Motorola Solutions (MSI) 10-K risk factor changes: FY2019 vs FY2018

[removed: We] [added: We] face a number of risks related to current global economic and political conditions, including low economic growth rates in certain markets, the impact of currency fluctuations, commodity price volatility, and unstable political conditions that have and could continue to unfavorably impact our [removed: business.][added: business.]

Global economic and political conditions continue to be challenging for many of our government and commercial markets, as economic growth in many [removed: countries, particularly in parts of Latin America] [added: countries] and [removed: 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 some of our customers are dependent on government grants to fund purchases of our products and services.

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

[removed: We] [added: 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 [removed: business.][added: business.]

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 [removed: burden.][added: burden e.g. the California Consumer Protection Act ('CCPA') which went into effect on January 1, 2020.]

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, [removed: services] [added: software] and [removed: software.][added: services.]

Any failure or perceived failure by us, our business partners, or third party service providers to comply with GDPR, [added: CCPA,] other [removed: federal, state or international] privacy-related or data protection laws and regulations, or the privacy commitments [removed: 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 [added: have or] are considering legislation requiring local storage and processing of data that, if enacted, could increase the cost and complexity of offering our products, [removed: services and] software [added: and services] or maintaining our business operations in those jurisdictions.

[removed: A] [added: A] security breach or other significant disruption of our IT systems, those of our outsource partners, suppliers or those we manufacture, install, and in some cases operate and maintain for our customers, caused by cyber attack or other means, could have a negative impact on our operations, sales, and operating [removed: results.][added: results.]

As a provider of [removed: mission-critical] [added: mission critical] communications systems for customers in critical infrastructure sectors of the U.S. and globally, including systems that we operate and maintain for certain customers of [removed: ours,] [added: ours or as a software-based service,] we face additional risk as a target of sophisticated attacks aimed at compromising both our company’s and our customers’ sensitive information and intellectual [removed: property, through means referred to as advanced persistent threats.][added: property.]

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

We cannot guarantee that all threat attempts will be successfully thwarted even with these countermeasures [added: despite significant investment] and [removed: we are therefore investing more in detection] [added: focus on the security of our products, services,] and [removed: response capabilities to minimize potential impacts.][added: corporate environment.]

Further, we are dependent, in certain instances, upon our outsourced business partners, suppliers, and customers to adequately protect our IT systems and those IT systems that we manage for our [removed: customers.]

Such unauthorized access to, or release of, this information could: (i) allow others to unfairly compete with us, (ii) compromise safety or security, given the [removed: mission-critical] [added: mission critical] nature of our customers’ systems, (iii) subject us to claims for breach of contract, tort, and other civil [removed: claims,] [added: claims without adequate indemnification from our suppliers,] and (iv) damage our reputation.

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

[removed: A] [added: A] significant amount of our international business is transacted in local currency and a significant percentage of our cash and cash equivalents are held outside of the United States, which exposes us to risk relating to currency fluctuations, changes in foreign exchange regulations and repatriation delays and costs, which could negatively impact our sales, profitability and financial [removed: flexibility.][added: flexibility.]

In addition, foreign exchange regulations [added: and capital controls enforced by certain jurisdictions] may limit our ability to convert [added: foreign currency] or repatriate [removed: foreign currency.][added: cash.]

[removed: We] [added: We] face uncertainty in the global geopolitical landscape that may impede the implementation of our strategy outside the United [removed: States.][added: States.]

There may [removed: also] be broader uncertainty over [removed: the position the United States will take with respect to certain] [added: U.S.] treaty and trade [removed: relationships] [added: relations] with other countries.

This [removed: uncertainty may] [added: could] impact [removed: (i)] the ability or willingness of non-U.S. companies to transact business in the [removed: United States, including with our company, (ii)] [added: U.S.,] regulation and trade agreements affecting U.S. companies, [removed: (iii) global stock markets] and [removed: (iv) general] global economic conditions.

All [removed: of] these factors are outside [removed: of] our control, but may cause us to adjust [removed: our] strategy [removed: in order] [added: so as] to compete effectively in global [removed: markets] [added: markets,] and could adversely affect our business, financial condition, operating results and cash [removed: flows.][added: flow.]

[removed: A] [added: A] portion of our business is dependent upon U.S. government contracts and grants, which are highly regulated and subject to oversight audits by U.S. government representatives and subject to cancellations.

Such audits could result in adverse findings and negatively impact our [removed: business.][added: business.]

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 corruption, Trade [removed: Act Agreement,] [added: Agreements Act,] Buy [removed: American] [added: America] Act, and the False Claims Act.

[removed: Any] [added: For contracts covered by the Cost Accounting Standards, any] costs found to be improperly allocated to a specific contract may not be allowed, and such costs already reimbursed may have to be refunded.

All contracts with the U.S. government [removed: are subject to cancellation at the] [added: can be terminated for] convenience [removed: of] [added: by] the [removed: U.S. government.][added: government at any time.]

[removed: Government] [added: Government] regulation of radio frequencies may limit the growth of public safety [added: narrowband and] broadband systems or reduce barriers to entry for new [removed: competitors.][added: competitors.]

The allocation of frequencies is regulated in the U.S. and other countries and limited spectrum is allocated to wireless [removed: services and specifically] [added: services, including] to public safety users.

[removed: We] [added: We] derive a portion of our revenue from government customers who award business through competitive bidding which can involve significant upfront costs and risks.

This effort may not result in awards of business or we may fail to accurately estimate the costs to fulfill contracts awarded to us, which could have adverse consequences on our future [removed: profitability.][added: profitability.]

Many government customers, including most U.S. government customers, award business through [removed: a] competitive bidding [removed: process,] [added: processes,] which [removed: results] [added: result] in greater competition and increased pricing pressure.

[removed: The] [added: These] competitive bidding [removed: process involves] [added: processes involve] significant cost and managerial time to prepare bids for contracts that may not be awarded to us.

[removed: We] [added: We] enter into fixed-price contracts that could subject us to losses in the event we fail to properly estimate our costs or hedge our risks associated with currency [removed: fluctuations.][added: fluctuations.]

[removed: The] [added: The] expansion of our [added: video security and] software [removed: business] [added: businesses] creates a greater risk than we have been exposed to in the past that we may not be able to properly assess or [removed: mitigate.][added: mitigate.]

The process of developing new [added: video security and] software products and enhancing existing [removed: 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.

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

We may allocate a significant portion of our available [removed: working capital] [added: operating cash flow] to finance all or a portion of the purchase price relating to possible acquisitions.

[removed: The] [added: The] expansion of our services business creates increased areas of risk that we may not be able to properly assess or [removed: mitigate.][added: mitigate.]

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

[removed: We] [added: We] expect to continue to make strategic acquisitions of other companies or businesses and these acquisitions introduce significant risks and uncertainties, including risks related to integrating the acquired businesses and achieving benefits from the [removed: acquisitions.][added: acquisitions.]

Noncompliance with the GDPR can trigger significant fines.

Existing or future privacy-related legislation and regulations pertaining to artificial intelligence that apply to us or to our customers may require us to change our current products and services and/or result in additional expenses, which could adversely affect our business and results of operations.

We could suffer reputational damage from negative publicity related to products and services that utilize artificial intelligence, which could also adversely affect our business and results of operations.

Current or future privacy-related legislation and governmental regulations pertaining to artificial intelligence may affect how our business is conducted.

Legislation and governmental regulations related to artificial intelligence may also influence our current and prospective customers’ activities, as well as their expectations and needs in relation to our products and services.

Compliance with these laws and regulations may be onerous and expensive, and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance.

Any such increase in costs as a result of changes in these laws and regulations or in their interpretation could individually or in the aggregate make our products and services that use artificial intelligence technologies less attractive to our customers, delay the introduction of new products, in one or more regions, cause us to change or limit our business practices or affect our financial condition and operating results.

We envision a future in which artificial intelligence operating in our products and services will help our public safety and private sector customers build safer communities with stronger communication platforms.

Artificial intelligence may be flawed and datasets may be insufficient or contain biased information.

As we work to responsibly meet our customers’ needs for products and services that use artificial intelligence, we could suffer reputational damage as a result of any inconsistencies in the application of the technology or ethical concerns both of which may generate negative publicity.

If we fail to effectively manage our investment in cybersecurity, our business, products, and services could suffer from the resulting weaknesses in our infrastructure, systems or controls.

customers, including the hosts of our cloud infrastructure on top of which our cloud-based solutions are built.

