01—Abstract
Summary
Summary of the 10-K filed February 13, 2015. Cited figures are marked; the original filing is the authoritative source.
Motorola Solutions, Inc. (MSI) reported net sales of $5.9 billiona for the year ended December 30, 2014, a decrease from $6.2 billion in 2013.
The company experienced an operating loss of $1.0 billionb in 2014, primarily due to a significant $1.9 billion pension settlement charge. This resulted in a net loss from continuing operations of $697 million, or $(2.84) per diluted share, a stark contrast to the $933 million in earnings, or $3.45 per diluted share, reported in 2013. The company completed the sale of its Enterprise business to Zebra Technologies for $3.5 billion, reclassifying these results as discontinued operations.
This strategic divestiture allows Motorola Solutions to focus on its core mission-critical communication infrastructure, devices, software, and services for government and public safety customers. Despite the overall financial loss in continuing operations, the company highlighted structural improvements such as a reduced cost base, a growing backlog, and a strengthened financial profile with lower pension obligations.
Looking ahead, Motorola Solutions aims to leverage its leadership in digital migration, expand its services offerings, and capitalize on opportunities in public safety LTE solutions. The company continues to prioritize R&D, returning capital to shareholders through repurchases and dividends, and aims for further operational expense reductions in the coming year.
02—Key points
Key Highlights
- Reported a net loss from continuing operations of $697 million in 2014, compared to net earnings of $933 million in 2013, heavily impacted by a $1.9 billion pension settlement charge.
- Completed the sale of its Enterprise business to Zebra Technologies for $3.5 billion in October 2014, reclassifying those results as discontinued operations.
- Net sales decreased by 6% to $5.9 billion in 2014 from $6.2 billion in 2013, with declines across both Products and Services segments, particularly in North America and APME.
- Operating expenses were reduced by over $200 million in 2014 through restructuring and efficiency measures.
- Returned approximately $2.9 billion in capital to shareholders in 2014 through share repurchases ($2.5 billion) and dividends ($318 million).
- Ended 2014 with a record backlog of $5.8 billion, a 6% increase year-over-year, with a significant portion in the Services segment.
- Invested in next-generation public safety broadband solutions based on LTE technology, winning significant deals in this area.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Motorola Solutions, Inc. kept $0.22.
- Revenue$5.88B100.0%
- Cost of revenue−$3.05B51.9%
- Gross profit$2.83B48.1%
- Operating costs−$3.84B65.2%
- Operating income−$1.01B17.1%
- Interest, other & tax$2.31B39.2%
- Net income$1.30B22.1%
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 13, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $5.88B$6.23B | −5.6% |
| Cost of Revenue | $3.05B$3.12B | −2.2% |
| Gross Profit | $2.83B$3.11B | −8.9% |
| R&D Expenses | $681.00M$761.00M | −10.5% |
| SG&A Expenses | $1.18B$1.33B | −11.0% |
| Operating Income | -$1.01B$947.00M | −206.2% |
| Interest Expense | $147.00M$132.00M | +11.4% |
| Net Income | $1.30B$1.10B | +18.2% |
| EPS (Basic) | $5.29$4.13 | +28.1% |
| EPS (Diluted) | $5.29$4.06 | +30.3% |
| Shares Outstanding (Basic) | 245.60M266.00M | −7.7% |
| Shares Outstanding (Diluted) | 245.60M270.50M | −9.2% |
05—Questions
Frequently Asked Questions
What was the primary reason for the significant operating loss in 2014?
The primary driver of the operating loss in 2014 was a substantial $1.9 billion pension settlement charge related to the settlement of a U.S. pension plan. This charge significantly impacted the company's reported earnings for the year.
What is the strategic significance of selling the Enterprise business?
The sale of the Enterprise business for $3.5 billion allows Motorola Solutions to sharpen its focus on its core mission-critical communication offerings for government and public safety customers. This strategic divestiture enables the company to streamline operations and concentrate resources on growth areas such as public safety LTE and expanding its services portfolio.
How did the company return capital to shareholders in 2014?
In 2014, Motorola Solutions returned approximately $2.9 billion in capital to shareholders. This was achieved through significant share repurchases totaling $2.5 billion and cash dividends paid amounting to $318 million.
What is the company's outlook for growth and key focus areas moving forward?
Motorola Solutions anticipates continued growth by supporting the global migration to digital communication systems, expanding its Services segment (including managed and lifecycle support services), and advancing its public safety LTE solutions. The company sees ongoing opportunities in upgrading aging analog communication networks and expects its revenue mix to continue shifting towards services.
06—Continue