Item 1. Financial Statements

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Net sales from products			$	1,439					$	1,221					$	3,697					$	3,250
Net sales from services			934						886						2,708						2,601
Net sales			2,373						2,107						6,405						5,851
Costs of products sales			659						559						1,844						1,516
Costs of services sales			683						503						1,683						1,478
Costs of sales			1,342						1,062						3,527						2,994
Gross margin			1,031						1,045						2,878						2,857
Selling, general and administrative expenses			378						351						1,069						985
Research and development expenditures			197						183						577						545
Other charges			83						60						262						209
Operating earnings			373						451						970						1,118
Other income (expense):
Interest expense, net			(60)						(56)						(171)						(154)
Gain on sales of investments and businesses, net			1						—						3						—
Other, net			19						10						50						70
Total other expense			(40)						(46)						(118)						(84)
Net earnings before income taxes			333						405						852						1,034
Income tax expense			53						97						75						186
Net earnings			280						308						777						848
Less: Earnings attributable to non-controlling interests			1						1						3						4
Net earnings attributable to Motorola Solutions, Inc.			$	279					$	307					$	774					$	844
Earnings per common share:
Basic			$	1.67					$	1.81					$	4.62					$	4.98
Diluted			$	1.63					$	1.76					$	4.50					$	4.87
Weighted average common shares outstanding:
Basic			167.2						169.2						167.5						169.3
Diluted			171.5						174.1						171.9						173.4

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

			Three Months Ended												Nine Months Ended
(In millions)			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Net earnings			$	280					$	308					$	777					$	848
Foreign currency translation adjustments			(162)						(44)						(317)						(19)
Defined benefit plans			15						16						58						49
Total other comprehensive income (loss), net of tax			(147)						(28)						(259)						30
Comprehensive income			133						280						518						878
Less: Earnings attributable to non-controlling interests			1						1						3						4
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders			$	132					$	279					$	515					$	874

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except par value)			October 1, 2022						December 31, 2021
ASSETS
Cash and cash equivalents			$	822					$	1,874
Accounts receivable, net			1,368						1,386
Contract assets			1,033						1,105
Inventories, net			1,157						788
Other current assets			327						259
Total current assets			4,707						5,412
Property, plant and equipment, net			866						1,042
Operating lease assets			338						382
Investments			146						209
Deferred income taxes			988						916
Goodwill			2,851						2,565
Intangible assets, net			1,177						1,105
Other assets			552						558
Total assets			$	11,625					$	12,189
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current portion of long-term debt			$	1					$	5
Accounts payable			885						851
Contract liabilities			1,549						1,650
Accrued liabilities			1,333						1,557
Total current liabilities			3,768						4,063
Long-term debt			6,012						5,688
Operating lease liabilities			302						313
Other liabilities			1,937						2,148
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: 10/1/22—168.6; 12/31/21—169.6
Outstanding shares: 10/1/22—167.5; 12/31/21—168.7
Additional paid-in capital			1,239						987
Retained earnings			989						1,350
Accumulated other comprehensive loss			(2,638)						(2,379)
Total Motorola Solutions, Inc. stockholders’ equity (deficit)			(408)						(40)
Non-controlling interests			14						17
Total stockholders’ equity (deficit)			(394)						(23)
Total liabilities and stockholders’ equity (deficit)			$	11,625					$	12,189

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)

(In millions, except per share data)			Shares						Common Stock and Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings						Noncontrolling Interests
Balance as of December 31, 2021			169.6						$	989					$	(2,379)					$	1,350					$	17
Net earnings																					267						1
Other comprehensive loss															(5)
Issuance of common stock and stock options exercised			1.2						50
Share repurchase program			(2.2)																		(493)
Share-based compensation expenses									37
Dividends declared $0.79 per share																					(132)
ASU 2020-06 modified retrospective adoption									(10)												10
Balance as of April 2, 2022			168.6						$	1,066					$	(2,384)					$	1,002					$	18
Net earnings																					228						1
Other comprehensive loss															(107)
Issuance of common stock and stock options exercised									2
Share repurchase program			(0.7)																		(162)
Share-based compensation expenses									44
Dividends declared $0.79 per share																					(132)
Dividends paid to non-controlling interest on subsidiary common stock																											(6)
Balance as of July 2, 2022			167.9						$	1,112					$	(2,491)					$	936					$	13
Net earnings																					279						1
Other comprehensive loss															(147)
Issuance of common stock and stock options exercised			1.1						84
Share repurchase program			(0.4)																		(94)
Share-based compensation expenses									45
Dividends declared $0.79 per share																					(132)
Balance as of October 1, 2022			168.6						$	1,241					$	(2,638)					$	989					$	14

