including adverse credit conditions, low economic growth rates, risk of sovereign defaults, particularly in certain European countries, continuing high rates of unemployment, reduced corporate...

  • Page 16
    ... of Motorola Mobility. The funding position of our pension plans is affected by the performance of the financial markets, particularly the equity and debt markets, and the interest rates used to calculate our pension obligations for funding and expense purposes. Annual pension contributions...

  • Page 17
    .... We face intense competition in these markets and new products are expensive to develop and bring to market. Our success depends, in substantial part, on the timely and successful introduction of new products and upgrades of current products to comply with emerging industry standards and to address...

  • Page 18
    ... and adjustments, if required, may materially reduce our revenues or profits upon completion and final negotiation of audits. Negative audit findings could also result in investigations, termination of a contract or grant, forfeiture of profits or reimbursements, suspension of payments, fines and...

  • Page 19
    ... not limited to changes in classifications or errors or omissions related to such classifications and certifications; (ii) changes in U.S. and non-U.S. rules related to trade, environmental, health and safety, technical standards and consumer protection; (iii) longer payment cycles; (iv) tax issues...

  • Page 20
    ... or volatility in the capital markets may result in higher funding costs for us and adversely affect our ability to access funds and other credit related products. Changes in our effective tax rate may have a negative impact on future operating results. We are subject to income taxes in the U.S. and...

  • Page 21
    ... the quality of the materials, components, subsystems and services they supply, which might result in greater product returns, service problems and warranty claims and regulatory compliance issues and could harm our business, financial condition and results of operations. Failure of our suppliers...

  • Page 22
    ... financial or business condition of these distributors, representatives or retailers, could affect our ability to bring products to market. Our future operating results depend on our ability to purchase a sufficient amount of materials, parts and components to meet the demands of our customers and...

  • Page 23
    ... tools and may generate income under license agreements. We regard our intellectual property as proprietary and attempt to protect it with patents, copyrights, trademarks, trade secret laws, confidentiality agreements and other methods. We also generally restrict access to and distribution...

  • Page 24
    ... license agreement we could lose our rights to the Motorola Marks. We have a worldwide, perpetual and royalty-free license from Motorola Mobility to use the Motorola Marks as part of our corporate name and in connection with the manufacture, sale, and marketing of our current products and services...

  • Page 25
    ... in our financial statements in future periods, which could negatively impact our financial results. Changes in our operations or sales outside the U.S. markets could result in lost benefits in impacted countries and increase our cost of doing business. We have entered into various agreements with...

  • Page 26
    ...-skilled personnel. In 2012, we are planning changes to our annual stock grants, which may increase the retention risk of affected employees. The unfavorable outcome of any pending or future litigation or administrative action could negatively impact the Company. Our financial results and reputation...

  • Page 27
    ... financial results that may affect our share price include, but are not limited to, market expectations of our performance, spending plans of our customers and the level of perceived growth in the industries in which we participate. In connection with the distribution of Motorola Mobility, Motorola...

  • Page 28
    ...: Unresolved Staff Comments None. Item 2: Properties Motorola Solutions' principal executive offices are located at 1303 East Algonquin Road, Schaumburg, Illinois 60196. Motorola Solutions also operates manufacturing facilities and sales offices in other U.S. locations and in many other countries.

  • Page 29
    ... were located in: Penang, Malaysia; Reynosa, Mexico; McAllen, Texas; Schaumburg, Illinois; Berlin, Germany; and Suzhou, China. Motorola Solutions generally considers the productive capacity of the plants operated by each of our business segments to be adequate and sufficient for the requirements of...

  • Page 30
    ... misleading statements concerning Motorola's financial projections and sales demand for Motorola phones during the class period. The complaint sought unspecified damages and other relief relating to the purported inflation in the price of Motorola shares during the class period. On February 28, 2011...

