Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)			54
Consolidated Financial Statements:
Consolidated Statements of Operations			56
Consolidated Statements of Comprehensive Income (Loss)			57
Consolidated Balance Sheets			58
Consolidated Statements of Stockholders' Equity (Deficit)			59
Consolidated Statements of Cash Flows			60
Notes to Consolidated Financial Statements			61

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Motorola Solutions, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Motorola Solutions, Inc. and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the 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.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Estimated Costs to Complete System Contracts

As described in Note 1 to the consolidated financial statements, $1.9 billion of the Company’s total net sales for the year ended December 31, 2023 was generated from system contracts. The Company's revenue recognition over time is based on an input measure of costs incurred, which depicts the transfer of control to its customers under its contracts. For system contracts accounted for over time using estimated costs as a measure of performance completed, management relies on estimates around the total estimated costs to complete the contract (“Estimated Costs at Completion”). Total Estimated Costs at Completion include direct labor, material and subcontracting costs. Due to the nature of the efforts required to be performed to meet the underlying performance obligation, determining Estimated Costs at Completion may be complex and subject to many variables. Management reviews the progress and performance of open contracts in order to determine the estimate of Estimated Costs at Completion. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion, the project schedule, identified risks and opportunities, and the related changes in estimates of costs. The risks and opportunities include management’s judgment about the ability and the cost to achieve the project schedule, technical requirements, and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of work to be performed, the availability and cost of materials, and performance by subcontractors, among other variables. Based on this analysis, any adjustment to net sales, cost of sales, and the related impact to operating income are recorded as necessary in the period they become known.

The principal considerations for our determination that performing procedures relating to revenue recognition - estimated costs to complete system contracts is a critical audit matter are (i) the significant judgment by management in developing the estimates of total net sales and Estimated Costs at Completion, including significant judgments and assumptions on a contract by contract basis and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s estimates of total net sales and Estimated Costs at Completion for system contracts.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the estimates of total net sales and Estimated Costs at Completion for system contracts. These procedures also included, among others, testing management’s process for developing the estimates of total net sales and Estimated Costs at Completion, including evaluating, for a sample of contracts, the reasonableness of certain significant judgments and assumptions used by management. Evaluating the significant judgments and assumptions used by management in developing the estimates of total net sales and Estimated Costs at Completion involved evaluating whether the significant judgments and assumptions were reasonable considering (i) on a test basis, management’s historical forecasting accuracy; (ii) on a test basis, evidence to support the relevant judgments and assumptions; (iii) the consistent application of accounting policies; and (iv) the timely identification of circumstances which may require a modification to a previous estimate.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 15, 2024

We have served as the Company’s auditor since 2018.

Consolidated Statements of Operations

			Years ended December 31
(In millions, except per share amounts)			2023						2022						2021
Net sales from products			$	5,814					$	5,368					$	4,606
Net sales from services			4,164						3,744						3,565
Net sales			9,978						9,112						8,171
Costs of products sales			2,591						2,595						2,104
Costs of services sales			2,417						2,288						2,027
Costs of sales			5,008						4,883						4,131
Gross margin			4,970						4,229						4,040
Selling, general and administrative expenses			1,561						1,450						1,353
Research and development expenditures			858						779						734
Other charges			257						339						286
Operating earnings			2,294						1,661						1,667
Other income (expense):
Interest expense, net			(216)						(226)						(208)
Gains on sales of investments and businesses, net			—						3						1
Other, net			68						77						92
Total other expense			(148)						(146)						(115)
Net earnings before income taxes			2,146						1,515						1,552
Income tax expense			432						148						302
Net earnings			1,714						1,367						1,250
Less: Earnings attributable to noncontrolling interests			5						4						5
Net earnings attributable to Motorola Solutions, Inc.			$	1,709					$	1,363					$	1,245
Earnings per common share:
Basic			$	10.23					$	8.14					$	7.36
Diluted			9.93						7.93						7.17
Weighted average common shares outstanding:
Basic			167.0						167.5						169.2
Diluted			172.1						171.9						173.6
Dividends declared per share			$	3.62					$	3.25					$	2.92

See accompanying notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income (Loss)

			Years ended December 31
(In millions)			2023						2022						2021
Net earnings			$	1,714					$	1,367					$	1,250
Other comprehensive income (loss), net of tax (Note 4):
Foreign currency translation adjustments			57						(155)						(24)
Derivative instruments			(12)						—						—
Defined benefit plans			(50)						(1)						91
Total other comprehensive income (loss), net of tax			(5)						(156)						67
Comprehensive income			1,709						1,211						1,317
Less: Earnings attributable to noncontrolling interests			5						4						5
Comprehensive income attributable to Motorola Solutions, Inc.			$	1,704					$	1,207					$	1,312

See accompanying notes to consolidated financial statements.

Consolidated Balance Sheets

			December 31
(In millions, except par value)			2023						2022
ASSETS
Cash and cash equivalents			$	1,705					$	1,325
Accounts receivable, net			1,710						1,518
Contract assets			1,102						974
Inventories, net			827						1,055
Other current assets			357						383
Current assets held for disposition			24						—
Total current assets			5,725						5,255
Property, plant and equipment, net			964						927
Operating lease assets			495						485
Investments			143						147
Deferred income taxes			1,062						1,036
Goodwill			3,401						3,312
Intangible assets, net			1,255						1,342
Other assets			274						310
Non-current assets held for disposition			17						—
Total assets			$	13,336					$	12,814
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current portion of long-term debt			$	1,313					$	1
Accounts payable			881						1,062
Contract liabilities			2,037						1,859
Accrued liabilities			1,504						1,638
Current liabilities held for disposition			1						—
Total current liabilities			5,736						4,560
Long-term debt			4,705						6,013
Operating lease liabilities			407						419
Other liabilities			1,741						1,691
Non-current liabilities held for disposition			8						—
Preferred stock, $100 par value: 0.5 shares authorized; none issued and outstanding			—						—
Common stock, $0.01 par value:			2						2
Authorized shares: 600.0
Issued shares: 12/31/23—167.4; 12/31/22—168.5
Outstanding shares: 12/31/23—166.2; 12/31/22—167.5
Additional paid-in capital			1,622						1,306
Retained earnings			1,640						1,343
Accumulated other comprehensive loss			(2,540)						(2,535)
Total Motorola Solutions, Inc. stockholders’ equity			724						116
Noncontrolling interests			15						15
Total stockholders’ equity			739						131
Total liabilities and stockholders’ equity			$	13,336					$	12,814

See accompanying notes to consolidated financial statements.

Consolidated Statements of Stockholders’ Equity (Deficit)

(In millions)			Shares						Common Stock and Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings						Noncontrolling Interests
Balance as of January 1, 2021			170.2						$	761					$	(2,446)					$	1,127					$	17
Net earnings																					1,245						5
Other comprehensive income															67
Issuance of common stock and stock options exercised			1.9						99
Share repurchase program			(2.5)																		(528)
Share-based compensation expenses									129
Dividends paid to noncontrolling interest in subsidiary common stock																											(5)
Dividends declared																					(494)
Balance as of December 31, 2021			169.6						$	989					$	(2,379)					$	1,350					$	17
Net earnings																					1,363						4
Other comprehensive loss															(156)
Issuance of common stock and stock options exercised			2.6						157
Share repurchase program			(3.7)																		(836)
Share-based compensation expenses									172
Dividends paid to noncontrolling interest in subsidiary common stock																											(6)
Dividends declared																					(544)
ASU 2020-06 modified retrospective adoption									(10)												10
Balance as of December 31, 2022			168.5						$	1,308					$	(2,535)					$	1,343					$	15
Net earnings																					1,709						5
Other comprehensive loss															(5)
Issuance of common stock and stock options exercised			1.8						104
Share repurchase program			(2.9)																		(808)
Share-based compensation expenses									212
Dividends paid to noncontrolling interest in subsidiary common stock																											(5)
Dividends declared																					(604)
Balance as of December 31, 2023			167.4						$	1,624					$	(2,540)					$	1,640					$	15

See accompanying notes to consolidated financial statements.

Consolidated Statements of Cash Flows

			Years ended December 31
(In millions)			2023						2022						2021
Operating
Net earnings			$	1,714					$	1,367					$	1,250
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization			356						440						438
Non-cash other charges			14						23						3
Exit of video manufacturing operations			24						—						—
Loss on ESN fixed asset impairment			—						147						—
Share-based compensation expenses			212						172						129
Gains on sales of investments and businesses, net			—						(3)						(1)
Losses from the extinguishment of long-term debt			—						6						18
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable			(180)						(112)						3
Inventories			200						(242)						(284)
Other current assets and contract assets			(82)						(1)						(205)
Accounts payable, accrued liabilities, and contract liabilities			(144)						451						578
Other assets and liabilities			(38)						(91)						(126)
Deferred income taxes			(32)						(334)						34
Net cash provided by operating activities			2,044						1,823						1,837
Investing
Acquisitions and investments, net			(180)						(1,177)						(521)
Proceeds from sales of investments			19						46						16
Capital expenditures			(253)						(256)						(243)
Proceeds from sales of property, plant and equipment			—						—						6
Net cash used for investing activities			(414)						(1,387)						(742)
Financing
Net proceeds from issuance of debt			—						595						844
Repayment of debt			(1)						(285)						(353)
Revolving credit facility renewal fees			—						—						(7)
Issuances of common stock			104						156						102
Purchases of common stock			(804)						(836)						(528)
Payment of dividends			(589)						(530)						(482)
Payment of dividends to noncontrolling interest			(5)						(6)						(5)
Net cash used for financing activities			(1,295)						(906)						(429)
Effect of exchange rate changes on cash and cash equivalents			45						(79)						(46)
Net increase (decrease) in cash and cash equivalents			380						(549)						620
Cash and cash equivalents, beginning of period			1,325						1,874						1,254
Cash and cash equivalents, end of period			$	1,705					$	1,325					$	1,874
Supplemental Cash Flow Information
Cash paid during the period for:
Interest paid			$	234					$	226					$	207
Income and withholding taxes, net of refunds			$	587					$	307					$	257

See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements

(Dollars in millions, except as noted)

1. Summary of Significant Accounting Policies

Principles of Consolidation**:** The consolidated financial statements include the accounts of Motorola Solutions, Inc. (the “Company” or “Motorola Solutions”) and all controlled subsidiaries. All intercompany transactions and balances have been eliminated.

The consolidated financial statements as of December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021, include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company's consolidated financial position, results of operations, statements of comprehensive income, and statements of stockholders' equity and cash flows for all periods presented.

Use of Estimates: The preparation of financial statements in conformity with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP") requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Revenue Recognition: Net sales consist of a wide range of goods and services including the delivery of products, systems and system integration as well as offering software and service solutions. The Company recognizes revenue to reflect the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for goods or services.

The Products and Systems Integration segment is comprised of devices, systems, and systems integration for our Land Mobile Radio Communication ("LMR" or "LMR Communications") and Video Security and Access Control ("Video") technologies. Direct customers of the Products and Systems Integration segment are typically government, public safety agencies, procuring at state, local, and federal levels as well as large commercial customers with secure mission-critical needs. Indirect customers are defined as customers purchasing professional and commercial radios and video security, which are primarily sold through the Company's reseller partners to an end-customer base, composed of various industries where private communications networks and video security are used to secure operations and enable a mobile workforce. Contracts with the Company's customers are typically fixed fee, with consideration measured net of associated sales taxes, and, as it relates to our government customers, funded through appropriations. The Company records consideration from shipping and handling on a gross basis within Net sales. In limited instances where the Company is not the principal in the arrangement, the Company will recognize revenue on a net basis.

LMR and Video devices include two-way portable and vehicle-mounted radios, fixed video cameras and accessories. Devices are considered capable of being distinct and distinct within the context of the Company's contracts. Revenue is recognized upon the transfer of control of the devices to the customer at a point in time, typically consistent with delivery under the applicable shipping terms. Devices are sold by both the direct sales force and through reseller partners. Revenue is generally recognized upon transfer of devices to reseller partners, rather than the end-customer, except for limited consignment arrangements. Provisions for returns and reseller discounts are made on a portfolio basis using historical data.

The Products and Systems Integration segment includes both customized communications networks and video security solutions, including the integration of these networks with devices, software, and applications within both LMR and Video technologies. For systems contracts, revenue for the year ended December 31, 2023 was $1.9 billion compared to $1.8 billion for the year ended December 31, 2022 and $1.9 billion for the year ended December 31, 2021. The communications networks include the aggregation of promises to the customer to provide i) a communications network core and central processing software, base stations, consoles, and repeaters or ii) a video security solution including video analytics, network video management hardware and software, and access control solutions. The individual promises within a communications network contract are not distinct in the context of the contract, as the Company provides a significant service of integrating and customizing the goods and services promised. The communications network represents a distinct performance obligation for which revenue is recognized over time, as the Company creates an asset with no alternative use and has an enforceable right to payment for work performed. The Company's revenue recognition over time is based on an input measure of costs incurred, which depicts the transfer of control to its customers under its contracts. Products and Systems Integration revenue for communications network systems is recognized over an average duration of approximately one to two years. Individual promises of the video security solution are capable of being distinct and distinct in the context of the contract. Video security solutions are traditionally sold through reseller partners, with contracts negotiated under fixed pricing. Revenue is recognized upon the transfer of control of the video solution to the reseller partners, typically upon shipment.

The Software and Services segment provides solutions for government, public safety and commercial communications networks. Direct customers of the Software and Services segment are typically government, public safety and first-responder agencies and municipalities. Indirect customers are commercial customers who distribute our software solutions to a final end customer base. Contracts with our customers are typically fixed fee, with consideration measured net of associated sales taxes, and, as it relates to our direct customers, funded through government appropriations.

Software offerings primarily include Command Center and Video software and services which can be delivered either as an “as-a-service”, on-premise, or hybrid solution. Solutions delivered as-a-service consist of a range of promises including hosted software, technical support and the right to unspecified future software enhancements. Software is not distinct from the hosting

service since the customer does not have the right to take possession of the software at any time during the term of the arrangement. The hosted software, technical support, and right to unspecified future software enhancements each represent a series of distinct services that are delivered concurrently using the same over-time method. As such, the promises are accounted for as a single performance obligation with revenue recognized on a straight-line basis.

On-premise and hybrid offerings generally consist of multiple promises primarily including software licenses and post-contract customer support. The promises are generally each distinct and distinct within the context of the contract as the customer benefits from each promise individually without any significant integration or interrelationship between the promises. On-premise software revenue is generally recognized at the point in time when the customer can benefit from the software which generally aligns with the beginning of the license period. Revenue for post-contract customer support is recognized over time as the customer simultaneously receives and consumes the services on a straight-line basis. In certain situations when the software license is not distinct within the context of the contract, revenue for the software license is recognized over time following the transfer of control under the arrangement. For hybrid arrangements, the on-premise software and as-a-service software are generally distinct performance obligations where the on-premise solution is recognized at the point when the customer can benefit from the software and the as-a-service software is recognized over time as the customer receives the benefit from the hosted solution.

Services include a continuum of service offerings beginning with repair, technical support and maintenance. More advanced offerings include: monitoring, software updates and cybersecurity services. Managed service offerings range from partial to full operation of customer-owned or Motorola Solutions-owned communications networks. Services are provided across all technologies and are both distinct and capable of being distinct in the context of the contract, representing a series of recurring services that the Company stands ready to perform over the contract term. Since services contracts typically allow for customers to terminate for convenience or for non-appropriations of fiscal funding, the contract term is generally considered to be limited to a monthly or annual basis, subject to customer renewal. While contracts with customers are typically fixed fee, certain managed services contracts may be subject to variable consideration related to the achievement of service level agreement performance measurements. The Company has not historically paid significant penalties under service level agreements, and accordingly, it does not constrain its contract price. Certain contracts may also contain variable consideration driven by the number of users. Revenue is typically recognized on services over time as a series of services performed over the contract term on a straight-line basis.

The Company enters into arrangements which generally consist of multiple promises to our customers. The Company evaluates whether the promised goods and services are distinct or a series of distinct goods or services. Where contracts contain multiple performance obligations, the Company allocates the total estimated consideration to each performance obligation based on applying an estimated selling price (“ESP”) as our best estimate of standalone selling price. We use list price as the standalone selling price for indirect sales sold through our channel partners. Given the unique nature of the goods and services we provide to direct customers, sufficient standalone sales of our products generally do not exist. Therefore, the Company determines ESP by: (i) collecting all reasonably available historical data points including sales, cost and margin analyses of the product or services, and other inputs based on its normal pricing and discounting practices, (ii) making any reasonably required adjustments to the data based on market and Company-specific factors, and (iii) stratifying the data points for similar customers and circumstances, when appropriate, based on major product or service, type of customer, geographic market, and sales volume.