Radio spectrum is required to provide wireless voice, data, and video communications service.

The global demand for wireless communications has grown exponentially, and spurred competition for access among various networks and users.

In response, regulators are reassessing the allocations of spectrum among users, including public safety users, and considering whether to change the allocation of certain bands from narrowband to broadband use, or to require sharing of spectrum bands.

Our results could be positively or negatively affected by the rules and regulations adopted by regulators.

Our products operate both on licensed and unlicensed spectrum.

The availability of additional radio spectrum may provide new business opportunities.

Conversely, the loss of available radio spectrum may result in the loss of business opportunities.

Regulatory changes in current spectrum bands (e.g., the sharing of previously dedicated or other spectrum) may also provide opportunities or may require modifications to some of our products so they can continue to be manufactured and

marketed.

Opportunities in the public safety broadband market may also be impacted by the First Responder Network Authority which was authorized by Congress to develop, build, and operate a nationwide broadband network for first responders.

Additionally, as our portfolio of products increases, we may be subject to new regulatory and statutory requirements and could result in additional compliance obligations and liabilities for our business.

For example, in the United States we may be a provider of Next Generation 911 services which may be subject to Federal and state regulation.

must devote to the development of new technologies, and (v) the ability to differentiate our products and compete with other companies in the same markets.

As our business grows, the breadth and value of our intellectual property, including patents, trade secrets, and source code, may become a target from internal threats, business partners who assist in the development of products and our intellectual property, and external third party actors.

Our intellectual property protection may be inadequate to protect against these threats of misappropriation, thereby allowing competitors to unfairly use our intellectual property to compete against us.

or suppliers.

Requests for vendor financing continue, including in response to financial challenges surrounding state and local governments.

Following a referendum in 2016, the United Kingdom (the “U.K.”) formally left the E.U. on January 31, 2020.

There is now a transition period until December 31, 2020, when current UK-EU relationships will continue unchanged.

During this period, the U.K. and E.U. will seek to negotiate their long-term economic relations.

Failure to reach agreement during 2020 could risk significant disruption to U.K./E.U. trade which could prolong stock market volatility and currency exchange rate fluctuations that resulted in strengthening of the U.S. dollar.

A significant amount of our sales and operations are conducted outside the United States and transacted in local currency.

policies.

The accounting for convertible debt securities that may be settled in cash or in shares of common stock could have a material effect on our reported financial results.

Under U.S. GAAP, an entity must separately account for the debt component and the embedded conversion option of convertible debt instruments that may be settled entirely or partially in cash or in shares of common stock upon conversion, such as our 1.75% senior convertible notes (“New Senior Convertible Note”).

The fair value of the embedded conversion option is classified as an addition to stockholder’s equity.

The difference between book carrying cost and face value of the debt represents a non-cash discount.

This difference will be amortized into interest expense over the estimated life of the New Senior Convertible Notes.

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.

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 tightening of credit for certain commercial customers.

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

We have sizable sales and operations in Canada, Europe, Middle East, Africa, Asia, and Latin America.

A significant amount of this business is transacted in local currency.

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

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.

The prospect of Brexit has already caused global stock market 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 U.K.’s final withdrawal, especially without any deal on terms, may bring global economic uncertainty, which could cause our customers to closely monitor their costs and reduce their spending budgets.

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.

Radio frequencies are required to provide wireless services.

The growth of public safety broadband communications systems may be affected: (i) by regulations relating to the access to allocated spectrum for public safety users, (ii) if adequate frequencies are not allocated, or (iii) if new technologies are not developed to better utilize the frequencies currently allocated for such use.

Industry growth may also be affected by new licensing fees required to use frequencies.

The U.S. leads the world in allocating spectrum to enable wireless communications including LTE.

Other countries have also allocated spectrum to allow deployment of these and other technologies.

This changing landscape may introduce new competition and new opportunities for us.

MSI’s opportunities to sell LTE equipment and related software and services in the U.S may be substantially impacted by: (i) AT&T's success in satisfying FirstNet contract requirements and milestones, including, among others, subscriber adoption rate, mandatory payments to FirstNet, and coverage, (ii) Verizon and 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.

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.

For certain supplies we have also experienced less support and focus from our suppliers as our spend has 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, certain suppliers have and others may cancel or not extend contractual arrangements, which will not afford us with sufficient protection against a reduction or interruption in supplies.

Moreover, in the event any of these suppliers breach their contracts with us, our legal remedies associated with such a breach may be insufficient to compensate us for any damages we may suffer.

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

We completed a number of large divestitures in the past and could have potential liabilities associated with those transactions and the businesses we divested.

In the past, we have spun-off or sold a number of large businesses, including Motorola Mobility, our Networks business and our Enterprise business.

In connection with our divestitures we typically remain liable for certain pre-closing liabilities associated with the divested business, such as pension liabilities, taxes, employment, environmental liabilities and litigation.

Even though we establish reserves for any expected ongoing liability associated with divested businesses, those reserves may not be sufficient if unexpected liabilities arise and this could negatively impact our financial condition and future results of operations.

We may not have the ability to settle the remaining principal amount of $800 million of the 2% Senior Convertible Notes (the "Senior Convertible Notes") in cash in the event of conversion or to repurchase the Senior Convertible Notes upon the occurrence of a fundamental change, which could have a material effect on our reported financial results.

Our Senior Convertible Notes are convertible any time.

The

If we do not have adequate cash available, either from cash on hand, funds generated from operations or existing financing arrangements, or we cannot obtain additional financing arrangements, we may not be able to settle the principal amount of the Senior Convertible Notes in cash and, in the case of settlement of conversion elections, will be required to settle the principal amount of the Senior Convertible Notes in stock.

If we settle any portion of the principal amount of the Senior Convertible Notes in stock, it will result in immediate, and possibly material, dilution to the interests of existing security holders.

Following any conclusion that we no longer have the ability to settle the Senior Convertible Notes in cash, we will be required on a going forward basis to change our accounting policy for earnings per share from the treasury stock method to the if-converted method.

Earnings per share will most likely be significantly lower under the if-converted method as compared to the treasury stock method.

Our ability to repurchase the Senior Convertible Notes in cash upon the occurrence of a fundamental change or make any other required payments may be limited by law or the terms of other agreements relating to our indebtedness outstanding at the time.

Our failure to repurchase the Senior Convertible Notes when required would result in an event of default with respect to the Senior Convertible Notes and may constitute an event of default or prepayment under, or result in the acceleration of the maturity of, our then-existing indebtedness.

The following is a discussion and analysis of our financial position as of December 31, [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] and results of operations for each of the three years in the period ended December 31, [removed: 2018.][added: 2019.]

[removed: Executive Overview][added: Executive Overview]

[removed: Recent] [added: Recent] Acquisitions and [removed: Developments][added: Developments]

On January 7, 2019, we announced that we acquired VaaS International [removed: Holdings, Inc.] [added: Holdings] ("VaaS"), a [removed: "video analysis as a service"] company that is a [removed: leading] global provider of data and image analytics for vehicle location for [added: $445 million, inclusive of share-based compensation withheld at] a [removed: purchase price] [added: fair value] of [removed: $445 million.][added: $38 million that will be expensed over an average service period of one year.]

This acquisition expands our software portfolio in the command center with additional solutions for Next Generation [removed: 9-1-1.][added: 9-1-1 within our Software and Services segment.]

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 [removed: $98] [added: 98] billion Chilean pesos, or approximately $147 million.

[removed: Our Business][added: Our Business]

Motorola Solutions is a leading global provider of [removed: mission-critical communications.][added: mission critical communications and analytics.]

We serve our customers with a global footprint of sales in more than 100 countries and [removed: 16,000] [added: 17,000] employees worldwide [removed: based on] [added: utilizing] our industry leading innovation and a deep portfolio of products and services.

We conduct our business globally and manage it by two [removed: segments:][added: segments (as mentioned, we changed the name order of the segment to Software and Services):]

[removed: Products] [added: Products] and Systems [removed: Integration:] [added: Integration:] The Products and Systems Integration segment offers an extensive portfolio of infrastructure, devices, accessories, video [removed: solutions,] [added: security devices] and [added: infrastructure, and] the implementation, [removed: 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 [removed: “TETRA”] [added: (“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.