  • Page 31
    ... royalty rates, with terms and conditions that are demonstrably free of any unfair discrimination. On February 23, 2011, Microsoft amended the complaint to add General Instrument Corporation as a defendant. In November 2010, Motorola Mobility, Inc. and General Instrument Corporation filed complaints...

  • Page 32
    ... the patents-in-suit by making, using, offering for sale and selling in the United States certain mobile devices and related software. The complaint seeks unspecified monetary damages and injunctive relief. On November 9, 2010, Motorola Mobility, Inc. filed counterclaims against Apple Inc. to their...

  • Page 33
    ...August 2010; Senior Vice President, Government and Public Safety from May 2007 to January 2009; Senior Vice President, International Sales Operations, Networks and Enterprise from May 2006 to May 2007. Edward J. Fitzpatrick; age 45; Executive Vice President, Chief Financial Officer since May 3, 2011...

  • Page 34
    ... International Controller, Home and Networks Mobility from June 2007 to March 2008; Senior Director of Accounting and Transaction Support, Networks and Enterprise from May 2006 to June 2007. The above executive officers will serve as executive officers of Motorola Solutions until the regular meeting...

  • Page 35
    ... Purchased as Part of Publicly Announced Plans or Program (2) 1,396,356 2,689,613 4,070,880 8,156,849 (1) Average price paid per share of common stock repurchased is the execution price, including commissions paid to brokers. (2) On July 28, 2011, the Company announced that its Board of Directors...

  • Page 36
    ... the Company's distribution to its shareholders of one share of Motorola Mobility for every eight shares of Motorola, Inc. common stock on January 4, 2011. For purposes of this graph, the Motorola Mobility distribution is treated as a non-taxable cash dividend of $26.46 (per share post reverse stock...

  • Page 37
    ... Data Motorola Solutions, Inc. and Subsidiaries Five-Year Financial Summary (Dollars in millions, except as noted) Operating Results Net sales from products Net sales from services Net sales Cost of product sales Cost of service sales Costs of sales Gross margin Selling, general and administrative...

  • Page 38
    ... enterprise-grade mobile computers and tablets, laser/imaging/RFID based data capture products, WLAN and iDEN infrastructure, software and services. What were our 2011 financial results? • We increased net sales by 8% to $8.2 billion in 2011, compared to net sales of $7.6 billion in 2010. • We...

  • Page 39
    ... Enterprise customers the products and services they require to meet their mobile workforce needs, and build successful long-term relationships. We are committed to employing disciplined financial policies, achieving our financial plan, and executing on our capital allocation framework. In 2012, we...

  • Page 40
    ... per share amounts) Net sales from products Net sales from services Net sales Cost of product sales Cost of service sales Costs of sales Gross margin Selling, general and administrative expenses Research and development expenditures Other charges Operating earnings Other income (expense): Interest...

  • Page 41
    ... offset by increased employee benefit expenses. Other Charges We recorded net charges of $341 million in Other charges in 2011, compared to net charges of $150 million in 2010. The charges in 2011 included: (i) $200 million of charges relating to the amortization of intangibles, (ii) $88 million of...

  • Page 42
    ... Sigma Fund investments. Effective Tax Rate We recorded $3 million of net tax benefit in 2011, resulting in a negative effective tax rate on continuing operations compared to $403 million of net tax expense in 2010, resulting in an effective tax rate of 61%. Our negative effective tax rate in 2011...

  • Page 43
    ...24.5% of net sales, in 2010, compared to $1.7 billion, or 23.9% of net sales, in 2009. SG&A expenses increased in both segments, primarily due to: (i) increased selling and marketing expenses related to the increase in net sales, and (ii) increased employee benefit-related expenses. The increases in...

  • Page 44
    ... net tax expense, resulting in an effective tax rate of 30% in 2009. Our effective tax rate in 2010 was higher than the U.S. statutory rate of 35% primarily due to an increase in the U.S. federal income tax accrual for repatriation of undistributed foreign earnings and a non-cash tax charge related...

