Motorola Solutions (MSI) 10-K risk factor changes: FY2018 vs FY2017

Global economic and political conditions continue to be challenging for many of our government and commercial markets, as economic growth in many countries, particularly in parts of Latin America and in other emerging markets, has remained low or declined, currency fluctuations have impacted profitability, credit markets have remained tight for certain counterparties of ours and [removed: many] [added: some] of our customers [removed: remain] [added: are] dependent on government grants to fund purchases of our products and services.

Requests for vendor financing continue to increase in volume and scope, including in response to reduced tax revenue at the state and local government level and [removed: ongoing] tightening of credit for certain commercial customers.

The inability of these customers to obtain sufficient credit or other funds, including as a result of lower tax revenues, [added: increases in interest rates,] currency fluctuations or unavailability of government grants, to finance purchases of our products and services and/or to meet their payment obligations to us could have, and in some cases has had, a negative impact on our financial results.

- Inability to Operate and Grow in Certain Markets: We operate in a number of markets with a risk of intensifying political instability, including [removed: Europe,] [added: Europe (including the impact of Brexit discussed below),] Russia, Brazil, the Middle East and Africa.

While we employ a number of countermeasures and security controls, including [removed: training and audits] [added: training, audits,] and utilization of commercial information security [removed: threat sharing] [added: threat-sharing] networks to protect against such attacks, we, along with the industry, have experienced a gradual and steady increase in the sophistication of these threats, most noticeably through well-crafted social engineering and phishing attempts.

Our [removed: Company] [added: company] outsources certain business operations, including, but not limited to IT, HR information systems, manufacturing, repair, [removed: distribution] [added: distribution,] and engineering services.

The “attack surface” for us to protect against our adversaries is thus often extended to these partners and customers, as well as our suppliers, and we have some dependency upon their [removed: cyber security] [added: cybersecurity] capabilities as well as their willingness to exchange threat and response information with [removed: us][added: us.]

The European Courts invalidation of Safe Harbor as a mechanism to legitimize cross border data flows increases the risk that our [removed: Company,] [added: company,] directly or through some third-party service provider that we use, may inappropriately transfer [removed: EU] [added: E.U.] personal data.

We have sizable sales and operations in [removed: Canada and our] [added: Canada,] Europe, Middle [removed: East and] [added: East,] Africa, Asia, and Latin [removed: America regions.][added: America.]

In June 2016, the United Kingdom (the [removed: “U.K”)] [added: “U.K.”)] held a referendum in which voters approved [removed: an] [added: the country’s] exit from the [removed: European Union (“E.U.”),] [added: E.U.,] commonly referred to as Brexit.

The [removed: announcement] [added: prospect] of Brexit has [removed: resulted in volatility in the] [added: already caused] global stock market [added: volatility] and currency exchange rate fluctuations that resulted in strengthening of the U.S. dollar relative to other foreign currencies in which we conduct business.

The [removed: announcement of Brexit and likely withdrawal of the U.K. from the E.U.] [added: U.K.’s final withdrawal, especially without any deal on terms,] may [removed: also create] [added: bring] global economic uncertainty, which [removed: may] [added: could] cause our customers to closely monitor their costs and reduce their spending budgets.

[removed: In addition, there] [added: There] may [added: also] be [added: broader] uncertainty [removed: as to] [added: over] the position the United States will take with respect to certain treaty and trade relationships with other countries.

Among the causes for debarment are violations of various laws or policies, including those related to procurement integrity, export control, U.S. government security regulations, employment practices, protection of criminal justice data, protection of the environment, accuracy of records, proper recording of costs, foreign [removed: corruption] [added: corruption, Trade Act Agreement, Buy American Act,] and the False Claims Act.

Generally, in the [removed: U.S.] [added: U.S.,] government contracts and grants are subject to oversight audits by government representatives.

MSI’s opportunities to sell LTE equipment and related software and services in the U.S [removed: will] [added: may] be substantially impacted by: [removed: (1)] [added: (i)] AT&T's success in satisfying [added: FirstNet] contract requirements and milestones, including, among others, subscriber adoption rate, mandatory payments to FirstNet, and [removed: coverage] [added: coverage, (ii) Verizon] and [removed: (2)] [added: other commercial broadband carriers providing services for public safety, and (iii)] fiscal, public, and regulatory policies and/or special interest politics that risk delaying deployment.

Even if we are awarded contracts, we may fail to accurately estimate the resources and costs required to fulfill a contract, or to resolve problems with our subcontractors or suppliers, which could negatively impact the profitability of any contract [removed: award] [added: awarded] to us, particularly in the case of [added: fixed price contracts.]

The expansion of our [removed: solutions and] services business creates [removed: new competitors and new and] increased areas of risk that we [removed: have not been exposed to in the past and that we] may not be able to properly assess or mitigate.

We plan to continue to expand our [removed: solutions and] services business by offering additional and expanded managed services for existing and new types of customers, such as designing, building, operating, managing and in some cases owning a [removed: public- safety] [added: public-safety] system or other commercial system.

The offering of managed services involves the integration of multiple services, multiple vendors and multiple technologies, requiring that we partner with other solutions and services providers, often on [removed: multiyear] [added: multi-year] projects.

Additionally, our managed services business [removed: will be expanded to include] [added: includes] the hosting of software applications.

[removed: -] We may face increasing competition from traditional system [removed: integrators and] [added: integrators,] the defense [removed: industry as solutions] [added: industry,] and [added: commercial software companies as] services contracts become larger and more complicated.

[removed: -] Expansion will bring us into contact with new regulatory requirements and restrictions, such as data security or data residency/localization obligations, with which we will have to comply and may increase the costs of doing business, reduce margins and delay or limit the range of new solutions and services which we will be able to offer.

[removed: -] We may be required to agree to specific performance metrics that meet the customer's requirements for network security, availability, reliability, maintenance and support and, in some cases, if these performance metrics are not met we may not be paid.

From [removed: time to time] [added: time-to-time] we access the capital markets to obtain financing.

[removed: In addition,] [added: Furthermore,] there can be no assurances we will be able to refinance our existing indebtedness (i) on commercially reasonable terms, (ii) on terms, including with respect to interest rates, as favorable as our current debt, or (iii) at all.

Under certain circumstances, an increase in the interest rate payable by us under our revolving credit facility, if any amounts [removed: were] [added: are] borrowed under such facility, could negatively affect our operating cash flows.

Our future operating results depend on our ability to purchase at acceptable prices a sufficient amount of materials, parts, and components, as well as services and [removed: software] [added: software,] to meet the demands of our customers and any disruption to our suppliers or significant increase in the price of supplies could have a negative impact on our results of operations.

In addition, certain supplies, including for some of our critical components, [added: services and software solutions,] are available only from a single source or limited sources and we may not be able to diversify sources in a timely manner.

If demand for our products or services increases from our current expectations or if suppliers are unable to meet our demand for other reasons, including as a result of natural disasters or financial issues, we could experience an interruption in [removed: supplies] [added: supply] or a significant increase in the price of [removed: supplies,] [added: supply,] including as a [removed: result of having to move to an alternative source, that could have a negative impact on our business as a result of increased cost or delay in or inability to deliver our products.]

[removed: We] [added: For certain supplies we] have also experienced less support and focus from our suppliers as our spend has [removed: diminished,] [added: diminished relative to their other customers,] making it more difficult for us to resolve gaps in supply due to unforeseen changes in forecast and demand.

In addition, [removed: our current contractual arrangements with] certain suppliers [added: have and others] may [removed: be cancelled] [added: cancel] or not [removed: extended by such suppliers and, therefore,] [added: extend contractual arrangements, which will] not afford us with sufficient protection against a reduction or interruption in supplies.

Our joint use of the Motorola Marks could result in product and market confusion and negatively impact our ability to expand [removed: our] business under the Motorola brand.

Furthermore, MTH has the right to license the brand to [removed: third- parties] [added: third-parties] and either Motorola Mobility or licensed third-parties may use the brand in ways that make the brand less attractive for [removed: customers of Motorola Solutions, creating increased risk that Motorola Solutions may need to develop an alternate or additional brand.]

If one of our suppliers, subcontractors, brokers, distributors, resellers, or TPSRs violates labor or other laws or implements labor or other business practices that are regarded as unethical, the shipment of finished [added: products to us could be interrupted, orders could be canceled, relationships could be terminated and our reputation could be damaged.]

In [removed: 2017, approximately 42%] [added: 2018, 41%] percent of our revenue was generated outside the U.S. In addition, we have a number of research and development, administrative and sales facilities outside the U.S. and [removed: more than 54%] [added: 55%] of our employees are employed outside the U.S. Most of our suppliers' operations are outside the U.S. and [removed: most] [added: a significant portion] of our products are manufactured outside the U.S., both internally and by third-parties.

Because we have sizable sales and operations, including outsourcing and procurement arrangements, outside of the U.S., we have more complexity in our operations and are exposed to a unique set of global risks that could negatively impact our business, financial condition, results of operations, and cash flows, including but not limited to: (i) currency fluctuations, (ii) import/export regulations, tariffs, trade barriers and trade disputes, customs classifications and certifications, including but not limited to changes in classifications or errors or omissions related to such classifications and certifications, (iii) changes in U.S. and non-U.S. rules related to trade, environmental, health and safety, technical standards, consumer and intellectual property and consumer protection, (iv) longer payment cycles, (v) tax issues, such as tax law changes, variations in tax laws from country to country and as compared to the U.S., obligations under tax incentive agreements, difficulties in repatriating cash generated or held abroad in a tax-efficient manner and difficulties in securing local country approvals for cash repatriations, (vi) changes in foreign exchange regulations, (vii) challenges in collecting accounts receivable, (viii) cultural and language differences, (ix) employment regulations and local labor conditions, (x) privacy and data protection regulations and restrictions, (xi) difficulties protecting intellectual property in foreign countries, (xii) instability in economic or political conditions, including inflation, recession [removed: and actual or anticipated military or political conflicts and terrorism, (xiii) natural disasters, (xiv) public health issues or outbreaks,(xv) changes in laws or regulations that negatively impact benefits being received by us or that require costly modifications in products sold or operations performed in such countries, (xvi) litigation in foreign court systems and foreign enforcement or administrative proceedings, and (xvii) applicability of anti-corruption laws including the Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act.]

We also are subject to risks that our operations could be [removed: conducted] [added: impacted] by our employees, contractors, representatives or agents in ways that violate the FCPA, the U.K. Bribery Act, or other similar anti-corruption laws.

Moreover, we face additional risks that our [removed: anti- corruption] [added: anti-corruption] policies and procedures may be violated by TPSRs or other third-parties that help sell our products or provide other solutions and services, because such TPSRs and other [removed: third parties] [added: third-parties] are not our employees, and, it is therefore more difficult to oversee [removed: \[and control\]] [added: and control] their conduct.

Many of our components and some of our products, including software, are developed and/or manufactured by [removed: third- parties] [added: third-parties] and in some cases designed by third-parties and if such third-parties lack sufficient quality control, change the design of components or if there are significant changes in the financial or business condition of such third-parties, it may have a negative impact on our business.

Although we do not anticipate a significant impact to the business at this time, the possibility of a partial federal government shutdown in the U.S. could potentially delay award of contracts and timing of payments.