The Company accounts for certain system contracts without an alternative use on an over-time basis, electing an input method of estimated costs as a measure of performance completed. The selection of costs incurred as a measure of progress aligns the transfer of control to the overall production of the customized system.

For system contracts accounted for over time using estimated costs as a measure of performance completed, the Company relies on estimates around the total estimated costs to complete the contract (“Estimated Costs at Completion”). Total Estimated Costs at Completion include direct labor, material and subcontracting costs. Due to the nature of the efforts required to be performed to meet the underlying performance obligation, determining Estimated Costs at Completion may be complex and subject to many variables. The Company has a standard and disciplined process in which management reviews the progress and performance of open contracts in order to determine the best estimate of Estimated Costs at Completion. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion, the project schedule, identified risks and opportunities, and the related changes in estimates of costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the project schedule, technical requirements, and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of work to be performed, the availability and cost of materials, and performance by subcontractors, among other variables. Based on this analysis, any adjustment to net sales, cost of sales, and the related impact to operating income are recorded as necessary in the period they become known. When estimates of total costs to be incurred on a contract exceed estimates of total revenue to be earned, a provision for the entire loss on the contract is recorded in the period in which the loss is determined.

Cash Equivalents: The Company considers all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents. Restricted cash was $2 million at each of December 31, 2023 and December 31, 2022.

Investments: The Company generally invests in equity securities of a strategic nature.

The Company applies the equity method of accounting for equity investments if the Company has significant influence over the issuing entity. The Company’s share of the investee’s underlying net income or loss is recorded to Other, net within Other income (expense).

Equity securities with readily determinable fair values are carried at fair value with changes in fair value recorded in Other, net within Other income (expense). Equity securities without readily determinable fair values are carried at cost, less impairments, if any, and adjusted for observable price changes for the identical or a similar investment of the same issuer. The Company performs a qualitative impairment assessment to determine if such investments are impaired. The qualitative assessment considers all available information, including declines in the financial performance of the issuing entity, the issuing entity’s operating environment, and general market conditions. Impairments of equity securities without readily determinable fair values are recorded to Other, net within Other income (expense).

Inventories: Inventories are valued at the lower of cost (which approximates cost on a first-in, first-out basis) and net realizable value.

Property, Plant and Equipment: Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis, based on the estimated useful lives of the assets (leasehold improvements, one to twenty years; machinery and equipment, one to fifteen years) and commences once the assets are ready for their intended use. When certain events or changes in operating conditions occur, useful lives of the assets may be adjusted or an impairment assessment may be performed on the recoverability of the carrying value.

Goodwill and Intangible Assets: Goodwill is assessed for impairment at least annually at the reporting unit, or more frequently if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value level. The Company performs its annual assessment of goodwill for impairment as of the last day of the third quarter of each fiscal year, typically through a qualitative assessment. Indicators of impairment include: (i) macroeconomic conditions, (ii) industry and market conditions, (iii) cost factors, including product and selling, general and administrative costs, (iv) overall financial performance of the Company, (v) changes in share price, and (vi) other relevant company-specific events. If it is determined that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the Company will perform a quantitative goodwill impairment test, which compares the fair value of the reporting unit to its carrying value. A quantitative assessment includes the assignment of assets and liabilities to each of the Company's reporting units and an assessment of the fair value of each of the Company's reporting units. The Company utilizes an income approach (discounted cash flows) to estimate the fair value of each reporting unit, which is corroborated by market multiples when available and as appropriate. Key assumptions in the quantitative analysis include revenue growth rates (including long-term growth rates for terminal value assumptions), operating margin estimates, discount rates, and where applicable, the comparable multiples from publicly traded companies in the Company's industry.

If the carrying amount of a reporting unit exceeds its fair value, the Company would recognize an impairment loss in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

Intangible assets are amortized on a straight line basis over their respective estimated useful lives ranging from one to twenty years. The Company has no intangible assets with indefinite useful lives.

Leases: The Company leases certain office, factory and warehouse space, land and other equipment, principally under non-cancelable operating leases.

The Company determines if an arrangement is a lease at inception of the contract. The Company’s key considerations in determining whether a contract is or contains a lease include establishing whether the supplier has the ability to use other assets to fulfill its service or whether the terms of the agreement enable the Company to control the use of a dedicated asset during the contract term. In the majority of the Company’s contracts where it must identify whether a lease is present, it is readily determinable that the Company controls the use of the assets and obtains substantially all of the economic benefit during the term of the contract. In those contracts where identification is not readily determinable, the Company has determined that the supplier has either the ability to use another asset to provide the service or the terms of the contract give the supplier the right to operate the asset at its discretion during the term of the contract.

Right-of-use ("ROU") assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company’s lease payments are typically fixed or contain fixed escalators. The Company has elected to not separate lease and non-lease components for all of its current lease categories and therefore, all consideration is included in lease payments. For the Company’s leases consisting of land and other equipment (i.e. “communications network sites”), future payments are subject to variability due to changes in indices or rates. The Company values its ROU assets and lease liabilities based on the index or rate in effect at lease commencement. Future changes in the indices or rates are accounted for as variable lease costs. Other variable lease costs include items that are not fixed at lease commencement including property taxes, insurance, and operating charges that vary based on usage. ROU assets also include lease payments made in advance and are net of lease incentives.

As the majority of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rates based on the information available at the commencement date in determining the present value of future payments. The Company’s incremental borrowing rates are based on the term of the lease, the economic environment of the lease, and the effect of collateralization.

The Company's lease terms range from one to twenty-one years and may include options to extend the lease by one to ten years or terminate the lease after the initial non-cancelable term. The Company does not include options in the determination of

the lease term for the majority of leases as sufficient economic factors do not exist that would compel it to continue to use the underlying asset beyond the initial non-cancelable term. However, for the Company's communications network site leases that are necessary to provide services to customers under managed service arrangements, the Company includes options in the lease term to the extent of the customer contracts to which those leases relate.

Impairment of Long-Lived Assets: Long-lived assets, which include intangible assets, held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. The Company evaluates recoverability of assets to be held and used by comparing the carrying amount of an asset (group) to future net undiscounted cash flows to be generated by the asset (group). If an asset (group) is considered to be impaired, the impairment to be recognized is equal to the amount by which the carrying amount of the asset (group) exceeds the asset's (group's) fair value calculated using a discounted future cash flows analysis or market comparable analysis. Assets held for sale, if any, are reported at the lower of the carrying amount or fair value less cost to sell.

Income Taxes: The Company records deferred income tax assets and liabilities based on the estimated future tax effects of differences between the financial and tax bases of assets and liabilities based on currently enacted tax laws. The Company's deferred and other tax balances are based on management's interpretation of the tax regulations and rulings in numerous tax jurisdictions. Income tax expenses and liabilities recognized by the Company also reflect its best estimates and assumptions regarding, among other things, the level of future taxable income, the effect of the Company's various tax planning strategies, and uncertain tax positions. Future tax authority rulings and changes in tax laws, changes in projected levels of taxable income, and future tax planning strategies could affect the actual effective tax rate and tax balances recorded by the Company.

Long-Term Receivables: Long-term receivables include trade receivables where contractual terms of the note agreement are greater than one year. The Company estimates credit losses on accounts receivable based on historical losses and then takes into account estimates of current and future economic conditions. Long-term receivables are considered past due if payments have not been received according to the contractual terms of the note agreement, including principal and interest. Impaired long-term receivables are valued based on the present value of expected future cash flows discounted at the receivable’s effective interest rate, or the fair value of the collateral if the receivable is collateral dependent. Interest income and late fees on impaired long-term receivables are recognized only when payments are received. Previously impaired long-term receivables are no longer considered impaired and are reclassified to performing when they have performed under restructuring for four consecutive quarters.

Environmental Liabilities: The Company maintains a liability related to ongoing remediation efforts of environmental media such as groundwater, soil, and soil vapor, as well as related legal fees for a designated Superfund site under the Comprehensive Environmental Response, Compensation and Liability Act (commonly known as the “Superfund Act”) incurred by a legacy business. It is the Company’s policy to re-evaluate the reserve when certain events become known that will impact the future cash payments. When the timing and amount of the future cash payments are fixed or reliably determinable, the Company discounts the future cash flows used in estimating the accrual using a risk-free treasury rate. The current portion of the estimated environmental liability is included in the Accrued liabilities statement line and the non-current portion is included in the Other liabilities statement line within the Company’s Consolidated Balance Sheet.

Foreign Currency: Certain non-U.S. operations within the Company use their respective local currency as their functional currency. Those operations that do not have the U.S. dollar as their functional currency translate assets and liabilities at current rates of exchange in effect at the balance sheet date and revenues and expenses using rates that approximate those in effect during the period. The resulting translation adjustments are included as a component of Accumulated other comprehensive income (loss) in the Company’s Consolidated Balance Sheet. For those operations that have transactions denominated in local currency which differs from functional currency, transactions denominated in the local currency are measured in their functional currency using the current rates of exchange for monetary assets and liabilities and historical rates of exchange for nonmonetary assets. Gains and losses from remeasurement of monetary assets and liabilities are included in Other within Other income (expense) within the Company’s Consolidated Statements of Operations.

The Company uses financial instruments to reduce its overall exposure to the effects of currency fluctuations on cash flows. The Company’s policy prohibits speculation in financial instruments for profit on exchange rate fluctuations, trading in currencies for which there are no underlying exposures, or entering into transactions for any currency to intentionally increase the underlying exposure.

The Company’s strategy related to foreign exchange exposure management is to offset the gains or losses on the financial instruments against gains or losses on the underlying operational cash flows, net investments or monetary assets and liabilities based on the Company's assessment of risk. The Company enters into derivative contracts for some of its non-functional currency cash, receivables, and payables, which are primarily denominated in major currencies that can be traded on open markets. The Company typically uses forward contracts and options to hedge these currency exposures. In addition, the Company has entered into derivative contracts for some forecasted transactions or net investments in some of its overseas entities, which are designated as part of a hedging relationship if it is determined that the transaction qualifies for hedge accounting under the provisions of the authoritative accounting guidance for derivative instruments and hedging activities. A portion of the Company’s exposure is from currencies that are not traded in liquid markets and these are addressed, to the extent reasonably possible, by managing net asset positions, product pricing and component sourcing.

Derivative Instruments: For Foreign exchange contracts, not designated as hedging instruments, gains and losses are recorded immediately in Other income (expense) within the Consolidated Statements of Operations. For Equity swap contracts, which do not qualify for hedge accounting, gains and losses are recorded immediately in Selling, general and administrative

expenses within the Consolidated Statements of Operations. Gains and losses pertaining to instruments designated as net investment hedges that qualify for hedge accounting are recognized as a component of Accumulated other comprehensive income. Components excluded from the assessment of hedge ineffectiveness in net investment hedges are included in Accumulated other comprehensive income at their initial value and amortized into Interest expense, net on a straight-line basis. Gains and losses pertaining to instruments designated as cash flow hedges that qualify for hedge accounting are recognized as a component of Accumulated other comprehensive income.

Fair Value Measurements: The Company holds certain fixed income securities, equity securities and derivatives, which are recognized and disclosed at fair value in the financial statements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date and is measured using the fair value hierarchy. This hierarchy prescribes valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions about current market conditions. The prescribed fair value hierarchy and related valuation methodologies are as follows:

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations, in which all significant inputs are observable, in active markets.

Level 3 — Valuations derived from valuation techniques, in which one or more significant inputs are unobservable.

Earnings Per Share: The Company calculates its basic earnings per share based on the weighted-average number of common shares issued and outstanding. Net earnings attributable to Motorola Solutions, Inc. is divided by the weighted average common shares outstanding during the period to arrive at the basic earnings per share. Diluted earnings per share is calculated by dividing net earnings attributable to Motorola Solutions, by the sum of the weighted-average number of common shares used in the basic earnings per share calculation and the weighted-average number of common shares that would be issued assuming exercise or conversion of all potentially dilutive securities, excluding those securities that would be anti-dilutive to the earnings per share calculation. Both basic and diluted earnings per share amounts are calculated for net earnings attributable to Motorola Solutions for all periods presented.

Share-Based Compensation Costs: The Company grants share-based compensation awards and offers an employee stock purchase plan. The amount of compensation cost for these share-based awards is generally measured based on the fair value of the awards as of the date that the share-based awards are issued and adjusted to the estimated number of awards that are expected to vest. The fair values of stock options and stock appreciation rights are generally determined using a Black-Scholes option pricing model which incorporates assumptions about expected volatility, risk-free rate, dividend yield, and expected life. Performance-based stock options, performance stock units, and market stock units vest based on market conditions and are therefore measured under a Monte Carlo simulation in order to simulate a range of possible future unit prices for Motorola Solutions over the performance period. Compensation cost for share-based awards is recognized on a straight-line basis over the vesting period.

Defined Benefit Plans: The Company records annual expenses relating to its defined benefit plans based on calculations which include various actuarial assumptions, including discount rates, assumed asset rates of return, compensation increases, and turnover rates. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends. Under relevant accounting rules, when almost all of the plan participants are considered inactive, the amortization period for certain unrecognized gains and losses changes from the average remaining service period to the average remaining lifetime of the participants. As such, depending on the specific plan, the Company amortizes gains and losses over periods ranging from nine to twenty-seven years. Prior service costs will be amortized over periods ranging from one to seventeen years. Benefits under all pension plans are valued based on the projected unit credit cost method. The Company utilizes a five-year, market-related asset value method of recognizing asset related gains and losses.

The benefit obligation and plan assets for the Company's defined benefit plans are presented on a net basis according to the plans' net funded status and measured as of December 31, 2023.

Recent Acquisitions:

On December 15, 2023, the Company acquired IPVideo Corporation ("IPVideo"), the creator of the HALO Smart Sensor, for $170 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $5 million to certain key employees that will be expensed over a service period of one year. The HALO Smart Sensor is a multifunctional safety and security device with built-in vape detection and air quality monitoring, gunshot detection, abnormal noise and motion detection and emergency keyword detection. This acquisition adds sensor technology to the Company's physical security portfolio. The business is a part of the Products and Systems Integration segment.

On December 14, 2022, the Company acquired Rave Mobile Safety, Inc. ("Rave Mobile"), a leader in mass notification and incident management, for $553 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $2 million to certain key employees that will be expensed over a service period of two years. This acquisition complements the Company's portfolio with a platform specifically designed to help organizations and public safety agencies communicate and collaborate during emergencies. The business is a part of the Software and Services segment.

On October 25, 2022, the Company acquired Futurecom Systems Group, ULC ("Futurecom"), a leading provider of radio coverage extension solutions for public safety agencies, for $30 million, net of cash acquired. Futurecom designs and manufactures radio frequency repeaters. This acquisition further expands the Company's communications network and device portfolios. The business is a part of the Products and Systems Integration segment.

On August 8, 2022, the Company acquired Barrett Communications Pty Ltd ("Barrett Communications"), a global provider of specialized radio communications, for $18 million, net of cash acquired. This acquisition complements the Company's existing radio portfolio, allowing the Company to use high frequency and very high frequency radio communications to support mission-critical operations. The business is a part of the Products and Systems Integration segment.

On May 12, 2022, the Company acquired Videotec S.p.A. ("Videotec"), a global provider of ruggedized video security solutions, for $23 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $4 million to certain key employees that will be expensed over a service period of one year. This acquisition extends the Company's breadth of high-performance video products, reinforcing the Company's strategy to be a global leader in video security solutions. The business is a part of the Products and Systems Integration segment.

On April 19, 2022, the Company acquired Calipsa, Inc. ("Calipsa"), a technology leader in cloud-native advanced video analytics, for $39 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $4 million to certain key employees that will be expensed over a service period of two years. This acquisition extends the Company's intelligent analytics across video security solutions and supports the accelerating trend of enterprises using cloud technologies to enhance safety and security. The business is a part of the Software and Services segment.

On March 23, 2022, the Company acquired TETRA Ireland Communications Limited ("TETRA Ireland"), the provider of Ireland's National Digital Radio Service, for $120 million, net of cash acquired. The Company was an initial shareholder of TETRA Ireland and acquired the remaining interest in the entity from the other shareholders. This acquisition expands the Company's portfolio of delivering mission-critical voice and data communications solutions to first responders and frontline workers. The business is part of the Software and Services segment.

