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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 10-K
_____________________________
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2013
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
_____________________________
MOTOROLA SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
_____________________________
DELAWARE 36-1115800
(State of Incorporation) (I.R.S. Employer Identification No.)
1303 East Algonquin Road, Schaumburg, Illinois 60196
(Address of principal executive offices)
(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 Registered
Common Stock, $.01 Par Value per Share New York Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
_____________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. Yes No
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 and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted 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 and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June 28, 2013 (the last business day of
the Registrant’s most recently completed second quarter) was approximately $13.6 billion.
The number of shares of the registrant’s Common Stock, $.01 par value per share, outstanding as of January 31, 2014 was 253,865,362.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement to be delivered to stockholders in connection with its Annual Meeting of Stockholders to be held on
May 5, 2014, are incorporated by reference into Part III.

Table of contents

  • Page 1
    ...) (Address of principal executive offices) 36-1115800 (I.R.S. Employer Identification No.) 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...

  • Page 2
    ... 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 Certain Beneficial Owners and Management and Related...

  • Page 3
    ... infrastructure, software and applications that are associated with these products. Enterprise service revenues include maintenance, integration, and device and network management. We were incorporated under the laws of the State of Delaware as the successor to an Illinois corporation, Motorola, Inc...

  • Page 4
    ..., and maintenance services for both public safety and private communications networks. Our lifecycle management services have been expanded to include: (i) offerings which maintain system operations via hardware and software maintenance, (ii) device management, (iii) migration assistance programs to...

  • Page 5
    .... These specialized computers are used in industrial applications (e.g. inventory management in warehouses and distribution centers), field mobility applications (e.g. field service, post and parcel, and direct store delivery) and customer facing applications (e.g. mobile point of sale and staff...

  • Page 6
    ... information technology resources required in retail branches, indoor and outdoor access for distribution centers, and access points designed specifically for hospitality guest rooms. iDEN: We design and deliver network infrastructure, software, and services supporting the iDen mobile communication...

  • Page 7
    ... enhancements to our existing products. In the Government segment our R&D programs are focused on the development of: (i) new public safety devices and infrastructure, (ii) public safety broadband networks based on the LTE standard, (iii) critical command center applications that include voice...

  • Page 8
    ..., this would harmonize Canada's 700 MHz band plan with that in the U.S. In June 2013, in Mexico, the Constitutional Reform in Telecommunications Law went into effect which requires the federal government to build a nationwide broadband network through a public-private partnership, using 90 MHz...

  • Page 9
    .... We provide custom products which require the stocking of inventories and a large variety of piece parts and replacement parts in order to meet delivery and warranty requirements. To the extent suppliers' product life cycles are shorter than ours, stocking of lifetime buy inventories is required to...

  • Page 10
    ... may also be obtained without charge by 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 8

  • Page 11
    hardcopy by clicking on "Printed Materials" at www.motorolasolutions.com/investors. Our Internet website and the information contained therein or incorporated therein are not intended to be incorporated into this Annual Report on Form 10K. 9

  • Page 12
    ... financing, including public financing or government grants, in order to fund their operations and make purchases from us. The inability of these customers to obtain sufficient credit or other funds to finance purchases of our products and services and/or to meet their payment obligations to us...

  • Page 13
    ... of funding for a government program or insolvency of managed services enterprise customers could result in a loss of anticipated future revenue attributable to that program, which could have an adverse impact on our profitability. The expansion of our global solutions and services business...

  • Page 14
    ... are tightly controlled by federal, state and local laws. Failure to comply with these laws could cost us opportunities to seek certain government sales opportunities or even result in fines, prosecution, or debarment. Government regulation of radio frequencies may limit the growth of public safety...

  • Page 15
    ... result in greater product returns, service problems, warranty claims and costs and regulatory compliance issues and could harm our business, financial condition and results of operations. Many of our components and products, including software, are designed, developed and/or manufactured by third...

  • Page 16
    ... funds and other credit related products. In addition, we may avoid taking actions that would otherwise benefit us or our stockholders, such as engaging in certain acquisitions or engaging in stock repurchases, that would negatively impact our credit rating. Returns on pension and retirement plan...

  • Page 17
    ... meet customers' demands depends, in part, on our ability to timely obtain an adequate delivery of quality materials, parts and components, as well as services and software from our suppliers. In addition, certain supplies are available only from a single source or limited sources and we may not be...