In [removed: 2018,] [added: 2019,] the segment’s net sales were [removed: $5.1] [added: $5.3] billion, representing [removed: 69%] [added: 68%] of our consolidated net sales.

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

Software includes a public safety and enterprise command center software suite, unified communications applications, and video software solutions, delivered both [removed: on premise] [added: on-premise] and “as a service.” [removed: In 2018, the segment’s net sales were $2.2 billion, representing 31%] [added: Services includes a continuum] of [removed: our consolidated net sales.][added: service offerings beginning with repair, technical support and maintenance.]

[removed: 2018 Financial Results][added: 2019 Financial Results]

| • | Net sales were [removed: $7.3] [added: $7.9] billion in [removed: 2018] [added: 2019] compared to [removed: $6.4] [added: $7.3] billion in [removed: 2017] [added: 2018] and [removed: grew] [added: driven by growth] in the [removed: Americas and EMEA.] [added: Americas.] |

| • | Earnings attributable to Motorola Solutions, Inc. were [removed: $966] [added: $868] million, or [removed: $5.62] [added: $4.95] per diluted common share in [removed: 2018,] [added: 2019,] compared to [removed: losses] [added: earnings] of [removed: $155] [added: $966] million, or [removed: $(0.95)] [added: $5.62] per diluted common share in [removed: 2017.] [added: 2018.] |

| • | We returned [removed: $469] [added: $694] million of capital in the form of [removed: $132] [added: $315] million in share repurchases and [removed: $337] [added: $379] million in dividends in [removed: 2018 and invested $1.2 billion in acquisitions.] [added: 2019.] |

| • | We increased our quarterly dividend by [removed: 10%] [added: 12%] to [removed: $0.57] [added: $0.64] per share in November [removed: 2018.] [added: 2019.] |

| • | Ended [removed: 2018] [added: 2019] with a backlog position of [removed: $10.6] [added: $11.3] billion, up [removed: $988] [added: $659] million compared to [removed: 2017.] [added: 2018.] |

[removed: Segment] [added: Segment] Financial [removed: Highlights][added: Highlights]

| • | In the Products and Systems Integration segment, net sales were [removed: $5.1] [added: $5.3] billion in [removed: 2018,] [added: 2019,] an increase of [removed: $587] [added: $229] million, or [removed: 13%,] [added: 5%,] compared to [removed: $4.5] [added: $5.1] billion in [removed: 2017.] [added: 2018.] On a geographic basis, net sales increased in the [removed: Americas and EMEA,] [added: Americas,] partially offset by [added: declines in EMEA and] AP. Operating earnings were [removed: $854] [added: $994] million in [removed: 2018,] [added: 2019,] compared to [removed: $969] [added: $854] million in [removed: 2017.] [added: 2018.] Operating margin [removed: decreased] [added: increased] in [removed: 2018] [added: 2019] to [removed: 16.7%] [added: 18.7%] from [removed: 21.5%] [added: 16.7%] in [removed: 2017] [added: 2018] driven by [removed: costs related to the closure of certain supply chain operations in Europe, an increase to] [added: higher sales and gross margin, as well as] an [removed: existing] environmental reserve [removed: related to a legacy business, and higher expenses related to acquisitions.] [added: charge of $40 million taken in 2018.] |

| • | In the [removed: Services and] Software [added: and Services] segment, net sales were [removed: $2.2] [added: $2.6] billion in [removed: 2018,] [added: 2019,] an increase of [removed: $376] [added: $315] million, or [removed: 20%,] [added: 14%,] compared to [removed: $1.9] [added: $2.2] billion in [removed: 2017.] [added: 2018.] On a geographic basis, net sales increased in [removed: every region. The increase in net sales was driven by growth excluding acquisitions in both Services and Software and also including] the [removed: acquisitions of Plant, Kodiak Networks,] [added: Americas] and [removed: Interexport.] [added: EMEA, partially offset by declines in AP.] Operating earnings were [removed: $401] [added: $587] million in [removed: 2018,] [added: 2019,] compared to [removed: $315] [added: $401] million in [removed: 2017.] [added: 2018.] Operating margin increased in [removed: 2018] [added: 2019] to [removed: 17.9%] [added: 22.9%] from [removed: 16.9%] [added: 17.9%] in [removed: 2017 on] [added: 2018 driven by] higher sales and gross [removed: margin.] [added: margin, as well as an environmental reserve charge of $17 million taken in 2018.] |

[removed: Looking Forward][added: Looking Forward]

[removed: Our services and software] [added: The] business [removed: supplements] [added: is part of] our [removed: LMR business.][added: Software and Services segment.]

[removed: Our framework for efficient] [added: Lastly, we remain committed to our] capital deployment [removed: of] [added: model, which is a framework in which we allocate] cash flow from operations [removed: consists of approximately:] [added: as follows:] (i) 50% for acquisitions [removed: or] [added: and] share repurchases, (ii) 30% for dividends, and (iii) 20% for investments in [removed: the business][added: capital expenditures.]

We expect to continue a balanced approach in [removed: allocating] capital [added: allocation] through this framework.

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

| | [removed: Years] [added: *Years] ended December [removed: 31] [added: 31*] | | | | | | | | | | | | | | | | | | | |

| [removed: (Dollars] [added: *(Dollars] in millions, except per share [removed: amounts)] [added: amounts)*] | [removed: 2018] [added: 2019] | | | | [removed: %] [added: %] of Sales | | | [removed: 2017] [added: 2018] | | | | % of Sales | | | [removed: 2016] [added: 2017] | | | | % of Sales | |

| Net sales from products | [removed: $] [added: $] | [removed: 4,463] [added: 4,746] | | | | | | $ | [removed: 3,772] [added: 4,463] | | | | | | $ | [removed: 3,649] [added: 3,772] | | | | |

| Net sales from services | [removed: 2,880] [added: 3,141] | | | | | | | [removed: 2,608] [added: 2,880] | | | | | | | [removed: 2,389] [added: 2,608] | | | | | |

| Net sales | [removed: 7,343 | |] [added: $] | [added: 7,343] | | | [added: $] | 6,380 | | | [removed: | | | | 6,038 | | | |] [added: 15] | [added: %] |

| Costs of product sales | [removed: 2,035] [added: 2,049] | | | | [removed: 45.6] [added: 43.2] | [removed: %] [added: %] | | [removed: 1,686] [added: 2,035] | | | | [removed: 44.7] [added: 45.6] | % | | [removed: 1,649] [added: 1,686] | | | | [removed: 45.2] [added: 44.7] | % |

| Costs of services sales | [removed: 1,828] [added: 1,907] | | | | [removed: 63.5] [added: 60.7] | [removed: %] [added: %] | | [removed: 1,670] [added: 1,828] | | | | [removed: 64.0] [added: 63.5] | % | | [removed: 1,520] [added: 1,670] | | | | [removed: 63.6] [added: 64.0] | % |

| Costs of sales | [removed: 3,863] [added: 3,956] | | | | [removed: 52.6] [added: 50.2] | [removed: %] [added: %] | | [removed: 3,356] [added: 3,863] | | | | 52.6 | % | | [removed: 3,169] [added: 3,356] | | | | [removed: 52.5] [added: 52.6] | % |

| Gross margin | [removed: 3,480 | |] [added: $] | [added: 3,480] | [removed: 47.4] | [removed: %] | [added: $] | 3,024 | | | [removed: | 47.4 | % | | 2,869 | | | | 47.5] [added: 15] | % |

| Selling, general and administrative expenses | [removed: 1,254] [added: 1,403] | | | | [removed: 17.1] [added: 17.8] | [removed: %] [added: %] | | [removed: 1,025] [added: 1,254] | | | | [removed: 16.1] [added: 17.1] | % | | [removed: 1,044] [added: 1,025] | | | | [removed: 17.3] [added: 16.1] | % |

| Research and development expenditures | [removed: 637] [added: 687] | | | | [removed: 8.7] [added: 8.7] | [removed: %] [added: %] | | [removed: 568] [added: 637] | | | | [removed: 8.9] [added: 8.7] | % | | [removed: 553] [added: 568] | | | | [removed: 9.2] [added: 8.9] | % |

| Other charges | [removed: 334] [added: 260] | | | | [removed: 4.5] [added: 3.3] | [removed: %] [added: %] | | [removed: 147] [added: 334] | | | | [removed: 2.3] [added: 4.5] | % | | [removed: 224] [added: 147] | | | | [removed: 3.7] [added: 2.3] | % |

In 2019, the segment’s net sales were $2.6 billion, representing 32% of our consolidated net sales.

| • | Operating earnings were $1.6 billion in 2019 compared to $1.3 billion in 2018. |

| • | Our operating cash flow increased $748 million to $1.8 billion in 2019. |

On October 16, 2019, we acquired a data solutions business for vehicle location information for a purchase price of $85 million, net of cash acquired.