(In millions, except per share data)			Shares						Common Stock and Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings						Noncontrolling Interests
Balance as of December 31, 2020			170.2						$	761					$	(2,446)					$	1,127					$	17
Net earnings																					244						1
Other comprehensive income															36
Issuance of common stock and stock options exercised			1.4						44
Share repurchase program			(1.0)																		(170)
Share-based compensation expenses									29
Dividends declared $0.71 per share																					(121)
Balance as of April 3, 2021			170.6						$	834					$	(2,410)					$	1,080					$	18
Net earnings																					293						1
Other comprehensive income															22
Issuance of common stock and stock options exercised			0.2						14
Share repurchase program			(0.5)																		(102)
Share-based compensation expenses									31
Dividends declared $0.71 per share																					(120)
Dividends paid to non-controlling interest on subsidiary common stock																											(5)
Balance as of July 3, 2021			170.3						$	879					$	(2,388)					$	1,151					$	14
Net earnings																					307						1
Other comprehensive loss															(28)
Issuance of common stock and stock options exercised			0.3						39
Share repurchase program			(0.6)																		(137)
Share-based compensation expenses									34
Dividends declared $0.71 per share																					(120)
Balance as of October 2, 2021			170.0						$	952					$	(2,416)					$	1,201					$	15

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Condensed Consolidated Statements of Cash Flows (Unaudited)

			Nine Months Ended
(In millions)			October 1, 2022						October 2, 2021
Operating
Net earnings			$	777					$	848
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization			331						325
Non-cash other charges (income)			20						(6)
Loss on ESN fixed asset impairment			147						—
Share-based compensation expenses			126						94
Gain on sales of investments and businesses, net			(3)						—
Loss 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			5						189
Inventories			(360)						(99)
Other current assets and contract assets			(38)						(136)
Accounts payable, accrued liabilities and contract liabilities			(183)						(39)
Other assets and liabilities			(66)						(62)
Deferred income taxes			(212)						2
Net cash provided by operating activities			550						1,134
Investing
Acquisitions and investments, net			(590)						(360)
Proceeds from sales of investments and businesses, net			38						4
Capital expenditures			(183)						(175)
Proceeds from sales of property, plant and equipment			—						6
Net cash used for investing activities			(735)						(525)
Financing
Net proceeds from issuance of debt			595						844
Repayments of debt			(283)						(351)
Revolving credit facility renewal fees			—						(7)
Issuances of common stock			137						99
Purchases of common stock			(749)						(397)
Payments of dividends			(398)						(362)
Payments of dividends to non-controlling interests			(6)						(5)
Net cash used for financing activities			(704)						(179)
Effect of exchange rate changes on total cash and cash equivalents			(163)						(31)
Net increase (decrease) in total cash and cash equivalents			(1,052)						399
Cash and cash equivalents, beginning of period			1,874						1,254
Cash and cash equivalents, end of period			$	822					$	1,653
Supplemental Cash Flow Information
Cash paid during the period for:
Interest paid			$	157					$	155
Income and withholding taxes, net of refunds			$	270					$	230

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

			INDEX FOR NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
						Page No.
Note 1			Basis of Presentation			8
Note 2			Revenue from Contracts with Customers			10
Note 3			Leases			12
Note 4			Other Financial Data			13
Note 5			Debt and Credit Facilities			19
Note 6			Risk Management			20
Note 7			Income Taxes			21
Note 8			Retirement and Other Employee Benefits			22
Note 9			Share-Based Compensation Plans			22
Note 10			Fair Value Measurements			23
Note 11			Sales of Receivables			23
Note 12			Commitments and Contingencies			24
Note 13			Segment Information			25
Note 14			Reorganization of Business			25
Note 15			Intangible Assets and Goodwill			26

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in millions, except as noted)

**1.**Basis of Presentation

The condensed consolidated financial statements as of October 1, 2022 and for the three and nine months ended October 1, 2022 and October 2, 2021 include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to state fairly the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholders' Equity (Deficit), and Statements of Cash Flows of Motorola Solutions, Inc. (“Motorola Solutions” or the “Company”) for all periods presented.