  • Page 18
    ... of revenue or future orders, (ii) customer-imposed penalties on us for failure to meet contractual requirements, (iii) increased costs associated with repairing or replacing products, and (iv) a negative impact on our goodwill and brand name reputation. In some cases, if the quality issue affects...

  • Page 19
    ... softwarerelated intellectual property as a result of either our use of open-source software code or the use of third-party software that contains open-source code. Since our products are comprised of complex technology, much of which we acquire from suppliers through the purchase of components...

  • Page 20
    ... as the sale to Lenovo, or bankruptcy of Motorola Mobility could result in an incompatible third-party owning the Motorola Marks. We have a worldwide, perpetual and royalty-free license from MTH to use the Motorola Marks as part of our corporate name and in connection with the manufacture, sale, and...

  • Page 21
    ... value in connection with a transaction in the form of cash payments for their ownership interest, particularly in the case of founders, change-in-control agreements, acceleration of stock options and the lifting of restrictions on other equity-based compensation rights. To retain such employees...

  • Page 22
    ... could result in lost benefits in impacted countries and increase our cost of doing business. We have entered into various agreements with non-U.S. governments, agencies or similar organizations under which we receive certain benefits relating to its operations and/or sales in the jurisdiction. If...

  • Page 23
    ... costs could negatively impact our financial results. Item 1B: 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...

  • Page 24
    ... 42; Corporate Vice President and Chief Accounting Officer since November 3, 2009; Vice President and Assistant Controller from March 2008 to November 2009. The above executive officers will serve as executive officers of Motorola Solutions until the regular meeting of the Board of Directors in May...

  • Page 25
    ... under "Item 8: Financial Statements and Supplementary Data.'' The following table provides information with respect to acquisitions by the Company of shares of its common stock during the quarter ended December 31, 2013. ISSUER PURCHASES OF EQUITY SECURITIES (d) Approximate Dollar Value of Shares...

  • Page 26
    ... the five-year cumulative total returns of Motorola Solutions, Inc., the S&P 500 Index and the S&P Communications Equipment Index. This graph assumes $100 was invested in the stock or the Index on December 31, 2008 and reflects the payment of dividends, including the Company's distribution to its...

  • Page 27
    ... Costs of product 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 Gains on sales of investments and businesses, net Other Total...

  • Page 28
    ... data capture products, wireless local area network ("WLAN") and integrated digital enhanced network ("iDEN") infrastructure, software and applications that are associated with these products. Enterprise service revenues include maintenance, integration, and device and network management. Change in...

  • Page 29
    ... of the largest TETRA networks in the world, delivering voice and data services to the UK's emergency services and (ii) a $187 million public safety contract with Libya to provide country-wide coverage. • In our Enterprise segment: The core product lines stabilized and returned to growth over the...

  • Page 30
    ... various enterprise environments, including devices on Microsoft with Windows Embedded 8, Android, and at the web-browser level, HTML5. Outside of our investment in mobile computing, we continue to invest in new products across the Enterprise portfolio that serve many existing customers, but address...

  • Page 31
    ... Costs of product 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 Gains on sales of investments and businesses, net Other Total...

  • Page 32
    ... iDEN sales, which typically have higher margins, and (iii) higher Psion sales in its first full year since being acquired in the fourth quarter of 2012, which typically have lower margins than other core product lines in the Enterprise segment. Selling, General and Administrative Expenses Selling...

  • Page 33
    ... Sigma Fund, as discussed within "Liquidity and Capital Resources." The tax benefit for excess foreign tax credits relates to the repatriation of foreign earnings of certain non-U.S. subsidiaries reorganized under our recently implemented holding company structure. Our effective tax rate in 2012 was...

  • Page 34
    ...general and administrative ("SG&A") expenses increased 3% to $2.0 billion, or 22.6% of net sales in 2012, compared to $1.9 billion, or 23.2% of net sales in 2011. The increase in SG&A expenses is driven by an increase in pension and employee benefit-related expenses, as well as the Psion acquisition...

  • Page 35
    ...by a decrease in variable compensation expenses and reduced defined benefit plan expenses, partially offset by a mix change where infrastructure and deployment services growth was offset by radio declines. Segment Results-2012 Compared to 2011 In 2012, the segment's net sales were $6.0 billion, a 12...

  • Page 36
    ... product and service mix. The decrease in SG&A expenses was driven by a decrease in variable compensation expenses and reduced defined benefit expenses, partially offset by incremental expenses relating to the Psion acquisition. Segment Results-2012 Compared to 2011 In 2012, the segment's net sales...