The acquisition enhances our video security platform by adding data to our existing license plate recognition (“LPR”) database within our Software and Services segment.

On July 11, 2019, we acquired WatchGuard, Inc. ("WatchGuard"), a provider of in-car and body-worn video solutions for $271 million, inclusive of share-based compensation withheld at a fair value of $16 million that will be expensed over an average service period of two years.

The acquisition was settled with $250 million of cash, net of cash acquired.

The acquisition expands our video security platform within both the Product and Systems Integration segment and the Software and Services segment.

On March 11, 2019, we acquired Avtec, Inc. ("Avtec"), a provider of dispatch communication equipment for U.S. public safety and commercial customers for a purchase price of $136 million in cash, net of cash acquired.

This acquisition expands our commercial portfolio with new capabilities, allowing us to offer an enhanced platform for customers to communicate, coordinate resources, and secure their facilities.

The business is part of both the Product and Systems Integration segment and the Software and Services segment.

The acquisition was settled with $231 million of cash, net of cash acquired, and 1.4 million of shares issued at a fair value of $160 million for a purchase price of $391 million.

This acquisition expands our video security platform within both the Product and Systems Integration segment and the Software and Services segment.

The acquisition expands our video security platform within both the Product and Systems Integration segment and the Software and Services segment.

The business is part of our Software and Services segment.

We continue to further leverage our position as a leader in mission critical communications into additional growth opportunities in our video security and command center software platforms.

Specifically, we view drivers of these growth opportunities as follows: (i) video cross-selling opportunities, where we have traditionally sold video into commercial verticals, we are now seeking opportunities into the government and public safety verticals; (ii) potential share gains in video from customers seeking domestic vendors; (iii) accelerating traction with command center software suite sales; and (iv) a deeper penetration of service into existing LMR customers as communication networks become more complex, software-centric and data-driven.

As the Company pursues these growth opportunities, we continue to expect to gain operating leverage as we scale our businesses.

Specifically, we’ve made go-to-market investments in both video security and our command center software platforms with growth in mind.

We’ve made a number of acquisitions since 2016 and we see opportunity to continue to rationalize costs within both segments of our business, further driving gains in the operating margins of our businesses.

| Gross margin | 3,931 | | | | 49.8 | % | | 3,480 | | | | 47.4 | % | | 3,024 | | | | 47.4 | % |

| AP | 8 | % | | 9 | % | | 11 | % |

| *(In millions)* | 2019 | | | | 2018 | | | | *% Change* | |

| Net sales | $ | 7,887 | | | $ | 7,343 | | | 7 | % |

Net sales includes:

| • | growth in Devices, Software, and Services due to strong demand in Americas, inclusive of acquisitions; |

| • | $312 million of incremental revenue from acquisitions; and |

| • | the Americas grew 12% across video security, LMR and command center software within both the Products and Systems Integration and the Software and Services segments, inclusive of incremental revenue from acquisitions; |

| • | EMEA was down 3%, with a 14% decrease in Products and Systems Integration, partially offset by a 9% growth in the Software and Services segments, inclusive of incremental revenue from acquisitions. EMEA experienced $61 million of unfavorable foreign currency effects in 2019 compared to 2018; and |

| • | AP was down 3% with declines of 4% in the Products and Systems Integration segment and 2% in the Software and Services segment. AP experienced $28 million of unfavorable foreign currency effects in 2019 compared to 2018. |

| • | $157 million of incremental revenue from acquisitions; and |

| • | partially offset by $54 million foreign currency headwinds; |

| • | Devices were up $251 million reflecting strong demand for both LMR and video security devices; and |

| • | Systems and Systems Integration decreased 1% driven primarily by EMEA, which had two large system deployments completed in the Middle East and Africa in 2018. |

| • | $155 million of incremental revenue from acquisitions; and |

| • | partially offset by $59 million of foreign currency headwinds; |

| • | Software was up $234 million, or 55%, driven by growth in both our video software solutions portfolio and command center software sales, inclusive of acquisitions; and |

| *(In millions)* | 2019 | | | | 2018 | | | | *% Change* | |

The increase was driven by:

| • | higher margins within the Software and Services segment primarily driven by higher Software sales, inclusive of acquisitions. |

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.

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 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.

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

Services includes a continuum of service offerings

beginning with repair, technical support and maintenance.

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

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.

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.

As communication networks have become increasingly complex, software-centric, and data-driven, we have expanded our services offering to maintain, monitor, secure and manage our customers' networks.

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.

We expect our overall revenue mix to continue to shift towards services and software over time.

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.

Video devices, video management, video analytics software, and access control solutions for both government and commercial customers is a large and expanding market.

There are video cameras deployed across airports, rail, streets, and public and private buildings that use advanced tools including artificial intelligence and machine learning to capture, analyze, and use all of this content in a meaningful way.

Our offerings, including high-definition cameras, advanced video analytics, and video management solutions provide a scalable architecture that allow for easier and faster deployments than other point solutions that are in the marketplace today.

We remain committed to driving shareholder value with revenue growth, operating leverage, cash flow generation, and efficient capital deployment.

through capital expenditures.

Our share repurchase program has approximately $1.6 billion of authority available as of December 31, 2018.

| Earnings per diluted common share* | $ | 5.62 | | | | | | $ | (0.95 | ) | | | | | $ | 3.24 | | | | |

| AP | 9 | % | | 11 | % | | 11 | % |

This growth includes:

The primary drivers of increases, with offsetting decreases, are as follows:

| • | a $471 million valuation allowance against U.S. foreign tax credit carryforwards; and |

| • | income tax expense of $366 million from the remeasurement of our deferred tax balances at the lower federal tax rate of 21%. |

[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

As of December 31, [removed: 2018,] [added: 2019,] we have [removed: $5.3] [added: $5.1] billion of long-term debt, including the current [removed: portion of long-term debt,] [added: portion,] which is primarily priced at long-term, fixed interest rates.

[removed: Foreign] [added: Foreign] Currency [removed: Risk][added: Risk]

[removed: We typically] [added: Our policy permits us to] use forward contracts and options to hedge these currency exposures.

At December 31, [removed: 2018,] [added: 2019,] we had outstanding foreign exchange contracts totaling [removed: $819 million,] [added: $1.1 billion,] compared to [removed: $507] [added: $819] million outstanding at December 31, [removed: 2017.][added: 2018.]

The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency as of December 31, [removed: 2018] [added: 2019] and the corresponding positions as of December 31, [removed: 2017:][added: 2018:]

| | [removed: Notional Amount] [added: *Notional Amount*] | | | | | | |

| [removed: Net] [added: *Net] Buy (Sell) by [removed: Currency] [added: Currency*] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | |

| British [removed: Pound] [added: pound] | [removed: $] [added: 107] | [removed: 139] | | | [removed: $] [added: 139] | [removed: 72] | |

| Australian [removed: Dollar] [added: dollar] | [removed: (105] [added: (123] | | [removed: )] [added: )] | | [removed: (64] [added: (105] | | ) |

| Chinese [removed: Renminbi] [added: renminbi] | [removed: (55] [added: (79] | | [removed: )] [added: )] | | [removed: (73] [added: (55] | | ) |

| Brazilian [removed: Real] [added: real] | [removed: (41] [added: (47] | | [removed: )] [added: )] | | [removed: (45] [added: (41] | | ) |

[removed: Derivative] [added: Currently, our derivative] financial instruments consist primarily of currency forward contracts.

Other monetary assets and liabilities denominated in a currency other than the functional currency of the legal entity consist primarily of cash, cash equivalents, [removed: short-term investments, as well as] accounts payable and [added: accounts] receivable.

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: $57] [added: $59] million.

| Euro | $ | 134 | | | $ | 89 | |

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

In addition, we have a subsidiary that has variable interest loans denominated in Chilean Peso.

| Euro | 89 | | | | 149 | | |

Accounts payable and receivable are reflected at fair value in the financial statements.