We are subject to laws and regulations regarding privacy, data protection and information security, and our actual or perceived failure to comply with such legal obligations could adversely affect our business.

The European Union ("E.U.") adopted the General Data Protection Regulation ("GDPR") which took effect on May 25, 2018 harmonizing data protection laws across the E.U. The GDPR strengthens individual privacy rights and enhances data protection obligations for processors and controllers of personal data.

This includes expanded disclosures about how personal information is to be used, limitations on retention of information and mandatory data breach notification requirements.

Non-compliance with the GDPR can trigger fines of up to €20 million or 4% of total worldwide annual revenue, whichever is greater.

Also, U.S. federal, state and other foreign governments and agencies have adopted or are considering adopting laws and regulations regarding the collection, storage, use, processing and disclosure of personal data.

State governments within the U.S. are starting to enact their own versions of “GDPR- like” privacy legislation which will create additional compliance challenges, risk, and administrative burden.

Even though comprehensive U.S. Federal Privacy legislation is being discussed seriously by lawmakers and other stakeholders, it is possible that a one-size fits all compliance program may be difficult to achieve/manage globally.

Because the interpretation and application of privacy and data protection laws are still uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing practices or the features of our products, services and software.

Any failure or perceived failure by us, our business partners, or third party service providers to comply with GDPR, other federal, state or international privacy-related or data protection laws and regulations, or the privacy commitments contained in contracts could result in proceedings against us by governmental entities or others and significant fines, which could have a material adverse effect on our business and operating results and harm our reputation.

In addition, some countries are considering legislation requiring local storage and processing of data that, if enacted, could increase the cost and complexity of offering our products, services and software or maintaining our business operations in those jurisdictions.

Although we maintain insurance related to cybersecurity risks, there can be no assurance that our insurance coverage will cover the particular cyber incident at issue or that such coverage will be sufficient.

The U.K. government has so far been unable to secure a parliamentary majority for the withdrawal agreement.

Continued uncertainty, or a U.K. exit without any agreement on terms, would risk significant disruption to U.K./E.U. trade.

In addition, U.S. federal legislation including the National Defense Authorization Act and various "buy American" programs may impose limitations on the ability of the federal government or other parties to contract with certain foreign entities.

The expansion of our software business creates a greater risk than we have been exposed to in the past that we may not be able to properly assess or mitigate.

The process of developing new software products and enhancing existing software products is complex, costly and uncertain, and any failure by us to anticipate customers' changing needs and emerging technological trends accurately could significantly harm our market share, results of operations and financial condition.

Any failure to accurately predict technological and business trends, control research and development costs or execute our innovation strategy could harm our business and financial performance.

Our research and development initiatives may not be successful in whole or in part, including research and development projects which we have prioritized with respect to funding and/or personnel.

As part of our growth strategy, we may seek to acquire new software technologies.

The process of integrating acquired assets into our operations may result in unforeseen operating difficulties and expenditures and may absorb significant management attention that would otherwise be available for the ongoing development of our business.

We may allocate a significant portion of our available working capital to finance all or a portion of the purchase price relating to possible acquisitions.

Any future acquisition or investment opportunity may require us to obtain additional financing to complete the transaction.

The anticipated benefits of any acquisitions may not be realized.

In addition, future acquisitions by us could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities and amortization expenses related to intangible assets, any of which could materially adversely affect our operating results and financial position.

result of having to move to an alternative source, that could have a negative impact on our business as a result of increased cost or delay in or inability to deliver our products or services.

We have seen increases in the price of certain supplies as we no longer qualify for certain volume discounts compared to other customers of our suppliers given technology changes, our evolving portfolio and lower volumes than customers in other commercial industries.

Many of these assertions are

customers of Motorola Solutions, creating increased risk that Motorola Solutions may need to develop an alternate or additional brand.

and actual or anticipated military or political conflicts and terrorism, (xiii) natural disasters, (xiv) public health issues or outbreaks, (xv) changes in laws or regulations that negatively impact benefits being received by us or that require costly modifications in products sold or operations performed in such countries, (xvi) litigation in foreign court systems and foreign enforcement or administrative proceedings, and (xvii) applicability of anti-corruption laws including the Foreign Corrupt Practices Act (“FCPA”) and the U.K. Bribery Act.

New products

The

In addition, as we have divested

While we have significantly reduced our reliance on a number of older legacy information systems that are harder to maintain we could negatively impact our operations and financial results.

It is expected that the U.K. government will initiate a process to withdraw from the E.U. and begin negotiating the terms of its separation.

fixed price contracts.

- We may recognize revenue over time as a services offering, rather than at a point in time as with a traditional equipment sale, which will extend revenue recognition over the length of the services contracts, which may be several years.

- The managed services business is one characterized by large subcontracting arrangements and we may not be able to obtain favorable contract terms including adequate indemnities, performance commitments or other protections from our subcontractors to adequately mitigate our exposure to our customers.

We have seen and expect to continue to see increases in the price of certain supplies as we no longer qualify for certain volume discounts given our significant decrease in direct material spend over the last several years as a result of our spin-offs and divestitures.

products to us could be interrupted, orders could be canceled, relationships could be terminated and our reputation could be damaged.

In addition, although we often assign contracts associated with the divested business to a buyer in a divestiture, often that assignment will be subject to the consent of the contractual counterparty, which may not be obtained or may be conditioned, resulting in the company remaining liable under the contract.

In connection with our divestitures we make representations and warranties and agree to covenants relating to the business divested.

We remain liable for a period of time for breaches of representations, warranties and covenants and we also indemnify buyers in the event of such breaches and for other specific risks.

elsewhere with intellectual property subject to the claims.

If our systems are damaged, fail to function properly, or otherwise become

We also currently rely on a number of older legacy information systems that are harder to maintain and that we now have fewer resources to maintain since implementing our new ERP system.

A system failure could negatively impact our operations and financial results.

The following is a discussion and analysis of our financial position as of December 31, [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] and results of operations for each of the three years in the period ended December 31, [removed: 2017.][added: 2018.]

We serve our customers with a global footprint of sales in more than 100 countries and [removed: 15,000] [added: 16,000] employees worldwide based on our industry leading innovation and a deep portfolio of products and services.

The primary customers of the Products [added: and Systems Integration] segment are government, public safety and first-responder agencies, municipalities, and commercial and industrial customers who operate private communications networks and [removed: manage] [added: video solutions typically managing] a mobile workforce.

In [removed: 2017,] [added: 2018,] the segment’s net sales were [removed: $3.8] [added: $5.1] billion, representing [removed: 59%] [added: 69%] of our consolidated net sales.

[removed: Services:] [added: Services and Software:] The Services [added: and Software] segment provides a [removed: full set] [added: broad range] of [removed: service] [added: solution] offerings for government, public [removed: safety,] [added: safety] and commercial communication [removed: networks including: (i) Integration services, (ii) Managed & Support services, and (iii) iDEN services.][added: networks.]

[removed: Managed & Support services includes a continuum of service offerings] beginning with repair, technical [removed: support,] [added: support] and [removed: hardware] maintenance.

More advanced offerings include [removed: network] monitoring, software [removed: maintenance,] [added: updates] and [removed: cyber security] [added: cybersecurity] services.

Managed [removed: service offerings] [added: services] range from partial [removed: or] [added: to] full operation of customer [removed: owned networks to operation of] [added: or] Motorola [removed: Solutions owned] [added: Solutions-owned] networks.

Recent [added: Acquisitions and] Developments

On [removed: February 1,] [added: March 28,] 2018, we [removed: announced our intention to purchase] [added: completed the acquisition of] Avigilon [removed: Corporation,] [added: Corporation ("Avigilon"),] a provider of advanced [removed: end-to-end] security and [removed: surveillance] [added: video] solutions including video analytics, network video management hardware and software, [removed: surveillance] [added: video] cameras and access control solutions for a purchase price of [removed: approximately $1.3 billion Canadian dollars.][added: $974 million.]

This acquisition [removed: will expand] [added: expands] our software portfolio in the [removed: Command Center] [added: command center] with additional solutions for Next Generation 9-1-1.

[removed: 2017 financial results][added: 2018 Financial Results]

| • | Net sales were [removed: $6.4] [added: $7.3] billion in [removed: 2017] [added: 2018] compared to [removed: $6.0] [added: $6.4] billion in [removed: 2016] [added: 2017] and grew in [removed: every region] [added: the Americas and EMEA.] |

| • | [removed: Operating] [added: higher operating] earnings [removed: were $1.3 billion] in [removed: 2017,] [added: 2017 as] compared to [removed: $1.1 billion in 2016] [added: 2016;] |

| • | [removed: Returned $790] [added: We returned $469] million of capital in the form of [removed: $483] [added: $132] million in share repurchases and [removed: $307] [added: $337] million in dividends in [removed: 2017] [added: 2018] and invested [removed: $298 million] [added: $1.2 billion] in [removed: acquisitions] [added: acquisitions.] |

| • | [removed: Increased] [added: We increased] our quarterly dividend by [removed: 11%] [added: 10%] to [removed: $0.52] [added: $0.57] per share in November [removed: 2017] [added: 2018.] |

As communication networks have become increasingly complex, software-centric, and data-driven, we have [removed: shifted] [added: expanded] our [removed: offerings] [added: services offering] to [removed: align with this technology trend in serving] [added: maintain, monitor, secure and manage] our [removed: customers.][added: customers' networks.]

We expect our overall revenue mix to continue to shift towards [removed: software and] services [added: and software] over time.

Our framework for efficient capital deployment of cash flow from operations consists of approximately: (i) 50% for acquisitions or share repurchases, (ii) 30% for dividends, and (iii) 20% for investments in the business [removed: through capital expenditures.]

Our share repurchase program has approximately [removed: $1.7] [added: $1.6] billion of authority available as of December 31, [removed: 2017.][added: 2018.]