  • Page 37
    ... ended December 31 Government Enterprise 2013 $ $ 86 47 133 $ $ 2012 33 17 50 $ $ 2011 40 18 58 Cash payments for exit costs and employee separations in connection with these reorganization plans were $59 million in 2013, as compared to $55 million in 2012, and $81 million in 2011. The $109 million...

  • Page 38
    ... million to our non-U.S. pension plans during 2013, 2012, and 2011 respectively. Our pension deficit is 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...

  • Page 39
    ...proceeds received in 2013 were primarily comprised of proceeds from sales of equity investments. The $38 million of disbursements in 2012 were primarily comprised of payments to NSN related to the purchase price adjustment from the sale of the Networks business completed in 2011, partially offset by...

  • Page 40
    ... and other equipment, principally under non-cancelable operating leases. Our future minimum lease obligations, net of minimum sublease rentals, totaled $491 million. Rental expense, net of sublease income, was $66 million in 2013, $65 million in 2012, and $92 million in 2011. Purchase Obligations...

  • Page 41
    ... supplier on-hand 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...

  • Page 42
    ...: -Revenue recognition -Inventory valuation -Income taxes -Restructuring activities -Retirement benefits -Valuation and recoverability of goodwill Revenue Recognition Net sales consist of a wide range of activities including the delivery of stand-alone equipment or services, custom design and...

  • Page 43
    ..., we generally recognize revenue for the sale of products obtained from other companies based on the gross amount billed. Within the Enterprise segment, products are often sold through distributors to value-added resellers. In addition to cooperative marketing and other incentive programs, we...

  • Page 44
    ... entirely of software or software-related products, including the sale of software upgrades or software support agreements to previously sold software, in accordance with software accounting guidance. For such arrangements, revenue is allocated to the deliverables based on the relative fair value of...

  • Page 45
    ... inventory balance at December 31, 2013, compared to 24% of the gross inventory balance at December 31, 2012. We have inventory reserves for excess inventory, pending cancellations of product lines due to technology changes, long-life cycle products, lifetime buys at the end of supplier production...

  • Page 46
    ... benefit plan, the Motorola Supplemental Pension Plan ("MSPP"), which provides supplemental benefits to individuals by replacing 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...

  • Page 47
    ...Covered retirees are able to use the annual subsidy they receive through this account toward the purchase of their own health care coverage from private insurance companies and for reimbursement of eligible health care expenses. The amendment to the Postretirement Health Care Benefits Plan effective...

  • Page 48
    ... is derived based on Motorola Solutions' consolidated stock price. We also used the guideline company method, which focuses on comparing our risk profile and growth prospects to select guideline publicly traded companies. • The determination of fair value of the reporting units and assets and...

  • Page 49
    ...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 50
    ... programs and employee separation costs, (g) our ability and cost to repatriate funds, (h) the impact of the timing and level of sales and the geographic location of such sales, (i) the impact of maintaining inventory, (j) future cash contributions to pension plans or retiree health benefit plans...

  • Page 51
    ... possible, by managing net asset positions, product pricing and component sourcing. At December 31, 2013, we had outstanding foreign exchange contracts totaling $837 million, compared to $523 million outstanding at December 31, 2012. Management believes that these financial instruments should not...

  • Page 52
    ® Reg. U.S. Patent & Trademark Office. MOTOROLA MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo, as well as iDEN are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other products or service names are the property of their respective owners...

  • Page 53
    ... REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders Motorola Solutions, Inc.: We have audited the accompanying consolidated balance sheets of Motorola Solutions, Inc. and Subsidiaries (the Company) as of December 31, 2013 and 2012, and the related consolidated statements of...

  • Page 54
    ... Costs of product 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 Gains on sales of investments and businesses, net Other Total...

  • Page 55
    ... instruments, net of tax of $1, $(1), and $0 Net unrealized gain (loss) on securities, net of tax of $1, $1, and $(1) Total other comprehensive income (loss) Comprehensive income Less: Earnings (loss) attributable to noncontrolling interest Comprehensive income attributable to Motorola Solutions...

  • Page 56
    Motorola Solutions, Inc. and Subsidiaries Consolidated Balance Sheets December 31 (In millions, except par value) ASSETS Cash and cash equivalents Sigma Fund and short-term investments Accounts receivable, net Inventories, net Deferred income taxes Other current assets Total current assets Property,...

  • Page 57
    ... Share repurchase program Excess tax benefit from share-based compensation Share-based compensation expense Net loss on derivative hedging instruments, net of tax of $(0) Distribution of Motorola Mobility Dividends paid to noncontrolling interest on subsidiary common stock Sale of noncontrolling...