The foreign exchange financial instruments are held for purposes other than trading.

[removed: General][added: General]

Motorola Solutions is a [removed: leading] global [removed: provider of mission-critical communications.][added: leader in mission critical communications and analytics.]

Our technology platforms in [added: mission critical] communications, [removed: software, video,] [added: command center software] and [removed: services] [added: video security, bolstered by managed and support services,] make cities safer and help communities and businesses thrive.

We serve more than 100,000 [added: public safety and commercial] customers in [removed: more than] [added: over] 100 countries and have a rich heritage of innovation spanning more than 90 years.

Monroe [removed: Street,] [added: St.,] Chicago, Illinois 60661.

[removed: Recent Acquisitions][added: Recent Acquisitions]

On January 7, 2019, we announced that we acquired VaaS International [removed: Holdings, Inc.] [added: Holdings] ("VaaS"), a [removed: "video analysis as a service"] company that is a [removed: leading] global provider of data and image analytics for vehicle location for [added: $445 million, inclusive of share-based compensation withheld at] a [removed: purchase price] [added: fair value] of [removed: $445 million.][added: $38 million that will be expensed over an average service period of one year.]

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 [removed: solutions] [added: 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 [removed: Communications] [added: Communications,] for a purchase price of $237 million.

This acquisition expands our [removed: software portfolio in the] command center [added: software portfolio] with additional solutions for [removed: Next Generation 9-1-1.][added: next generation 9-1-1 within our Software and Services segment.]

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 [removed: $98] [added: 98] billion Chilean pesos, or approximately $147 million.

[removed: Business Organization][added: Business Organization]

[removed: Products] [added: Products] and Systems Integration [removed: Segment][added: Segment]

The Products and Systems Integration segment offers an extensive portfolio of [removed: infrastructure,] devices, [added: including land mobile radio ("LMR") handsets, infrastructure and] accessories, [added: as well as] video [removed: solutions, and the implementation, optimization, and integration of such systems, devices,] [added: security devices] and [removed: applications.][added: infrastructure.]

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

In [removed: 2018,] [added: 2019,] the segment’s net sales were [removed: $5.1] [added: $5.3] billion, representing [removed: 69%] [added: 68%] of our consolidated net sales.

[removed: Devices:] [added: Devices:] Devices includes two-way portable and vehicle-mounted radios, [removed: accessories, software features,] [added: fixed] and [removed: upgrades.][added: mobile video cameras and accessories.]

Devices represented [removed: 63%] [added: 65%] of the net sales of the Products and Systems Integration segment in [removed: 2018.][added: 2019.]

[removed: Systems] [added: Systems] and Systems [removed: Integration:] [added: Integration:] Systems and Systems Integration include [added: the infrastructure related to] customized radio [removed: networks,] [added: networks and] video solutions and [removed: implementation, optimization,] [added: the implementation] and integration [removed: of networks, devices, software, and applications.][added: associated with the systems.]

Systems and Systems Integration represented [removed: 37%] [added: 35%] of the net sales of the Products and Systems Integration segment in [removed: 2018.][added: 2019.]

[removed: Services] [added: Software] and [removed: Software Segment][added: Services Segment]

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

In [removed: 2018,] [added: 2019,] the segment’s net sales were [removed: $2.2] [added: $2.6] billion, representing [removed: 31%] [added: 32%] of our consolidated net sales.

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

[removed: | Software |] [added: Software:] Software includes a public safety and enterprise command center software suite, unified communications applications, and video software solutions, delivered both [removed: on premise] [added: on-premise] and “as a service” and represented [removed: 19%] [added: 26%] of the net sales of the [removed: Services and] Software [added: and Services] segment in [removed: 2018. |][added: 2019.]

[removed: Strategy] [added: Strategy] and Focus [removed: Areas][added: Areas]

We offer comprehensive solutions [removed: that include infrastructure, devices,] [added: in mission critical communications, command center] software [removed: applications,] [added: and] video [removed: cameras] [added: security] and analytics, [added: bolstered by managed] and [added: support] services that help our customers work safely and efficiently.

[removed: (i)Continued innovation] [added: (i)Innovation] in [added: a] standards-based [added: mission critical] voice and data solutions [removed: spanning APCO 25, TETRA, DMR,] [added: market, which is made up of LMR] and [removed: Long-term] [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 ("LMR") platform] [added: LMR] business, which is reflected in [removed: our] [added: an] install base of over 13,000 systems deployed in 100+ countries around the world.

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

We believe our [removed: government] [added: government, public safety] and commercial customers will continue to require next-generation systems, enhanced software features and analytics, as well as incremental services to drive operational efficiencies.

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

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

[removed: (iii)] [added: (iv)] Command center software solutions to support public safety workflow [removed: -] from [removed: a citizen's emergency call] [added: calling 9-1-1] and dispatching first responders to communicating with personnel in the field and managing records and evidence.

[removed: Motorola Solutions is building a] [added: We have built an end-to-end] command center software offering that provides a unified suite of solutions across the public safety [removed: workflow.][added: workflow which differentiates us from much of the competition.]

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

[removed: (iv)Video] [added: (iii)Video] analytics, network video management software and hardware, video cameras, and access control solutions for government and commercial customers.

[removed: Our] [added: Our] Customers and [removed: Contracts][added: Contracts]

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

Our largest customers are the [removed: United States ("U.S.") federal] [added: U.S.] 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: 8%] [added: 9%] and [removed: 7%] [added: 8%] of our consolidated net sales in [removed: 2018,] [added: 2019,] respectively.

The segment also includes the implementation and integration of such systems, devices and applications.

We also sell to commercial and industrial customers who use private radio networks and video security in the course of their operations.

As of December 31, 2019, we changed the name of the "Services and Software" segment to "Software and Services." The change is to the name only and no other financial information has been reclassified from previous periods presented or for the year ended December 31, 2019.

Services: Services includes a continuum of service offerings beginning with repair, technical support, and maintenance.

More advanced offerings include monitoring, software updates, and cybersecurity services.

Managed services range from partial or full operation of customer-owned networks to operation of Motorola Solutions-owned networks.

Services represented 74% of the net sales of the Software and Services segment in 2019.

These solutions are designed to be "purpose-built" for the unique needs of our customers, which include customers in the government, public safety and commercial verticals.

As communication networks have become increasingly complex, software-centric and data-driven, we have expanded our services offerings and accordingly, we expect the deeper penetration of service sales into existing LMR customers to be a driver in our Services business growth.

We have invested in go-to-market resources to increase coverage and drive share gains in the video market.

In addition, our strategy is to utilize the relationships we have as a leader in mission critical communications to expand our video security offerings further in the government and public safety verticals.

The competitive landscape in each platform varies across the markets we serve.

The mission critical communications platform has a high barrier to entry due to the technological standards and requirements driven by customers resulting in less competitive turnover.

The command center software and video analytics and security markets have a lower barrier to entry due to the fewer technological requirements needed to enter the market.

The command center software market has many competitors who provide point solutions for pieces of the command center workflow.

The video and security market has become

increasingly competitive as video technology has advanced, incorporating artificial intelligence and machine learning, which provide richer solutions to customers.

As we continue to evolve our services strategy, we may subcontract work to other companies to fulfill customer needs in geographical areas that we do not have coverage or additional services that we do not provide.

Some of our major competitors within LMR, command center software, and video security are below:

| Platform | Competitor |

| LMR | L3Harris Technologies, Inc., Hytera, Airbus SE, and Kenwood Corporation |

| Command center software | Central Square Technologies, Axon Enterprise, Inc., Tyler Technologies, Inc., West Corporation, Intergraph Corporation, and Zetron |

| Video security | Axis Communications, Hikvision, Dahua Technology Company, Hanwha Group, Genetec Inc., Axon Enterprise, Inc. |

| | $ | 11,259 | | | $ | 10,600 | |

On October 16, 2019, we acquired a data solutions business for vehicle location information for a purchase price of $85 million, net of cash acquired.

The acquisition enhances our video security platform by adding data to our existing license plate recognition (“LPR”) database within our Software and Services segment.

On July 11, 2019, we acquired WatchGuard, Inc. ("WatchGuard"), a provider of in-car and body-worn video solutions for $271 million, inclusive of share-based compensation withheld at a fair value of $16 million that will be expensed over an average service period of two years.