The Company operates on a 52-week fiscal year, with each fiscal year ending on December 31. With respect to each fiscal quarter, the Company operates on a 13-week fiscal quarter, with all fiscal quarters ending on a Saturday.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2021 (the "Form 10-K"). The results of operations for the three and nine months ended October 1, 2022 are not necessarily indicative of the operating results to be expected for the full year.

The preparation of financial statements in conformity with U.S. 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.

Business Overview

The Company reports net sales in the following three major products and services (which the Company refers to as “technologies” in this Quarterly Report on Form 10-Q (this “Form 10-Q”)): Land Mobile Radio Communications (“LMR” or “LMR Communications”), Video Security and Access Control ("Video"), and Command Center Software.

• LMR Communications: Infrastructure, devices (two-way radio and broadband, including both for public safety and Professional Commercial Radio ("PCR")) and software that enable communications, inclusive of installation and integration, backed by services, to assure availability, security and resiliency.

• Video Security and Access Control: Cameras (fixed, body-worn, in-vehicle), access control, infrastructure, video management, software and artificial intelligence-enabled analytics that enable visibility “on scene” and bring attention to what’s important.

• Command Center Software: Software suite that enables collaboration and seamless information sharing through the public safety workflow from "911 call to case closure."

Recent Acquisitions

Subsequent to quarter end, 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 radio network and device portfolios. The business is a part 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 period 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 to be a global leader in end-to-end video security solutions within Video. 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. The transaction also includes the potential for the Company to make earn-out payments based on Openpath's achievement of certain financial targets from January 1, 2022 through December 31, 2022. 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 September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 amendments are effective for all entities for fiscal years beginning after December 15, 2022 on a retrospective basis, including interim periods within those fiscal years, except for the requirement to disclose rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. Early adoption is permitted upon issuance of the update. The Company is continuing to evaluate the impact of the adoption of this ASU on its financial statements and disclosures.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity," which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments. The new guidance removes the separation models for convertible debt with a cash conversion feature or a beneficial conversion feature. In addition, the new standard requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The Company adopted ASU No. 2020-06 on January 1, 2022, using the modified retrospective method of adoption. As a result of the adoption of this ASU, the Company's $1 billion of 1.75% senior convertible notes due 2024 issued to Silver Lake Partners (the "Senior Convertible Notes") are accounted as a single liability measured at its amortized cost, given the embedded conversion feature does not require bifurcation and recognition as a derivative. Upon adoption of this ASU, amounts previously recognized in additional paid-in capital from the original embedded conversion feature of $10 million were reclassified to retained earnings. The Company uses the if-converted method as required under ASU No. 2020-06 to determine the dilutive effect of the convertible instrument. Refer to Note 4, "Other Financial Data" to our condensed consolidated financial statements included in this Part I, Item 1 of this Form 10-Q for the effect of the Senior Convertible Notes on diluted earnings per common share.

In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which requires companies to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a business combination in accordance with ASC Topic 606. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 results in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. The ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted this ASU as of January 1, 2022 on a prospective basis and the adoption of this standard did not have a material impact on the Company's financial statements and

disclosures. The Company anticipates that this adoption will generally result in the Company recognizing larger contract liabilities in connection with business combinations.

In November 2021, the FASB issued ASU No. 2021-10, "Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance." This ASU requires disclosures to increase the transparency of transactions with a governmental entity accounted for by applying a grant or contribution accounting model by analogy, including disclosures around: (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The ASU was effective for the Company on January 1, 2022, including interim periods, with early adoption permitted. The Company adopted this ASU as of January 1, 2022 on a prospective basis, and the adoption of this standard did not have a material impact on the Company's financial statements and disclosures.

2. Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes the disaggregation of the Company's revenue by segment, region, major products and services and customer type for the three and nine months ended October 1, 2022 and October 2, 2021, consistent with the information reviewed by the Company's chief operating decision maker for evaluating the financial performance of the Company's reportable segments:

			Three Months Ended
			October 1, 2022																		October 2, 2021
(In millions)			Products and Systems Integration						Software and Services						Total						Products and Systems Integration						Software and Services						Total
Regions:
North America			$	1,166					$	521					$	1,687					$	992					$	457					$	1,449
International			363						323						686						333						325						658
			$	1,529					$	844					$	2,373					$	1,325					$	782					$	2,107
Major Products and Services:
LMR Communications			$	1,243					$	569					$	1,812					$	1,111					$	547					$	1,658
Video Security and Access Control			286						133						419						214						102						316
Command Center Software			—						142						142						—						133						133
			$	1,529					$	844					$	2,373					$	1,325					$	782					$	2,107
Customer Types:
Direct			$	902					$	769					$	1,671					$	838					$	703					$	1,541
Indirect			627						75						702						487						79						566
			$	1,529					$	844					$	2,373					$	1,325					$	782					$	2,107

			Nine Months Ended
			October 1, 2022																		October 2, 2021
(In millions)			Products and Systems Integration						Software and Services						Total						Products and Systems Integration						Software and Services						Total
Regions:
North America			$	2,961					$	1,514					$	4,475					$	2,603					$	1,343					$	3,946
International			957						973						1,930						935						970						1,905
			$	3,918					$	2,487					$	6,405					$	3,538					$	2,313					$	5,851
Major Products and Services:
LMR Communications			$	3,190					$	1,684					$	4,874					$	2,948					$	1,642					$	4,590
Video Security and Access Control			728						368						1,096						590						284						874
Command Center Software			—						435						435						—						387						387
			$	3,918					$	2,487					$	6,405					$	3,538					$	2,313					$	5,851
Customer Types:
Direct			$	2,271					$	2,259					$	4,530					$	2,148					$	2,099					$	4,247
Indirect			1,647						228						1,875						1,390						214						1,604
			$	3,918					$	2,487					$	6,405					$	3,538					$	2,313					$	5,851

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 values associated with remaining performance obligations which were not yet satisfied as of October 1, 2022 was $9.1 billion. A total of $4.8 billion was from Products and Systems Integration performance obligations that were not yet satisfied as of October 1, 2022, of which $2.9 billion is expected to be recognized in the next twelve months. The remaining amounts will generally be satisfied over time as systems are implemented. A total of $4.3 billion was from Software and Services performance obligations that were not yet satisfied as of October 1, 2022. 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 service contracts, its disclosure of the remaining performance obligations that are unsatisfied assumes the contract term is limited until renewal. The Company expects to recognize $1.4 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.

Contract Balances

(In millions)			October 1, 2022						December 31, 2021
Accounts receivable, net			$	1,368					$	1,386
Contract assets			1,033						1,105
Contract liabilities			1,549						1,650
Non-current contract liabilities			327						306

Revenue recognized during the three months ended October 1, 2022 which was previously included in Contract liabilities as of July 2, 2022 was $437 million, compared to $472 million of revenue recognized during the three months ended October 2, 2021 which was previously included in Contract liabilities as of July 3, 2021. Revenue recognized during the nine months ended October 1, 2022 which was previously included in Contract liabilities as of December 31, 2021 was $939 million, compared to $946 million recognized during the nine months ended October 2, 2021 which was previously included in Contract liabilities as of December 31, 2020. The Company reversed $3 million of revenue during the three months ended October 1, 2022 related to performance obligations satisfied, or partially satisfied, in previous periods, compared to $2 million of reversals for the three months ended October 2, 2021, primarily driven by changes in the estimates of progress on system contracts. Revenue of $23 million was reversed during the nine months ended October 1, 2022 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 $15 million of reversals for the nine months ended October 2, 2021.

There were no material expected credit losses recorded on contract assets during each of the three and nine months ended October 1, 2022 and October 2, 2021.

Contract Cost Balances

(In millions)			October 1, 2022						December 31, 2021
Current contract cost assets			$	52					$	30
Non-current contract cost assets			120						124

Amortization of non-current contract cost assets was $14 million and $41 million for the three and nine months ended October 1, 2022, respectively, and $12 million and $37 million for the three and nine months ended October 2, 2021, respectively.