  • Page 45
    ... benefit-related expenses, and (ii) an increase in R&D expenditures, primarily related to an increase in employee benefit-related expenses. As a percentage of net sales in 2010 as compared 2009, gross margin was flat, SG&A expenses increased and R&D expenditures decreased. Enterprise Segment In 2011...

  • Page 46
    ... relating to employee separation costs that are expected to be paid in 2012, and (ii) $14 million relating to lease termination obligations that are expected to be paid over a number of years. Liquidity and Capital Resources We returned $1.1 billion in cash to shareholders through share repurchases...

  • Page 47
    ...non-U.S. pension plans. The funded status of our pension plans are impacted by the volatility of corporate bond rates which are used to determine the plan discount rate as well as returns on the pension plan asset portfolio. The discount rate used to measure the benefit obligation at the end of 2011...

  • Page 48
    ... pension liabilities following the distribution of Motorola Mobility on January 4, 2011, and following the sale of certain assets and liabilities of the Networks business to NSN on April 29, 2011. Retirement benefits are further discussed in the "Significant Accounting Policies-Retirement Benefits...

  • Page 49
    ... higher information technology capital spend. Capital spending in 2009 was lower across all functions as compared to 2010 and 2011, but was higher in our service organization as a number of our owned networks required capital upgrades. Sales of Investments and Businesses: We received $1.1 billion in...

  • Page 50
    ..., related to the payment of a dividend declared in November 2008. In February 2009, we announced that our Board of Directors suspended the declaration of quarterly cash dividends on our common stock. During the year ended December 31, 2010, we paid $23 million of dividends to a minority shareholder...

  • Page 51
    ... inventory and raw materials attributable to canceled orders. Our liability would only arise in the event we terminate the agreements for reasons other than "cause." We outsource certain corporate functions, such as benefit administration and information technology-related services. These contracts...

  • Page 52
    ... certain arrangements, the value of accounts receivable sold is supported by credit insurance purchased from third-party insurance companies, less deductibles or self-insurance requirements under the insurance policies. Under these arrangements, our total credit exposure, less insurance coverage, to...

  • Page 53
    47 Adequate Internal Funding Resources We believe that we have adequate internal resources available to fund expected working capital and capital expenditure requirements for the next twelve months as supported by the level of cash, cash equivalents, short-term investments and Sigma Fund balances in...

  • Page 54
    ... gross amount billed. Within our Enterprise segment, products are primarily sold through distributors and value-added resellers (collectively "channel partners"). Channel partners may provide a service or add componentry in order to resell our products to end users. Sales to channel partners where...

  • Page 55
    ... as general consulting, network management or advisory projects are often sold in stand-alone engagements. Technical support services are also often sold separately through renewals of annual contracts. We determine VSOE based on our normal pricing and discounting practices for the specific product...

  • Page 56
    ..., long-life cycle products, lifetime buys at the end of supplier production runs, business exits, and a shift of production to outsourcing. If future demand or market conditions are less favorable than those projected by management, additional inventory writedowns may be required. Income Taxes Our...

  • Page 57
    ... from brokers, counterparties, fund administrators, online securities data services, or investment managers. Fixed income securities, including short-term instruments, may be priced using pricing models comprised of observable inputs which include, but are not limited to, market quotations, yields...

  • Page 58
    ... employees meeting certain age and service requirements upon termination of employment (the "Postretirement Health Care Benefits Plan"). For eligible employees hired prior to January 1, 2002, we offset a portion of the postretirement medical costs to the retired participant. As of January 1, 2005...

  • Page 59
    ... Officers' Plan investment portfolio was predominantly fixed-income securities. A second key assumption is the discount rate. The discount rate assumptions used for pension benefits and postretirement health care benefits accounting reflects, at December 31 of each year, the prevailing market rates...