| (Dollars in millions, except per share amounts) | [removed: 2017] [added: 2018] | | | | % of Sales | | | [removed: 2016] [added: 2017] | | | | % of Sales | | | [removed: 2015] [added: 2016] | | | | % of Sales | |

| Net sales from products | $ | [removed: 3,772] [added: 4,463] | | | | | | $ | [removed: 3,649] [added: 3,772] | | | | | | $ | [removed: 3,676] [added: 3,649] | | | | |

| Net sales from services | [removed: 2,608] [added: 2,880] | | | | | | | [removed: 2,389] [added: 2,608] | | | | | | | [removed: 2,019] [added: 2,389] | | | | | |

| Net sales | [removed: 6,380 | |] [added: $] | [added: 6,380] | | | [added: $] | 6,038 | | | [removed: | | | | 5,695 | | | |] [added: 6] | [added: %] |

| Costs of product sales | [removed: 1,686] [added: 2,035] | | | | [removed: 44.7] [added: 45.6] | % | | [removed: 1,649] [added: 1,686] | | | | [removed: 45.2] [added: 44.7] | % | | [removed: 1,625] [added: 1,649] | | | | [removed: 44.2] [added: 45.2] | % |

| Costs of services sales | [removed: 1,670] [added: 1,828] | | | | [removed: 64.0] [added: 63.5] | % | | [removed: 1,520] [added: 1,670] | | | | [removed: 63.6] [added: 64.0] | % | | [removed: 1,351] [added: 1,520] | | | | [removed: 66.9] [added: 63.6] | % |

| Costs of sales | [removed: 3,356] [added: 3,863] | | | | 52.6 | % | | [removed: 3,169] [added: 3,356] | | | | [removed: 52.5] [added: 52.6] | % | | [removed: 2,976] [added: 3,169] | | | | [removed: 52.3] [added: 52.5] | % |

| Gross margin | [removed: 3,024] [added: 3,480] | | | | 47.4 | % | | [removed: 2,869] [added: 3,024] | | | | [removed: 47.5] [added: 47.4] | % | | [removed: 2,719] [added: 2,869] | | | | [removed: 47.7] [added: 47.5] | % |

| Research and development expenditures | [removed: 568] [added: 637] | | | | [removed: 8.9] [added: 8.7] | % | | [removed: 553] [added: 568] | | | | [removed: 9.2] [added: 8.9] | % | | [removed: 620] [added: 553] | | | | [removed: 10.9] [added: 9.2] | % |

| Interest expense, net | [removed: (201] [added: (222] | | ) | | [removed: (3.2] [added: (3.0] | )% | | [removed: (205] [added: (201] | | ) | | [removed: (3.4] [added: (3.2] | )% | | [removed: (173] [added: (205] | | ) | | [removed: (3.0] [added: (3.4] | )% |

| Gains (losses) on sales of investments and businesses, net | [removed: 3] [added: 16] | | | | [removed: —] [added: 0.2] | % | | [removed: (6] [added: 3] | | [removed: )] | | [removed: (0.1] [added: —] | [removed: )%] [added: %] | | [removed: 107] [added: (6] | | [added: )] | | [removed: 1.9] [added: (0.1] | [removed: %] [added: )%] |

| Other | [removed: (8] [added: 53] | | [removed: )] | | [removed: (0.1] [added: 0.7] | [removed: )%] [added: %] | | [removed: (12] [added: (10] | | ) | | (0.2 | )% | | [removed: (11] [added: 7] | | [removed: )] | | [removed: (0.2] [added: 0.1] | [removed: )%] [added: %] |

| [removed: Earnings from continuing operations] [added: Net earnings] before income taxes | [removed: 1,076] [added: 1,102] | | | | [removed: 16.9] [added: 15.0] | % | | [removed: 844] [added: 1,076] | | | | [removed: 14.0] [added: 16.9] | % | | [removed: 917] [added: 844] | | | | [removed: 16.1] [added: 14.0] | % |

| Income tax expense | [removed: 1,227] [added: 133] | | | | [removed: 19.2] [added: 1.8] | % | | [removed: 282] [added: 1,227] | | | | [removed: 4.7] [added: 19.2] | % | | [removed: 274] [added: 282] | | | | [removed: 4.8] [added: 4.7] | % |

| [removed: Earnings] [added: Net earnings] (loss) [removed: from continuing operations] | [removed: (151] [added: 969] | | [removed: )] | | [removed: (2.4] [added: 13.2] | [removed: )%] [added: %] | | [removed: 562] [added: (151] | | [added: )] | | [removed: 9.3] [added: (2.4] | [removed: %] [added: )%] | | [removed: 643] [added: 562] | | | | [removed: 11.3] [added: 9.3] | % |

| Less: Earnings attributable to noncontrolling interests | [removed: 4] [added: 3] | | | | [removed: 0.1] [added: —] | % | | [removed: 2] [added: 4] | | | | [removed: —] [added: 0.1] | % | | [removed: 3] [added: 2] | | | | [removed: 0.1] [added: —] | % |

| [removed: Earnings (loss) from continuing operations*] [added: Net earnings (loss)*] | [removed: (155] [added: $] | [added: 966] | [removed: )] | | [removed: (2.4] [added: 13.2] | [removed: )%] [added: %] | | [removed: 560] [added: $] | [added: (155] | [added: )] | | [removed: 9.3] [added: (2.4] | [removed: %] [added: )%] | | [removed: 640] [added: $] | [added: 560] | | | [removed: 11.2] [added: 9.3] | % |

| Earnings per diluted common share* | $ | [removed: (0.95] [added: 5.62] | [removed: )] | | | | | $ | [removed: 3.24] [added: (0.95] | [added: )] | | | | | $ | [removed: 3.02] [added: 3.24] | | | | |

| | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | |

| Americas | [removed: 68] [added: 69] | % | | 68 | % | | [removed: 71] [added: 68] | % |

During the second quarter of 2018, we modified our internal reporting structure to better align the way financial information is reported to and analyzed by executive leadership in part as a result of recent acquisitions contributing to the growth within the newly-aligned Services and Software segment.

Previously, we had two reporting segments: Products and Services.

The changes in reporting structure consist of Systems Integration-related revenue and costs moving from the old Services segment into the newly-presented Products and Systems Integration segment and software-related revenue and costs moving from the old Products segment into the newly-presented Services and Software segment.

On January 7, 2019, we announced that we acquired VaaS International Holdings, Inc. ("VaaS"), a "video analysis as a service" company that is a leading global provider of data and image analytics for vehicle location for a purchase price of $445 million.

This acquisition expands our command center software portfolio.

We have reached an agreement with the U.K. Home Office on terms for the new direction of the U.K. Emergency Services Network (“ESN”) that we expect to sign in early 2019.

During the fourth quarter of 2018, we signed an agreement to extend the Airwave contract through 2022 with substantially similar terms to the prior agreement.

On March 7, 2018, we completed the acquisition of Plant Holdings, Inc. ("Plant"), the parent company of Airbus DS Communications for a purchase price of $237 million.

On August 28, 2017, we completed the acquisition of Kodiak Networks, a provider of broadband push-to-talk for commercial customers, for a purchase price of $225 million.

On March 13, 2017, we completed the acquisition of Interexport, a managed service provider of communications systems to public safety and commercial customers in Chile, for a purchase price of $98 billion Chilean pesos, or approximately $147 million.

On November 10, 2016, we completed the acquisition of Spillman Technologies ("Spillman"), a provider of comprehensive law enforcement and public safety software solutions, for a purchase price of $221 million.

The acquisition expands our command center services and software portfolio and enables us to offer a full suite of solutions to a broader customer base.

On February 19, 2016, we completed the acquisition of Guardian Digital Communications Limited ("GDCL"), a holding company of Airwave Solutions Limited ("Airwave"), the largest private operator of a public safety network in the world.

All of the outstanding equity of GDCL was acquired for the sum of £1, after which we invested into GDCL £698 million, net of cash acquired, or approximately $1.0 billion, to settle all third party debt.

Motorola Solutions is a leading global provider of mission-critical communications.

Our technology platforms in communications, software, video, and services make cities safer and help communities and businesses thrive.

At Motorola Solutions, we are ushering in a new era in public safety and security.

Products and Systems Integration: The Products and Systems Integration segment offers an extensive portfolio of infrastructure, devices, accessories, video solutions, and the implementation, optimization, and integration of such systems, devices, and applications, including the Company’s: (i) “ASTRO” products, which meet the Association of Public Safety Communications Officials Project 25 standard, (ii) “Dimetra” products which meet the European Telecommunications Standards Institute Terrestrial Trunked Radio “TETRA” standard, (iii) Professional and Commercial Radio (“PCR”) products, (iv) broadband technology products, such as Long-Term Evolution (“LTE”), and (v) video solutions, such as video cameras.

Services includes a continuum of service offerings

Software includes a public safety and enterprise command center software suite, unified communications applications, and video software solutions, delivered both on premise and “as a service.” In 2018, the segment’s net sales were $2.2 billion, representing 31% of our consolidated net sales.

| • | Operating earnings were $1.3 billion in both 2018 and 2017. |

| • | Earnings attributable to Motorola Solutions, Inc. were $966 million, or $5.62 per diluted common share in 2018, compared to losses of $155 million, or $(0.95) per diluted common share in 2017. |

| • | Our operating cash flow decreased $271 million to $1.1 billion in 2018. The decrease is driven by the $500 million contribution to our U.S. pension plan, partially offset by higher earnings. |

| • | Ended 2018 with a backlog position of $10.6 billion, up $988 million compared to 2017. |

Segment Financial Highlights

| • | In the Products and Systems Integration segment, net sales were $5.1 billion in 2018, an increase of $587 million, or 13%, compared to $4.5 billion in 2017. On a geographic basis, net sales increased in the Americas and EMEA, partially offset by AP. Operating earnings were $854 million in 2018, compared to $969 million in 2017. Operating margin decreased in 2018 to 16.7% from 21.5% in 2017 driven by costs related to the closure of certain supply chain operations in Europe, an increase to an existing environmental reserve related to a legacy business, and higher expenses related to acquisitions. |

| • | In the Services and Software segment, net sales were $2.2 billion in 2018, an increase of $376 million, or 20%, compared to $1.9 billion in 2017. On a geographic basis, net sales increased in every region. The increase in net sales was driven by growth excluding acquisitions in both Services and Software and also including the acquisitions of Plant, Kodiak Networks, and Interexport. Operating earnings were $401 million in 2018, compared to $315 million in 2017. Operating margin increased in 2018 to 17.9% from 16.9% in 2017 on higher sales and gross margin. |

Entering 2019, we believe we are well-positioned for continued leadership in mission-critical communications.

Our technology platforms in communications, video, services, and software help make cities safer and enable communities and businesses to thrive.

At Motorola Solutions, we are ushering in a new era in public safety and security.

We are a leading provider of solutions that enable first responders, federal and local governments, as well as commercial customers, to communicate in everyday and extreme situations.

Our land mobile radio ("LMR") solutions are uniquely designed, built, and delivered for our customers’ specific needs, and we continue to expect LMR to be the preferred solution for our customers in the years ahead.

Our services and software business supplements our LMR business.

We expect continued growth for our value-added services going forward.

Additionally, we have command center software solutions for the public safety workflow to serve the 6,000+ emergency call centers in North America.

We have invested organically and via the acquisitions of Plant, Kodiak Networks and Spillman in 2018, 2017 and 2016, respectively, to add new capabilities to our command center software offering.

These investments help improve efficiency for first responders by enabling them to make use of rich data content such as pictures, video, and text messages.

From shorter response times to new applications such as proactive incident management, we are providing new capabilities with command center software solutions increasingly delivered as a service.

Next Generation 9-1-1 is an important and growing movement that the U.S. and other countries are expected to continue prioritizing for investment.

Our largest investment in 2018 was the acquisition of Avigilon and its video and analytics solutions, which are an increasingly powerful tool for first responders.

We are a leading global provider of mission-critical communication infrastructure, devices, accessories, software, and services.

Our products and services help government, public safety, and commercial customers improve their operations through increased effectiveness, efficiency, and safety of their mobile workforces.

Products: The Products segment is comprised of Devices and Systems.

Devices includes two-way portable and vehicle mounted radios, accessories, and software features and upgrades.

Systems includes the radio network core and central processing software, base stations, consoles, repeaters, and software applications and features.

Integration services includes the implementation, optimization, and integration of systems, devices, software, and applications.

Services and SaaS offerings are provided across all radio network technologies, Command Center Consoles, and Smart Public Safety Solutions.

iDEN services consists primarily of hardware and software maintenance services for our legacy iDEN customers.

In 2017, the segment’s net sales were $2.6 billion, representing 41% of our consolidated net sales.

Trends Affecting Our Business

Impact of Macroeconomic Conditions: The stronger U.S. dollar and weakening economic conditions had a negative impact on sales throughout 2015 and 2016, particularly in Latin America, parts of Europe, and China.