On March 3, 2022, the Company acquired Ava Security Limited ("Ava"), a global provider of cloud-native video security and analytics, for $388 million, net of cash acquired. In addition, the Company issued restricted stock and restricted stock units at a fair value of $7 million to certain key employees that will be expensed over an average service period of two years. This acquisition expands the Company's portfolio of intelligent video solutions that help to enhance safety and streamline operations. The business is a part of both the Products and Systems Integration segment and the Software and Services segment.

On December 16, 2021, the Company acquired 911 Datamaster, Inc. ("911 Datamaster"), a Next Generation 911 ("NG911") data solutions provider, for $35 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $3 million to certain key employees that will be expensed over a service of two years. This acquisition reinforces the Company's strategy to be a leader in command center solutions and further supports 911 call centers’ unique organizational workflows as they transition to NG911 technologies. The business is a part of the Software and Services segment.

On October 29, 2021, the Company acquired Envysion, Inc. ("Envysion"), a leader in enterprise video security and business analytics, for $124 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $1 million to certain key employees that will be expensed over a service period of one year. This acquisition expands the Company's presence in the industry and reinforces the Company's strategy as a global leader in end-to-end video security solutions. The business is a part of both the Products and Systems Integration segment and the Software and Services segment.

On July 15, 2021, the Company acquired Openpath Security Inc. ("Openpath"), a cloud-based mobile access control provider for $298 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $29 million to certain key employees that will be expensed over an average service period of three years. This acquisition expands the Company's ability to combine video security and access control solutions within Video to help support enterprise customers. The business is a part of both the Products and Systems Integration segment and the Software and Services segment.

Recent Accounting Pronouncements:

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to

assess segment performance. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning in 2025, with early adoption permitted. The ASU will require the Company to disclose additional expense categories at the segment level including Cost of sales, Selling, general and administrative expenses, Research and development expenditures and other charges once it adopts this ASU. The Company is still evaluating the complete impact of the adoption of this ASU on its disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which expands disclosures in an entity's income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company anticipates that it will have additional disclosures regarding cash taxes and the income tax rate reconciliation once it adopts this ASU.

Recently Adopted Accounting Pronouncements

In September 2022, the FASB issued ASU No. 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations,” which requires disclosures to enhance transparency about an entity’s use of supplier finance programs. The amendments require a buyer that uses supplier finance programs to disclose the program’s key terms, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period and a description of where in the financial statements outstanding amounts are presented. Only the amount outstanding at the end of the period must be disclosed in interim periods. The Company adopted ASU 2022-04 on January 1, 2023. Refer to Note 4, "Other Financial Data" to our consolidated financial statements included in this Part II, Item 8 of this Form 10-K for the related disclosures.

2. Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes the disaggregation of our revenue by segment, geography, major product and service type and customer type for the years ended December 31, 2023, 2022 and 2021, consistent with the information reviewed by our chief operating decision maker for evaluating the financial performance of reportable segments:

			Years Ended
			2023																		2022																		2021
(in millions)			Products and Systems Integration						Software and Services						Total						Products and Systems Integration						Software and Services						Total						Products and Systems Integration						Software and Services						Total
Regions
North America			$	4,507					$	2,425					$	6,932					$	4,286					$	2,088					$	6,374					$	3,723					$	1,838					$	5,561
International			1,735						1,311						3,046						1,442						1,296						2,738						1,310						1,300						2,610
			$	6,242					$	3,736					$	9,978					$	5,728					$	3,384					$	9,112					$	5,033					$	3,138					$	8,171
Major Products and Services
LMR Communications			$	5,127					$	2,399					$	7,526					$	4,713					$	2,274					$	6,987					$	4,203					$	2,205					$	6,408
Video			1,115						611						1,726						1,015						508						1,523						830						396						1,226
Command Center			—						726						726						—						602						602						—						537						537
			$	6,242					$	3,736					$	9,978					$	5,728					$	3,384					$	9,112					$	5,033					$	3,138					$	8,171
Customer Type
Direct			$	3,619					$	3,396					$	7,015					$	3,368					$	3,057					$	6,425					$	3,147					$	2,842					$	5,989
Indirect			2,623						340						2,963						2,360						327						2,687						1,886						296						2,182
			$	6,242					$	3,736					$	9,978					$	5,728					$	3,384					$	9,112					$	5,033					$	3,138					$	8,171

Remaining Performance Obligations

Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations that are unsatisfied, or partially unsatisfied, as of the end of a period. The transaction value associated with remaining performance obligations which were not yet satisfied as of December 31, 2023 was $9.3 billion. A total of $5.0 billion was from Products and Systems Integration performance obligations that were not yet satisfied, of which $3.0 billion is expected to be recognized in the next twelve months. The remaining amounts will generally be satisfied over time as systems are implemented. Remaining performance obligations from the Products and Systems Integration segment are equal to disclosed backlog for the segment. A total of $4.3 billion was from Software and Services performance obligations that were not

yet satisfied as of December 31, 2023. The determination of Software and Services performance obligations that are not satisfied takes into account a contract term that may be limited by the customer’s ability to terminate for convenience. Where termination for convenience exists in the Company's services contracts, its disclosure of the remaining performance obligations that are unsatisfied assumes the contract term is limited until renewal. As a result, remaining performance obligations from the Software and Services segment may be less than disclosed backlog in the Software and Services segment due to multi-year service contracts with termination for convenience clauses. The Company expects to recognize $1.7 billion from unsatisfied Software and Services performance obligations over the next twelve months, with the remaining performance obligations to be recognized over time as services are performed and software is implemented.

In October 2021, the U.K.'s Competition and Markets Authority ("CMA") announced that it had opened a market investigation into the Mobile Radio Network Services market. This investigation included Airwave, the Company's private mobile radio communications network that the Company acquired in 2016. On July 31, 2023, the CMA adopted a remedies order which implemented the price control set out in its final decision, which was suspended until the CAT dismissed the Company's appeal on December 22, 2023. Based on the adoption of the remedies order, since August 1, 2023, revenue under the Airwave contract has been recognized in accordance with the prospective price control as the contract value was subject to variable consideration constraints. The remaining performance obligations for Airwave services contracted with the Home Office through 2026, inclusive of the five month period beginning August 1, 2023, was reduced by $777 million to align with the remedies order as of December 31, 2023.

Payment terms on system contracts are typically tied to implementation milestones associated with progress on contracts, while revenue recognition is over time based on a cost-to-cost method of measuring performance. The Company may recognize a Contract asset or Contract liability, depending on whether revenue has been recognized in excess of billings or billings in excess of revenue. Services contracts are typically billed in advance, generating Contract liabilities until the Company has performed the services. The Company does not record a financing component to contracts when it expects, at contract inception, that the period between the transfer of a promised good or service and related payment terms are less than a year.

Contract Balances

December 31 (in millions)			2023						2022						2021
Accounts receivable, net			$	1,710					$	1,518					$	1,386
Contract assets			1,102						974						1,105
Contract liabilities			2,037						1,859						1,650
Non-current contract liabilities			424						363						306

Revenue recognized during the year ended December 31, 2023 which was previously included in Contract liabilities as of January 1, 2023 was $1.3 billion, compared to $1.1 billion of revenue recognized during the year ended December 31, 2022 which was previously included in Contract liabilities as of January 1, 2022, and $1.0 billion of revenue recognized during the year ended December 31, 2021 which was previously included in Contract liabilities as of January 1, 2021. Revenue of $37 million was reversed during the year ended December 31, 2023 related to performance obligations satisfied, or partially satisfied, in previous periods, primarily driven by changes in the estimates of progress on system contracts, compared to $26 million during the year ended December 31, 2022 and $4 million during the year ended December 31, 2021.

There have been no material expected credit losses recognized on contract assets during the year ended December 31, 2023.

Contract Cost Balances

December 31 (in millions)			2023						2022						2021
Current contract cost assets			$	56					$	61					$	30
Non-current contract cost assets			119						130						124

Contract cost assets include incremental costs to obtain a contract, primarily related to the Company's sales incentive plans, and certain costs to fulfill contracts. Contract cost assets are amortized into expense over a period that follows the passage of control to the customer over time. Incremental costs to obtain a contract with the Company's sales incentive plans are accounted for under a portfolio approach, with amortization ranging from one year to eight years to approximate the recognition of revenues over time. Where incremental costs to obtain a contract will be recognized in one year or less, the Company applies a practical expedient around expensing amounts as incurred. Amortization of contract cost assets was $61 million for the year ended December 31, 2023, compared to $62 million as of the year ended December 31, 2022 and $52 million as of the year ended December 31, 2021.

3. Leases

The Company leases certain office, factory and warehouse space, land and other equipment under various operating leases.

Components of Lease Expense

(in millions)			December 31, 2023						December 31, 2022			December 31, 2021
Lease expense:
Operating lease cost			$	140					$	130		$	133
Short-term lease cost			$	1					$	1		$	2
Variable cost			36						33			36
Sublease income			(5)						(5)			(7)
Net lease expense from operating leases			$	172					$	159		$	164

Operating Lease Assets and Liabilities

(in millions)			Statement Line Classification						December 31, 2023						December 31, 2022
Right-of-use lease assets			Operating lease assets						$	495					$	485
Current lease liabilities			Accrued liabilities						$	125					$	118
Non-current lease liabilities			Operating lease liabilities						$	407					$	419

Other Information Related to Leases

(in millions)			December 31, 2023						December 31, 2022						December 31, 2021
Supplemental cash flow information:
Net cash used for operating activities related to operating leases			$	147					$	145					$	145
Right-of-use assets obtained in exchange for lease liabilities			$	98					$	221					$	40

Assets obtained in exchange for lease liabilities during the year ended December 31, 2023 included $66 million of additional leases due to renewals of three large managed services contracts due to an assumption that it is reasonably certain that renewal options will be extended on the associated radio tower site leases. During the year ended December 31, 2022, the Company recorded $150 million of assets obtained in exchange for lease liabilities due to an assumption that it is reasonably certain that renewal options will be extended on its radio tower site leases operated within the Airwave communications network consistent with the contract extension of the radio communication services through 2026. In addition, assets obtained in exchange for lease liabilities of $34 million were recorded in connection with the Company's acquisition of TETRA Ireland.

			December 31, 2023						December 31, 2022
Weighted average remaining lease terms (years)			5						5
Weighted average discount rate			4.34		%				4.07		%

Future Lease Payments

December 31 (in millions)			Amount
2024			$	145
2025			132
2026			115
2027			66
2028			41
Thereafter			92
Total lease payments			$	591
Less: Interest			59
Present value of operating lease liabilities			$	532

4. Other Financial Data

Statement of Operations Information

Other Charges (Income)

Other charges (income) included in Operating earnings consist of the following:

Years ended December 31 (in millions)			2023						2022						2021
Other charges (income):
Intangibles amortization (Note 15)			$	177					$	257					$	236
Reorganization of businesses (Note 14)			22						18						24
Legal Settlements			4						23						3
Fixed asset impairments			3						12						—
Environmental reserve expense			15						—						—
Exit of video manufacturing operations			24						—						—
Operating lease asset impairments			6						24						10
Acquisition-related transaction fees			7						23						15
Gain on Hytera legal settlement			—						(15)						—
Other			(1)						(3)						(2)
			$	257					$	339					$	286

During the year ended December 31, 2023, the Company revised the estimate for its liability related to ongoing remediation efforts of environmental media such as groundwater, soil, and soil vapor, as well as related legal fees for a designated Superfund site under the Superfund Act incurred by a legacy business. It is the Company's policy to re-evaluate the reserve when certain events become known that will impact the future cash payments. During the year ended December 31, 2023, the Company became aware of incremental costs required in its remediation of the Superfund site. As such, the Company recorded a charge of $15 million, increasing the reserve balance to $127 million. The Company discounted the cash flows used in estimating this accrual using a risk-free treasury rate. The current portion of the estimated environmental liability is $8 million and is included in the Accrued liabilities statement line and the non-current portion is included in the "Other liabilities" statement line within the Company's Consolidated Balance Sheets.

Other Income (Expense)

Interest expense, net, and Other both included in Other income (expense) consist of the following:

Years ended December 31 (in millions)			2023						2022						2021
Interest expense, net:
Interest expense			$	(249)					$	(240)					$	(215)
Interest income			33						14						7
			$	(216)					$	(226)					$	(208)
Other, net:
Net periodic pension and postretirement benefit (Note 8)			$	99					$	123					$	123
Loss from the extinguishment of long-term debt (Note 5)			—						(6)						(18)
Investment impairments			(16)						(1)						—
Foreign currency gain (loss)			(53)						37						17
Gain (loss) on derivative instruments (Note 6)			20						(61)						(30)
Gains (loss) on equity method investments			—						(3)						5
Fair value adjustments to equity investments			13						(30)						(8)
Gain on TETRA Ireland equity method investment			—						21						—
Other			5						(3)						3
			$	68					$	77					$	92

Earnings Per Common Share

Basic and diluted earnings per common share from net earnings attributable to Motorola Solutions, Inc. are computed as follows:

																					Amounts attributable to Motorola Solutions, Inc. common stockholders
									Net Earnings
Years ended December 31																					2023						2022						2021
Basic earnings per common share:
Earnings																					$	1,709					$	1,363					$	1,245
Weighted average common shares outstanding																					167.0						167.5						169.2
Per share amount																					$	10.23					$	8.14					$	7.36
Diluted earnings per common share:
Earnings																					$	1,709					$	1,363					$	1,245
Weighted average common shares outstanding																					167.0						167.5						169.2
Add effect of dilutive securities:
Share-based awards																					3.7						3.7						4.0
1.75% senior convertible notes																					1.5						0.7						0.4
Diluted weighted average common shares outstanding																					172.1						171.9						173.6
Per share amount																					$	9.93					$	7.93					$	7.17

In the computation of diluted earnings per common share for the year ended December 31, 2023, the assumed exercise of 0.3 million options, including 0.2 million subject to market-based contingent option agreements, were excluded because their inclusion would have been antidilutive. In the computation of diluted earnings per common share for the year ended December 31, 2022, the assumed exercise of 0.3 million options, including 0.1 million subject to market-based contingent option agreements, were excluded because their inclusion would have been antidilutive. In the computation of diluted earnings per common share for the year ended December 31, 2021, the assumed exercise of 0.2 million options, including 0.1 million subject to market-based contingent option agreements, were excluded because their inclusion would have been antidilutive.

As of December 31, 2023, the Company had $1.0 billion of 1.75% senior convertible notes outstanding, which mature on September 15, 2024 ("Senior Convertible Notes"). The notes are convertible based on a rate of 4.9670 per $1,000 principal amount as of December 31, 2023 (which is equal to a conversion price of $201.33 per share), adjusted for dividends declared through the date of settlement. The notes became fully convertible as of September 5, 2021, providing the holders the option to convert all or any portion of their Senior Convertible Notes. In November 2021, the Company's Board of Directors approved an irrevocable determination requiring the future settlement of the principal amount of the Senior Convertible Notes to be in cash. Because the Company has irrevocably decided to settle the principal amount of the Senior Convertible Notes in cash, the

Company did not reflect any shares underlying the Senior Convertible Notes in its diluted weighted average shares outstanding until the average stock price per share for the period exceeded the conversion price. Upon conversion of the Senior Convertible Notes, the Company has the option to settle the conversion spread in cash or shares. The Company included the number of shares that would be issuable upon conversion in the Company’s computation of diluted earnings per share, based on the amount by which the average stock price exceeded the conversion price for the period ended December 31, 2023. The value by which the Senior Convertible Notes exceeded their principal amount if converted as of December 31, 2023 was $586 million. On February 14, 2024, the Company agreed with Silver Lake Partners to repurchase $1.0 billion aggregate principal amount of the 1.75% Senior Convertible Notes for aggregate consideration of $1.59 billion in cash, inclusive of the conversion premium. The cash consideration will be paid during the first quarter of 2024 and is expected to be paid from cash on the balance sheet and short-term borrowings including under the 2021 Motorola Solutions Credit Agreement. Refer to "Note 5: Debt and Credit Facilities" in this “Part II. Item 8. Financial Statements and Supplementary Data” of this Form 10-K for a further discussion of the Senior Convertible Notes.