  • Page 58
    ... Proceeds from sales of short-term investments, net Net cash provided by investing activities from continuing operations Financing Repayment of debt Net proceeds from issuance of debt Contributions to Motorola Mobility Issuance of common stock Purchase of common stock Excess tax benefit from share...

  • Page 59
    ..., the Company generally recognizes revenue for the sale of products obtained from other companies based on the gross amount billed. Within the Enterprise segment, products are often sold through distributors to value-added resellers. In addition to cooperative marketing and other incentive programs...

  • Page 60
    ... total estimates of revenue to be earned, a provision for the entire loss on the contract is recorded in the period the loss is determined. Hardware and Software Services Support Revenue under equipment and software maintenance agreements, which do not contain specified future software upgrades...

  • Page 61
    ... Company accounts for multiple-element arrangements that consist entirely of software or software-related products, including the sale of software upgrades or software support agreements to previously sold software, in accordance with software accounting guidance. For such arrangements, revenue is...

  • Page 62
    ... 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 63
    .... Retirement Benefits: The Company records annual expenses relating to its pension benefit and postretirement plans based on calculations which include various actuarial assumptions, including discount rates, assumed asset rates of return, compensation increases, turnover rates and health care cost...

  • Page 64
    ..., marine and airband radio businesses, formerly included as part of the Government segment, are reported as discontinued operations in the consolidated statements of operations for all periods presented. On October 28, 2011, the Company completed the sale of its wireless broadband businesses. During...

  • Page 65
    3. Other Financial Data Statement of Operations Information Other Charges Other charges included in Operating earnings consist of the following: Years ended December 31 Other charges: Intangibles amortization Reorganization of businesses Legal and related insurance matters, net Other $ 2013 $ 26 ...

  • Page 66
    ... to Motorola Solutions, Inc...securities: Share-based awards Diluted weighted average common shares outstanding Per share amount $ $ 2013 2012 2011 2013 Net Earnings 2012 2011...basis for the years ended December 31, 2013 and December 31, 2012, the assumed exercise of 5.6 million and 5.9 million stock...

  • Page 67
    ...of cash surrender values of its split-dollar value life insurance plans as of December 31, 2012, from Other assets to Investments, to conform to the balance sheet presentation as of December 31, 2013. During the years ended December 31, 2013, 2012 and 2011, the Company recorded investment impairment...

  • Page 68
    ...-process and production materials Less inventory reserves $ 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 deposits and refunds receivable Other 2013 $ 390 105 113 159 767 $ 2012 416...

  • Page 69
    ... dollar life insurance arrangements Postretirement health care benefit plan Deferred revenue Unrecognized tax benefits Other $ 778 334 295 95 146 79 675 2,402 $ $ 2013 1,759 117 302 102 205 2,485 $ $ 2012 3,389 167 304 98 237 4,195 Stockholders' Equity Information Share Repurchase Program...

  • Page 70
    ... Benefit Items: Prior-service costs Actuarial net losses $ $ 2013 (1) Cost of sales (1) Net of tax Gains on sales of investments and businesses, (4) net 1 Tax expense (3) Net of tax $ (49) Selling, general, and administrative expenses 159 Selling, general, and administrative expenses 110 Total...

  • Page 71
    ... as of December 31, 2013. The Company has never borrowed under the 2011 Motorola Solutions Credit Agreement. At December 31, 2013, the commitment fee assessed against the daily average unused amount was 25 basis points. 5. Risk Management Derivative Financial Instruments Foreign Currency Risk The...

  • Page 72
    ... rate payments from variable to maximum fixed-rate payments. The Interest Agreements are not accounted for as a part of a hedging relationship and, accordingly, the changes in the fair value of the Interest Agreements are included in Other income (expense) in the Company's consolidated statements...

  • Page 73
    ... Derivatives not designated as hedging instruments: Interest rate contracts Foreign exchange contracts Total derivatives not designated as hedging instruments $ 2013 2012 2011 Statement of Operations Location $ 2 6 8 $ (1) $ (13) (14) $ (1) Other income (expense) (17) Other income (expense) (18...

  • Page 74
    ..., net of tax Balance at December 31 $ 1 $ (1) (1) (1) $ 2012 (3) $ 3 1 1 $ 2011 - (1) (2) (3) 2013 2012 2011 Financial Statement Location Accumulated other comprehensive loss Cost of sales $ (1) $ 1 3 (1) $ (1) 2 - - 1 Other income (expense) $ 6. Income Taxes Components of earnings...