During that time, the strengthening dollar reduced the purchasing power of our customers, and economic challenges negatively impacted government and commercial budgets in these regions.

While economic conditions in parts of the world stabilized in 2017 in contrast to the prior year, we expect continued political and economic uncertainty, in particular with the United Kingdom’s planned exit from the European Union (commonly referred to as “Brexit”), and in parts of Latin America and Europe.

Focus on Managed & Support Services and Software: Services continues to grow at a faster rate than the Products segment, driven by acquisitions as well as growth in Managed & Support services absent of acquisitions.

While Services generally have lower gross margins than our Products segment, we expect revenue growth will continue to drive operating margin expansion.

During the year ended December 31, 2017, our Services segment grew by 9%.

In addition, we continue to invest in software through internal development and strategic acquisitions, as our customers increasingly demand expanded technology solutions that are delivered via software and related services.

This includes mobile applications and software in the Command Center that provide enhanced capabilities such as analytics and predictive intelligence.

In some cases, government funding or mandates help drive this software expansion, such as Next Generation 9-1-1 funding in the United States, and Public Safety LTE investment in the United States, United Kingdom, and other countries.

This evolving trend provides a growth opportunity for us.

The acquisition is expected to be completed in the second quarter of 2018.

On July 28, 2017, we announced our intention to purchase Plant Holdings, Inc., the parent company of Airbus DS Communications.

The acquisition is expected to be completed in the first quarter of 2018.

Recent Changes to U.S. Tax Law

On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law.

The Tax Act contains broad and complex provisions including, but not limited to: (i) the reduction of corporate income tax rate from 35% to 21%, (ii) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries, (iii) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (iv) modifying limitation on excessive employee remuneration, (v) requiring current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations, (vi) repeal of corporate alternative minimum tax (“AMT”) and changing how AMT credits can be realized, (vii) creating a new minimum tax, (viii) creating a new limitation on deductible interest expense, (ix) changing rules related to uses and limitations of net operating loss carryforwards and foreign tax credits created in tax years beginning after December 31, 2017, and (x) eliminating the deduction for income attributable to domestic production activities.

As required under U.S. GAAP, the effects of tax law changes are recognized in the period of enactment.

Accordingly, we have recorded incremental income tax expense in the amount of $874 million associated with the Tax Act during the year ended December 31, 2017.

Change in Presentation

During the first quarter of 2017, we restructured our regions to combine the North America and Latin America regions into one region which is now reflected as the Americas.

Accordingly, we now report net sales in the following three geographic regions: the Americas, Europe, Middle East and Africa ("EMEA"), and Asia Pacific ("AP").

We have updated all periods presented to reflect this change in presentation.

| • | Ended 2017 with a record backlog position of $9.6 billion, up 15% compared to 2016 |

| • | Recorded an $874 million tax expense due to U.S. tax reform |

| • | Loss from continuing operations was $155 million, or $0.95 per diluted common share in 2017, compared to earnings of $560 million, or $3.24 per diluted common share in 2016 |

| • | Operating cash flow increased $181 million to $1.3 billion in 2017 |

Financial results for our two segments in 2017

| • | In the Products segment, net sales were $3.8 billion in 2017, an increase of $123 million, or 3%, compared to $3.6 billion in 2016. On a geographic basis, net sales increased in every region, compared to 2016. Operating earnings were $914 million in 2017, compared to $734 million in 2016. Operating margin increased in 2017 to 24.2% from 20.1% in 2016. |

| • | In the Services segment, net sales were $2.6 billion in 2017, an increase of $219 million, or 9%, compared to $2.4 billion in 2016. On a geographic basis, net sales increased in every region, compared to 2016. Managed & Support services grew 12% primarily driven by the acquisitions of Airwave, Spillman Technologies, Interexport and Kodiak Networks. Operating earnings were $368 million in 2017, compared to $333 million in 2016. Operating margin increased in 2017 to 14.1% from 13.9% in 2016. |

Entering 2018, we believe we are well-positioned to compete moving forward.

As of December 31, [removed: 2017,] [added: 2018,] we have [removed: $4.5] [added: $5.3] billion of long-term debt, including the current portion of long-term debt, which is primarily priced at long-term, fixed interest rates.

[removed: Our subsidiaries] [added: In addition, we] have [added: a subsidiary that has] variable interest loans denominated in [removed: the Euro and] Chilean Peso.

Our strategy related to foreign exchange exposure management is to offset the gains or losses on the financial instruments against losses or gains on the underlying operational cash [removed: flows or] [added: flows, net] investments [added: or monetary assets and liabilities] based on our assessment of risk.

In addition, we enter into derivative contracts for some forecasted [removed: transactions,] [added: transactions or net investments in some of our overseas entities,] which are designated as part of a hedging relationship if it is determined that the transaction qualifies for hedge accounting under the provisions of the authoritative accounting guidance for derivative instruments and hedging activities.

At December 31, [removed: 2017,] [added: 2018,] we had outstanding foreign exchange contracts totaling [removed: $507] [added: $819] million, compared to [removed: $717] [added: $507] million outstanding at December 31, [removed: 2016.][added: 2017.]

The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency as of December 31, [removed: 2017] [added: 2018] and the corresponding positions as of December 31, [removed: 2016:][added: 2017:]

| Net Buy (Sell) by Currency | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| Euro | [removed: $] [added: 89] | [removed: 149] | | | [removed: $] [added: 149] | [removed: 122] | |

| British Pound | [removed: 72] [added: $] | [added: 139] | | | [removed: 246] [added: $] | [added: 72] | |

| Chinese Renminbi | [removed: (73] [added: (55] | | ) | | [removed: (108] [added: (73] | | ) |

| Australian Dollar | [removed: (64] [added: (105] | | ) | | [removed: (51] [added: (64] | | ) |

| Brazilian Real | [removed: (45] [added: (41] | | ) | | [removed: (56] [added: (45] | | ) |

Derivative financial instruments consist primarily of currency forward [removed: contracts and options.][added: contracts.]

Assuming the amounts of the outstanding foreign exchange contracts represent our underlying foreign exchange risk related to monetary assets and liabilities, a hypothetical unfavorable 10% movement in the foreign exchange rates, from current levels, would reduce the value of those monetary assets and liabilities by approximately [removed: $52] [added: $57] million.

Interest on the $400 million Term Loan is variable and indexed to LIBOR.

We are exposed to foreign currency risk as a result of buying and selling in various currencies, our net investments in foreign entities, and monetary assets and liabilities denominated in a currency other than the functional currency of the legal entity holding the instrument.

We have interest rate swap agreements in place which change the characteristics of interest rate payments from variable to maximum fixed-rate payments.

A hypothetical unfavorable movement of 10% in the interest rates would have an immaterial impact on the hedge’s fair value.

Instruments that are designated as part of a hedging relationship must be effective at reducing the risk associated with the exposure being hedged and are designated as part of a hedging relationship at the inception of the contract.

Accordingly, changes in the market values of hedge instruments must be highly correlated with changes in market values of the underlying hedged items both at the inception of the hedge and over the life of the hedge contract.

Products [added: and Systems Integration] Segment

The Products [added: and Systems Integration] segment offers an extensive portfolio of infrastructure, devices, accessories, [added: video solutions,] and [removed: software.][added: the implementation, optimization, and integration of such systems, devices, and applications.]

The primary customers of the Products [added: and Systems Integration] segment are government, public safety and first-responder agencies, municipalities, and commercial and industrial customers who operate private communications networks and [removed: manage a mobile workforce.][added: video solutions.]

In [removed: 2017,] [added: 2018,] the segment’s net sales were [removed: $3.8] [added: $5.1] billion, representing [removed: 59%] [added: 69%] of our consolidated net sales.

The Products [added: and Systems Integration] segment has the following two principal product lines:

Devices: Devices [removed: includes: (i)] [added: includes] two-way portable [removed: radios] and vehicle-mounted radios, [removed: (ii) accessories such as speaker microphones, batteries, earpieces, headsets, carry cases and cables, and (iii)] [added: accessories,] software [removed: features] [added: features,] and upgrades.

Devices represented [removed: 74%] [added: 63%] of the net sales of the Products [added: and Systems Integration] segment in [removed: 2017.][added: 2018.]

Systems [added: and Systems Integration] represented [removed: 26%] [added: 37%] of the net sales of the Products [added: and Systems Integration] segment in [removed: 2017.][added: 2018.]

Our Devices and Systems [added: and Systems Integration] are based on the following industry technology standards:

Services [added: and Software] Segment

The Services [added: and Software] segment provides a [removed: full set] [added: broad range] of [removed: service] [added: solution] offerings for government, public [removed: safety,] [added: safety] and commercial [removed: communication networks.][added: customers.]

In [removed: 2017,] [added: 2018,] the segment’s net sales were [removed: $2.6] [added: $2.2] billion, representing [removed: 41%] [added: 31%] of our consolidated net sales.

The Services [added: and Software] segment has the following principal product lines:

| [removed: Managed & Support services] [added: Services] | [removed: Managed & Support services] [added: Services] includes a continuum of service offerings beginning with repair, technical support, and [removed: hardware] maintenance. More advanced offerings include [removed: network] monitoring, software [removed: maintenance,] [added: updates,] and [removed: cyber security] [added: cybersecurity] services. Managed [removed: service offerings] [added: services] range from partial or full operation of [removed: customer owned] [added: customer-owned] networks to operation of Motorola [removed: Solutions owned] [added: Solutions-owned] networks. Services [removed: and Software as a Service (SaaS) are provided across all radio network technologies, Command Center Software Offerings, and Smart Public Safety Solutions. Managed & Support services] represented [removed: 69%] [added: 81%] of the net sales of the Services [added: and Software] segment in [removed: 2017.] [added: 2018.] |

We offer comprehensive solutions that include infrastructure, devices, software applications, [added: video cameras] and [removed: services designed] [added: analytics,] and [removed: delivered to enable] [added: services that help] our customers [removed: to] [added: work] safely and [removed: effectively accomplish their mission.][added: efficiently.]

Our strategy for long-term growth and the evolution of our business includes organic and inorganic investments in the following [removed: three] [added: four] areas:

(i)Continued innovation in standards-based voice and data solutions spanning APCO 25, TETRA, DMR, and [removed: LTE] [added: Long-term Evolution ("LTE")] technologies.

Our dedication, focus, and innovation for public safety and commercial solutions built the foundation of our [removed: Land Mobile Radio] [added: land mobile radio] ("LMR") platform business, which is reflected in our [removed: installed] [added: install] base of over [removed: 12,500] [added: 13,000] systems deployed in 100+ countries around the world.

These systems have a multi-year and often multi-decade life span which [removed: drives] [added: helps drive] demand for additional device sales, software upgrades, infrastructure refresh and expansion, as well as additional services to maintain, monitor, and manage these complex networks and solutions.

[removed: (ii)Managed and support services] [added: (ii)Services] offerings that leverage our large global [removed: installed] [added: install] base and allow our customers to improve performance across their systems, devices, and applications for greater safety and productivity.

Our comprehensive suite of services - from repair, technical support, security, and system monitoring to operation of [removed: customer owned] [added: customer-owned] networks or Motorola [removed: Solutions owned] [added: Solutions-owned] networks, ensures continuity and reduces risks for continued critical communications operations.