  • Page 60
    ... Health Care Benefits Plan liability following the Separation of Motorola Mobility on January 4, 2011. We maintain a number of endorsement split-dollar life insurance policies that were taken out on now-retired officers under a plan that was frozen prior to December 31, 2004. We had purchased...

  • Page 61
    ... test was not required for fiscal 2011. 2010 and 2009 The annual goodwill impairment tests for fiscal 2010 and fiscal 2009 were performed using the two step goodwill impairment analysis. In Step One, the fair value of each reporting unit is compared to its book value. Management must apply judgment...

  • Page 62
    ...expenditures, cost of capital and discount rates as compared to the estimates utilized for the purpose of calculating the fair value of each reporting unit, as well as a decline in macroeconomic conditions, the industry, the market, overall financial performance or our stock price and related market...

  • Page 63
    ... cost to obtain performance related bonds, (n) adequacy of resources to fund expected working capital and capital expenditure measurements, (o) expected payments pursuant to commitments under long-term agreements, (p) the ability to meet minimum purchase obligations, (q) our ability to sell accounts...

  • Page 64
    ... primarily of cash, cash equivalents, Sigma Fund investments and short-term investments, as well as accounts payable and receivable. Accounts payable and receivable are reflected at fair value in the financial statements. Assuming the amounts of the outstanding foreign exchange contracts represent...

  • Page 65
    ... revenue arrangements that include software elements. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Motorola Solutions, Inc.'s internal control over financial reporting as of December 31, 2011, based on criteria established...

  • Page 66
    60 Motorola Solutions, Inc. and Subsidiaries Consolidated Statements of Operations (In millions, except per share amounts) Net sales from products Net sales from services Net sales Cost of product sales Cost of service sales Costs of sales Gross margin Selling, general and administrative expenses ...

  • Page 67
    ...Motorola Solutions, Inc. and Subsidiaries Consolidated Balance Sheets (In millions, except per share amounts) ASSETS Cash and cash equivalents Sigma Fund and short-term investments Accounts receivable, net Inventories, net Deferred income taxes Other current assets Current assets held for sale Total...

  • Page 68
    ...and stock options exercised Share repurchase program Excess tax benefit from stock-based compensation Share-based compensation expense Net loss on derivative instruments, net of tax of $(0) Distribution of Motorola Mobility Dividends paid to noncontrolling interest on subsidiary common stock Sale of...

  • Page 69
    ... from sales (purchases of) short-term investments, net Net cash provided by (used for) investing activities Financing Repayment of short-term borrowings, net Repayment of debt Contributions to Motorola Mobility Issuance of common stock Repurchase of common stock Excess tax benefits from share-based...

  • Page 70
    ... "Company" or "Motorola Solutions") and all controlled subsidiaries. All intercompany transactions and balances have been eliminated. The consolidated financial statements as of December 31, 2011 and 2010 and for the years ended December 31, 2011, 2010 and 2009, include, in the opinion of management...

  • Page 71
    ... purchase support on a time and materials basis. Additionally, advanced services such as general consulting, network management or advisory projects are often sold in stand-alone engagements. Technical support services are also often sold separately through renewals of annual contracts. The Company...

  • Page 72
    ...'s or A2/P-1 by Moody's Investors Service), U.S. dollar-denominated fixed income obligations, including certificates of deposit, commercial paper, government bonds, corporate bonds and asset- and mortgage-backed securities. Under the Sigma Fund's investment policies, except for obligations of the...

  • Page 73
    ...) exceeds the asset's (group's) fair value calculated using a discounted future cash flows analysis or market comparables. Assets held for sale, if any, are reported at the lower of the carrying amount or fair value less cost to sell. Income Taxes: Deferred tax assets and liabilities are recognized...

  • Page 74
    ... related to unrecognized tax benefits in Interest expense and penalties in Selling, general and administrative expenses in the Company's consolidated statements of operations. Sales and Use Taxes: The Company records taxes imposed on revenue-producing transactions, including sales, use, value added...