3. Leases

Components of Lease Expense

			Three Months Ended												Nine Months Ended
(in millions)			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Lease expense:
Operating lease cost			$	32					$	34					$	98					$	101
Finance lease cost
Amortization of right-of-use assets			$	1					$	2					$	5					$	8
Short-term lease cost			$	—					$	—					$	1					$	2
Variable cost			9						9						26						27
Sublease income			(1)						(2)						(4)						(4)
Net lease expense			$	41					$	43					$	126					$	134

Lease Assets and Liabilities

(in millions)						Statement Line Classification						October 1, 2022						December 31, 2021
Assets:
Operating lease assets						Operating lease assets						$	338					$	382
Finance lease assets						Property, plant and equipment, net						10						16
												$	348					$	398
Current liabilities:
Operating lease liabilities						Accrued liabilities						$	77					$	124
Finance lease liabilities						Current portion of long-term debt						1						4
												$	78					$	128
Non-current liabilities:
Operating lease liabilities						Operating lease liabilities						$	302					$	313
												$	302					$	313

Other Information Related to Leases

			Nine Months Ended
(in millions)			October 1, 2022						October 2, 2021
Supplemental cash flow information:
Net cash used for operating activities related to operating leases			$	124					$	124
Net cash used for financing activities related to finance leases			4						9
Assets obtained in exchange for lease liabilities:
Operating leases			$	77					$	31

The increase in assets obtained in exchange for lease liabilities for the nine months ended October 1, 2022 compared to the nine months ended October 2, 2021 was primarily due to $34 million of additional leases acquired in connection with the Company's acquisition of TETRA Ireland on March 23, 2022.

			October 1, 2022						December 31, 2021
Weighted average remaining lease terms (years):
Operating leases			6						6
Finance leases			1						1
Weighted average discount rate:
Operating leases			3.13		%				3.11		%
Finance leases			3.84		%				3.99		%

Future Lease Payments

			October 1, 2022
(in millions)			Operating Leases						Finance Leases						Total
Remainder of 2022			$	18					$	—					$	18
2023			91						1						92
2024			77						—						77
2025			63						—						63
2026			50						—						50
Thereafter			118						—						118
Total lease payments			$	417					$	1					$	418
Less: Interest			38						—						38
Present value of lease liabilities			$	379					$	1					$	380

4. Other Financial Data

Statements of Operations Information

Other Charges

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

			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Other charges:
Intangibles amortization (Note 15)			$	63					$	56					$	194					$	172
Legal settlements			12						—						23						3
Operating lease asset impairments			4						—						16						7
Acquisition-related transaction fees			2						2						16						6
Reorganization of business (Note 14)			2						2						14						22
Fixed asset impairments			1						—						12						—
Gain on Hytera legal settlement			—						—						(13)						—
Other			(1)						—						—						(1)
			$	83					$	60					$	262					$	209

In February 2022, the Company recognized a gain of $13 million related to the recovery, through legal proceedings to seize and liquidate assets, of financial receivables owed to the Company by the bankruptcy estate of the two U.S. subsidiaries of Hytera Communications Corporation Limited of Shenzhen, China. Refer also to "Hytera Bankruptcy Proceedings" in Note 12, "Commitments and Contingencies" to our condensed consolidated financial statements included in this Part I, Item 1 of this Form 10-Q for additional information related to these proceedings.

Other Income (Expense)

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

			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Interest income (expense), net:
Interest expense			$	(62)					$	(58)					$	(179)					$	(160)
Interest income			2						2						8						6
			$	(60)					$	(56)					$	(171)					(154)
Other, net:
Net periodic pension and postretirement benefit (Note 8)			$	28					$	31					$	91					$	91
Loss from the extinguishment of long-term debt (Note 5)			—						—						(6)						(18)
Investment impairments			—						—						(1)						—
Foreign currency gain			45						5						95						13
Loss on derivative instruments (Note 6)			(54)						(10)						(111)						(19)
Gain (loss) on equity method investments			—						1						(2)						5
Fair value adjustments to equity investments			(5)						(18)						(35)						(5)
Gain on TETRA Ireland equity method investment			—						—						21						—
Other			5						1						(2)						3
			$	19					$	10					$	50					$	70

The Company previously held a minority ownership interest in TETRA Ireland, and, upon acquisition of 100% of the equity of TETRA Ireland on March 23, 2022, recorded a $21 million gain to adjust the Company's initial equity method investment to fair value during the nine months ended October 1, 2022. Refer to Note 15, "Intangible Assets and Goodwill" to the Company's condensed consolidated financial statements included in this Part I, Item 1 of this Form 10-Q for further information related to this acquisition.