The acquisition was settled with $250 million of cash, net of cash acquired.

The acquisition expands our video security platform within both the Product and Systems Integration segment and the Software and Services segment.

On March 11, 2019, we acquired Avtec, Inc. ("Avtec"), a provider of dispatch communications for U.S. public safety and commercial customers for a purchase price of $136 million in cash, net of cash acquired.

This acquisition expands our commercial portfolio with new capabilities, allowing us to offer an enhanced platform for customers to communicate, coordinate resources and secure their facilities.

The business is part of both the Product and Systems Integration segment and the Software and Services segment.

The acquisition was settled with $231 million of cash, net of cash acquired, and 1.4 million of shares issued at a fair value of $160 million for a purchase price of $391 million.

This acquisition expands our video security platform within both the Product and Systems Integration segment and the Software and Services segment.

The acquisition expands our video security platform within both the Product and Systems Integration segment and the Software and Services segment.

The business is part of the Software and Services segment.

The business is part of the Software and Services segment.

Our R&D programs are focused on the development of: (i) mission critical communications (ii) command center software and (iii) video security.

In addition, we import materials and components that are subject to import duties, including tariffs in connection with products procured in China.

The duties and tariffs we are subject to do not have a significant impact on our financial results.

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.

This acquisition expands our command center software portfolio.

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.

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

Land Mobile Radio Standards

| | | | |

| --- | --- | --- | --- |

| Industry standard definition | The Association of Public Safety Communications Officials Project 25 standard ("APCO-25") | The European Telecommunications Standards Institute (“ETSI”) Terrestrial Trunked Radio standard ("TETRA") | ETSI, Digital mobile radio ("DMR") and professional commercial radio ("PCR") standards |

| Industry standard name | APCO P25 | TETRA | DMR |

| Motorola Solutions product name | ASTRO | Dimetra IP | PCR MOTOTRBO (Digital) |

| Primary end users | Government, Public Safety | Government, Public Safety | Commercial |

| Primary geographic region of use | North America, Latin America, Asia, Middle East, Africa | Europe, Asia, Latin America, Middle East, Africa | All regions |

| Services | Services includes a continuum of service offerings beginning with repair, technical support, and maintenance. More advanced offerings include monitoring, software updates, and cybersecurity services. Managed services range from partial or full operation of customer-owned networks to operation of Motorola Solutions-owned networks. Services represented 81% 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.

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

We feel our suite of services positions us well for this change and allows us to provide incremental, value-added services for our customers.

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

The markets in which we operate are highly competitive.

Traditional LMR competitors include: Harris, Hytera, Airbus, and Kenwood.

As we continue to evolve our 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 command center software suite and video solutions has added additional competitors such as: West Corporation, Intergraph, 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 regulators and increasing investment by broadband and IP solution providers.

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

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

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.

In the U.S., the Federal Communications Commission (“FCC”) and the National Telecommunications and Information Administration (“NTIA”) regulate spectrum use by non-federal entities and federal entities, respectively.

Similarly, every country around the world has one or more regulatory bodies that define and implement the rules for use of radio spectrum, pursuant to their respective national laws and international coordination under the International Telecommunications Union (“ITU”).

As television transmission and reception technology transitions from analog to more efficient digital modes, various countries around the world are examining, and in some cases already pursuing, the redevelopment of portions of the television spectrum.

In the U.S., spectrum historically used for broadcast television, known as the 700MHz band, has been redeveloped and deployed for new uses (the so-called “digital dividend” spectrum), including broadband and narrowband wireless communications.

In 2016, this trend continued in the U.S. and additional TV spectrum in the 600MHz band was auctioned for broadband communications (part of the “Broadcast Incentive Auction”).

In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial [removed: position, liquidity,] [added: position] or [removed: results of operations.][added: liquidity.]

However, an unfavorable resolution could have a material adverse effect on our [removed: consolidated financial position, liquidity, or] results of operations in the periods in which the matters are ultimately resolved, or in the periods in which more information is obtained that changes management's opinion of the ultimate disposition.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

| [removed: ý] [added: ☒] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2018][added: 2019]

| [removed: ¨] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the transition period from [removed: to][added: to]

[removed: Commission] [added: Commission] File [removed: number 1-7221][added: number 1-7221]

[removed: MOTOROLA] [added: MOTOROLA] SOLUTIONS, [removed: INC.][added: INC.]

| [removed: DELAWARE] [added: Delaware] | | [removed: 36-1115800] [added: 36-1115800] |

[removed: 500 West] Monroe [removed: Street, Chicago, Illinois 60661][added: Street, Chicago, Illinois 60661]

[removed: (847) 576-5000][added: (847) 576-5000]

[removed: (Registrant’s] [added: Registrant’s] telephone [removed: number)][added: number, including area code:]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of Each [removed: Class] [added: Class] | | [removed: Name] [added: | | Trading Symbol(s) | | Name] of Each Exchange on Which [removed: Registered] [added: Registered] |

| Common [removed: Stock, $.01] [added: Stock | $0.01 |] Par Value [removed: per Share] | | [added: MSI | |] New York Stock Exchange |

[removed: None][added: None]

Yes [removed: ý] [added: ☒] No [removed: ¨][added: ☐]

Yes [removed: ¨] [added: ☐] No [removed: ý][added: ☒]

| Large accelerated filer [removed: x] | [added: ☒] | [added: |] Accelerated filer [removed: ¨] | [added: ☐] | [added: |] Non-accelerated filer [removed: ¨] | [added: ☐] | [added: |] Smaller reporting company [removed: ¨] | [added: ☐] | [added: |] Emerging growth company [removed: ¨] | [added: ☐ |]

| | | [added: |] (Do not check if a smaller reporting company) | | | | | | | [added: | | | |]

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June [removed: 30, 2018] [added: 29, 2019] (the last business day of the Registrant’s most recently completed second quarter) was approximately [removed: $14.9] [added: $21.4] billion.

The number of shares of the registrant’s Common Stock, $.01 par value per share, outstanding as of [removed: February 1, 2019] [added: January 31, 2020] was [removed: 163,871,288.][added: 170,579,096.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the registrant’s definitive Proxy Statement to be delivered to stockholders in connection with its Annual Meeting of Stockholders to be held on May [removed: 13, 2019,] [added: 11, 2020,] are incorporated by reference into Part III.

| | [removed: Page] [added: Page] |

| Business Organization | [removed: [3](#sF86589EBCF4356319B09293CFC2944E4)] [added: [3](#s0974D3E6E5C8564B83DAF2C1DA3871B4)] |

| Strategy and Focus Areas | [removed: [4](#sC6F14F4F80045478A304643649840C6F)] [added: [3](#s8B8C9E42B5925F04AEF59C0841F5C6E9)] |

| Customers and Contracts | [removed: [5](#s530249D7092F5191B68594397FE4E341)] [added: [4](#s8807A59F87C650F5BCCB4429EF034FE4)] |

| [Research and [removed: Development](#s28FB4F1CE8D6573C9E7164AA00CE047A)] [added: Development](#s1448D52D818A594CAA3D385BDF516B4A)] | [removed: [6](#s0F70D4D9544255ADACBE15BC0E7EDEBF)] [added: [6](#sCE60B04A1E53526885DEEE4708DF78AC)] |

| [Intellectual Property [removed: Matters](#sD22F9FBC472C595CBB5BE5A2400FB78A)] [added: Matters](#sC9F8B6DA4AC455DA8F01373B9326A7BD)] | [removed: [6](#s8CA29CCF1E4E5CD2AE3E2CDBAD03C5DB)] [added: [7](#sC21CEEAD80AB565597B3EF7899233ADB)] |

| Inventory and Raw Materials | [removed: [7](#s5AF6357C14BA5AA6B0E56C51F6D30E68)] [added: [8](#s7866FCA980595887B431D75F042A3E9E)] |

| [Environmental [removed: Quality](#s97F29748D0C35618A8D36919B87743F4)] [added: Quality](#sDB6227D71BF8593C940BE20FC0B11106)] and Regulatory Matters | [removed: [7](#s8202C76BE6775EED92592E663FEB51B3)] [added: [8](#s068A4678D2645238A7D3C8C08653865D)] |

| Material Dispositions | [removed: [8](#s628E921755185461861C3A8C6476E24C)] [added: [8](#sF57E8AD3972C51CDB142C395427CF81D)] |