Balance Sheet Information

Accounts Receivable, Net

Accounts receivable, net, consists of the following:

December 31			2023						2022
Accounts receivable			$	1,779					$	1,579
Less allowance for credit losses			(69)						(61)
			$	1,710					$	1,518

Inventories, Net

Inventories, net, consist of the following:

December 31			2023						2022
Finished goods			$	328					$	354
Work-in-process and production materials			640						829
			968						1,183
Less inventory reserves			(141)						(128)
			$	827					$	1,055

Other Current Assets

Other current assets consist of the following:

December 31			2023						2022
Current contract cost assets (Note 2)			$	56					$	61
Contractor receivables			40						47
Tax-related deposits (Note 7)			32						33
Other			229						242
			$	357					$	383

Property, Plant and Equipment, Net

Property, plant and equipment, net, consist of the following:

December 31			2023						2022
Land			$	5					$	5
Leasehold improvements			448						456
Machinery and equipment			2,396						2,303
			2,849						2,764
Less accumulated depreciation			(1,885)						(1,837)
			$	964					$	927

During the year ended December 31, 2023, the Company entered into an arrangement to sell its Richmond, British Columbia and Richardson, Texas video manufacturing operations, including the machinery and equipment, inventory, transfer of employees and related facility lease to a contract manufacturer. During the year ended December 31, 2023, the Company presented the assets and liabilities as held for sale in its Consolidated Balance Sheets and recognized an impairment loss of $24 million on the exit of video manufacturing operations within Other charges in the Consolidated Statements of Operations, as

the carrying value of the asset group was below the expected selling price. The Company closed the transaction on February 1, 2024.

During the year ended December 31, 2022, the Company signed a mutual agreement with the Home Office of the United Kingdom (the "Home Office") for the Company to exit the Emergency Services Network ("ESN") communications systems contract early, inclusive of twelve months of transition services through the end of 2023. During the year ended December 31, 2022, the Company recorded a fixed asset impairment loss of $147 million related to assets constructed and used in the deployment of the ESN services contract with the Home Office based on its expectation that, more likely than not, the ESN long-lived asset group will be disposed of significantly before the end of its previously estimated useful life. The impairment loss was recorded in the Software and Services segment within cost of sales in the Consolidated Statements of Operations.

Depreciation expense for the years ended December 31, 2023, 2022, and 2021 was $179 million, $183 million and $202 million, respectively.

Investments

Investments consist of the following:

December 31			2023						2022
Common stock			$	28					$	21
Strategic investments, at cost			28						45
Company-owned life insurance policies			74						69
Equity method investments			13						12
			$	143					$	147

During the years ended December 31, 2023 and December 31, 2022, the Company recognized a gain of $12 million and a loss of $11 million, respectively, in Other income (expense) within the Consolidated Statements of Operations related to a change in the fair value of its investment in Evolv Technologies Holdings, Inc.

Strategic investments include investments in non-public technology-driven startup companies. Strategic investments do not have a readily determinable fair value and are recorded at cost, less any impairment, and adjusted for changes resulting from observable, orderly transactions for identical or similar securities. During the year ended December 31, 2023, the Company recorded a $16 million investment impairment charge, compared to a $1 million investment impairment charge during the year ended December 31, 2022 and no investment impairment charges during the year ended December 31, 2021, representing other-than-temporary declines in the value of the Company’s strategic equity investment portfolio.

Other Assets

Other assets consist of the following:

December 31			2023						2022
Defined benefit plan assets (Note 8)			$	98					$	164
Non-current contract cost assets (Note 2)			119						130
Other			57						16
			$	274					$	310

Accounts Payable

The Company utilizes a supplier finance program that provides suppliers with the ability to accelerate payment on the Company's invoices beyond the stated payment terms. Under the terms of this program, the Company agrees to pay an intermediary the stated amount of confirmed invoices on the stated maturity dates of the invoices, and the supplier is able to negotiate earlier payment terms with the intermediary. The Company or the intermediary may terminate the agreement at any time upon 60 days' notice. The Company does not provide any forms of guarantees under this arrangement. Supplier participation in the program is solely at the supplier's discretion, and the participating suppliers negotiate their arrangements directly with the intermediary. The Company has no economic interest in a supplier's decision to participate in the program, and their participation has no bearing on our payment terms or amounts due. The stated invoice payment terms range from 75 to 120 days from the invoice date and are considered commercially reasonable.

The Company's outstanding amounts related to the suppliers participating in this program was $35 million and $37 million as of December 31, 2023 and December 31, 2022, respectively. Supplier finance program obligations are classified as Accounts payable within the Consolidated Balance Sheets. The following table displays a rollforward of the confirmed amount of supplier finance obligations from January 1, 2023 to December 31, 2023:

(in millions)			2023
Confirmed obligations at the beginning of the year			$	37
Invoices confirmed during the year			114
Confirmed invoices paid during the year			(116)
Confirmed obligations outstanding at the end of the year			$	35

Accrued Liabilities

Accrued liabilities consist of the following:

December 31			2023						2022
Compensation			$	407					$	374
Tax liabilities (Note 7)			231						367
Dividend payable			163						148
Trade liabilities			140						145
Operating lease liabilities (Note 3)			125						118
Customer reserves			89						78
Other			349						408
			$	1,504					$	1,638

Other Liabilities

Other liabilities consist of the following:

December 31			2023						2022
Defined benefit plans (Note 8)			$	939					$	1,004
Non-current contract liabilities (Note 2)			424						363
Unrecognized tax benefits (Note 7)			26						29
Deferred income taxes (Note 7)			55						73
Environmental Reserve			119						108
Other			178						114
			$	1,741					$	1,691

Stockholders’ Equity Information

Share Repurchase Program: Through a series of actions, including approval in November 2023 to increase the authorized amount by $2.0 billion, the Board of Directors has authorized the Company to repurchase in the aggregate up to $18.0 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, 2023, the Company had used approximately $15.5 billion of the share repurchase authority, excluding transaction costs and excise tax, to repurchase shares, leaving approximately $2.5 billion of authority available for future repurchases. As of January 1, 2023, the Company's share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act of 2022, which was $4 million as of December 31, 2023.

The Company's share repurchases for 2023, 2022, and 2021 can be summarized as follows:

Year			Shares Repurchased (in millions)						Average Price						Amount (in millions)
2023			2.9						$	278.56					$	804
2022			3.7						225.00						836
2021			2.5						208.41						528

Payment of Dividends: On November 16, 2023, the Company announced that its Board of Directors approved an increase in the quarterly cash dividend from $0.88 per share of common stock to $0.98 per share of common stock. During the years ended December 31, 2023, 2022, and 2021 the Company paid $589 million, $530 million, and $482 million, respectively, in cash dividends to holders of its common stock. On January 12, 2024, the Company paid an additional $163 million in cash dividends to holders of its common stock.

Accumulated Other Comprehensive Loss

The following table displays the changes in Accumulated other comprehensive loss, including amounts reclassified into income, and the affected line items in the Consolidated Statements of Operations during the years ended December 31, 2023, 2022, and 2021:

			Years ended December 31
			2023						2022						2021
Foreign Currency Translation Adjustments:
Balance at beginning of period			$	(539)					$	(384)					$	(360)
Other comprehensive income (loss) before reclassification adjustment			61						(156)						(30)
Tax benefit (expense)			(4)						1						6
Other comprehensive income (loss), net of tax			57						(155)						(24)
Balance at end of period			$	(482)					$	(539)					$	(384)
Derivative instruments:
Balance at beginning of period			$	—					$	—					$	—
Other comprehensive income (loss) before reclassification adjustment			(12)						—						—
Tax benefit			—						—						—
Other comprehensive income (loss), net of tax			(12)						—						—
Balance at end of period			$	(12)					$	—					$	—
Defined Benefit Plans:
Balance at beginning of period			$	(1,996)					$	(1,995)					$	(2,086)
Other comprehensive income (loss) before reclassification adjustment			(130)						(76)						37
Tax benefit (expense)			34						18						(7)
Other comprehensive income (loss) before reclassification adjustment, net of tax			(96)						(58)						30
Reclassification adjustment - Actuarial net losses into Other income (expense)			61						80						89
Reclassification adjustment - Prior service benefits into Other income (expense)			1						(2)						(8)
Tax expense			(16)						(21)						(20)
Reclassification adjustments into Net earnings, net of tax			46						57						61
Other comprehensive income (loss), net of tax			(50)						(1)						91
Balance at end of period			$	(2,046)					$	(1,996)					$	(1,995)
Total Accumulated other comprehensive loss			$	(2,540)					$	(2,535)					$	(2,379)

5. Debt and Credit Facilities

Long-Term Debt

December 31			2023						2022
4.0% senior notes due 2024			313						312
1.75% senior convertible notes due 2024			1,000						1,000
6.5% debentures due 2025			70						70
7.5% debentures due 2025			252						252
4.6% senior notes due 2028			695						694
6.5% debentures due 2028			25						24
4.6% senior notes due 2029			802						803
2.3% senior notes due 2030			894						893
2.75% senior notes due 2031			845						845
5.60% senior notes due 2032			595						595
6.625% senior notes due 2037			38						38
5.5% senior notes due 2044			397						397
5.22% debentures due 2097			93						92
			6,019						6,015
Adjustments for unamortized gains on interest rate swap terminations			(1)						(1)
Less: current portion			(1,313)						(1)
Long-term debt			$	4,705					$	6,013

On September 5, 2019, the Company entered into an agreement with Silver Lake Partners to issue the Senior Convertible Notes. Interest on these notes is payable semiannually. The notes became fully convertible as of September 5, 2021. The notes are convertible based on a conversion rate of 4.9670 per $1,000 principal amount as of December 31, 2023 (which is equal to a conversion price of $201.33 per share), adjusted for dividends declared through the date of settlement. On February 14, 2024, the Company agreed with Silver Lake Partners to repurchase $1.0 billion aggregate principal amount of the 1.75% Senior Convertible Notes for aggregate consideration of $1.59 billion in cash, inclusive of the conversion premium. The cash consideration will be paid during the first quarter of 2024 and is expected to be paid from cash on the balance sheet and short-term borrowings including under the 2021 Motorola Solutions Credit Agreement.

In May of 2021, the Company issued $850 million of 2.75% senior notes due 2031. The Company recognized net proceeds of $844 million after debt issuance costs. A portion of these proceeds were then used to redeem $324 million in principal amount of the 3.5% senior notes due 2023 for a purchase price of $341 million, excluding $3 million of accrued interest. After accelerating the amortization of debt discounts and debt issuance costs, the Company recognized a loss of $18 million related to the redemption in Other, net within Other income (expense) in the Consolidated Statements of Operations.

In May of 2022, the Company issued $600 million of 5.6% senior notes due 2032. The Company recognized net proceeds of $595 million after debt issuance costs and discounts. A portion of these proceeds was then used to repurchase $275 million in principal amount of the Company's 4.0% senior notes due 2024 pursuant to a cash tender offer, for a purchase price of $279 million, excluding $3 million of accrued interest. After accelerating the amortization of debt discounts and debt issuance costs, the Company recognized a loss of $6 million related to the tender offer in Other, net within Other income (expense) in the Consolidated Statements of Operations.

The Company has an unsecured commercial paper program, backed by the 2021 Motorola Solutions Credit Agreement (defined below), under which the Company may issue unsecured commercial paper notes up to a maximum aggregate principal amount of $2.2 billion outstanding at any one time. Proceeds from the issuances of the commercial paper notes are expected to be used for general corporate purposes. The notes are issued at a zero-coupon rate and are issued at a discount which reflects the interest component. At maturity, the notes are paid back in full including the interest component. The notes are not redeemable prior to maturity. As of December 31, 2023 the Company had no outstanding debt under the commercial paper program.

Aggregate requirements for long-term debt maturities during the next five years are as follows: $1.3 billion in 2024, $322 million in 2025, no maturities in 2026 or 2027, and $724 million in 2028.

Credit Facilities

As of December 31, 2023, the Company had a $2.25 billion syndicated, unsecured revolving credit facility scheduled to mature in March 2026 (the "2021 Motorola Solutions Credit Agreement"). The 2021 Motorola Solutions Credit Agreement includes a letter of credit sub-limit and fronting commitments of $450 million. An annual facility fee is payable on the undrawn amount of the credit line. The interest rate and facility fee are subject to adjustment if the Company's credit rating changes. The Company must comply with certain customary covenants including a maximum leverage ratio, as defined in the 2021 Motorola Solutions Credit Agreement. The Company was in compliance with its financial covenants as of December 31, 2023.

6. Risk Management

Foreign Currency Risk

The Company had outstanding foreign exchange contracts with notional amounts totaling $1.3 billion and $1.1 billion at December 31, 2023 and December 31, 2022, respectively. The Company does not believe these financial instruments should subject it to undue risk due to foreign exchange movements because gains and losses on these contracts should generally offset gains and losses on the underlying assets, liabilities and transactions.

The following table shows the Company's five largest net notional amounts of the positions to buy or sell foreign currency as of December 31, 2023 and the corresponding positions as of December 31, 2022:

			Notional Amount
Net Buy (Sell) by Currency			2023						2022
Euro			$	322					$	185
British pound			252						290
Australian dollar			(140)						(130)
Canadian dollar			76						—
Chinese renminbi			(66)						(61)

Counterparty Risk

The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of non-performance by counterparties. However, the Company’s risk is limited to the fair value of the instruments when the derivative is in an asset position. The Company actively monitors its exposure to credit risk. As of December 31, 2023, all of the counterparties had investment grade credit ratings. As of December 31, 2023, the credit risk with all derivative counterparties was approximately $14 million.

Derivative Financial Instruments

The following tables summarize the fair values and location in the Consolidated Balance Sheet of all derivative financial instruments held by the Company at December 31, 2023 and 2022:

			Fair Values of Derivative Instruments
December 31, 2023			Other Current Assets						Accrued Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts			$	1					$	3
Treasury rate lock			—						$	12
Derivatives not designated as hedging instruments:
Foreign exchange contracts			$	12					$	1
Equity swap contracts			$	1					$	—
Total derivatives			$	14					$	16

			Fair Values of Derivative Instruments
December 31, 2022			Other Current Assets						Accrued Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts			$	—					$	5
Derivatives not designated as hedging instruments:
Foreign exchange contracts			15						—
Total derivatives			$	15					$	5

The following table summarizes the effect of derivatives on the Company's consolidated financial statements for the years ended December 31, 2023, 2022 and 2021:

			Financial Statement Location
			2023						2022						2021
Derivatives designated as hedging instruments:
Foreign exchange contracts			Accumulated other comprehensive income (loss)			$	(4)					$	12					$	13
Forward points recognized			Other income (expense)			$	3					$	2					$	1
Treasury rate lock			Accumulated other comprehensive income (loss)			$	(12)					$	—					$	—
Derivatives not designated as hedging instruments:
Foreign exchange contracts			Other income (expense)			$	20					$	(61)					$	(30)
Equity swap contracts			Selling, general and administrative expenses			$	1					$	—					$	—

Net Investment Hedges

The Company uses foreign exchange forward contracts to hedge against the effect of the British pound and the Euro exchange rate fluctuations against the U.S. dollar on a portion of its net investment in certain European operations. The Company recognizes changes in the fair value of the net investment hedges as a component of foreign currency translation adjustments within other comprehensive income to offset a portion of the change in translated value of the net investments being hedged, until the investments are sold or liquidated. As of December 31, 2023, the Company had €100 million of net investment hedges in certain Euro functional subsidiaries and £60 million of net investment hedges in certain British pound functional subsidiaries.

The Company excludes the difference between the spot rate and the forward rate of the forward contract from its assessment of hedge effectiveness. The effect of the forward points recognized is amortized on a straight line basis and recognized through interest expense within Other income (expense) in the Consolidated Statement of Operations.

Equity Swap Contracts

During the year ended December 31, 2023, the Company entered into equity swap contracts which serve as economic hedges against volatility within the equity markets, impacting the Company's deferred compensation plan obligations. These contracts are not designated as hedges for accounting purposes. Unrealized gains and losses on these contracts are included in Selling, general and administrative expenses in the Consolidated Statements of Operations. The notional amount of these contracts as of December 31, 2023 was $15 million.

Treasury Rate Lock

In order to manage interest rate exposure, during the year ended December 31, 2023, the Company entered into Treasury rate lock agreements to protect against unfavorable interest rate changes relating to forecasted debt transactions. These derivatives are designated as cash flow hedges with unrealized gains and losses deferred in other comprehensive income. The derivatives will be settled upon the issuance of the related debt and gains and losses generated from the derivatives will be recognized within interest expense over the same period that the hedged interest payments affect earnings. The Company entered into Treasury rate lock agreements in a cash flow hedging relationship with a notional amount of $200 million as of December 31, 2023 and did not enter into any such agreements as of December 31, 2022.