Earnings Per Common Share

The computation of basic and diluted earnings per common share is as follows:

			Amounts attributable to Motorola Solutions, Inc. common stockholders
			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Basic earnings per common share:
Earnings			$	279					$	307					$	774					$	844
Weighted average common shares outstanding			167.2						169.2						167.5						169.3
Per share amount			$	1.67					$	1.81					$	4.62					$	4.98
Diluted earnings per common share:
Earnings			$	279					$	307					$	774					$	844
Weighted average common shares outstanding			167.2						169.2						167.5						169.3
Add effect of dilutive securities:
Share-based awards			3.6						4.3						3.8						3.9
1.75% senior convertible notes			0.7						0.6						0.6						0.2
Diluted weighted average common shares outstanding			171.5						174.1						171.9						173.4
Per share amount			$	1.63					$	1.76					$	4.50					$	4.87

In the computation of diluted earnings per common share for the three months ended October 1, 2022, the assumed exercise of 0.4 million options, including 0.2 million subject to market based contingent option agreements, were excluded from the computation of diluted earnings per common share because their inclusion would have been antidilutive. In the computation of diluted earnings per common share for the nine months ended October 1, 2022, 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.

In the computation of diluted earnings per common share for the three months ended October 2, 2021, no shares were considered anti-dilutive. In the computation of diluted earnings per common share for the nine months ended October 2, 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 October 1, 2022, the Company had $1.0 billion of the Senior Convertible Notes outstanding, which mature on September 15, 2024. The notes are convertible based on a conversion rate of 4.9140 per $1,000 principal amount (which is equal to an initial conversion price of $203.50 per share), adjusted for dividends declared through the date of settlement. The notes became fully convertible as of September 5, 2021, when the average stock price exceeded the contractual conversion price, 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 settled 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, which first occurred for the quarter ended October 2, 2021. 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 October 1, 2022. The value by which the Senior Convertible Notes exceeded their principal amount if converted as of October 1, 2022 was $189 million.

Balance Sheet Information

Accounts Receivable, Net

Accounts receivable, net, consists of the following:

			October 1, 2022						December 31, 2021
Accounts receivable			$	1,433					$	1,456
Less allowance for credit losses			(65)						(70)
			$	1,368					$	1,386

Inventories, Net

Inventories, net, consist of the following:

			October 1, 2022						December 31, 2021
Finished goods			$	352					$	268
Work-in-process and production materials			924						643
			1,276						911
Less inventory reserves			(119)						(123)
			$	1,157					$	788

Other Current Assets

Other current assets consist of the following:

			October 1, 2022						December 31, 2021
Current contract cost assets (Note 2)			$	52					$	30
Tax-related deposits			35						41
Other			240						188
			$	327					$	259

Property, Plant and Equipment, Net

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

			October 1, 2022						December 31, 2021
Land			$	5					$	5
Leasehold improvements			445						474
Machinery and equipment			2,232						2,439
			2,682						2,918
Less accumulated depreciation			(1,816)						(1,876)
			$	866					$	1,042

During the third quarter of 2022, the Company began negotiations with the Home Office of the United Kingdom (the "Home Office") regarding an early exit by the Company from the Emergency Services Network ("ESN") communications systems contract, inclusive of twelve months of transition services. As a result of the negotiations, the Company determined that the future service potential of the asset is limited, based on the Company's intention to terminate the contract in advance of the contracted service term. During the three months ended October 1, 2022, the Company recorded a fixed asset impairment loss of $147 million related to assets constructed and used in the deployment of the ESN service contract with the Home Office based on its current 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 recognized impairment loss represents the amount by which the carrying amount of the asset group exceeded the fair value as of October 1, 2022, under a measurement of discounted cash flows. The impairment loss was recorded in the Software and Services segment within cost of sales in the Condensed Consolidated Statements of Operations.