  • Page 75
    ... expected volatility, risk free rate, dividend yield, and expected life. Compensation cost for share-based awards is recognized on a straight-line basis over the vesting period. Retirement Benefits: The Company records annual expenses relating to its pension benefit and postretirement plans based on...

  • Page 76
    ...structured to be tax-free to Motorola Solutions and its stockholders for U.S. tax purposes (other than with respect to any cash received in lieu of fractional shares). The historical financial results of Motorola Mobility are reflected in the Company's consolidated financial statements and footnotes...

  • Page 77
    ... December 31 Other charges (income): Intangibles amortization Reorganization of businesses IP settlements and reserve adjustment Legal and related insurance matters, net Environmental reserve charge Pension plan adjustments, net Long-term financing receivable reserve 2011 2010 2009 $200 $203 $218 52...

  • Page 78
    ...: Years Ended December 31 Interest expense, net: Interest expense Interest income Other: Investment impairments Gain (loss) from the extinguishment of the Company's outstanding long-term debt Foreign currency gain Gain on Sigma Fund investments Other 2011 2010 2009 $(132) $(217) $(207) 58 88...

  • Page 79
    ... payments from non-current securities and sold the balance of the remaining securities for $67 million. Investments Investments consist of the following: Recorded Value Short-term Investments Investments Less Unrealized Unrealized Gains Losses Cost Basis December 31, 2011 Available-for-sale...

  • Page 80
    ... 31 Finished goods Work-in-process and production materials Less inventory reserves 2011 $ 398 284 682 (170) $ 512 Other Current Assets Other current assets consist of the following: December 31 Costs and earnings in excess of billings Contract-related deferred costs Tax-related refunds receivable...

  • Page 81
    ... liabilities consist of the following: December 31 Deferred revenue Compensation Billings in excess of costs and earnings Tax liabilities Customer reserves Networks purchase price adjustment Distribution related obligation Dividend payable Other 2011 2010 $ 774 $ 746 471 558 250 226 126 179 125...

  • Page 82
    ...of 2009, related to the payment of a dividend declared in November 2008. In February 2009, the Company announced that its Board of Directors suspended the declaration of quarterly cash dividends on the Company's common stock. During the years ended December 31, 2011, 2010, and 2009, the Company paid...

  • Page 83
    ... (expense) in the consolidated statements of operations. Aggregate requirements for long-term debt maturities during the next five years are as follows: 2012- $405 million; 2013-$5 million; 2014-$4 million; 2015-$4 million; and 2016-$5 million. Credit Facilities As of December 31, 2011, the Company...

  • Page 84
    ... that are not traded in liquid markets and these are addressed, to the extent reasonably possible, by managing net asset positions, product pricing and component sourcing. At December 31, 2011, the Company had outstanding foreign exchange contracts with notional amounts totaling $524 million...

  • Page 85
    ... aggregate credit risk with all counterparties. The following tables summarize the fair values and location in the consolidated balance sheets of all derivative financial instruments held by the Company, including immaterial amounts related to held for sale businesses, at December 31, 2011 and 2010...

  • Page 86
    ... 2009 $- $ 2 $ (7) (5) 3 21 2 (5) (12) $ (3) $- $ 2 2011 2010 Financial Statement Location $(1) 2 $(9) (6) Accumulated other comprehensive loss Cost of sales/Net sales 1 1 Other income (expense) Balance at January 1 Increase (decrease) in fair value Reclassifications to earnings, net of tax...

  • Page 87
    ...) Total income tax expense (benefit) $ 2011 2010 2009 $ 2 $ (45) $ 66 30 183 88 3 74 6 35 (118) 111 (31) (38) 212 373 (54) (128) 191 160 (49) 103 (26) 28 (3) $ 403 $188 Deferred tax charges that were recorded within Accumulated other comprehensive loss in the Company's consolidated balance sheets...