Today, agency procurement models are primarily [removed: capex] [added: capital expenditure] investments in [removed: customer owned] [added: customer-owned] and operated solutions with long-term contracts.

As agencies seek budget predictability, increased flexibility, and [removed: outcome based] [added: outcome-based] solutions, there continues to be a shift to alternative consumption models.

As the public safety market continues to embrace software offerings to enhance their workflows, we are able to sell cloud-first [removed: SaaS offerings] [added: software as a service ("SaaS") offering] in addition to on-premise solutions with ancillary implementation and managed services.

We [removed: address the communication needs of] [added: serve] government agencies, state and local public safety and first-responder agencies, [removed: and] [added: as well as] commercial and industrial customers who utilize private communications [removed: networks and] [added: networks, often to] manage a mobile workforce.

Our sales model includes both direct sales by our in-house sales force, which [removed: tends] [added: tend] to focus on our largest accounts, and sales through our channel partner program.

Our largest customers are the [removed: U.S.] [added: United States ("U.S.")] federal government (through multiple contracts with its various branches and agencies, including the armed services) and the Home Office of the United Kingdom, representing approximately [removed: 9% and] 8% [added: and 7%] of our consolidated net sales in [removed: 2017,] [added: 2018,] respectively.

The loss of these customers could have a material adverse effect on our revenue [added: and earnings over several quarters as many of our contracts with these governments are long-term in nature.]

Net sales in the Americas [added: region] continued to comprise a significant portion of our business, accounting for [removed: 68%,] [added: 69%,] 68% and [removed: 71%] [added: 68%] of our consolidated net sales in [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] respectively.

Traditional [removed: Land Mobile Radio] [added: LMR] competitors include: Harris, Hytera, Airbus, and Kenwood.

As demand for [removed: fully integrated] [added: fully-integrated] voice, data, and broadband systems continue to grow, we may face additional competition from public telecommunications carriers and telecommunications equipment providers.

As we continue to evolve our [removed: Integration] services [removed: and Managed & Support services] strategy, we may work with other companies on a consortium or joint venture basis as customers' delivery needs become more complex to fulfill.

Our continued focus on growing our [removed: Command Center] [added: command center software] suite [added: and video solutions] has added additional competitors such as: West Corporation, Intergraph, [removed: Tri-Tech,] [added: Central Square, Axis, Hikvision, Dahua,] and Zetron.

Several other competitive factors may have an impact on our future business including: evolving spectrum mandates by government [removed: regulators,] [added: regulators and] increasing investment by broadband and IP solution [removed: providers, and new low-tier competitors.][added: providers.]

Our backlog [removed: for the Products and Services segments] includes all product and service orders that have been received and are believed to be firm.

As of December 31, [removed: 2017] [added: 2018] and December 31, [removed: 2016,] [added: 2017,] our backlog was as follows:

| (In millions) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

Approximately [removed: 54%] [added: 52%] of the Products [added: and Systems Integration] segment backlog and [removed: 25%] [added: 21%] of the Services [added: and Software] segment backlog is expected to be recognized as revenue during [removed: 2018.][added: 2019.]

Our R&D programs are focused on the development of: (i) new public safety devices, infrastructure, software and solutions, (ii) [removed: Command Center] [added: command center software] applications that include voice, data, and video, [removed: and] (iii) public safety broadband solutions based on [removed: the] LTE [removed: technology.][added: technology, and (iv) video devices and software applications.]

R&D expenditures were [removed: $568] [added: $637] million in [removed: 2017, $553] [added: 2018, $568] million in [removed: 2016,] [added: 2017,] and [removed: $620] [added: $553] million in [removed: 2015.][added: 2016.]

Motorola Solutions is a leading global provider of mission-critical communications.

Our technology platforms in communications, software, video, and services make cities safer and help communities and businesses thrive.

At Motorola Solutions, we are ushering in a new era in public safety and security.

Public safety and commercial customers globally depend on our solutions to keep them connected, from everyday to extreme moments.

We serve more than 100,000 customers in more than 100 countries and have a rich heritage of innovation spanning more than 90 years.

Recent Acquisitions

On January 7, 2019, we announced that we acquired VaaS International Holdings, Inc. ("VaaS"), a "video analysis as a service" company that is a leading global provider of data and image analytics for vehicle location for a purchase price of $445 million.

This acquisition expands our command center software portfolio.

On March 28, 2018, we completed the acquisition of Avigilon Corporation ("Avigilon"), a provider of advanced security and video solutions including video analytics, network video management hardware and software, video cameras and access control solutions for a purchase price of $974 million.

On March 7, 2018, we completed the acquisition of Plant Holdings, Inc. ("Plant"), the parent company of Airbus DS Communications for a purchase price of $237 million.

This acquisition expands our software portfolio in the command center with additional solutions for Next Generation 9-1-1.

On August 28, 2017, we completed the acquisition of Kodiak Networks, a provider of broadband push-to-talk for commercial customers, for a purchase price of $225 million.

On March 13, 2017, we completed the acquisition of Interexport, a managed service provider of communications systems to public safety and commercial customers in Chile, for a purchase price of $98 billion Chilean pesos, or approximately $147 million.

On November 10, 2016, we completed the acquisition of Spillman Technologies ("Spillman"), a provider of comprehensive law enforcement and public safety software solutions, for a purchase price of $221 million.

The acquisition expands our command center services and software portfolio and enables us to offer a full suite of solutions to a broader customer base.

On February 19, 2016, we completed the acquisition of Guardian Digital Communications Limited ("GDCL"), a holding company of Airwave Solutions Limited ("Airwave"), the largest private operator of a public safety network in the world.

All of the outstanding equity of GDCL was acquired for the sum of £1, after which we invested into GDCL £698 million, net of cash acquired, or approximately $1.0 billion, to settle all third party debt.

During the second quarter of 2018, we modified our internal reporting structure to better align the way financial information is reported to and analyzed by executive leadership in part as a result of recent acquisitions contributing to the growth within the newly-aligned Services and Software segment.

Previously, we had two reporting segments: Products and Services.

The changes in reporting structure consist of Systems Integration-related revenue and costs moving from the old Services segment into the newly-presented Products and Systems Integration segment and software-related revenue and costs moving from the old Products segment into the newly-presented Services and Software segment.

Devices also includes video cameras.

Systems and Systems Integration: Systems and Systems Integration include customized radio networks, video solutions and implementation, optimization, and integration of networks, devices, software, and applications.

Land Mobile Radio Standards

| Software | Software includes a public safety and enterprise command center software suite, unified communications applications, and video software solutions, delivered both on premise and “as a service” and represented 19% of the net sales of the Services and Software segment in 2018. |

In 2018, Motorola Solutions marked 90 years as a communications technology provider.

Since Motorola was founded in 1928, our commitment to innovation has been at the heart of our company.

Today, we design and deliver solutions that are purpose-built for the unique needs of our customers, who work in coal mines, run into burning buildings, teach in classrooms, and everything in between.

(iii) Command center software solutions to support public safety workflow - from a citizen's emergency call and dispatching first responders to communicating with personnel in the field and managing records and evidence.

Motorola Solutions is building a command center software offering that provides a unified suite of solutions across the public safety workflow.

(iv)Video analytics, network video management software and hardware, video cameras, and access control solutions for government and commercial customers.

We have video solutions installed at thousands of customer sites, including school campuses, transportation systems, healthcare centers, public venues, critical infrastructure, prisons, factories, casinos, airports, financial institutions, government facilities, and retailers.

| Products and Systems Integration | $ | 3,199 | | | $ | 3,314 | |

| Services and Software | 7,401 | | | | 6,298 | | |

| | $ | 10,600 | | | $ | 9,612 | |

During 2018, compliance with these U.S. federal, state and local, and international laws did not have a material effect on our capital expenditures, or competitive position; however, we recorded a $57 million charge once we became aware of additional remediation requirements for the designated Superfund site under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the “Superfund Act”) incurred by a legacy business.

The charge was primarily due to: (i) changes in the expected timeline of the remediation activities to 30 years and (ii) additional costs for further remediation efforts, increasing the reserve to $107 million.

Regulatory Matters

The next WRC is scheduled to be held in October-November 2019.

WRC-19 will focus on 5G, harmonizing the internet of things ("IOT"), and satellite coordination.

broadband spectrum for public safety which will provide new business opportunities for us in the future and to reinforce the importance of LMR spectrum and services.

We are a leading global provider of mission-critical communication infrastructure, devices, accessories, software and services.

Our products and services help government, public safety, and commercial customers improve their operations through increased effectiveness, efficiency, and safety of their mobile workforces.

We serve our customers with a global footprint of sales in more than 100 countries based on our industry leading innovation and a deep portfolio of products and services.

We conduct our business globally and manage it through two segments: Products and Services.

Systems: Systems includes: (i) the radio network core and central processing software, (ii) base stations, (iii) consoles, (iv) repeaters, and (v) software applications and features.

| Integration services | Integration services includes the implementation, optimization, and integration of systems, devices, software, and applications. Integration services represented 30% of the net sales of the Services segment in 2017. |

| iDEN services | Integrated Digital Enhanced Network (“iDEN”) is a Motorola Solutions proprietary push-to-talk technology. iDEN services consist primarily of hardware and software maintenance services for our legacy iDEN customers and represented 1% of the net sales of the Services segment in 2017. |

In 2018, Motorola Solutions will celebrate 90 years of providing public safety and commercial customers with secure and reliable mission critical communications.

Our customers have unique voice, data, and operational requirements.

(iii)Software solutions to support the entire public safety workflow - from the command center to mobile applications in the field to post-incident analytics.

Motorola Solutions is attempting to expand its software offerings to provide solutions across the various segments of the public safety workflow.

and earnings over several quarters as many of our contracts with these governments are long-term in nature.

| Products | $ | 1,895 | | | $ | 1,513 | |

| Services | 7,717 | | | | 6,858 | | |

| | $ | 9,612 | | | $ | 8,371 | |

The increase in backlog of $1.2 billion is driven by acquisitions and growth in both the Products and Services segments absent of acquisitions.

During 2017, compliance with these U.S. federal, state and local, and international laws did not have a material effect on our capital expenditures, earnings, or competitive position.

(“ITU”).

On October 27, 2014, we completed the sale of certain assets and liabilities of the Enterprise business to Zebra Technologies Corporation ("Zebra").

The financial results of the disposed business have been classified as discontinued operations for all periods presented.

The results of discontinued operations are discussed in further detail in the “Discontinued Operations” footnote included in Item 8.

For the fiscal year ended December 31, [removed: 2017][added: 2018]

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of [removed: July 1, 2017] [added: June 30, 2018] (the last business day of the Registrant’s most recently completed second quarter) was approximately [removed: $12.6] [added: $14.9] billion.

The number of shares of the registrant’s Common Stock, $.01 par value per share, outstanding as of February [removed: 2, 2018] [added: 1, 2019] was [removed: 161,307,525.][added: 163,871,288.]