  • Page 75
    ... tax credit. The Company recently reorganized certain of its non-U.S. subsidiaries under a holding company structure in order to facilitate the efficient movement of non-U.S. cash and provide a platform to fund foreign investments, such as potential acquisitions and capital expenditures. During 2013...

  • Page 76
    ...Inventory Accrued liabilities and allowances Employee benefits Capitalized items Tax basis differences on investments Depreciation tax basis differences on fixed assets Undistributed non-U.S. earnings Tax carryforwards Business reorganization Warranty and customer reserves Deferred revenue and costs...

  • Page 77
    ... Balance at December 31 $ 161 $ 16 72 (10) (82) (1) 156 $ 2012 191 11 11 (24) (24) (4) 161 $ During 2013, the Company recorded a net increase in unrecognized tax benefits related to prior year tax positions of $72 million, of which $63 million related to previously accrued non-U.S. income taxes...

  • Page 78
    ... Malaysia Singapore United Kingdom Tax Years 2008-2013 2002-2013 2009-2013 2008-2013 1997-2013 2012-2013 2009-2013 2008-2013 2009-2013 2007-2013 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 79
    ... from private insurance companies and for reimbursement of eligible health care expenses. Net Periodic Cost The net periodic costs (benefit) for pension and Postretirement Health Care Benefits plans were as follows: U.S. Pension Benefit Plans Years ended December 31 2013 2012 2011 $ - $ Service cost...

  • Page 80
    ... value at January 1 Return on plan assets Company contributions Employee contributions Foreign exchange valuation adjustment Benefit payments from plan assets Fair value at December 31 Funded status of the plan Unrecognized net loss Unrecognized prior service benefit Prepaid (accrued) pension cost...

  • Page 81
    ... to determine costs for the plans were as follows: U.S. Pension Benefit Plans December 31 Discount rate Investment return assumption 2013 4.35% 7.00% 2012 5.10% 8.25% Non U.S. Pension Benefit Plans 2012 2013 4.16% 6.05% 4.61% 6.24% Postretirement Health Care Benefits Plan 2013 3.80% 7.00% 2012 4.75...

  • Page 82
    ...retired officers under a plan that was frozen prior to December 31, 2004. The Company had purchased the life insurance policies to insure the lives of employees and then entered into a separate agreement with the employees that split the policy benefits between the Company and the employee. Motorola...

  • Page 83
    ...to fund these policies. The net periodic pension cost for these split-dollar life insurance arrangements was $5 million for the years ended December 31, 2013, 2012 and 2011. The Company has recorded a liability representing the actuarial present value of the future death benefits as of the employees...

  • Page 84
    ...15,729 11,184 270 39 59 63 74 At December 31, 2013, the Company had $23 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 weighted average period of approximately two...

  • Page 85
    ... employees of Motorola Mobility were cancelled. Upon the completed divestiture of the Networks business on April 29, 2011, approximately 1.4 million unvested RSUs were cancelled. Total Share-Based Compensation Expense Compensation expense for the Company's employee stock options, stock appreciation...

  • Page 86
    ... Value Measurements The Company holds certain fixed income securities, equity securities and derivatives, which are recognized and disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer...

  • Page 87
    ... 31, 2013 and 2012 were as follows: U.S. Pension Benefit Plans December 31, 2013 Common stock and equivalents Commingled equity funds Preferred stock Government, agency and government-sponsored enterprise obligations Other government bonds Corporate bonds Mortgage-backed bonds Commingled bond funds...

  • Page 88
    ... or 2012. Non-U.S. Pension Benefit Plans December 31, 2013 Common stock and equivalents Commingled equity funds Government, agency, and government-sponsored enterprise obligations Corporate bonds Commingled bond funds Commingled short-term investment funds Total investment securities Accrued income...

  • Page 89
    ..., 2012 Common stock and equivalents Commingled equity funds Corporate bonds Government, agency, and government-sponsored enterprise obligations Commingled bond funds Commingled short-term investment funds Total investment securities Cash Accrued income receivable Insurance contracts* Fair value plan...

  • Page 90
    ..., and government sponsored enterprise fixed income securities. Our pension plan assets also include commingled equities classified as Level 2. These securities are priced using pricing services, bid/offer, and last trade. Prices may also be obtained from brokers, counterparties, fund administrators...

  • Page 91
    ... Contingencies Lease Obligations The Company leases certain office, factory and warehouse space, land, and information technology and other equipment under principally non-cancelable operating leases. Rental expense, net of sublease income, for the years ended December 31, 2013, 2012 and 2011 was...