  • Page 88
    ... the historical and projected pre-tax profits generated by the Motorola Solutions U.S. operations. The Company also considered tax planning strategies that are prudent and can be reasonably implemented. During 2011, the Company recorded $274 million of tax benefits related to the reversal of...

  • Page 89
    ... Malaysia Singapore United Kingdom Tax Years 2008-2011 2002-2011 2004-2011 2008-2011 1996-2011 2007-2011 2005-2011 1998-2011 2005-2011 2004-2011 Although the final resolution of the Company's global tax disputes is uncertain, based on current information, in the opinion of the Company's management...

  • Page 90
    ... the Regular Pension Plan benefits that are lost by such individuals under the retirement formula due to application of the limitations imposed by the Internal Revenue Code. However, elected officers who are covered under the Officers' Plan or who participated in the restricted stock buy-out are...

  • Page 91
    ... net loss Settlement loss Net periodic pension cost Non-U.S. Plans Years Ended December 31 Service cost Interest cost Expected return on plan assets Amortization of: Unrecognized net loss Unrecognized prior service cost Settlement/curtailment gain Net periodic pension cost 2011 2010 2009 $ 17 $ 24...

  • Page 92
    ... Return on plan assets Company contributions Settlements/curtailments Employee contributions Foreign exchange valuation adjustment Tax payments from plan assets Benefit payments from plan assets Fair value at December 31 Funded status of the plan Unrecognized net loss Unrecognized prior service cost...

  • Page 93
    ...to meet or exceed the expected rate of return on plan assets assumption. To achieve this, the pension plans retain professional investment managers that invest plan assets in equity and fixed income securities and cash. In addition, some plans invest in insurance contracts. The Company's measurement...

  • Page 94
    ... service requirements upon termination of employment (the "Postretirement Health Care Benefits Plan"). For eligible employees hired prior to January 1, 2002, the Company offsets a portion of the postretirement medical costs to the retired participant. As of January 1, 2005, the Postretirement Health...

  • Page 95
    ...January 1 Return on plan assets Company contributions Benefit payments made with plan assets Fair value at December 31 Funded status of the plan Unrecognized net loss Unrecognized prior service cost Accrued postretirement health care costs Components of accrued postretirement health care cost: Years...

  • Page 96
    ...in the discount rate trend assumption with respect to the liability and related expense. The Company has no significant Postretirement Health Care Benefit Plans outside the United States. Other Benefit Plans The Company maintains a number of endorsement split-dollar life insurance policies that were...

  • Page 97
    ... The net periodic pension cost for these split-dollar life insurance arrangements was $5 million for the years ended December 31, 2011 and 2010. The Company has recorded a liability representing the actuarial present value of the future death benefits as of the employees' expected retirement date of...

  • Page 98
    ... exercisable at December 31 Approx. number of employees granted options At December 31, 2011, the Company had $36 million of total unrecognized compensation expense, net of estimated forfeitures, related to stock option plans and the employee stock purchase plan that will be recognized over the...

  • Page 99
    ...reflect Mobility spin-off Vested Terminated, canceled or expired RS and RSU outstanding at December 31 Approx. number of employees granted RSUs (2,407) (867) 9,559 29,973 58 56 51 (988) (1,033) 8,061 26,969 80 60 55 At December 31, 2011, the Company had unrecognized compensation expense related...

  • Page 100
    ... stock purchase plans, RS and RSUs was as follows: Year Ended December 31 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...

  • Page 101
    ...3 The following table summarizes the changes in fair value of our Level 3 assets: 2011 2010 $ 15 $ 19 21 3 (39) (11) 3 4 $ - $ 15 Balance at January 1 Transfers to Level 3 Payments received for securities sold Gain on Sigma Fund investments included in Other income (expense) Balance at December 31

  • Page 102
    ...care benefits plans' assets by level in the fair value hierarchy as of December 31, 2011 and 2010 were as follows: Regular Pension Plan December 31, 2011 Common stock and equivalents Commingled equity funds Preferred stock U.S. government and agency obligations Other government bonds Corporate bonds...