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 [removed: 14, 2018,] [added: 13, 2019,] are incorporated by reference into Part III.

| Business Organization | [removed: [3](#sFF9C8A08DF455F4F83DB7C43A22B4DBB)] [added: [3](#sF86589EBCF4356319B09293CFC2944E4)] |

| Strategy and Focus Areas | [removed: [4](#sD5EE0328F4825B40BA98E869AA8338AE)] [added: [4](#sC6F14F4F80045478A304643649840C6F)] |

| Customers and Contracts | [removed: [4](#s96B2D18367065163A0F47291B8A9EB8C)] [added: [5](#s530249D7092F5191B68594397FE4E341)] |

| [Research and [removed: Development](#s125A8CFF18075B719850DE60BB224CED)] [added: Development](#s28FB4F1CE8D6573C9E7164AA00CE047A)] | [removed: [5](#s1498C112D7E15A7BAF33AD0D95FF13CA)] [added: [6](#s0F70D4D9544255ADACBE15BC0E7EDEBF)] |

| [Intellectual Property [removed: Matters](#sB141EBC6B2ED55F49909BA81A0504B36)] [added: Matters](#sD22F9FBC472C595CBB5BE5A2400FB78A)] | [removed: [6](#s6B388F78AD045EC9B47AE7C1F0810200)] [added: [6](#s8CA29CCF1E4E5CD2AE3E2CDBAD03C5DB)] |

| Inventory and Raw Materials | [removed: [6](#s329A0B68CE2E578B9FAA7032F6FD2A18)] [added: [7](#s5AF6357C14BA5AA6B0E56C51F6D30E68)] |

| [Environmental [removed: Quality](#s0A06021043FC58DCA0F72C39D881F460)] [added: Quality](#s97F29748D0C35618A8D36919B87743F4)] and Regulatory Matters | [removed: [6](#sF7FEC661A99B513A81E6AA66C87B03B7)] [added: [7](#s8202C76BE6775EED92592E663FEB51B3)] |

| Material Dispositions | [removed: [7](#sC7B0F418747C5A67B89CB7C19C0FFE75)] [added: [8](#s628E921755185461861C3A8C6476E24C)] |

| [Financial Information About Geographic [removed: Areas](#sE3A93800BA195647A2681EE73AE507DB)] [added: Areas](#sA6FBA65BC55E5A31A8841831F5E110AB)] | [removed: [7](#sCF70F72EDE1258A28F139A2D31746F6C)] [added: [8](#s60913B9F2FA55AAF92B08150EC82CE34)] |

| [Financial Information About [removed: Segments](#s4BFA0924E2C75AA09041B49F52AA7ECE)] [added: Segments](#s5D8867AA7B94529E850B9395445CEEB4)] | [removed: [7](#sA3B9B90F85CC521CAB79EBA24A71F005)] [added: [8](#s2C264B530BC05D89B3E239FC309CEC22)] |

| [Item 1A. Risk [removed: Factors](#sDFC1B8DA8C1E5BE5A9A5DF9A81EC78ED)] [added: Factors](#sD9C8C07ED3DC5221B1484C5234EDFF78)] | [removed: [8](#s9C0B5F8092B056FB9C5A973EB89C7A56)] [added: [9](#sC5ACEB5DDD5B57259F184B78250F1841)] |

| [Item 1B. Unresolved Staff [removed: Comments](#sEE2F2AFF31CB5E3BB8586594A9B9798C)] [added: Comments](#sB2813727BE5D557BB69791E3F5D4844A)] | [removed: [20](#s2FD34D745A8D535CBD2446F677E56EDD)] [added: [21](#sB8047109C0D953EF96080E78D2ED6948)] |

| [Item 3. Legal [removed: Proceedings](#s3DC16A7B1B5C5AD781DAB9E57B4CA7ED)] [added: Proceedings](#s6B854FF5B19B57ECA6CEEB03A4EFEE91)] | [removed: [20](#s552E584BB9625E62AF04D25F8086C0A8)] [added: [21](#s94163285BFBC5CF4B5FAE46C65799F93)] |

| [Item 4. Mine Safety [removed: Disclosures](#sEA514703C3FB5415BE2DDE17B5C02319)] [added: Disclosures](#s6173C4CF81B45CF5B111A13A2EA3EF3D)] | [removed: [20](#s26C8B7379D9D523D9753229C76E23D6D)] [added: [21](#s7F3E0B9574F55448B86749E482D69D7B)] |

| [Executive Officers of the [removed: Registrant](#sA45B668C63C950DEBE16A4595FAED58B)] [added: Registrant](#s64967F01F1895BC8A86458664E9CB973)] | [removed: [20](#s63C38738BC9D50FD8D21963121DA6CB1)] [added: [22](#s8AAE71D46B875E68A921CB8259C2F4F3)] |

| [Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s999C44B74CF25E9ABCCEEFB6FA234220)] [added: Securities](#s4E30B860ACFD59098E58689394D9C140)] | [removed: [22](#s999C44B74CF25E9ABCCEEFB6FA234220)] [added: [23](#s4E30B860ACFD59098E58689394D9C140)] |

| [Item 6. Selected Financial [removed: Data](#sBB138318B3D5536AA412A1A27AB7454B)] [added: Data](#s4EFB953FC9EC578A96A7B3C33C493475)] | [removed: [24](#sBB138318B3D5536AA412A1A27AB7454B)] [added: [25](#s4EFB953FC9EC578A96A7B3C33C493475)] |

| [Item 7. Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s57A02F55A7B25813A0843DE1A2FEDC27)] [added: Operations](#s400B9B384F8F5D22A8765CF2C36130A6)] | [removed: [25](#s57A02F55A7B25813A0843DE1A2FEDC27)] [added: [26](#s400B9B384F8F5D22A8765CF2C36130A6)] |

| [Item 7A. Quantitative and Qualitative Disclosures About Market [removed: Risk](#s421FF39AAC725AB0A8CDC44A273E4633)] [added: Risk](#sBD5FB5490228513A91C7513FAB629D6A)] | [removed: [42](#s421FF39AAC725AB0A8CDC44A273E4633)] [added: [47](#sBD5FB5490228513A91C7513FAB629D6A)] |

| [Item 8. Financial Statements and Supplementary [removed: Data](#s681F4F194A8B5D7CBDAC4DB41D0D6F36)] [added: Data](#sFD9A613C3F0D5D76AB0E78D08376B6F7)] | [removed: [44](#s681F4F194A8B5D7CBDAC4DB41D0D6F36)] [added: [48](#sFD9A613C3F0D5D76AB0E78D08376B6F7)] |

| [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s772972A439455F90B444FC519814CBEC)] [added: Disclosure](#s86ED1D0B4E735C87B9E1E178DDCFA599)] | [removed: [89](#s772972A439455F90B444FC519814CBEC)] [added: [96](#s86ED1D0B4E735C87B9E1E178DDCFA599)] |

| [Item 9A. Controls and [removed: Procedures](#s4B4CC0774ECA5B2EB062EB4527555255)] [added: Procedures](#s0A400E9D433151FD9CFB0E6D3DFF1023)] | [removed: [89](#s4B4CC0774ECA5B2EB062EB4527555255)] [added: [96](#s0A400E9D433151FD9CFB0E6D3DFF1023)] |

| [Item 9B. Other [removed: Information](#s887EB3CE27BB55C0A334C90CF535E0DE)] [added: Information](#sB10F799A84FA541DA598DFFA5005BE12)] | [removed: [89](#s887EB3CE27BB55C0A334C90CF535E0DE)] [added: [96](#sB10F799A84FA541DA598DFFA5005BE12)] |

| [PART [removed: III](#s8AFC78F7BAF65CD4995F663CD13F5D63)] [added: III](#sAD2DADB2D1195DCAB6F3C56B162272A6)] | [removed: [91](#s8AFC78F7BAF65CD4995F663CD13F5D63)] [added: [98](#sAD2DADB2D1195DCAB6F3C56B162272A6)] |

| [Item 10. Directors, Executive Officers and Corporate [removed: Governance](#s1680A31085F35F6B9924AE25815045D3)] [added: Governance](#sFEE33796DE4F5FE69A3F264081F5F5C5)] | [removed: [91](#s1680A31085F35F6B9924AE25815045D3)] [added: [98](#sFEE33796DE4F5FE69A3F264081F5F5C5)] |

| [Item 11. Executive [removed: Compensation](#s8EEA4A43887E5F9881E1D8B42800447C)] [added: Compensation](#s002661BBAD6651BE9E9E8B6F15878640)] | [removed: [91](#s8EEA4A43887E5F9881E1D8B42800447C)] [added: [98](#s002661BBAD6651BE9E9E8B6F15878640)] |

| [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s9E3BBF7BF9475042B04432DA8CA45C60)] [added: Matters](#s05010BFC53FC5470BCBD2E6CD7D3CA73)] | [removed: [91](#s9E3BBF7BF9475042B04432DA8CA45C60)] [added: [98](#s05010BFC53FC5470BCBD2E6CD7D3CA73)] |

| [Item 13. Certain Relationships and Related Transactions, and Director [removed: Independence](#sE14805C6A1C85E9B89C782C6F2712148)] [added: Independence](#sD4DA8B30721451CB9B94CD20E8F6EE6C)] | [removed: [91](#sE14805C6A1C85E9B89C782C6F2712148)] [added: [98](#sD4DA8B30721451CB9B94CD20E8F6EE6C)] |

| [Item 14. Principal Accounting Fees and [removed: Services](#s3BD46F5A43FC5F79AE4D5A9B176AE40D)] [added: Services](#s7DA2C28BB7125C25B07ECE5B6F979486)] | [removed: [91](#s3BD46F5A43FC5F79AE4D5A9B176AE40D)] [added: [98](#s7DA2C28BB7125C25B07ECE5B6F979486)] |

| [Item 15. Exhibits and Financial Statement [removed: Schedules](#s48D3C758848B511F908EEA4C39C2E4CE)] [added: Schedules](#s60A8AE6B31375E609559F0486C2BF5CC)] | [removed: [92](#s48D3C758848B511F908EEA4C39C2E4CE)] [added: [99](#s60A8AE6B31375E609559F0486C2BF5CC)] |

| [15(a)(1) Financial [removed: Statements](#s1C5495B7A2C75840ACB5AF108D65D754)] [added: Statements](#sEF45E964E7285D18BC6691634DF1858C)] | [removed: [92](#s1C5495B7A2C75840ACB5AF108D65D754)] [added: [99](#sEF45E964E7285D18BC6691634DF1858C)] |

| [15(a)(2) Financial Statement Schedule and Independent Auditors’ [removed: Report](#s7ABA695093C65EFE9A99EC05881722C0)] [added: Report](#s983B6AA0B6D458C88216F907CCB02957)] | [removed: [92](#s7ABA695093C65EFE9A99EC05881722C0)] [added: [99](#s983B6AA0B6D458C88216F907CCB02957)] |