  • Page 92
    ... general warranties contained in certain commercial and intellectual property agreements. Historically, the Company has not made significant payments under these agreements. In addition, pursuant to the Master Separation and Distribution Agreement and certain other agreements with Motorola Mobility...

  • Page 93
    ... service revenues include maintenance, integration, and device and network management. For the years ended December 31, 2013, 2012 and 2011, no single customer accounted for more than 10% of the Company's net sales. Segment Information Net Sales Years ended December 31 Government Enterprise $ Total...

  • Page 94
    ... at the time a restructuring plan is approved by management. Exit costs consist of future minimum lease payments on vacated facilities and other contractual terminations. At each reporting date, the Company evaluates its accruals for employee separation and exit costs to ensure the accruals are...

  • Page 95
    ... plans. The employees affected were located in all geographic regions. During 2012, the Company recorded net reorganization of business charges of $50 million, including $9 million of charges in Costs of sales and $41 million of charges under Other charges in the Company's consolidated statements...

  • Page 96
    ...) $ 44 2011 Exit costs Employee separation costs Adjustments $ $ 1 $ (3) (2) $ 14. Intangible Assets and Goodwill The Company accounts for acquisitions using purchase accounting with the results of operations for each acquiree included in the Company's consolidated financial statements for the...

  • Page 97
    ... unit's goodwill. A charge is recorded in the financial statements if the carrying value of the reporting unit's goodwill is greater than its implied fair value. The Company weighted the valuation of its reporting units at 50% based on the income approach and 50% based on the market-based approach...

  • Page 98
    ... including macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, changes in share price, and entity-specific events. In addition, the Company considered the fair value derived for each reporting unit in conjunction with the 2010 goodwill impairment...

  • Page 99
    ... 1,060 496 269 17 278 177 182 $ 2012 3rd 2,153 1,066 1,087 485 262 16 324 206 206 $ 4th 2,441 1,212 1,229 510 290 6 423 336 336 Operating Results Net sales Costs of sales Gross margin Selling, general and administrative expenses Research and development expenditures Other charges Operating earnings...

  • Page 100
    ... 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 our...

  • Page 101
    ...standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Motorola Solutions, Inc. and Subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows...

  • Page 102
    ...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 to Investor Relations, Motorola Solutions, Inc., Corporate Offices, 1303 East Algonquin Road, Schaumburg, Illinois...

  • Page 103
    ... 15: Exhibits, Financial Statement Schedules (a) 1. Financial Statements See Part II, Item 8 hereof. 2. Financial Statement Schedules and Independent Auditors' Report All schedules omitted are inapplicable or the information required is shown in the consolidated financial statements or notes thereto...

  • Page 104
    ... of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and the effectiveness of internal control over financial reporting as of December...

  • Page 105
    ...its behalf by the undersigned, thereunto duly authorized. MOTOROLA SOLUTIONS, INC. By: /S/ GREGORY Q. BROWN Gregory Q. Brown Chairman and Chief Executive Officer February 13, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following...

  • Page 106
    ... No. 2 to the Form 10 Registration Statement filed on October 8, 2010 by Motorola Mobility Holdings, Inc. (formerly Motorola SpinCo Holdings Corporation (File No. 1-34805)). 10.6 Stock Purchase Agreement, dated as of February 26, 2012, by and between Motorola Solutions, Inc. and Carl C. Icahn and...

  • Page 107
    ...Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2009 (File No. 1-7221)). 10.12 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 May 6, 2008 to...

  • Page 108
    ....'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (File No. 1-7221)). 10.37 Form of Motorola Solutions Deferred Stock Units Agreement between Motorola Solutions, Inc. and its nonemployee directors, relating to the deferred stock units issued in lieu of cash compensation to...

  • Page 109
    ... 10.9 to Motorola, Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2009 (File No. 1-7221)). 10.48 Form of Motorola, Inc. Award Document-Terms and Conditions Related to Non-Employee Director Nonqualified Stock Options relating to the Motorola Omnibus Incentive Plan of 2002...

  • Page 110
    ... of Insurance covering non-employee directors and their spouses (including a description incorporated by reference from the information under the caption "Director Retirement Plan and Insurance Coverage" of the Motorola Solutions' Proxy Statement. 10.69 Employment Agreement dated August 27, 2008 by...

  • Page 111
    ... 2002. XBRL Instance Document XBRL Taxonomy Extension Scheme Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith 109