7. Income Taxes

Components of Income Tax Expense

Components of earnings before income taxes are as follows:

Years ended December 31			2023						2022						2021
United States			$	1,744					$	1,312					$	1,030
Other nations			402						203						522
			$	2,146					$	1,515					$	1,552

Components of income tax expense are as follows:

Years ended December 31			2023						2022						2021
United States Federal			$	269					$	240					$	134
Other nations			125						159						98
States (U.S.)			70						83						36
Current income tax expense			464						482						268
United States Federal			(30)						(179)						(2)
Other nations			(9)						(118)						22
States (U.S.)			7						(37)						14
Deferred income tax expense (benefit)			(32)						(334)						34
Total income tax expense			$	432					$	148					$	302

Differences between income tax expense computed at the U.S. federal statutory tax rate of 21% and income tax expense as reflected in the Consolidated Statements of Operations are as follows:

Years ended December 31			2023									2022									2021
Income tax expense at statutory rate			$	450		21.0		%				$	318		21.0		%				$	326		21.0		%
State income taxes, net of federal benefit			71			3.3		%				76			5.0		%				55			3.5		%
Non-U.S. tax expense on non-U.S. earnings			15			0.7		%				1			0.1		%				8			0.5		%
U.S. tax expense (benefit) on undistributed non-U.S. earnings			(44)			(2.1)		%				(43)			(2.8)		%				6			0.4		%
Intra-group IP transfer			—			—		%				(77)			(5.1)		%				—			—		%
Stock compensation			(33)			(1.5)		%				(68)			(4.5)		%				(32)			(2.1)		%
Valuation allowances			(13)			(0.6)		%				(51)			(3.4)		%				(34)			(2.2)		%
Research credits			(19)			(0.9)		%				(16)			(1.1)		%				(20)			(1.3)		%
Reserve for uncertain tax positions			(3)			(0.1)		%				(6)			(0.4)		%				(10)			(0.6)		%
Other tax expense (benefit)			8			0.4		%				14			0.9		%				3			0.2		%
			$	432		20.1		%				$	148		9.8		%				$	302		19.5		%

The effective tax rate for 2023 was below the current U.S. federal statutory rate of 21% primarily due to the recognition of excess tax benefits on share-based compensation, the foreign derived intangible income deduction, and generation of research and development credits, offset by 2023 estimated U.S. state income taxes.

In 2021, the Organization of Economic Cooperation and Development ("OECD") introduced its Pillar Two Framework Model Rules ("Pillar 2"), that was supported by over 130 countries worldwide, which is designed to impose a 15% global minimum tax on adjusted financial results. Certain aspects of Pillar 2 took effect on January 1, 2024, while other aspects go into effect on January 1, 2025. The Company is evaluating the potential impact of Pillar 2 on its business, as the countries in which it operates are enacting legislation implementing Pillar 2. While many aspects of the application of Pillar 2 remain to be clarified, the Company does not expect Pillar 2 to materially impact its tax liability.

Deferred tax balances that were recorded within Accumulated other comprehensive loss in the Company’s Consolidated Balance Sheet, rather than Income tax expense, are the result of retirement benefit adjustments and currency translation adjustments. The adjustments were benefits of $14 million for the year ended December 31, 2023, charges of $2 million for the year ended December 31, 2022 and charges of $21 million for the year ended December 31, 2021.

The Company evaluates its permanent reinvestment assertions with respect to foreign earnings at each reporting period and generally, except for certain earnings that the Company intends to reinvest indefinitely due to the capital requirements of the foreign subsidiaries or due to local country restrictions, accrues for the U.S. federal and foreign income tax applicable to the earnings. As a result of the 2017 U.S. Tax Cuts and Jobs Act ("the Tax Act"), dividends from foreign subsidiaries are now exempt

or the earnings have been previously subject to U.S. tax. As a result, the tax accrual for undistributed foreign earnings is limited primarily to foreign withholding taxes and tax on inherent capital gains that would result from distribution of foreign earnings which are not permanently reinvested, and such earnings may be distributed without an additional charge.

Undistributed foreign earnings that the Company intends to reinvest indefinitely amounted to, in the aggregate, $1.8 billion at December 31, 2023. It is impracticable to determine the exact amount of unrecognized deferred tax liabilities on such earnings; however, due to the above-mentioned changes made under the Tax Act, the Company believes that the additional U.S. or foreign income tax charge with respect to such earnings, if distributed, would be immaterial.

Gross deferred tax assets were $2.1 billion and $2.2 billion for December 31, 2023 and December 31, 2022, respectively. Deferred tax assets, net of valuation allowances, were $2.0 billion at December 31, 2023 and December 31, 2022. Gross deferred tax liabilities were $1.0 billion at December 31, 2023 and December 31, 2022.

Significant components of deferred tax assets (liabilities) are as follows:

December 31			2023						2022
Inventory			$	30					$	38
Accrued liabilities and allowances			77						67
Employee benefits			270						290
Capitalized items			146						95
Tax basis differences on investments			4						6
Depreciation tax basis differences on fixed assets			(2)						1
Undistributed non-U.S. earnings			(28)						(38)
Tax attribute carryforwards			115						298
Business reorganization			9						7
Warranty and customer liabilities			22						22
Deferred revenue and costs			406						382
Valuation allowances			(63)						(221)
Operating lease assets			(120)						(116)
Operating lease liabilities			129						129
Other			10						4
			$	1,005					$	964

At December 31, 2023 and December 31, 2022, the Company had valuation allowances of $63 million and $221 million, respectively, against its deferred tax assets, including $44 million and $46 million, respectively, relating to deferred tax assets for non-U.S. subsidiaries. The Company’s U.S. valuation allowance decreased $156 million during 2023 primarily due to the expiration of the Company's U.S. foreign tax credits. The Company is evaluating a business initiative that, if implemented, could allow for additional utilization of its foreign tax credit carryforward on its 2023 U.S. tax return. As of December 31 2023, the Company was continuing to assess the initiative's feasibility and was not in a position to recognize the tax benefit associated with the utilization of additional foreign tax credit carryforward. If the Company decides to proceed with the initiative, the financial statement impact would be reflected in the period in which it makes its decision. The Company's Non-U.S. valuation allowance decreased $2 million during 2023 primarily due to a change in the realizability of certain Non-US deferred tax assets and the expiration of tax attributes. The Company believes that the remaining deferred tax assets are more-likely-than-not to be realizable based on estimates of future taxable income and the implementation of tax planning strategies.

Tax attribute carryforwards are as follows:

December 31, 2023			Gross Tax Loss						Tax Effected						Expiration Period
United States:
U.S. tax losses			$	129					$	27					2024-2037
General business credits			—						2						2030-2039
State tax losses			—						12						2024-2044
State tax credits			—						6						2024-2042
Non-U.S. subsidiaries:
Japan tax losses			6						2						2024-2029
United Kingdom tax losses			146						36						Unlimited
Canada tax losses			18						5						2034-2043
Canada tax credits			—						6						2037-2043
Spain tax credits			—						6						2024-2029
Other subsidiaries tax losses			49						10						Various
Other subsidiaries tax credits			—						3						Various
									$	115

The Company had unrecognized tax benefits of $32 million and $35 million at December 31, 2023 and December 31, 2022, respectively, of which approximately $27 million and $29 million, if recognized, would have affected the effective tax rate for 2023 and 2022, respectively.

A roll-forward of unrecognized tax benefits is as follows:

(in millions)			2023						2022
Balance at January 1			$	35					$	43
Additions based on tax positions related to current year			1						1
Additions for tax positions of prior years			1						2
Reductions for tax positions of prior years			(1)						(1)
Settlements and agreements			—						(4)
Lapse of statute of limitations			(4)						(6)
Balance at December 31			$	32					$	35

The Company recorded $26 million and $29 million of unrecognized tax benefits in Other liabilities at December 31, 2023 and December 31, 2022, respectively.

The Company has several US state and non-U.S. audits pending. A summary of open tax years by major jurisdiction is presented below:

Jurisdiction			Tax Years
United States			2020-2023
Australia			2019-2023
Canada			2019-2023
Germany			2018-2023
India			1997-2023
Israel			2019-2023
Poland			2018-2023
Malaysia			2016-2023
United Kingdom			2021-2023

Although the final resolution of the Company’s global tax disputes is uncertain, based on current information, in the opinion of the Company’s management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or liquidity. However, an unfavorable resolution of the Company’s global tax disputes could have a material adverse effect on the Company’s results of operations in the periods, and as of the dates, on which the matters are ultimately resolved.

Based on the potential outcome of the Company’s global tax examinations, the expiration of the statute of limitations for specific jurisdictions, or the continued ability to satisfy tax incentive obligations, it is reasonably possible that the unrecognized tax benefits will change within the next twelve months. The associated net tax impact on the effective tax rate, exclusive of valuation allowance changes, is estimated to be up to a $4 million tax benefit.

At December 31, 2023, the Company had $23 million accrued for interest and $12 million accrued for penalties on unrecognized tax benefits. At December 31, 2022, the Company had $22 million and $12 million accrued for interest and penalties, respectively, on unrecognized tax benefits. The Company's policy is to classify the interest and penalty as a component of interest expense and other expense, respectively.

8. Retirement Benefits

Pension and Postretirement Health Care Benefits Plans

U.S. Pension Benefit Plans

The Company’s non-contributory U.S. defined benefit plans (the "U.S. Pension Plans") provide benefits to U.S. employees hired prior to January 1, 2005, who became eligible after one year of service. The Company also has an additional non-contributory supplemental retirement benefit plan, the Motorola Supplemental Pension Plan ("MSPP"), which provided supplemental benefits to individuals by replacing benefits that are lost by such individuals under the retirement formula due to application of the limitations imposed by the Internal Revenue Code. In December 2008, the Company amended the U.S. Pension Plans and MSPP (together the "U.S. Pension Benefit Plans") such that, effective March 1, 2009: (i) no participant shall accrue any benefit or additional benefit on or after March 1, 2009, and (ii) no compensation increases earned by a participant on or after March 1, 2009 shall be used to compute any accrued benefit.

Postretirement Health Care Benefits Plan

Certain health care benefits are available to eligible domestic employees hired prior to January 1, 2002 and meeting certain age and service requirements upon termination of employment or retirement eligibility (the “Postretirement Health Care Benefits Plan”). As of January 1, 2005, the Postretirement Health Care Benefits Plan was closed to new participants. After a series of amendments, all eligible retirees under the age of 65 are provided an annual subsidy per household, versus per individual, toward the purchase of their own health care coverage from private insurance companies and for the reimbursement of eligible health care expenses. All eligible retirees over the age of 65 are entitled to one fixed-rate subsidy capped at $560 per participant.

Non-U.S. Pension Benefit Plans

The Company also provides defined benefit plans which cover non-U.S. employees in certain jurisdictions, principally the U.K. and Germany (the “Non-U.S. Pension Benefit Plans”). Other pension plans outside of the U.S. are not material to the Company either individually or in the aggregate.

In June 2015, the Company amended its non-U.S. defined benefit plan within the United Kingdom by closing future benefit accruals to all participants effective December 31, 2015.

Net Periodic Cost (Benefit)

The net periodic cost (benefit) for pension and Postretirement Health Care Benefits plans was as follows:

			U.S. Pension Benefit Plans																		Non-U.S. Pension Benefit Plans																		Postretirement Health Care Benefits Plan
Years ended December 31			2023						2022						2021						2023						2022						2021						2023						2022						2021
Service cost			$	—					$	—					$	—					$	1					$	1					$	1					$	—					$	—					$	—
Interest cost			190						128						115						56						29						21						5						2						1
Expected return on plan assets			(293)						(254)						(235)						(108)						(93)						(99)						(13)						(12)						(11)
Amortization of:
Unrecognized net loss			22						62						70						37						14						16						2						4						3
Unrecognized prior service benefit			—						—						—						(2)						(2)						(3)						3						—						(5)
Net periodic cost (benefit)			$	(81)					$	(64)					$	(50)					$	(16)					$	(51)					$	(64)					$	(3)					$	(6)					$	(12)

The status of the Company’s plans is as follows:

			U.S. Pension Benefit Plans												Non-U.S. Pension Benefit Plans												Postretirement Health Care Benefits Plan
			2023						2022						2023						2022						2023						2022
Change in benefit obligation:
Benefit obligation at January 1			$	3,809					$	5,140					$	1,207					$	1,935					$	103					$	78
Service cost			—						—						1						1						—						—
Interest cost			190						128						56						29						5						2
Plan amendments			—						—						—						—						—						46
Actuarial loss (gain)			59						(1,329)						62						(534)						2						(12)
Foreign exchange valuation adjustment			—						—						66						(174)						—						—
Benefit payments			(130)						(130)						(45)						(50)						(14)						(11)
Benefit obligation at December 31			$	3,928					$	3,809					$	1,347					$	1,207					$	96					$	103
Change in plan assets:
Fair value at January 1			$	3,076					$	4,157					$	1,092					$	1,870					$	134					$	186
Return on plan assets			324						(954)						56						(555)						14						(41)
Company contributions			3						3						9						8						—						—
Foreign exchange valuation adjustment			—						—						60						(181)						—						—
Benefit payments			(130)						(130)						(45)						(50)						(14)						(11)
Fair value at December 31			$	3,273					$	3,076					$	1,172					$	1,092					$	134					$	134
Funded status of the plan			$	(655)					$	(733)					$	(175)					$	(115)					$	38					$	31
Unrecognized net loss			1,695						1,689						829						758						68						70
Unrecognized prior service benefit (cost)			—						—						(67)						(70)						44						46
Prepaid pension cost			$	1,040					$	956					$	587					$	573					$	150					$	147
Components of prepaid (accrued) pension cost:
Current benefit liability			$	(2)					$	(3)					$	—					$	—					$	—					$	—
Non-current benefit liability			(653)						(730)						(210)						(185)						—						—
Non-current benefit asset			—						—						35						70						38						31
Deferred income taxes			403						403						102						83						31						32
Accumulated other comprehensive loss			1,292						1,286						660						605						81						84
Prepaid pension cost			$	1,040					$	956					$	587					$	573					$	150					$	147

For the year ended December 31, 2023, the primary driver of the increase in the U.S. Pension Benefit Plans' benefit obligation was higher actuarial losses due to a decrease in the discount rate from 5.20% as of December 31, 2022 to 5.01% as of December 31, 2023, partially offset by actuarial gains in the benefit obligation due to updated lump-sum interest rates and mortality. For the year ended December 31, 2022, the primary driver of the decrease in the U.S. Pension Benefit Plans benefit obligation was higher actuarial gains due to an increase in the discount rate from 2.98% as of December 31, 2021 to 5.20% as of December 31, 2022.

For the year ended December 31, 2023, the most significant drivers of the increase in Non-U.S. Pension Benefit Plans' benefit obligation were the higher actuarial losses coupled with unfavorable foreign exchange effects. The Non-U.S. Pension Benefit Plans incurred actuarial losses primarily due to decreases in the discount rates from 4.60% as of December 31, 2022 to 4.30% as of December 31, 2023. For the year ended December 31, 2022, the most significant drivers of the decrease in Non-U.S. Pension Benefit Plans' benefit obligation were the higher actuarial gains coupled with favorable foreign exchange effects. The Non-U.S. Pension Benefit Plans incurred actuarial gains primarily due to an increase in the discount rate from 1.82% as of December 31, 2021 to 4.60% as of December 31, 2022.

Actuarial Assumptions

Certain actuarial assumptions such as the discount rate and the long-term rate of return on plan assets have a significant effect on the amounts reported for net periodic cost and the benefit obligation. The assumed discount rates reflect the prevailing market rates of a universe of high-quality, non-callable, corporate bonds currently available that, if the obligation were settled at the measurement date, would provide the necessary future cash flows to pay the benefit obligation when due. The long-term rates of return on plan assets represent an estimate of long-term returns on an investment portfolio consisting of a mixture of equities, fixed income, cash and other investments similar to the actual investment mix. In determining the long-term return on plan assets, the Company considers long-term rates of return on the asset classes (both historical and forecasted) in which the Company expects the plan funds to be invested.

The Company uses a full yield curve approach to estimate interest and service cost components of net periodic cost (benefit) for defined benefit pension and other post-retirement benefit plans. The full yield curve approach requires the application of the specific spot rate along the yield curve used in the determination of the projected benefit obligation to the relevant projected cash flows.

The Company used "Mortality Improvement Scale MP-2021" to calculate both the 2023 U.S. projected benefit obligations and the 2022 U.S. projected benefit obligations.