10-K 1 msi201810-k.htm 10-K

| [PART I](#s08088816334851D4B439776EB513AEF0) | [3](#s8717E920F63F59B3A6C13AB01EFC9578) |

| [Item 1. Business](#sE3E83512A5605C6CAE1B53EAC16636A0) | [3](#s216DF9122F555684B84D08376126A2F0) |

| General | [3](#sDC95171E6A48526DA9EE998C135F5B05) |

| Competition | [5](#s809EEBF9BE1455FC81C7759955EEFAA0) |

| [Other Information](#sF52316C16D5A58D1AC1BDE27F771C674) | [6](#s97114D4FE35C560CA97F2389B9A7FD90) |

| [Backlog](#s85FE4F910A6457F9A18E611A65E78B35) | [6](#s8B60CADDB05659C19CD2AAE117DA4DC5) |

| [Employees](#sF934E8E212E35364AD5308D17CC8B3F2) | [8](#s8A2EE448EBCD5F569216ADBD021305F1) |

| [Available Information](#s6591F938A99D5005BD16E6B92AC84365) | [8](#s67D6986370D15C30AFCE4E61971DA17C) |

| [Item 2. Properties](#sF9637503D7D65468AA652ED7DB25CDA0) | [21](#sB41928A688F05A4D9BA3EA2A3B0D7C6C) |

| [PART II](#s3C04DF38295955B5AAE49E41CBAC1C8D) | [23](#s3C04DF38295955B5AAE49E41CBAC1C8D) |

| [PART IV](#sB206A3042EFD55F89D76F286AC40BA32) | [99](#sB206A3042EFD55F89D76F286AC40BA32) |

| [15(a)(3) Exhibits](#s30DD35EBED2D5885841AED7BC4A2DFB1) | [99](#s30DD35EBED2D5885841AED7BC4A2DFB1) |

10-K 1 msi201710-k.htm 10-K

| [PART I](#s1886B05193BF5B8EA9944BE263657295) | [3](#sFF87841651E150739064F46FAFB61BD3) |

| [Item 1. Business](#s166A13F2EC945CFDA12D071F87129322) | [3](#sECEE446CBBD85C47852E86837A9038D5) |

| General | [3](#sA52CCFFD38EF5766B95BCC2CC35677DE) |

| Competition | [5](#sF561860F9EEA568886010F791E8739D3) |

| [Other Information](#s5C6B3C7111945C0798EBADDED8B09F39) | [5](#sF1A474AEDC8D51548E48FD527742DA21) |

| [Backlog](#s0CE4F48AF62652008AC9801BFA0B500D) | [5](#sF87F19003E085EB3B31B06CB07CE1C50) |

| [Employees](#sC1BD94D2ADF05624919689BC61991179) | [7](#s62D404C549D352F19D44C33BA7435E3B) |

| [Available Information](#s4ED0903DDB3A5D31BA4A91AE787837E4) | [7](#s3DC50C26A99E5E6EB7E04B1177C541F6) |

| [Item 2. Properties](#s1C374711BC9E5AD0B2E5D638FD5EDCF6) | [20](#sB56E07F6503E5229AD8048403B46D92B) |

| [PART II](#sEF824D9A971C5ED2A02C4245BBFFE1B8) | [22](#sEF824D9A971C5ED2A02C4245BBFFE1B8) |

| [PART IV](#s3B975DAF70075AD6B915B277CA3568E4) | [92](#s3B975DAF70075AD6B915B277CA3568E4) |

| [15(a)(3) Exhibits](#s2DC7F5B2C34A5086926AE75B07DEAFAE) | [92](#s2DC7F5B2C34A5086926AE75B07DEAFAE) |

As of December 31, [removed: 2017,] [added: 2018,] we: (i) owned [removed: 2] [added: two] facilities (manufacturing and office), both of which were located in Europe, (ii) leased [removed: 203] [added: 239] facilities, [removed: 105] [added: 132] of which were located in [removed: North America and South America] [added: the Americas region] and [removed: 98] [added: 107] of which were located in other countries and (iii) primarily utilized three major facilities for the manufacturing and distribution of our products, located in: Penang, Malaysia; Elgin, Illinois; and Berlin, Germany.

In [removed: 2017,] [added: 2018,] approximately [removed: 35%] [added: 40%] of our products were manufactured in Illinois and approximately [removed: 60%] [added: 55%] of our products were manufactured in Penang.

If manufacturing in [removed: Malaysia] [added: Penang] or Illinois were disrupted, our overall productive capacity could be significantly reduced.

Motorola Solutions' Global Headquarters office is located at 500 W.

Motorola Solutions' principal executive offices are located at 500 W.

The following are the persons who were the executive officers of Motorola Solutions, their ages, and their current titles as of February [removed: 16, 2018] [added: 15, 2019] and the positions they have held during the last five years with the [removed: Company:][added: Company or as otherwise noted:]

Brown; age [removed: 57;] [added: 58;] Chairman and Chief Executive Officer since May 3, 2011.

Bonanotte; age [removed: 53;] [added: 54;] Executive Vice President and Chief Financial Officer since November 13, [removed: 2013; Corporate Vice President and Acting Chief Financial Officer from August 2013 to November 2013; and Corporate Vice President, Finance, Sales and Field Operations, from October 2012 to August] 2013.

[removed: Brda;] [added: "Jack" Molloy;] age [removed: 55;] [added: 47;] Executive Vice President, Products [removed: and Solutions] [added: & Sales] since [removed: July 24, 2017;] [added: August 28, 2018;] Executive Vice President, [removed: Products &] [added: Worldwide Sales and] Services from [added: July 2017 to August 2018; Executive Vice President, Worldwide Sales from] January 2016 to July 2017; Executive Vice President, [removed: Systems] [added: Americas Sales] & [removed: Products] [added: Services] from [removed: May] [added: November] 2015 to January 2016; Senior Vice President, [removed: Systems] [added: The Americas Sales] & [removed: Products] [added: Marketing] from [removed: December 2014] [added: September 2015] to [removed: May] [added: November] 2015; [removed: Senior Vice President, Government Solutions from March 2014 to December 2014;] and Senior Vice President, [removed: Global Solutions & Services] [added: North America Sales] from January [removed: 2013] [added: 2014] to [removed: March 2014.][added: August 2015.]

Hacker; age [removed: 46;] [added: 47;] Executive Vice President, General Counsel and Chief Administrative Officer since January 21, 2015; [added: and] Senior Vice President and General Counsel from June 2013 to January [removed: 2015; and Corporate Vice President, Law, Sales and Product Operations, International and Legal Operations from January 2013 to June 2013.][added: 2015.]

The above executive officers will serve as executive officers of Motorola Solutions until the regular meeting of the Board of Directors in May [removed: 2018] [added: 2019] or until their respective successors are elected.

Kelly S.

Mark; age 47; Executive Vice President, Services & Software since August 28, 2018; Senior Vice President, Managed & Support Services from July 2017 to August 2018; Corporate Vice President, Managed & Support Services from August 2015 to July 2017; and Corporate Vice President, Strategy from May 2011 to August 2015.

Rajan S.

Naik; age 47; Senior Vice President, Chief Strategy & Innovation Officer since December 2017; Corporate Vice President, Chief Strategy Officer from March 2016 to December 2017; and Senior Vice President, Chief Strategy Officer, Advanced Micro Devices, Inc. from January 2012 to February 2015.

Daniel G.

Pekofske; age 42; Corporate Vice President and Chief Accounting Officer since September 10, 2018; Vice President and Treasurer from January 2016 to September 2018; Vice President and Assistant Treasurer from March 2015 to January 2016; Vice President and Assistant Controller from February 2014 to March 2015; and Senior Director, Finance from December 2012 to February 2014.

Cynthia M.

Yazdi; age 54; Senior Vice President, Chief of Staff, Marketing & Communications and Motorola Solutions Foundation since August 28, 2018; Corporate Vice President, Chief of Staff to the Chairman and CEO, Global Marketing and Communications from February 2018 to August 2018; Vice President, Chief of Staff, Global Marketing and Communications from September 2016 to February 2018; Vice President, Chief of Staff from August 2015 to September 2016; and Senior Director, Sales Operations for Asia Pacific from January 2013 to August 2015.

Bruce W.

"Jack" Molloy; age 46; Executive Vice President, Worldwide Sales and Services since July 24, 2017; Executive Vice President, Worldwide Sales from January 2016 to July 2017; Executive Vice President, Americas Sales & Services from November 2015 to January 2016; Senior Vice President, The Americas Sales & Marketing from September 2015 to November 2015; Senior Vice President, North America Sales from January 2014 to August 2015; Corporate Vice President, Central US & Canada and NA Energy Market from January 2013 to December 2013.

John K.

Wozniak; age 46; Corporate Vice President and Chief Accounting Officer since November 3, 2009.

The number of stockholders of record of its common stock on February [removed: 2, 2018] [added: 1, 2019] was [removed: 28,697.][added: 26,760.]

Information regarding securities authorized for issuance under equity compensation plans is incorporated by reference to the information under the caption “Equity Compensation Plan Information” of Motorola Solutions’ Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders.

The following table provides information with respect to acquisitions by the Company of shares of its common stock during the quarter ended December 31, [removed: 2017.][added: 2018.]

| (2) | Through a series of actions, the [removed: Board] [added: board] of [removed: Directors] [added: directors] has authorized the Company to repurchase an aggregate amount of up to $14.0 billion of its outstanding shares of common stock (the “share repurchase program”). The share repurchase program does not have an expiration date. As of December 31, [removed: 2017,] [added: 2018,] the Company had used approximately [removed: $12.3] [added: $12.4] billion, including transaction costs, to repurchase shares. |

This graph assumes $100 was invested in the stock or the indices on December 31, [removed: 2012] [added: 2013] and reflects the payment of dividends.

[removed: ][added: ]

| 09/27/18 to 10/24/18 | — | | | $ | — | | | — | | | $ | 1,642,593,206 | |

| 10/25/18 to 11/20/18 | 485,945 | | | $ | 125.97 | | | 485,945 | | | $ | 1,581,377,757 | |

| 11/21/18 to 12/27/18 | 40,254 | | | $ | 124.23 | | | 40,254 | | | $ | 1,576,377,038 | |

| Total | 526,199 | | | $ | 125.84 | | | 526,199 | | | | | |

| 09/28/17 to 10/25/17 | — | | | N/A | | | | — | | | $ | 1,833,468,345 | |

| 10/26/17 to 11/22/17 | 749,423 | | | $ | 91.59 | | | 749,423 | | | $ | 1,770,826,834 | |

| 11/23/17 to 12/27/17 | 610,029 | | | $ | 92.39 | | | 610,029 | | | $ | 1,708,468,411 | |

| Total | 1,359,452 | | | $ | 91.95 | | | 1,359,452 | | | | | |

| (In millions, except per share amounts) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Net sales | $ | [removed: 6,380] [added: 7,343] | | | $ | [removed: 6,038] [added: 6,380] | | | $ | [removed: 5,695] [added: 6,038] | | | $ | [removed: 5,881] [added: 5,695] | | | $ | [removed: 6,227] [added: 5,881] | |

| Earnings (loss) from continuing operations, net of tax* | [added: 966 | | | |] (155 | | ) | | 560 | | | | 640 | | | | (697 | | ) | [removed: | 933 | | |]

| Diluted earnings (loss) from continuing operations per common share* | $ | [added: 5.62 | | | $ |] (0.95 | ) | | $ | 3.24 | | | $ | 3.17 | | | $ | (2.84 | ) | [removed: | $ | 3.45 | |]

| Earnings (loss) per diluted common share* | [added: 5.62 | | | |] (0.95 | | ) | | 3.24 | | | | 3.02 | | | | 5.29 | | | [removed: | 4.06 | | |]

| Diluted weighted average common shares outstanding (in millions) | [removed: 162.9] [added: 172.0] | | | | [removed: 173.1] [added: 162.9] | | | | [removed: 201.8] [added: 173.1] | | | | [removed: 245.6] [added: 201.8] | | | | [removed: 270.5] [added: 245.6] | | |