  • Page 103
    ... held Foreign exchange valuation adjustment Balance at December 31 Postretirement Health Care Benefits Plan December 31, 2011 Common stock and equivalents Commingled equity funds U.S. government and agency obligations Corporate bonds Mortgage-backed bonds Commingled bond funds Commingled short-term...

  • Page 104
    ...its consolidated balance sheet. The money market funds have quoted market prices that are generally equivalent to par. Using quoted market prices and market interest rates, the Company determined that the fair value of long-term debt at December 31, 2011 was $1.6 billion, compared to a face value of...

  • Page 105
    ... annually. The Company may or may not retain the obligation to service the sold accounts receivable and long-term receivables. The Company had no revolving sales facilities as of December 31, 2011. At December 31, 2010, the Company had a $200 million committed revolving credit facility for the sale...

  • Page 106
    ... 31, 2011, is zero. Under certain arrangements, the value of accounts receivable sold is supported by credit insurance purchased from third-party insurance companies, less deductibles or self-insurance requirements under the insurance policies. Under these arrangements, the Company's total credit...

  • Page 107
    ...The Enterprise segment includes sales of rugged and enterprise-grade mobile computers and tablets, laser/imaging/RFID-based data capture products, WLAN and iDEN infrastructure, software, and services. For the years ended December 31, 2011, 2010 and 2009, no single customer accounted for more than 10...

  • Page 108
    ... cash and cash equivalents, Sigma Fund, deferred income taxes, short-term investments, property, plant and equipment, investments, and the administrative headquarters of the Company. Geographic area information Property, Plant, and Net Sales Assets Equipment, net 2010 2009 2011 2010 2009 2011 2010...

  • Page 109
    ...in the Company's consolidated balance sheets at December 31, 2011, is expected to be paid, generally, within one year to: (i) severed employees who have already begun to receive payments, and (ii) approximately 600 employees to be separated in 2012. 2010 Charges During 2010, the Company continued to...

  • Page 110
    ...in the Company's consolidated balance sheets at December 31, 2010, represents future cash payments, primarily for lease termination obligations. Employee Separation Costs At January 1, 2010, the Company had an accrual of $31 million for employee separation costs, representing the severance costs for...

  • Page 111
    ... the Company's consolidated balance sheets at December 31, 2009, represented future cash payments, primarily for lease termination obligations. Employee Separation Costs At January 1, 2009, the Company had an accrual of $42 million for employee separation costs, representing the severance costs for...

  • Page 112
    ... for the years ended December 31, 2011, 2010 and 2009, respectively. As of December 31, 2011 future amortization expense is estimated to be $25 million in 2012, $10 million in 2013, $8 million in 2014 and $3 million in 2015 and $2 million in 2016. Amortized intangible assets, excluding goodwill, by...

  • Page 113
    ...it is the Company's view that future discounted cash flows are more reflective of the value of the reporting units. Based on the results of the 2009 and 2010 annual assessments of the recoverability of goodwill, the fair values of all reporting units exceeded their book values, indicating that there...

  • Page 114
    ... Financial Data (unaudited)* 2011 1st Operating Results Net sales Costs of sales Gross margin Selling, general and administrative expenses Research and development expenditures Other charges Operating earnings Earnings (loss) from continuing operations** Net earnings** Per Share Data (in dollars...

  • Page 115
    ... covered by this annual report (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...

  • Page 116
    ... of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Motorola Solutions, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders' equity and comprehensive income, and cash flows for...

  • Page 117
    ...that applies to all employees, including the Company's principal executive officer, principal financial officer and controller (principal accounting officer). The Code is posted on Motorola Solutions' Internet website, www.motorolasolutions.com/investor, and is available free of charge, upon request...