Depreciation expense for the three months ended October 1, 2022 and October 2, 2021 was $45 million and $49 million, respectively. Depreciation expense for the nine months ended October 1, 2022 and October 2, 2021 was $137 million and $153 million, respectively.

Investments

Investments consist of the following:

			October 1, 2022						December 31, 2021
Common stock			$	23					$	69
Strategic investments			43						35
Company-owned life insurance policies			67						81
Equity method investments			13						24
			$	146					$	209

On July 16, 2021, the Company paid $50 million for equity securities of NewHold Investment Corp. ("NHIC"), a special purpose acquisition company (SPAC) that completed a business combination with Evolv Technologies, Inc. After the business combination, NHIC was renamed “Evolv Technologies Holdings, Inc.” (together with its subsidiaries, “Evolv”). During the nine months ended October 1, 2022, the Company recognized a loss of $14 million in Other income (expense) within the Condensed Consolidated Statements of Operations related to a decrease in the fair value of the investment.

During the nine months ended October 1, 2022, the Company sold $12 million of equity securities and recognized a loss of $10 million in Other income (expense) within the Condensed Consolidated Statements of Operations, related to a decrease in the fair value related to an investment in a business operating in the critical infrastructure market.

Other Assets

Other assets consist of the following:

			October 1, 2022						December 31, 2021
Defined benefit plan assets			$	370					$	365
Non-current contract cost assets (Note 2)			120						124
Other			62						69
			$	552					$	558

Accrued Liabilities

Accrued liabilities consist of the following:

			October 1, 2022						December 31, 2021
Compensation			$	257					$	360
Tax liabilities			176						183
Dividend payable			132						134
Trade liabilities			162						235
Operating lease liabilities (Note 3)			77						124
Other			529						521
			$	1,333					$	1,557

Other Liabilities

Other liabilities consist of the following:

			October 1, 2022						December 31, 2021
Defined benefit plans			$	1,219					$	1,390
Non-current contract liabilities (Note 2)			327						306
Unrecognized tax benefits (Note 7)			35						36
Deferred income taxes (Note 7)			129						183
Environmental reserve			108						108
Other			119						125
			$	1,937					$	2,148

Stockholders’ Equity (Deficit)

Share Repurchase Program: During the three and nine months ended October 1, 2022, the Company paid an aggregate of $94 million, and $749 million, including transaction costs, to repurchase approximately 0.4 million and 3.3 million shares at an average price of $236.46 and $224.35 per share, respectively. As of October 1, 2022, the Company had $1.4 billion of authority available for future repurchases.

Payment of Dividends: During the three months ended October 1, 2022 and October 2, 2021, the Company paid $132 million and $120 million, respectively, in cash dividends to holders of its common stock. During the nine months ended October 1, 2022 and October 2, 2021, the Company paid $398 and $362 million, respectively, in cash dividends to holders of its common stock. Subsequent to the quarter, the Company paid an additional $132 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 Condensed Consolidated Statements of Operations during the three and nine months ended October 1, 2022 and October 2, 2021:

			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Foreign Currency Translation Adjustments:
Balance at beginning of period			$	(539)					$	(335)					$	(384)					$	(360)
Other comprehensive income (loss) before reclassification adjustment			(153)						(47)						(304)						(24)
Tax benefit (expense)			(9)						3						(13)						5
Other comprehensive income (loss), net of tax			(162)						(44)						(317)						(19)
Balance at end of period			$	(701)					$	(379)					$	(701)					$	(379)
Defined Benefit Plans:
Balance at beginning of period			$	(1,952)					$	(2,053)					$	(1,995)					$	(2,086)
Other comprehensive income before reclassification adjustment			—						—						17						—
Tax expense			—						—						(3)						—
Other comprehensive income before reclassification adjustment, net of tax			—						—						14						—
Reclassification adjustment - Actuarial net losses into Other income (Note 8)			20						22						60						65
Reclassification adjustment - Prior service benefits into Other income (Note 8)			(1)						(2)						(3)						(6)
Tax expense			(4)						(4)						(13)						(10)
Reclassification adjustment into Net earnings, net of tax			15						16						44						49
Other comprehensive income, net of tax			15						16						58						49
Balance at end of period			$	(1,937)					$	(2,037)					$	(1,937)					$	(2,037)
Total Accumulated other comprehensive loss			$	(2,638)					$	(2,416)					$	(2,638)					$	(2,416)