| Dividends declared per share | $ | [removed: 1.93] [added: 2.13] | | | $ | [removed: 1.70] [added: 1.93] | | | $ | [removed: 1.43] [added: 1.70] | | | $ | [removed: 1.30] [added: 1.43] | | | $ | [removed: 1.14] [added: 1.30] | |

| Total assets | $ | [removed: 8,208] [added: 9,409] | | | $ | [removed: 8,463] [added: 8,208] | | | $ | [removed: 8,346] [added: 8,463] | | | $ | [removed: 10,423] [added: 8,346] | | | $ | [removed: 11,851] [added: 10,423] | |

| Total debt | [removed: 4,471] [added: 5,320] | | | | [removed: 4,396] [added: 4,471] | | | | [removed: 4,349] [added: 4,396] | | | | [removed: 3,400] [added: 4,349] | | | | [removed: 2,461] [added: 3,400] | | |

| Capital expenditures | $ | [removed: 227] [added: 197] | | | $ | [removed: 271] [added: 227] | | | $ | [removed: 175] [added: 271] | | | $ | [removed: 181] [added: 175] | | | $ | [removed: 169] [added: 181] | |

| % of sales | [removed: 3.6] [added: 2.7] | | % | | [removed: 4.5] [added: 3.6] | | % | | [removed: 3.1] [added: 4.5] | | % | | 3.1 | | % | | [removed: 2.7] [added: 3.1] | | % |

| Research and development expenditures | $ | [removed: 568] [added: 637] | | | $ | [removed: 553] [added: 568] | | | $ | [removed: 620] [added: 553] | | | $ | [removed: 681] [added: 620] | | | $ | [removed: 761] [added: 681] | |

| % of sales | [removed: 8.9] [added: 8.7] | | % | | [removed: 9.2] [added: 8.9] | | % | | [removed: 10.9] [added: 9.2] | | % | | [removed: 11.6] [added: 10.9] | | % | | [removed: 12.2] [added: 11.6] | | % |

| Operating earnings | 1,255 | | | | 1,284 | | | | 1,048 | | | | 916 | | | | 900 | | |

| Operating earnings (loss) | 1,282 | | | | 1,067 | | | | 994 | | | | (1,006 | | ) | | 947 | | |

We have audited the accompanying consolidated balance sheets of Motorola Solutions, Inc. and subsidiaries (the [removed: “Company”)] [added: Company)] as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the [removed: three-year] [added: three‑year] period ended December 31, [removed: 2017,] [added: 2018,] and the related notes (collectively, the [removed: “consolidated] [added: consolidated] financial [removed: statements”).][added: statements).]

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the years in the [removed: three-year] [added: three‑year] period ended December 31, [removed: 2017,] [added: 2018,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”),] [added: (PCAOB),] the Company’s internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February [removed: 16, 2018] [added: 15, 2019] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Such procedures included examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the consolidated financial statements.

[removed: ][added: ]

| (In millions, except per share amounts) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Net sales from products | $ | [removed: 3,772] [added: 4,463] | | | $ | [removed: 3,649] [added: 3,772] | | | $ | [removed: 3,676] [added: 3,649] | |

| Net sales from services | [removed: 2,608] [added: 2,880] | | | | [removed: 2,389] [added: 2,608] | | | | [removed: 2,019] [added: 2,389] | | |

| Net sales | [removed: 6,380] [added: 7,343] | | | | [removed: 6,038] [added: 6,380] | | | | [removed: 5,695] [added: 6,038] | | |

| Costs of products sales | [removed: 1,686] [added: 2,035] | | | | [removed: 1,649] [added: 1,686] | | | | [removed: 1,625] [added: 1,649] | | |

| Costs of services sales | [removed: 1,670] [added: 1,828] | | | | [removed: 1,520] [added: 1,670] | | | | [removed: 1,351] [added: 1,520] | | |

| Costs of sales | [removed: 3,356] [added: 3,863] | | | | [removed: 3,169] [added: 3,356] | | | | [removed: 2,976] [added: 3,169] | | |

| Gross margin | [removed: 3,024] [added: 3,480] | | | | [removed: 2,869] [added: 3,024] | | | | [removed: 2,719] [added: 2,869] | | |

| Selling, general and administrative expenses | [removed: 979] [added: 45] | | | | [removed: 1,000] [added: 43] | | | | [removed: 1,021] [added: 45] | | |

| Research and development expenditures | [removed: 568] [added: 637] | | | | [removed: 553] [added: 568] | | | | [removed: 620] [added: 553] | | |

| Other charges | [removed: 195] [added: 67] | | | | [removed: 249] [added: 71] | | | | [removed: 84] [added: 126] | | | [added: | 70 | | | | 18 | | | | 37 | | | | 47 | | | | 45 | | |]

| Interest expense, net | [removed: (201] [added: (222] | | ) | | [removed: (205] [added: (201] | | ) | | [removed: (173] [added: (205] | | ) |

| Gains (losses) on sales of investments and businesses, net | [removed: 3] [added: 16] | | | | [removed: (6] [added: 3] | | [removed: )] | | [removed: 107] [added: (6] | | [added: )] |

| Other | [removed: (8] [added: 53] | | [removed: )] | | [removed: (12] [added: (10] | | ) | | [removed: (11] [added: 7] | | [removed: )] |

| [removed: Earnings from continuing operations] [added: Net earnings] before income taxes | [removed: 1,076] [added: 1,102] | | | | [removed: 844] [added: 1,076] | | | | [removed: 917] [added: 844] | | |

| Income tax expense | [removed: 1,227] [added: 133] | | | | [removed: 282] [added: 1,227] | | | | [removed: 274] [added: 282] | | |

| [removed: Earnings] [added: Net earnings] (loss) [removed: from continuing operations] | [removed: (151] [added: 969] | | [removed: )] | | [removed: 562] [added: (151] | | [added: )] | | [removed: 643] [added: 562] | | |

| Net earnings (loss) | [removed: (151] [added: $] | [added: 969] | [removed: )] | | [removed: 562] [added: $] | [added: (151] | [added: )] | | [removed: 613] [added: $] | [added: 562] | |

| Less: Earnings attributable to noncontrolling interests | [removed: 4] [added: 3] | | | | [removed: 2] [added: 4] | | | | [removed: 3] [added: 2] | | |

| Net earnings (loss) attributable to Motorola Solutions, Inc. | $ | [removed: (155] [added: 966] | [removed: )] | | $ | [removed: 560] [added: (155] | [added: )] | | $ | [removed: 610] [added: 560] | |

| [added: |] Amounts attributable to Motorola Solutions, Inc. common [removed: stockholders: |] [added: stockholders] | | | | | | | | | | |

| [added: Basic:] | $ | [removed: (0.95] [added: 5.95] | [removed: )] | | $ | [removed: 3.30] [added: (0.95] | [added: )] | | $ | [removed: 3.06] [added: 3.30] | |

| [added: Diluted:] | [removed: $] [added: 5.62] | [removed: (0.95] | [removed: )] | | [removed: $] [added: (0.95] | [removed: 3.24] | [added: )] | | [removed: $] [added: 3.24] | [removed: 3.02] | |

| Basic | [removed: 162.9] [added: 162.4] | | | | [removed: 169.6] [added: 162.9] | | | | [removed: 199.6] [added: 169.6] | | |

| Diluted | [removed: 162.9] [added: 172.0] | | | | [removed: 173.1] [added: 162.9] | | | | [removed: 201.8] [added: 173.1] | | |

| Dividends declared per share | $ | [removed: 1.93] [added: 2.13] | | | $ | [removed: 1.70] [added: 1.93] | | | $ | [removed: 1.43] [added: 1.70] | |

| (In millions) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Net earnings (loss) | [removed: $] [added: 969] | [removed: (151] | [removed: )] | | [removed: $] [added: (151] | [removed: 562] | [added: )] | | [removed: $] [added: 562] | [removed: 613] | |

| Foreign currency translation adjustments | [removed: 141] [added: (91] | | [added: )] | | [removed: (228] [added: 141] | | [removed: )] | | [removed: (62] [added: (228] | | ) |

| Marketable securities | [removed: 6] [added: (6] | | [added: )] | | [removed: 3] [added: 6] | | | | [removed: (47] [added: 3] | | [removed: )] |

| Defined benefit plans | [removed: (392] [added: (106] | | ) | | [removed: (226] [added: (392] | | ) | | [removed: 98] [added: (226] | | [added: )] |

| Total other comprehensive loss, net of tax | [removed: (245] [added: (203] | | ) | | [removed: (451] [added: (245] | | ) | | [removed: (11] [added: (451] | | ) |

| Comprehensive income (loss) | [removed: (396] [added: 766] | | [removed: )] | | [removed: 111] [added: (396] | | [added: )] | | [removed: 602] [added: 111] | | |

| Less: Earnings attributable to noncontrolling interest | [removed: 4] [added: 3] | | | | [removed: 2] [added: 4] | | | | [removed: 3] [added: 2] | | |

| Comprehensive income (loss) attributable to Motorola Solutions, Inc. common shareholders | $ | [removed: (400] [added: 763] | [removed: )] | | $ | [removed: 109] [added: (400] | [added: )] | | $ | [removed: 599] [added: 109] | |

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition in 2018 due to the adoption of ASU No. 2014-09, “Revenue from Contracts with Customers”.

February 15, 2019

| Selling, general and administrative expenses | 1,254 | | | | 1,025 | | | | 1,044 | | |

| Other charges | 334 | | | | 147 | | | | 224 | | |

| Operating earnings | 1,255 | | | | 1,284 | | | | 1,048 | | |

| Total other expense | (153 | | ) | | (208 | | ) | | (204 | | ) |

| Contract assets | 1,012 | | | | — | | |

| Contract liabilities | 1,263 | | | | — | | |

| Net earnings | | | | | | | | | | | | 966 | | | | 3 | | |

| Share repurchase program | (1.2 | ) | | | | | | | | | | (132 | | ) | | | | |

| ASU 2016-16 modified retrospective adoption | | | | | | | | | | | | (31 | | ) | | | | |

| ASU 2014-09 modified retrospective adoption | | | | | | | | | | | | 127 | | | | | | |

| Balance as of December 31, 2018 | 164.0 | | | $ | 421 | | | $ | (2,765 | ) | | $ | 1,051 | | | $ | 17 | |

| Net earnings (loss) attributable to Motorola Solutions, Inc. | $ | 966 | | | $ | (155 | ) | | $ | 560 | |

| Other current assets and contract assets | (251 | | ) | | (99 | | ) | | (185 | | ) |

| Settlement of conversion premium on convertible debt | (169 | | ) | | — | | | | — | | |

Revenue Recognition: Net sales consist of a wide range of goods and services including the delivery of devices, systems and system integration and a full set of software and service offerings.

The Company recognizes revenues when, or as, it transfers control of promised goods or services to its customers in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods and services.

Refer to Note 2 for further discussion of the Company’s accounting policies for revenue from contract with its customers.

Equity securities with readily determinable fair values are carried at fair value with changes in fair value recorded in Other within Other income (expense).

Equity securities without readily determinable fair values are carried at cost, less impairments, if any, and adjusted for observable price changes for the identical or a similar investment of the same issuer.

The Company performs a qualitative impairment assessment to determine if such investments are impaired.