Weighted average actuarial assumptions used to determine costs for the plans at the beginning of the fiscal year were as follows:

			U.S. Pension Benefit Plans												Non-U.S. Pension Benefit Plans												Postretirement Health Care Benefits Plan
			2023						2022						2023						2022						2023						2022
Discount rate			5.09		%				2.52		%				4.68		%				1.68		%				5.05		%				2.78		%
Investment return assumption			7.87		%				6.76		%				6.18		%				4.78		%				8.00		%				6.90		%

Weighted average actuarial assumptions used to determine benefit obligations for the plans were as follows:

			U.S. Pension Benefit Plans												Non-U.S. Pension Benefit Plans												Postretirement Health Care Benefits Plan
			2023						2022						2023						2022						2023						2022
Discount rate			5.01		%				5.20		%				4.30		%				4.60		%				4.92		%				5.10		%
Future compensation increase rate			n/a						n/a						0.67		%				0.67		%				n/a						n/a

The following table presents the accumulated benefit obligation, projected benefit obligation and fair value of plan assets for our plans that have an accumulated benefit obligation and projected benefit obligation in excess of plan assets:

			U.S. Pension Benefit Plans												Non U.S. Pension Benefit Plans
December 31			2023						2022						2023						2022
Accumulated benefit obligation			$	3,928					$	3,809					$	1,346					$	1,206
Projected benefit obligation			3,928						3,809						1,347						1,207
Fair value of plan assets			3,273						3,076						1,172						1,092

Investment Policy

The individual plans have adopted an investment policy designed to meet or exceed the expected rate of return on plan assets assumption. To achieve this, the plans retain professional advisors and investment managers that invest plan assets into various classes including, but not limited to: equity and fixed income securities, cash, cash equivalents, hedge funds, infrastructure/utilities, insurance contracts, leveraged loan funds and real estate. The Company uses long-term historical actual return experience with consideration of the expected investment mix of the plans’ assets, as well as future estimates of long-term investment returns, to develop its expected rate of return assumption used in calculating the net periodic cost. The individual plans have target mixes for these asset classes, which are readjusted periodically when an asset class weighting deviates from the target mix, with the goal of achieving the required return at a reasonable risk level.

The weighted-average asset allocations by asset categories for all pension plans and the Postretirement Health Care Benefits Plan were as follows:

			All Pension Benefit Plans												Postretirement Health Care Benefits Plan
December 31			2023						2022						2023						2022
Target Mix:
Equity securities			26		%				25		%				28		%				28		%
Fixed income securities			56		%				57		%				51		%				52		%
Cash and other investments			18		%				18		%				21		%				20		%
Actual Mix:
Equity securities			26		%				25		%				28		%				28		%
Fixed income securities			56		%				56		%				52		%				52		%
Cash and other investments			18		%				19		%				20		%				20		%

Within the equity securities asset class, the investment policy provides for investments in a broad range of publicly-traded securities including both domestic and foreign equities. Within the fixed income securities asset class, the investment policy provides for investments in a broad range of publicly-traded debt securities including: U.S. treasury issues, corporate debt securities, mortgage and asset-backed securities, as well as foreign debt securities. In the cash and other investments asset class, investments may include, but are not limited to: cash, cash equivalents, commodities, hedge funds, infrastructure/utilities, insurance contracts, leveraged loan funds and real estate.

Cash Funding

The Company made $3 million of contributions to its U.S. Pension Benefit Plans during each of 2023 and 2022. The Company contributed $9 million and $8 million to its Non U.S. Pension Benefit Plans during 2023 and 2022, respectively. The Company made no contributions to its Postretirement Health Care Benefits Plan in 2023 or 2022.

Expected Future Benefit Payments

The following benefit payments are expected to be paid:

Year			U.S. Pension Benefit Plans						Non-U.S. Pension Benefit Plans						Postretirement Health Care Benefits Plan
2024			$	183					$	47					$	15
2025			205						50						14
2026			224						51						12
2027			242						52						11
2028			260						53						9
2029-2033			1,409						271						30

Other Benefit Plans

Split-Dollar Life Insurance Arrangements

The Company maintains a number of endorsement split-dollar life insurance policies on now-retired officers under a frozen plan. The Company had purchased the life insurance policies to insure the lives of employees and then entered into a separate agreement with the employees that split the policy benefits between the Company and the employee. Motorola Solutions owns the policies, controls all rights of ownership, and may terminate the insurance policies. To effect the split-dollar arrangement, Motorola Solutions endorsed a portion of the death benefits to the employee and upon the death of the employee, the employee’s beneficiary typically receives the designated portion of the death benefits directly from the insurance company and the Company receives the remainder of the death benefits. It is currently expected that minimal cash payments will be required to fund these policies.

The net periodic pension cost for these split-dollar life insurance arrangements was $5 million for the years ended December 31, 2023, 2022 and 2021. The Company has recorded a liability representing the actuarial present value of the future death benefits as of the employees’ expected retirement date of $52 million and $54 million as of December 31, 2023 and December 31, 2022, respectively.

Deferred Compensation Plan

The Company maintains a deferred compensation plan (“the Plan”) for certain eligible participants. Under the Plan, participants may elect to defer base salary and cash incentive compensation in excess of 401(k) plan limitations. Participants under the Plan may choose to invest their deferred amounts in the same investment alternatives available under the 401(k) plan (as defined below). The Plan also allows for Company matching contributions for the following: (i) the first 4% of compensation deferred under the Plan, subject to a maximum of $50,000 for officers elected by the board of directors of the Company, (ii) lost matching amounts that would have been made under the 401(k) plan if participants had not participated in the Plan, and (iii) discretionary amounts as approved by the Compensation and Leadership Committee of the board of directors.

Defined Contribution Plan

The Company has various defined contribution plans, in which all eligible employees may participate. In the U.S., the Motorola Solutions 401(k) plan (the "401(k) plan") is a contributory plan. Matching contributions are based upon the amount of the employees’ contributions. The Company’s expenses for material defined contribution plans for the years ended December 31, 2023, 2022 and 2021 were $45 million, $43 million and $36 million, respectively.

Under the 401(k) plan, the Company may make an additional discretionary matching contribution to eligible employees. For the years ended December 31, 2023, 2022, and 2021 the Company made no discretionary contributions.

9. Share-Based Compensation and Other Incentive Plans

The Company grants options and stock appreciation rights to acquire shares of common stock to certain employees and to existing option holders of acquired companies in connection with the merging of option plans following an acquisition. Each option and stock appreciation right granted has an exercise price of no less than 100% of the fair market value of the common stock on the date of the grant. The awards have a contractual life of five to ten years and vest over two to three years. In conjunction with a change in control, stock options and stock appreciation rights assumed or replaced with comparable stock options or stock appreciation rights only become exercisable if the holder is also involuntarily terminated (for a reason other than cause) or resigns for good reason within 24 months of a change in control.

Restricted stock grants consist of shares or the rights to shares of the Company’s common stock which are awarded to certain employees. The grants are restricted in such that they are subject to vesting conditions; however, restricted stock holders have voting rights, and the rights to earn dividends on unvested shares.

Restricted stock unit (“RSU”) grants consist of shares or the rights to shares of the Company’s common stock which are awarded to certain employees and non-employee directors. The grants are restricted such that they are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer by the employee. In conjunction with a change in control, shares of RSUs assumed or replaced with comparable shares of RSUs will only have the restrictions lapse if the holder is also involuntarily terminated (for a reason other than cause) or resigns for good reason within 24 months of a change in control.

Performance-based stock options (“performance options”), market stock units ("MSUs"), and performance stock units ("PSUs") have been granted to certain Company executive officers. Performance options have a three-year performance period and are granted as a target number of units subject to adjustment based on company performance. Each performance option granted has an exercise price of no less than 100% of the fair market value of the common stock on the date of the grant. The awards have a contractual life of ten years. Shares ultimately issued for performance option awards granted are based on the actual total shareholder return (“TSR”) compared to the S&P 500 over the three-year performance period based on a payout factor that corresponds to actual TSR results as established at the date of grant. Vesting occurs on the third anniversary of the grant date. Under the terms of the MSUs, vesting is conditioned upon continuous employment until the vesting date and the payout factor is at least 60% of the share price on the award date. The payout factor is the share price on vesting date divided by share price on award date, with a maximum of 200%. The share price used in the payout factor is calculated using an average of the closing prices on the grant or vesting date, and the 30 calendar days immediately preceding the grant or vesting date. Vesting occurs ratably over three years. PSUs have been granted as a portion of the Long Range Incentive Plan (“LRIP”) awards issued to certain Company executive officers. The PSUs have a three-year performance period and were granted at a target number of units subject to adjustment based on company performance. The number of PSUs earned will be based on the actual TSR compared to the S&P 500 over the three-year performance period.

The employee stock purchase plan allows eligible participants to purchase shares of the Company’s common stock through payroll deductions of up to 20% of eligible compensation on an after-tax basis. Plan participants cannot purchase more than $25,000 of stock in any calendar year. The price an employee pays per share is 85% of the lower of the fair market value of the Company’s stock on the close of the first trading day or last trading day of the purchase period. The plan has two purchase periods, the first from October 1 through March 31 and the second from April 1 through September 30. For the years ended December 31, 2023, 2022 and 2021, employees purchased 0.4 million, 0.4 million and 0.6 million shares, respectively, at purchase prices of $194.62 and $231.40, $199.16 and $190.37, and $133.27 and $160.11, respectively.

Significant Assumptions Used in the Estimate of Fair Value

The Company calculates the value of each employee stock option, estimated on the date of grant, using the Black-Scholes option pricing model. The weighted-average estimated fair value of employee stock options granted during 2023, 2022 and 2021 was $73.04, $67.18 and $41.57, respectively, using the following weighted-average assumptions:

			2023						2022						2021
Expected volatility			24.4		%				29.2		%				27.3		%
Risk-free interest rate			4.2		%				2.5		%				0.8		%
Dividend yield			1.6		%				1.9		%				2.2		%
Expected life (years)			5.9						6.6						5.9

The Company calculates the value of each performance option, MSU, and PSU using a Monte Carlo simulation option pricing model, estimated on the date of grant. The fair values of performance options, MSUs, and PSUs granted during 2023 were $122.55, $299.32 and $348.27, respectively. The fair values of performance options, MSUs, and PSUs granted during 2022 were $84.73, $244.13 and $249.51, respectively. The fair value of performance options, MSUs and PSUs granted during 2021 was $60.42, $184.71 and $203.57, respectively. The following assumptions were used for the calculations.

			2023						2022						2021
			Performance Options						Performance Options						Performance Options
Expected volatility of common stock			25.1		%				29.7		%				28.5		%
Expected volatility of the S&P 500			33.3		%				39.2		%				38.7		%
Risk-free interest rate			4.1		%				2.0		%				1.2		%
Dividend yield			1.7		%				2.0		%				2.3		%
Expected life (years)			6.5						6.5						6.5

			2023						2022						2021
			Market Stock Unit						Market Stock Unit						Market Stock Units
Expected volatility of common stock			25.1		%				29.7		%				28.5		%
Risk-free interest rate			4.5		%				1.9		%				0.3		%
Dividend yield			1.5		%				1.6		%				1.8		%

			2023									2022			2021
			Performance Stock Units									Performance Stock Units			Performance Stock Units
Expected volatility of common stock			25.1		%							29.7		%	28.5		%
Expected volatility of the S&P 500			33.3		%							39.2		%	38.7		%
Risk-free interest rate			4.6		%							1.8		%	0.3		%
Dividend yield			1.4		%							1.6		%	1.8		%

The Company uses the implied volatility for traded options on the Company’s stock as the expected volatility assumption in the valuation of stock options, performance options, MSUs, and PSUs. The selection of the implied volatility approach was based upon the availability of actively-traded options on the Company’s stock and the Company’s assessment that implied volatility is more representative of future stock price trends than historical volatility. At the conclusion of each three-year PSU and performance option cycle, the Company uses the historical volatility as the expected volatility to calculate the actual TSR compared to the S&P 500.

The risk-free interest rate assumption is based upon the average daily closing rates during the year for U.S. Treasury notes that have a life which approximates the expected life of the grant. The dividend yield assumption is based on the Company’s future expectation of dividend payouts. The expected life represents the average of the contractual term of the options and the weighted average vesting period for all option tranches.

The Company has applied forfeiture rates, estimated based on historical data, of 10% to the stock option fair values calculated by the Black-Scholes option pricing model and 15% to RSUs. These estimated forfeiture rates are applied to grants based on their remaining vesting term and may be revised in subsequent periods if actual forfeitures differ from these estimates.

The following table summarizes information about the total stock options outstanding and exercisable under all stock option plans, at December 31, 2023 (in thousands, except exercise price and years):

			Options Outstanding																		Options Exercisable
Exercise price range			No. of options						Wtd. avg. Exercise Price						Wtd. avg. contractual life (in yrs.)						No. of options						Wtd. avg. Exercise Price						Wtd. avg. contractual life (in yrs.)
$51-$70			209						67						1						209						67						1
$71-$90			714						77						3						714						77						3
$91-$110			208						108						4						208						108						4
$111-$130			46						120						5						46						120						5
$131-$150			243						139						5						243						139						5
$151-$170			199						156						6						196						155						6
$171-$190			244						180						7						41						180						7
$191 and over			501						244						9						50						228						8
			2,364																		1,707

As of December 31, 2023, the weighted average contractual life for options outstanding and exercisable was four and three years, respectively.

Current Year Activity

Total share-based compensation activity was as follows (in thousands, except exercise price):

			Stock Options												Restricted Stock Units												Restricted Stock
			No. of Options Outstanding						Wtd. Avg. Exercise Price of Shares						No. of Non-Vested Awards						Wtd. Avg. Grant Date Fair Value						No. of Non-Vested Awards						Wtd. Avg. Grant Date Fair Value
Balance as of January 1, 2023			996						$	128					1,211						$	211					114						$	224
Granted			120						272						715						259						23						311
Releases/Exercised			(547)						89						(521)						191						(52)						225
Forfeited/Canceled			(3)						225						(63)						224						—						—
Balance as of December 31, 2023			566						$	191					1,342						$	224					85						$	244
Awards exercisable			297						149						—						—						—						—

			Performance Options												Market Stock Units												Performance Stock Units
			No. of Options Outstanding						Wtd. Avg. Exercise Price of Shares						No. of Non-Vested Awards						Wtd. Avg. Grant Date Fair Value						No. of Non-Vested Awards						Wtd. Avg. Grant Date Fair Value
Balance as of January 1, 2023			1,775						$	112					103						$	192					169						$	226
Granted			105						265						43						289						73						339
Releases/Exercised			(161)						118						(79)						166						(51)						261
Adjustment for payout factor			79						140						24						122						22						261
Forfeited/Canceled			—						—						(2)						135						—						—
Balance as of December 31, 2023			1,798						$	122					89						$	254					213						$	264
Awards exercisable			1,410						96						—						—						—						—

At December 31, 2023 and 2022, 7.2 million and 8.3 million shares, respectively, were available for future share-based award grants under the current share-based compensation plan, covering all equity awards to employees and non-employee directors.

Total Share-Based Compensation Expense

Compensation expense for the Company’s share-based compensation plans was as follows:

Years ended December 31			2023						2022						2021
Share-based compensation expense included in:
Costs of sales			$	40					$	28					$	16
Selling, general and administrative expenses			116						98						79
Research and development expenditures			56						46						34
Share-based compensation expense included in Operating earnings			212						172						129
Tax benefit			43						34						15
Share-based compensation expense, net of tax			$	169					$	138					$	114
Decrease in basic earnings per share			$	(1.01)					$	(0.82)					$	(0.67)
Decrease in diluted earnings per share			$	(0.98)					$	(0.80)					$	(0.66)

At December 31, 2023, the Company had unrecognized compensation expense related to all share based awards of $243 million, net of estimated forfeitures, expected to be recognized over the weighted average period of approximately three years and $5 million of unrecognized compensation expense related to the employee stock purchase plan that will be recognized over the remaining purchase period. The aggregate fair value of outstanding share based awards as of December 31, 2023 was $505 million.

Cash received from stock option exercises and the employee stock purchase plan was $104 million, $156 million, and $102 million for the years ended December 31, 2023, 2022, and 2021, respectively. The total intrinsic value of options exercised during the years ended December 31, 2023, 2022, and 2021 was $152 million, $292 million, and $186 million, respectively. The aggregate intrinsic value for options outstanding and exercisable as of December 31, 2023 was $413 million and $355 million, respectively, based on a December 31, 2023 stock price of $313.09 per share.