  • Page 118
    ... Index attached hereto, which is incorporated herein by this reference. Exhibit numbers 10.10 through 10.75, listed in the attached Exhibit Index, are management contracts or compensatory plans or arrangements required to be filed as exhibits to this form by Item 15(b) hereof. (b) Exhibits: See...

  • Page 119
    ... 31, 2011, and the effectiveness of internal control over financial reporting as of December 31, 2011, which reports appear in the December 31, 2011 annual report on Form 10-K of Motorola Solutions, Inc. As discussed in note 1 to the consolidated financial statements, in 2010, the Company adopted...

  • Page 120
    ...Chief Executive Officer and Director (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Corporate Vice President and Chief Accounting Officer (Principal Accounting Officer) Director February 15, 2012 February 15, 2012 February 15, 2012...

  • Page 121
    ...to the Form 10 Registration Statement filed on August 31, 2010 by Motorola Mobility Holdings, Inc. (formerly Motorola SpinCo Holdings Corporation) (File No. 1-34805)). Amended and Restated Intellectual Property License Agreement between Motorola Mobility, Inc. and Motorola, Inc. effective as of July...

  • Page 122
    ...' Annual Report on Form 10-K for the fiscal year ended December 31, 2010 ( File No. 1-34805)). Form of Motorola, Inc. Award Document-Terms and Conditions Related to Employee Nonqualified Stock Options relating to the Motorola Solutions Omnibus Incentive Plan of 2006 for grants from August 1, 2009 to...

  • Page 123
    ... 27, 2007 to May 5, 2008 (incorporated by reference to Exhibit 10.3 to Motorola, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (File No. 1-27221)). Motorola Solutions, Inc. Amended Award Document-Terms and Conditions Related to Employee Nonqualified Stock Options and...

  • Page 124
    ... Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (File No. 1-7221)). Form of Motorola Solutions Deferred Stock Units Agreement between Motorola Solutions, Inc. and its non-employee directors, relating to the deferred stock units issued in lieu of cash compensation to directors...

  • Page 125
    ... Solutions' Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (File No. 1-34805)). Form of Deferred Stock Units Award between Motorola, Inc. and its non-employee directors under the Motorola Omnibus Incentive Plan of 2006 or any successor plan for grants from February 11, 2007...

  • Page 126
    ... the caption "Director Retirement Plan and Insurance Coverage" of the Motorola Solutions' Proxy Statement and to Exhibit 10.6 to Motorola Solutions' Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, 2011 (File No. 1-7221). Employment Agreement dated August 27, 2008 by and between...

  • Page 127
    ... No. 1 to the Form 10 Registration Statement filed on August 31, 2010 by Motorola Mobility Holdings, Inc. (formerly Motorola SpinCo Holdings Corporation) (File No. 1-34805)). Aircraft Time Sharing Agreement dated May 4, 2009, by and between Motorola, Inc. and Gregory Q. Brown (incorporated by...

  • Page 128
    ...contacting the Investor Relations Department as listed above. Independent Registered Public Accounting Firm Auditors KPMG LLP 303 East Wacker Drive Chicago, IL 60601 U.S.A. Non-Incorporation Motorola Solutions' 2011 Form 10-K, as filed with the SEC, is included within this Annual Report. Other than...

  • Page 129
    ...global economy. We are proud that our products support mobile transactions of all kinds, as well as the safety and security of citizens everywhere. Working with our global channel partner community, Motorola Solutions reaches an extensive customer base, from small businesses to Fortune 500 companies...

  • Page 130
    MOTOROLA INNOVATES TO MOBILIZE AND CONNECT PEOPLE IN THE MOMENTS THAT MATTER

  • Page 131
    ...LLC and are used under license. All other trademarks are the property of their respective owners. © 2012 Motorola Solutions, Inc. All rights reserved. Motorola Solutions, Inc. trades under the symbol MSI and is proud to meet the listing requirements of the NYSE, the world's leading equities market.