| [Financial Information About Geographic [removed: Areas](#sA6FBA65BC55E5A31A8841831F5E110AB)] [added: Areas](#sD73634E970E254228B1BE9DD6D45F5A5)] | [removed: [8](#s60913B9F2FA55AAF92B08150EC82CE34)] [added: [8](#sD32F93984AC751E290770D41309C73C0)] |

| [Financial Information About [removed: Segments](#s5D8867AA7B94529E850B9395445CEEB4)] [added: Segments](#s0FCA0F66FB6552BABB5EDA59D828A892)] | [removed: [8](#s2C264B530BC05D89B3E239FC309CEC22)] [added: [9](#sDBB31DE5C7595348A2D8F63DA5E2540D)] |

| [Item 1A. Risk [removed: Factors](#sD9C8C07ED3DC5221B1484C5234EDFF78)] [added: Factors](#s6DD04971B1BD5A729855A7AF658D0A78)] | [removed: [9](#sC5ACEB5DDD5B57259F184B78250F1841)] [added: [10](#s2FFC5B495A735B86AC2E0D70998D019E)] |

| [Item 1B. Unresolved Staff [removed: Comments](#sB2813727BE5D557BB69791E3F5D4844A)] [added: Comments](#sA2F30E6B0657542AA44F8AAB490464AC)] | [removed: [21](#sB8047109C0D953EF96080E78D2ED6948)] [added: [22](#s2DB34775BACB515BA46A2AFF866614C6)] |

| [Item 3. Legal [removed: Proceedings](#s6B854FF5B19B57ECA6CEEB03A4EFEE91)] [added: Proceedings](#s3B36790198F95A4FA1E948C3BC978BC5)] | [removed: [21](#s94163285BFBC5CF4B5FAE46C65799F93)] [added: [22](#s588F40254CE657E085DC9E75025A8BC1)] |

or

500 W.

____________________________________________

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

Yes ☒ No ☐

Yes ☒ No ☐

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

Yes ☐ No ☒

| [PART I](#sA0CF06B8D22B5108902D0C6A9D13AEB5) | [3](#s1E42528818EE57E1845CA43E6E61D58E) |

| [Item 1. Business](#s1A083F3CA67F517FAEF80293F4C06BFA) | [3](#s65F0178962AF57F585B8606A4ACF735A) |

| General | [3](#sF1094516D0905B268A09FC336ADBAFF4) |

| Competition | [4](#s349626689DD854EEBF5041A18B359BC5) |

| [Other Information](#s00EC82C56A2D5B9E87733344282991FC) | [6](#s0B71D472E31D571292FDFAC35C952D9C) |

| [Backlog](#s327C77F3F36C5D4AA016B52565EE6472) | [6](#s9A9DE5B8613656488D4AEB7667C8D7B8) |

| [Employees](#sC83359BB01A95A729BCEFB7F2D2FA514) | [8](#s2247A26BFCBE584880065CE03AD2CD43) |

| [Available Information](#s2D9DD2035CB0502FA825AE2F31465867) | [9](#sF89AA638FE0D5D828870DDE945B4B40B) |

| [Item 2. Properties](#s6EFC42DCC4F258D496AB7C0C6F3153A2) | [22](#s6C24D8D56DFC5761855C7ACBEBC513C5) |

| [PART IV](#sF9E447EA06CB5A288D2D923718109D3A) | [101](#sF9E447EA06CB5A288D2D923718109D3A) |

| [15(a)(2) Financial Statement Schedule](#sCC5EC76D55CC59A3964AC5DD409076AA)s | [101](#sCC5EC76D55CC59A3964AC5DD409076AA) |

| [15(a)(3) Exhibits](#s2B3BD9965464553790A4B73A5F99B59B) | [101](#s2B3BD9965464553790A4B73A5F99B59B) |

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

_____________________________

or

| | | |

| --- | --- | --- |

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

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

| [15(a)(2) Financial Statement Schedule and Independent Auditors’ Report](#s983B6AA0B6D458C88216F907CCB02957) | [99](#s983B6AA0B6D458C88216F907CCB02957) |

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

Motorola Solutions' [removed: Global Headquarters office] [added: global headquarters] is [removed: located at] 500 W.

As of December 31, [removed: 2018,] [added: 2019,] we: (i) owned [removed: two facilities (manufacturing and office), both of which were located] [added: three facilities: one manufacturing facility] in Europe, [added: an office in Europe and an office in the U.S.,] (ii) leased [removed: 239] [added: 232] facilities, [removed: 132] [added: 128] of which were located in the Americas region and [removed: 107] [added: 104] of which were located in other countries and (iii) primarily utilized [removed: three] [added: six] major facilities for the manufacturing and distribution of our products, located in: Penang, Malaysia; Elgin, Illinois; [added: Plano, Texas; McAllen, Texas; Vancouver, BC, Canada;] and [removed: Berlin, Germany.][added: Gatineau, Quebec, Canada.]

In [removed: 2018,] [added: 2019,] approximately [removed: 40%] [added: 19%] of our products were manufactured in Illinois and approximately [removed: 55%] [added: 59%] of our products were manufactured in Penang.

Motorola Solutions sold its Penang, Malaysia facility and manufacturing operations to Sanmina Corporation ("Sanmina") on February 1, 2016.

The following are the persons who were the executive officers of Motorola Solutions, their ages, and their current titles as of February [removed: 15, 2019] [added: 14, 2020] and the positions they have held during the last five years with the Company or as otherwise noted:

Brown; age [removed: 58;] [added: 59;] Chairman and Chief Executive Officer since May 3, 2011.

Bonanotte; age [removed: 54;] [added: 55;] Executive Vice President and Chief Financial Officer since November 13, 2013.

Hacker; age [removed: 47;] [added: 48;] Executive Vice President, General Counsel and Chief Administrative Officer since January 21, [removed: 2015; and Senior Vice President and General Counsel from June 2013 to January] 2015.

Mark; age [removed: 47;] [added: 48;] Executive Vice President, [removed: Services &] Software [added: and Services] since August 28, 2018; Senior Vice President, Managed [removed: &] [added: and] Support Services from July 2017 to August 2018; Corporate Vice President, Managed [removed: &] [added: and] Support Services from August 2015 to July 2017; and Corporate Vice President, Strategy from May 2011 to August 2015.

"Jack" Molloy; age [removed: 47;] [added: 48;] Executive Vice President, Products [removed: &] [added: and] Sales since August 28, 2018; Executive Vice President, Worldwide Sales and Services from July 2017 to August 2018; Executive Vice President, Worldwide Sales from January 2016 to July 2017; Executive Vice President, Americas Sales [removed: &] [added: and] Services from November 2015 to January 2016; Senior Vice President, [removed: The] Americas Sales [removed: &] [added: and] Marketing from September 2015 to November 2015; and Senior Vice President, North America Sales from January 2014 to August 2015.

Naik; age [removed: 47;] [added: 48;] Senior Vice President, [removed: Chief] Strategy [removed: & Innovation Officer] [added: and Ventures,] 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.

Pekofske; age [removed: 42;] [added: 43;] 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; [added: and] Vice President and Assistant Controller from February 2014 to March [removed: 2015; and Senior Director, Finance from December 2012 to February 2014.][added: 2015.]

Yazdi; age [removed: 54;] [added: 55;] Senior Vice President, Chief of Staff, Marketing [removed: &] [added: and] 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.

The above executive officers will serve as executive officers of Motorola Solutions until the regular meeting of the Board of Directors in May [removed: 2019] [added: 2020] or until their respective successors are elected.

[removed: PART II][added: PART II]

Information about our Executive Officers

Executive Officers of the Registrant

The number of stockholders of record of its common stock on [removed: February 1, 2019] [added: January 31, 2020] was [removed: 26,760.][added: 24,266.]

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: 2019] [added: 2020] 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: 2018.][added: 2019.]