Motorola Solutions Incentive Plans

The Company's incentive plans provide eligible employees with an annual payment, calculated as a percentage of an employee’s eligible earnings, in the year after the close of the current calendar year if specified business goals and individual performance targets are met. The expense for awards under these incentive plans for the years ended December 31, 2023, 2022 and 2021 was $205 million, $165 million and $161 million, respectively.

Long-Range Incentive Plan

The LRIP rewards elected officers for the Company’s achievement of specified business goals during the period, based on a single performance objective measured over a three-year period. There were no LRIP awards with cash settlement terms for the year ended December 31, 2023. The expense for LRIP awards with cash settlement terms was $4 million and $8 million for the years ended December 31, 2022 and 2021, respectively.

10. Fair Value Measurements

Investments and Derivatives

The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of December 31, 2023 and December 31, 2022 were as follows:

December 31, 2023			Level 1						Level 2												Total
Assets:
Foreign exchange derivative contracts			$	—					$	13											$	13
Equity swap contracts			1						—												1
Common stock and equivalents			28						—												28
Liabilities:
Foreign exchange derivative contracts			$	—					$	4											$	4
Treasury rate lock			—						12												—

December 31, 2022			Level 1						Level 2												Total
Assets:
Foreign exchange derivative contracts			$	—					$	15											$	15
Common stock and equivalents			21						—												21
Liabilities:
Foreign exchange derivative contracts			$	—					$	5											$	5

Pension and Postretirement Health Care Benefits Plan Assets

The fair values of the various pension and postretirement health care benefits plans’ assets by level in the fair value hierarchy as of December 31, 2023 and 2022 were as follows:

U.S. Pension Benefit Plans

December 31, 2023			Level 1						Level 2						Level 3												Total
Equities			$	27					$	—					$	—											$	27
Commingled funds			1,230						479						—												1,709
Government fixed income securities			—						192						—												192
Corporate fixed income securities			—						894						—												894
Short-term investment funds			253						—						—												253
Private assets			—						—						157												157
Total investment securities			$	1,510					$	1,565					$	157											$	3,232
Accrued income receivable																											23
Cash																											18
Fair value plan assets																											$	3,273

The following table summarizes the changes in fair value of the Level 3 assets:

			2023
Fair value at January 1, 2023			111
Actual return on plan assets			10
Purchases			36
Fair value at December 31, 2023			157

December 31, 2022			Level 1						Level 2						Level 3						Total
Equities			$	48					$	—					—						$	48
Commingled funds			1,159						488						—						1,647
Government fixed income securities			—						159						—						159
Corporate fixed income securities			—						863						—						863
Short-term investment funds			186						—						—						186
Private Assets			—						—						111						111
Total investment securities			$	1,393					$	1,510					$	111					$	3,014
Accrued income receivable																					45
Cash																					17
Fair value plan assets																					$	3,076

Non-U.S. Pension Benefit Plans

December 31, 2023			Level 1						Level 2												Total
Equities			$	60					$	—											$	60
Commingled funds			289						32												321
Government fixed income securities			—						663												663
Short-term investment funds			60						—												60
Total investment securities			$	409					$	695											$	1,104
Cash																					5
Accrued income receivable																					16
Insurance contracts																					47
Fair value plan assets																					$	1,172

December 31, 2022			Level 1						Level 2												Total
Equities			$	55					$	—											$	55
Commingled funds			252						41												293
Government fixed income securities			—						491												491
Short-term investment funds			83						—												83
Total investment securities			$	390					$	532											$	922
Cash																					3
Accrued income receivable																					121
Insurance contracts																					46
Fair value plan assets																					$	1,092

Postretirement Health Care Benefits Plan

December 31, 2023			Level 1						Level 2						Level 3						Total
Equities			$	1					$	—					$	—					$	1
Commingled funds			49						20						—						69
Government fixed income securities			—						8						—						8
Corporate fixed income securities			—						38						—						38
Short-term investment funds			10						—						—						10
Private funds			—						—						7						7
Total investment securities			$	60					$	66					7						133
Accrued income receivable																					1
Fair value plan assets																					$	134

The following table summarizes the changes in fair value of the Level 3 assets:

			2023
Fair value at January 1, 2023			5
Purchases			2
Fair value at December 31, 2023			7

December 31, 2022			Level 1						Level 2						Level 3						Total
Equities			$	2					$	—					$	—					$	2
Commingled funds			49						22						—						71
Government fixed income securities			—						7						—						7
Corporate fixed income securities			—						39						—						39
Short-term investment funds			8						—						—						8
Private funds			—						—						5						5
Total investment securities			$	59					$	68					$	5					$	132
Accrued income receivable																					2
Fair value plan assets																					$	134

The following is a description of the categories of investments:

Equities — A diversified portfolio of corporate common and preferred stocks.

Commingled funds — A diversified portfolio of assets that includes corporate common and preferred stocks, emerging market and high-yield fixed income securities among others.

Government fixed income securities — Securities issued by municipal, domestic and foreign government agencies, index-linked government bonds as well as interest rate derivatives.

Corporate fixed income securities — A diversified portfolio of primarily investment grade bonds issued by corporations.

Short-term investment funds — Investments in money market accounts and derivatives with a liquidity of less than 90 days.

Private funds — A diversified portfolio of assets that includes private equity funds and private loans.

Level 1 investments include securities which are valued at the closing price reported on the active market in which the individual securities are traded. Level 2 investments consist principally of securities which are valued using independent third party pricing sources. Level 3 investments include securities with valuations derived from valuation techniques, in which one or more significant inputs are unobservable. A variety of inputs are utilized by the independent pricing sources including market based inputs, binding quotes, indicative quotes, and ongoing redemption and subscription activity. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation.

At December 31, 2023, the Company had $863 million of investments in money market government and U.S. treasury funds (Level 1) classified as Cash and cash equivalents in its Consolidated Balance Sheet, compared to $490 million at December 31, 2022. The money market funds had quoted market prices that are approximately at par.

Using quoted market prices and market interest rates, the Company determined that the fair value of long-term debt at December 31, 2023 was $6.4 billion, of which the Senior Convertible Notes were $1.6 billion (Level 2). The fair value of long-term debt at December 31, 2022 was $5.9 billion, of which the Senior Convertible Notes were $1.3 billion (Level 2). Since considerable judgment is required in interpreting market information, the fair value of the long-term debt is not necessarily indicative of the amount which could be realized in a current market exchange. Refer to "Note 5: Debt and Credit Facilities" in this “Part II. Item 8. Financial Statements and Supplementary Data” of this Form 10-K for a further discussion of the Senior Convertible Notes.

All other financial instruments are carried at cost, which is not materially different from the instruments’ fair values.

11. Long-term Financing and Sales of Receivables

Long-term Financing

Long-term receivables consist of receivables with payment terms greater than twelve months, long-term loans and lease receivables under sales-type leases. Long-term receivables consist of the following:

December 31			2023						2022
Long-term receivables, gross			$	36					$	40
Less allowance for losses			(2)						(2)
Long-term receivables			$	34					$	38
Less current portion			(13)						(13)
Non-current long-term receivables			$	21					$	25

The current portion of long-term receivables is included in Accounts receivable, net and the non-current portion of long-term receivables is included in Other assets in the Company’s Consolidated Balance Sheet. The Company recognized no interest

income on long-term receivables for the year ended December 31, 2023, compared to $1 million for each of the years ended December 31, 2022, and 2021.

Certain purchasers of the Company's products and services may request that the Company provide long-term financing (defined as financing with a term greater than one year) in connection with the sale of products and services. These requests may include all or a portion of the purchase price of the products and services. The Company's obligation to provide long-term financing may be conditioned on the issuance of a letter of credit in favor of the Company by a reputable bank to support the purchaser's credit or a pre-existing commitment from a reputable bank to purchase the long-term receivables from the Company. The Company had outstanding commitments to provide long-term financing to third-parties totaling $103 million at December 31, 2023 and $65 million at December 31, 2022.

Sales of Receivables

From time to time, the Company sells accounts receivable and long-term receivables to third-parties under one-time arrangements.

The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the years ended December 31, 2023, 2022 and 2021.

Years ended December 31			2023						2022						2021
Contract-specific discounting facility			$	—					$	49					$	211
Accounts receivable sales proceeds			96						179						56
Long-term receivables sales proceeds			182						204						248
Total proceeds from receivable sales			$	278					$	432					$	515

The Company may or may not retain the obligation to service the sold accounts receivable and long-term receivables.

At December 31, 2023, the Company had retained servicing obligations for $813 million of long-term receivables, compared to $891 million of long-term receivables at December 31, 2022. Servicing obligations are limited to collection activities of sold accounts receivables and long-term receivables.

Credit Quality of Long-Term Receivables and Allowance for Credit Losses

An aging analysis of financing receivables at December 31, 2023 and December 31, 2022 is as follows:

December 31, 2023			Total Long-term Receivable						Current Billed Due						Past Due Under 90 Days						Past Due Over 90 Days
Municipal leases secured tax exempt			$	15					$	1					$	1					$	1
Commercial loans and leases secured			21						1						—						1
Long-term receivables, including current portion			$	36					$	2					$	1					$	2

December 31, 2022			Total Long-term Receivable						Current Billed Due						Past Due Under 90 Days						Past Due Over 90 Days
Municipal leases secured tax exempt			$	22					$	1					$	1					$	1
Commercial loans and leases secured			18						—						—						2
Long-term receivables, including current portion			$	40					$	1					$	1					$	3

The Company uses an internally developed credit risk rating system for establishing customer credit limits. This system is aligned with and comparable to the rating systems utilized by independent rating agencies.

12. Commitments and Contingencies

Purchase Obligations

During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, the Company enters into agreements with contract manufacturers and suppliers that either allow it to procure inventory based upon criteria as defined by the Company or establish the parameters defining the Company’s requirements. In addition, we have entered into software license agreements which are firm commitments and are not cancellable.

As of December 31, 2023, the Company had entered into firm, non-cancelable, and unconditional commitments under such arrangements through 2030. The Company expects to make total payments of $469 million under these arrangements as follows: $131 million in 2024, $78 million in 2025, $73 million in 2026, $66 million in 2027, $63 million in 2028 and $58 million thereafter.

Legal Matters

Hytera Litigation

On March 14, 2017, the Company filed a complaint in the U.S. District Court for the Northern District of Illinois (the "Court") against Hytera Communications Corporation Limited of Shenzhen, China; Hytera America, Inc.; and Hytera Communications America (West), Inc. (collectively, "Hytera"), alleging trade secret theft and copyright infringement and seeking, among other things, injunctive relief, compensatory damages and punitive damages. On February 14, 2020, the Company announced that a jury decided in the Company's favor in its trade secret theft and copyright infringement case. In connection with this verdict, the jury awarded the Company $345.8 million in compensatory damages and $418.8 million in punitive damages, for a total of $764.6 million. In a series of post-trial rulings in 2021, the Court subsequently reduced the judgment to $543.7 million, but also ordered Hytera to pay the Company $51.1 million in pre-judgment interest and $2.6 million in costs, as well as $34.2 million in attorneys' fees. The Company continues to seek collection of the judgment through the ongoing legal process.

On December 17, 2020, the Court held that Hytera must pay the Company a forward-looking reasonable royalty on products that use the Company’s stolen trade secrets, and on December 15, 2021, set royalty rates for Hytera's sale of relevant products from July 1, 2019 forward. On July 5, 2022, the Court ordered that Hytera pay into a third-party escrow on July 31, 2022, the royalties owed to the Company based on the sale of relevant products from July 1, 2019 to June 30, 2022. Hytera failed to make the required royalty payment on July 31, 2022. On August 1, 2022, Hytera filed a motion to modify or stay the Court's previous July 5, 2022 royalty order, which the Court denied on July 11, 2023. On August 3, 2022, the Company filed a motion seeking to hold Hytera in civil contempt for violating the royalty order by not making the required royalty payment on July 31, 2022. On August 26, 2023, the Court granted the Company's contempt motion. As a result, on September 1, 2023, Hytera made a payment of $56 million into the third-party escrow. In addition to the September 1, 2023 payment of $56 million, Hytera has made de minimis quarterly royalty payments into the third-party escrow from October 2022 through January 2024. The aggregate amount paid into escrow will not be recognized until all contingencies are resolved and such amount is released from escrow.

Following the February 14, 2020 verdict and judgment in the Company's favor, Hytera subsequently filed several notices of appeal to the U.S. Court of Appeals for the Seventh Circuit (the "Court of Appeals"), including a notice of appeal filed on August 2, 2022 which appealed the orders related to the jury's verdict as well as the Court's royalty order. The Company filed its cross-appeal on August 5, 2022. The Court of Appeals heard oral arguments on the parties' appeals on December 5, 2023.

Hytera Bankruptcy Proceedings

Separate from the Company's litigation with Hytera, on May 27, 2020, Hytera America, Inc. and Hytera Communications America (West), Inc. each filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Central District of California (the “Bankruptcy Court”). On February 11, 2022, the Court entered an order to confirm the liquidation plan for the two Hytera entities and the distributions were made on February 25, 2022 to the creditors, including a distribution of $13 million to the Company. On December 22, 2022, an additional distribution of $2 million was made to the Company as well as an assignment of various delinquent accounts receivable of the bankrupt Hytera entities. The gains for the two monetary distributions were recorded to Other charges (income) in the Company's Consolidated Statements of Operations.

13. Information by Segment and Geographic Region

The Company conducts its business globally and manages it through the following two segments:

Products and Systems Integration: The Products and Systems Integration segment offers an extensive portfolio of infrastructure, devices, accessories, video security devices and infrastructure, and the implementation and integration of such systems, devices, and applications. Within LMR Communications, the Company is a global leader in the two-way radio category, including the Company’s Project 25 ("P25"), Terrestrial Trunked Radio (TETRA), Digital Mobile Radio (DMR), as well as other professional and commercial radio (“PCR”) solutions. The Company provides LTE solutions for public safety, government and commercial users, including devices operating in 700 MHz, 900 MHz and Citizens' Broadband Radio Service (CBRS) frequencies. The Company's Video technology includes network video management infrastructure, fixed security, certain mobile video equipment and access control solutions. The primary customers of the Products and Systems Integration segment are government, public safety and commercial customers who operate private communications networks and video security solutions and typically manage a mobile workforce. In 2023, the segment’s net sales were $6.2 billion, representing 63% of the Company's consolidated net sales.

Software and Services: The Software and Services segment provides a broad range of solution offerings for government, public safety and commercial customers. Software includes public safety and enterprise Command Center, unified communications applications, certain mobile video equipment, and video software solutions, delivered both on-premise and “as-a-service.” Services includes a continuum of service offerings beginning with repair, technical support and maintenance. More advanced technologies include monitoring, software updates and cybersecurity services. Managed services range from partial to full operation of customer-owned or Motorola Solutions-owned communications networks. In 2023, the segment’s net sales were $3.7 billion, representing 37% of the Company's consolidated net sales.

For the years ended December 31, 2023, 2022 and 2021, no single customer accounted for more than 10% of the Company's net sales.

Segment Information

The following table summarizes Net sales and Operating earnings by segment:

			Net Sales																		Operating Earnings
Years ended December 31			2023						2022						2021						2023						2022						2021
Products and Systems Integration			$	6,242					$	5,728					$	5,033					$	1,244					$	913					$	760
Software and Services			3,736						3,384						3,138						1,050						748						907
			$	9,978					$	9,112					$	8,171					$	2,294					$	1,661					$	1,667
Total other expense																					(148)						(146)						(115)
Net earnings before income taxes																					$	2,146					$	1,515					$	1,552

The following table summarizes the Company's capital expenditures and depreciation expense by segment:

			Capital Expenditures																		Depreciation Expense
Years ended December 31			2023						2022						2021						2023						2022						2021
Products and Systems Integration			$	97					$	77					$	90					$	83					$	79					$	87
Software and Services			156						179						153						96						104						115
			$	253					$	256					$	243					$	179					$	183					$	202

The Company's "chief operating decision maker" does not review or allocate resources based on segment assets.

Geographic Area Information

			Net Sales																		Assets
Years ended December 31			2023						2022						2021						2023						2022						2021
United States			$	6,559					$	6,008					$	5,236					$	10,207					$	9,227					$	9,420
United Kingdom			$	769					$	789					$	849					$	2,034					$	2,321					$	1,588
Canada			$	373					$	366					$	324					$	362					$	394					$	950
Other, net of eliminations			$	2,277					$	1,949					$	1,762					$	733					$	872					$	231
			$	9,978					$	9,112					$	8,171					$	13,336					$	12,814					$	12,189

Net sales attributed to geographic area are predominately based on the ultimate destination of the Company's products and services.

14. Reorganization of Businesses

The Company maintains a formal Involuntary Severance Plan (the “Severance Plan”), which permits the Company to offer eligible employees severance benefits based on years of service and employment grade level in the event that employment is involuntarily terminated as a result of a reduction-in-force or restructuring. The Company recognizes termination benefits based on formulas per the Severance Plan at the point in time that future settlement is probable and can be reasonably estimated based on estimates prepared at the time a restructuring plan is approved by management. Exit costs consist of contractual lease termination costs, costs to exit committed contracts and other contractual terminations. At each reporting date, the Company evaluates its accruals for employee separation and exit costs to ensure the accruals are still appropriate. In certain circumstances, accruals are no longer needed because of efficiencies in carrying out the plans or because employees previously identified for separation resigned from the Company and did not receive severance, or were redeployed due to circumstances not foreseen when the original plans were approved. In these cases, the Company reverses accruals through the Consolidated Statements of Operations where the original charges were recorded when it is determined they are no longer needed.

During 2023, 2022, and 2021 the Company continued to implement various productivity improvement plans aimed at achieving long-term, sustainable profitability by driving efficiencies and reducing operating costs. These initiatives impacted both of the Company’s segments and affected employees located in all geographic regions.

2023 Charges

During 2023, the Company recorded net reorganization of business charges of $53 million, including $7 million of charges in Costs of sales and $46 million of charges in Other charges in the Company’s Consolidated Statements of Operations. Included in the $53 million were charges of $41 million related to employee separation costs and a $24 million impairment loss related to the exit of video manufacturing operations, partially offset by $7 million of reversals for employee separation accruals no longer needed and $5 million of reversals for exit cost accruals no longer needed.

The following table displays the net charges incurred by segment:

Year ended December 31			2023
Products and Systems Integration			$	45
Software and Services			8
			$	53

Reorganization of Businesses Accruals

			Accruals at January 1						Additional Charges						Adjustments						Amount Used						Accruals at December 31
Reorganization costs			$	26					$	41					$	(7)					$	(37)					$	23
Exit costs			$	10					$	—					$	(5)					$	—					$	5
			$	36					$	41					$	(12)					$	(37)					$	28

Exit Costs

At January 1, 2023, the Company had an accrual of $10 million for exit costs related to the Company's exit of the ESN contract with the Home Office. During the year, the Company recorded a $5 million reversal for accruals no longer needed. The remaining $5 million of exit costs are recorded in Accrued liabilities in the Company's Consolidated Balance Sheet at December 31, 2023, and are expected to be paid within one year.

Employee Separation Costs

At January 1, 2023, the Company had an accrual of $26 million for employee separation costs. The 2023 additional charges of $41 million include severance costs for approximately 700 employees, of which 420 were direct employees and 280 were indirect employees. The adjustments of $7 million reflect reversals of accruals no longer needed. The $37 million used in 2023 reflects cash payments to severed employees. The remaining accrual of $23 million, which is included in Accrued liabilities in the Company’s Consolidated Balance Sheet at December 31, 2023, is expected to be paid, primarily within one year to: (i) severed employees who have already begun to receive payments and (ii) approximately 75 employees to be separated in 2024.

2022 Charges

During 2022, the Company recorded net reorganization of business charges of $36 million, including $18 million of charges in Costs of sales and $18 million of charges under Other charges in the Company’s Consolidated Statements of Operations. Included in the aggregate $36 million were charges of $36 million for employee separation costs and $10 million for exit costs, partially offset by $10 million of reversals of accruals no longer needed.

The following table displays the net charges incurred by segment:

Year ended December 31			2022
Products and Systems Integration			$	21
Software and Services			15
			$	36

Reorganization of Businesses Accruals

			Accruals at January 1						Additional Charges						Adjustments						Amount Used						Accruals at December 31
Reorganization costs			$	34					$	36					$	(10)					$	(34)					$	26
Exit costs			$	—					$	10					$	—					$	—					$	10
			$	34					$	46					$	(10)					$	(34)					$	36

Exit Costs

At January 1, 2022, the Company did not have an accrual for exit costs. There were $10 million of exit cost charges in 2022 related to the Company's exit of the ESN contract with the Home Office. The accrual of $10 million was included in Accrued liabilities in the Company's Consolidated Balance Sheet at December 31, 2022.

Employee Separation Costs

At January 1, 2022, the Company had an accrual of $34 million for employee separation costs. The 2022 additional charges of $36 million include severance costs for approximately 460 employees, of which 310 were direct employees and 150 were indirect employees. The adjustments of $10 million reflect reversals of accruals no longer needed. The $34 million used in

2022 reflects cash payments to severed employees. The remaining accrual of $26 million was included in Accrued liabilities in the Company’s Consolidated Balance Sheet at December 31, 2022.

2021 Charges

During 2021, the Company recorded net reorganization of business charges of $32 million, including $8 million of charges in Costs of sales and $24 million of charges in Other charges in the Company’s Consolidated Statements of Operations. Included in the aggregate $32 million were charges of $42 million for employee separation costs, partially offset by $10 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by segment:

Year ended December 31			2021
Products and Systems integration			$	25
Software and Services			7
			$	32

15. Intangible Assets and Goodwill

The Company accounts for acquisitions using purchase accounting with the results of operations for each acquiree included in the Company’s consolidated financial statements for the period subsequent to the date of acquisition.

Recent Acquisitions

On December 15, 2023, the Company acquired IPVideo Corporation ("IPVideo"), the creator of the HALO Smart Sensor, for $170 million, net of cash acquired. The transaction also includes the potential for the Company to make contingent earn-out payments of up to $15 million based on IPVideo's achievement of certain financial targets from January 1, 2024 through December 31, 2024. As of the acquisition date, the Company estimated the fair value of the contingent earn-out to be $2 million, which is included in the purchase price. In addition, the Company issued restricted stock at a fair value of $5 million to certain key employees that will be expensed over a service period of one year. The HALO Smart Sensor is a multifunctional safety and security device with built-in vape detection and air quality monitoring, gunshot detection, abnormal noise and motion detection and emergency keyword detection. This acquisition adds sensor technology to the Company's physical security portfolio. The Company recognized $109 million of goodwill, $72 million of identifiable intangible assets and $11 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $8 million of trade names, $6 million of customer relationships and $58 million of developed technology and will be amortized over a period of eight, twelve and fifteen years, respectively. The business is a part of the Products and Systems Integration segment. The purchase accounting is not yet complete and as such, the final allocation among income tax accounts, intangible assets, net liabilities and goodwill may be subject to change.

On December 14, 2022, the Company acquired Rave Mobile, a leader in mass notification and incident management, for $553 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $2 million to certain key employees that will be expensed over a service period of two years. This acquisition complements the Company's portfolio with a platform specifically designed to help organizations and public safety agencies communicate and collaborate during emergencies. The Company recognized $400 million of goodwill, $212 million of identifiable intangible assets and $59 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $9 million of trade names, $82 million of developed technology and $121 million of customer relationships and will be amortized over a period of nine, seventeen years and seventeen years, respectively. The business is a part of the Software and Services segment. The purchase accounting was completed as of the fourth quarter of 2023.

On October 25, 2022, the Company acquired Futurecom, a leading provider of radio coverage extension solutions for public safety agencies, for $30 million, net of cash acquired. Futurecom designs and manufactures radio frequency repeaters. This acquisition further expands the Company's communications network and device portfolios. The Company recognized $10 million of goodwill, $11 million of an identifiable intangible asset and $9 million of net assets. The goodwill is not deductible for tax purposes. The identifiable intangible asset was classified as developed technology and will be amortized over a period of six years. The business is a part of the Products and Systems Integration segment. The purchase accounting was completed as of the fourth quarter of 2023.

On August 8, 2022, the Company acquired Barrett Communications, a global provider of specialized radio communications, for $18 million, net of cash acquired. This acquisition complements the Company's existing radio portfolio, allowing the Company to use high frequency and very high frequency radio communications to support mission-critical operations. The Company recognized $1 million of goodwill, $3 million of identifiable intangible assets and $14 million of net assets. The identifiable intangible assets were classified as $1 million of trade names and $2 million of developed technology, both of which will be amortized over a period of seven years. The goodwill is not deductible for tax purposes. The business is part of the Products and Systems Integration segment. The purchase accounting was completed as of the third quarter of 2023.

On May 12, 2022, the Company acquired Videotec, a global provider of ruggedized video security solutions, for $23 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $4 million to certain key employees that will be expensed over a service period of one year. This acquisition extends the Company's breadth of high-performance video products, reinforcing the Company's strategy to be a global leader in video security solutions. The Company recognized $9 million of goodwill, $6 million of an identifiable intangible asset and $8 million of net assets. The goodwill is not deductible for tax purposes. The identifiable intangible asset was classified as developed technology and will be amortized over a period of four years. The business is part of the Products and Systems Integration segment. The purchase accounting was completed as of the second quarter of 2023.

On April 19, 2022, the Company acquired Calipsa, a technology leader in cloud-native advanced video analytics, for $39 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $4 million to certain key employees that will be expensed over a service period of two years. This acquisition extends the Company's intelligent analytics across video security solutions and supports the accelerating trend of enterprises using cloud technologies to enhance safety and security. The Company recognized $24 million of goodwill, $21 million of identifiable intangible assets, and $6 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $20 million of developed technology and $1 million of customer relationships that will be amortized over a period of fifteen and three years, respectively. The business is a part of the Software and Services segment. The purchase accounting was completed as of the second quarter of 2023.

On March 23, 2022, the Company acquired TETRA Ireland, the provider of Ireland's National Digital Radio Service, for $120 million, net of cash acquired. The Company was an initial shareholder of TETRA Ireland and acquired the remaining interest in the entity from the other shareholders. This acquisition expands the Company's portfolio of delivering mission-critical voice and data communications solutions to first responders and frontline workers. As a result of the acquisition, the Company recognized a $21 million gain recorded within Other income (expense) on the Company's initial minority interest. The Company recognized $47 million of goodwill, $90 million of identifiable intangible assets, and $6 million of net assets. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $83 million of customer relationships and $7 million of trade names that will be amortized over a period of twelve years and fourteen years, respectively. The business is part of the Software and Services segment. The purchase accounting was completed as of the first quarter of 2023.

On March 3, 2022, the Company acquired Ava, a global provider of cloud-native video security and analytics, for $388 million, net of cash acquired. In addition, the Company issued restricted stock and restricted stock units at a fair value of $7 million to certain key employees that will be expensed over an average service period of two years. This acquisition expands the Company's portfolio of intelligent video solutions that help to enhance safety and streamline operations. The Company recognized $267 million of goodwill, $165 million of identifiable intangible assets, and $44 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $144 million of developed technology and $21 million of customer relationships that will be amortized over a period of fourteen and two years, respectively. The business is a part of both the Products and Systems Integration segment and the Software and Services segment. The purchase accounting was completed as of the first quarter of 2023.

On December 16, 2021, the Company acquired 911 Datamaster, an NG911 data solutions provider, for $35 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $3 million to certain key employees that will be expensed over a service period of two years. This acquisition reinforces Motorola Solutions’ commitment to being a leader in command center solutions and further supports 911 call centers’ unique organizational workflows as they transition to NG911 technologies. The Company recognized $21 million of goodwill, $16 million of identifiable intangible assets and $2 million of net liabilities. The goodwill is deductible for tax purposes. The identifiable intangible assets were classified as $7 million of developed technology and $9 million of customer relationships that will be amortized over periods of nine and fourteen years, respectively. The business is a part of the Software and Services segment. The purchase accounting was completed as of the fourth quarter of 2022.

On October 29, 2021, the Company acquired Envysion, a leader in enterprise video security and business analytics, for $124 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $1 million to certain key employees that will be expensed over a service period of one year. This acquisition expands the Company's presence in the industry and reinforces the Company's strategy as a global leader in end-to-end video security solutions within Video. The Company recognized $79 million of goodwill, $37 million of identifiable intangible assets, and $8 million of net assets. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $26 million of customer relationships, $6 million of developed technology, and $5 million of trade names that will be amortized over a period of fifteen, four, and nine years, respectively. The business is a part of both the Products and Systems Integration segment and the Software and Services segment. The purchase accounting was completed as of the fourth quarter of 2022.

On July 15, 2021, the Company acquired Openpath, a cloud-based mobile access control provider for $298 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $29 million to certain key employees that will be expensed over an average service period of three years. The transaction included the potential for the Company to make earn-out payments of up to $40 million based on Openpath's achievement of certain financial targets from January 1, 2022 through December 31, 2022. The Company concluded there will be no payout related to the earn-out payments. This acquisition expands the Company's ability to combine video security and access control solutions within Video to help support enterprise customers. The Company recognized $234 million of goodwill, $73 million of identifiable intangible assets, and $9 million of net liabilities. The goodwill is not deductible for tax purposes. The identifiable intangible assets were classified as $57 million of developed technology and $16 million of customer relationships that will be amortized over a period of sixteen and two years, respectively. The business is a part of both the Products and Systems Integration segment and the Software and Services segment. The purchase accounting was completed as of the third quarter of 2022.

The results of operations for these acquisitions have been included in the Company’s Consolidated Statements of Operations subsequent to the acquisition date. The pro forma effects of these acquisitions are not significant individually or in the aggregate.

Intangible Assets

Amortized intangible assets are comprised of the following:

			2023												2022
December 31 (in millions)			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Intangible assets:
Developed technology			$	1,156					$	447					$	1,083					$	358
Patents			2						2						2						2
Customer-related			1,566						1,055						1,519						935
Other intangibles			105						70						97						64
			$	2,829					$	1,574					$	2,701					$	1,359

Amortization expense on intangible assets, which is included within Other charges in the Consolidated Statements of Operations, was $177 million, $257 million, and $236 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, future amortization expense is estimated to be $145 million in 2024, $132 million in 2025, $123 million in 2026, $113 million in 2027, and $112 million in 2028.

Amortized intangible assets, excluding goodwill, were comprised of the following by segment:

			2023												2022
December 31 (in millions)			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Products and Systems Integration			$	985					$	337					$	913					$	261
Software and Services			1,844						1,237						1,788						1,098
			$	2,829					$	1,574					$	2,701					$	1,359

Goodwill

The following table displays a rollforward of the carrying amount of goodwill, net of impairment losses, by segment from January 1, 2022 to December 31, 2023:

(in millions)			Products and Systems Integration						Software and Services						Total
Balance as of January 1, 2022			$	1,236					$	1,329					$	2,565
Goodwill acquired			227						573						800
Purchase accounting adjustments			(2)						(29)						(31)
Foreign currency translation			—						(22)						(22)
Balance as of December 31, 2022			$	1,461					$	1,851					$	3,312
Goodwill acquired			109						—						109
Purchase accounting adjustments			(2)						(29)						(31)
Foreign currency translation			—						11						11
Balance as of December 31, 2023			$	1,568					$	1,833					$	3,401

The Company conducts its annual assessment of goodwill for impairment as of the last day of the third quarter of each fiscal year. The goodwill impairment assessment is performed at the reporting unit level which is an operating segment or one level below an operating segment.

In 2023, the Company performed a qualitative assessment to determine whether it was more-likely-than-not that the fair value of each reporting unit was less than its carrying amount. In performing this qualitative assessment the Company assessed relevant events and circumstances including macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, changes in enterprise value, and entity-specific events. For fiscal year 2023, the Company concluded it was more-likely-than-not that the fair value of each reporting unit exceeded its carrying value. Therefore, a quantitative goodwill impairment test was not required and there was no impairment of goodwill in 2023.

In 2022, the Company elected to perform a quantitative assessment for each of its reporting units to determine if the fair value of each reporting unit exceeded the carrying value of the reporting unit. The Company concluded that the fair value of each reporting unit exceeded the carrying value and no goodwill impairment was required.

16. Valuation and Qualifying Accounts

The following table presents the valuation and qualifying account activity for the years ended December 31, 2023, 2022, and 2021:

			Balance at Beginning of Period						Charged to Earnings						Used						Adjustments*						Balance at End of Period
2023
Allowance for credit losses			$	61					$	29					$	(21)					$	—					$	69
2022
Allowance for credit losses			70						28						(36)						(1)						61
2021
Allowance for credit losses			75						22						(26)						(1)						70

*** Adjustments include translation adjustments