[removed: ISSUER] [added: ISSUER] PURCHASES OF EQUITY [removed: SECURITIES][added: SECURITIES]

| [removed: Period] [added: *Period*] | [removed: (a)] [added: *(a)] Total [removed: Number of Shares Purchased] [added: Number* *of Shares* *Purchased*] | | | [removed: (b)] [added: *(b)] Average [removed: Price Paid per Share (1)] [added: Price* *Paid per* *Share* *(1)*] | | | | [removed: (c)] [added: *(c)] Total [removed: Number of] [added: Number* *of] Shares [removed: Purchased as] [added: Purchased* *as] Part of [removed: Publicly Announced Plans or Program (2)] [added: Publicly* *Announced Plans* *or Program* *(2)*] | | | [removed: (d)] [added: *(d)] Approximate [removed: Dollar Value] [added: Dollar* *Value] of Shares [removed: that May] [added: that* *May] Yet Be [removed: Purchased Under] [added: Purchased* *Under] the Plans [removed: or Program (2)] [added: or* *Program* *(2)*] | | |

| (2) | Through a series of actions, the board of 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: 2018,] [added: 2019,] the Company had used approximately [removed: $12.4] [added: $12.7] billion, including transaction costs, to repurchase shares. |

[removed: PERFORMANCE GRAPH][added: PERFORMANCE GRAPH]

This graph assumes $100 was invested in the stock or the indices on December 31, [removed: 2013] [added: 2014] and reflects the payment of dividends.

[removed: ][added: ]

| 09/26/19 to 10/23/19 | — | | | $ | — | | | — | | | $ | 1,406,799,929 | |

| 10/24/19 to 11/20/19 | 599,930 | | | $ | 159.71 | | | 599,930 | | | $ | 1,310,984,815 | |

| 11/21/19 to 12/27/19 | 306,782 | | | $ | 161.60 | | | 306,782 | | | $ | 1,261,407,490 | |

| Total | 906,712 | | | $ | 160.35 | | | 906,712 | | | | | |


| 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 | | | | | |

| | [removed: Years] [added: *Years] Ended December [removed: 31] [added: 31*] | | | | | | | | | | | | | | | | | | |

| [removed: (In] [added: *(In] millions, except per share [removed: amounts)] [added: amounts)*] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| [removed: Operating Results] [added: Operating Results] | | | | | | | | | | | | | | | | | | | |

| Net sales | [removed: $] [added: $] | [removed: 7,343] [added: 7,887] | | | $ | [removed: 6,380] [added: 7,343] | | | $ | [removed: 6,038] [added: 6,380] | | | $ | [removed: 5,695] [added: 6,038] | | | $ | [removed: 5,881] [added: 5,695] | |

| Operating earnings | [removed: 1,255] [added: 1,581] | | | | [removed: 1,284] [added: 1,255] | | | | [removed: 1,048] [added: 1,284] | | | | [removed: 916] [added: 1,048] | | | | [removed: 900] [added: 916] | | |

| [removed: Per] [added: Per] Share Data (in [removed: dollars)] [added: dollars)] | | | | | | | | | | | | | | | | | | | |

| Diluted earnings (loss) from continuing operations per common share* | [added: $ | 4.95 | | |] $ | 5.62 | | | $ | (0.95 | ) | | $ | 3.24 | | | $ | 3.17 | | [removed: | $ | (2.84 | ) |]

| Earnings (loss) per diluted common share* | [added: 4.95 | | | |] 5.62 | | | | (0.95 | | ) | | 3.24 | | | | 3.02 | | | [removed: | 5.29 | | |]

| Diluted weighted average common shares outstanding (in millions) | [removed: 172.0] [added: 175.6] | | | | [removed: 162.9] [added: 172.0] | | | | [removed: 173.1] [added: 162.9] | | | | [removed: 201.8] [added: 173.1] | | | | [removed: 245.6] [added: 201.8] | | |

| Dividends declared per share | [removed: $] [added: $] | [removed: 2.13] [added: 2.35] | | | $ | [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: Balance Sheet] [added: Balance Sheet] | | | | | | | | | | | | | | | | | | | |

| Total assets | [removed: $] [added: $] | [removed: 9,409] [added: 10,642] | | | $ | [removed: 8,208] [added: 9,409] | | | $ | [removed: 8,463] [added: 8,208] | | | $ | [removed: 8,346] [added: 8,463] | | | $ | [removed: 10,423] [added: 8,346] | |

| Total debt | [removed: 5,320] [added: 5,129] | | | | [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: Other Data] [added: Other Data] | | | | | | | | | | | | | | | | | | | |

| Capital expenditures | [removed: $] [added: $] | [removed: 197] [added: 248] | | | $ | [removed: 227] [added: 197] | | | $ | [removed: 271] [added: 227] | | | $ | [removed: 175] [added: 271] | | | $ | [removed: 181] [added: 175] | |

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

| Research and development expenditures | [removed: $] [added: $] | [removed: 637] [added: 687] | | | $ | [removed: 568] [added: 637] | | | $ | [removed: 553] [added: 568] | | | $ | [removed: 620] [added: 553] | | | $ | [removed: 681] [added: 620] | |

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

| Earnings (loss) attributable to Motorola Solutions, Inc. | 868 | | | | 966 | | | | (155 | | ) | | 560 | | | | 640 | | |

| Earnings (loss) from continuing operations, net of tax* | 966 | | | | (155 | | ) | | 560 | | | | 640 | | | | (697 | | ) |

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

[removed: Opinion] [added: Opinion] on the Consolidated Financial [removed: Statements][added: Statements]

We have audited the accompanying consolidated balance [removed: sheets] [added: sheet] of Motorola Solutions, Inc. and subsidiaries (the Company) as of December 31, [removed: 2018 and 2017,] [added: 2018,] 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: two‑year] period ended December 31, 2018, and the related notes (collectively, the consolidated financial 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: 2018 and 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the years in the [removed: three‑year] [added: two‑year] period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

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

[removed: Change] [added: Change] in Accounting [removed: Principle][added: Principle]

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

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

We are a public accounting firm registered with the [removed: PCAOB] [added: Public Company Accounting Oversight Board (United States) (PCAOB)] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

[removed: ][added: ]

We have served as the Company’s auditor since [removed: 1959.][added: 2018.]

[removed: Consolidated] [added: Consolidated] Statements of [removed: Operations][added: Operations]

| | [removed: Years] [added: *Years] ended December [removed: 31] [added: 31*] | | | | | | | | | | |

| [removed: (In] [added: *(In] millions, except per share [removed: amounts)] [added: amounts)*] | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| Net sales from products | [removed: $] [added: $] | [removed: 4,463] [added: 4,746] | | | $ | [removed: 3,772] [added: 4,463] | | | $ | [removed: 3,649] [added: 3,772] | |

| Net sales from services | [removed: 2,880] [added: 3,141] | | | | [removed: 2,608] [added: 2,880] | | | | [removed: 2,389] [added: 2,608] | | |

| Net sales | [removed: 7,343] [added: 7,887] | | | | [removed: 6,380] [added: 7,343] | | | | [removed: 6,038] [added: 6,380] | | |

| Costs of products sales | [removed: 2,035] [added: 2,049] | | | | [removed: 1,686] [added: 2,035] | | | | [removed: 1,649] [added: 1,686] | | |

| Costs of services sales | [removed: 1,828] [added: 1,907] | | | | [removed: 1,670] [added: 1,828] | | | | [removed: 1,520] [added: 1,670] | | |

| Costs of sales | [removed: 3,863] [added: 3,956] | | | | [removed: 3,356] [added: 3,863] | | | | [removed: 3,169] [added: 3,356] | | |

| Gross margin | [removed: 3,480] [added: 3,931] | | | | [removed: 3,024] [added: 3,480] | | | | [removed: 2,869] [added: 3,024] | | |

| Selling, general and administrative expenses | [removed: 1,254] [added: 1,403] | | | | [removed: 1,025] [added: 1,254] | | | | [removed: 1,044] [added: 1,025] | | |

| Research and development expenditures | [removed: 637] [added: 687] | | | | [removed: 568] [added: 637] | | | | [removed: 553] [added: 568] | | |

| Other charges | [removed: 334] [added: 260] | | | | [removed: 147] [added: 334] | | | | [removed: 224] [added: 147] | | |

| Operating earnings | [removed: 1,255] [added: 1,581] | | | | [removed: 1,284] [added: 1,255] | | | | [removed: 1,048] [added: 1,284] | | |

| Interest expense, net | [removed: (222] [added: (220] | | [removed: )] [added: )] | | [removed: (201] [added: (222] | | ) | | [removed: (205] [added: (201] | | ) |

| Gains [removed: (losses)] on sales of investments and businesses, net | [removed: 16] [added: 5] | | | | [removed: 3] [added: 16] | | | | [removed: (6] [added: 3] | | [removed: )] |