5. Debt and Credit Facilities

			October 1, 2022						December 31, 2021
4.0% senior notes due 2024			$	312					$	585
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			694						693
6.5% debentures due 2028			24						24
4.6% senior notes due 2029			803						803
2.3% senior notes due 2030			893						893
2.75% senior notes due 2031			844						844
5.6% senior notes due 2032			595						—
6.625% senior notes due 2037			38						38
5.5% senior notes due 2044			396						396
5.22% debentures due 2097			92						92
Other debt			1						5
			6,014						5,695
Adjustments for unamortized gains on interest rate swap terminations			(1)						(2)
Less: current portion			(1)						(5)
Long-term debt			$	6,012					$	5,688

On May 31, 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 Condensed Consolidated Statements of Operations.

As of October 1, 2022, 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. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the London Interbank Offered Rate ("LIBOR"), at the Company's option. The 2021 Motorola Solutions Credit Agreement includes provisions allowing the Company to replace LIBOR with a replacement benchmark rate in the future under certain conditions defined in the agreement. 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 October 1, 2022.

The Company has an unsecured commercial paper program, backed by the 2021 Motorola Solutions Credit Agreement, 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 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 October 1, 2022 the Company had no outstanding debt under the commercial paper program.

6. Risk Management

Foreign Currency Risk

The Company had outstanding foreign exchange contracts with notional amounts totaling $887 million and $1.1 billion for the periods ended October 1, 2022 and December 31, 2021, 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 five largest net notional amounts of the positions to buy or sell foreign currency as of October 1, 2022, and the corresponding positions as of December 31, 2021:

			Notional Amount
Net Buy (Sell) by Currency			October 1, 2022						December 31, 2021
British pound			$	202					$	128
Euro			181						164
Australian dollar			(101)						(76)
Chinese renminbi			(67)						(89)
Brazilian real			(34)						(23)

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 October 1, 2022, all of the counterparties had investment grade credit ratings. As of October 1, 2022, the Company had $17 million of exposure to aggregate credit risk with all counterparties.

The following tables summarize the fair values and locations in the Condensed Consolidated Balance Sheets of all derivative financial instruments held by the Company as of October 1, 2022 and December 31, 2021:

			Fair Values of Derivative Instruments
October 1, 2022			Other Current Assets						Accrued Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts			$	11					$	—
Derivatives not designated as hedging instruments:
Foreign exchange contracts			6						32
Total derivatives			$	17					$	32

			Fair Values of Derivative Instruments
December 31, 2021			Other Current Assets						Accrued Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts			$	5					$	—
Derivatives not designated as hedging instruments:
Foreign exchange contracts			2						5
Total derivatives			$	7					$	5

The following table summarizes the effect of derivatives on the Company's condensed consolidated financial statements for the three and nine months ended October 1, 2022 and October 2, 2021:

			Financial Statement Location			Three Months Ended												Nine Months Ended
Foreign Exchange Contracts			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Effective portion			Accumulated other comprehensive gain (loss)			$	12					$	7					$	24					$	10
Forward points recognized			Other income (expense)			1						—						1						1
Undesignated derivatives recognized			Other income (expense)			(54)						(10)						(111)						(19)

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 investments 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 October 1, 2022, the Company had €100 million of net investment hedges in certain Euro functional subsidiaries and £15 million of net investment hedges in a British pound functional subsidiary.

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 excluded components will be amortized on a straight line basis and recognized through interest expense. During the nine months ended October 1, 2022 and October 2, 2021, the Company amortized $1 million of income from the excluded components through interest expense, respectively.

7. Income Taxes

At the end of each interim reporting period, the Company makes an estimate of its annual effective income tax rate. Tax expense in interim periods is calculated at the estimated annual effective tax rate plus or minus the tax effects of items of income and expense that are discrete to the period. The estimate used in providing for income taxes on a year-to-date basis may change in subsequent interim periods.

In January 2022, the Company completed an intra-group transfer of certain intellectual property ("IP") rights from non-U.S. wholly-owned subsidiaries of the Company to the United States in order to better align with current and future business operations. The transfer resulted in a step-up in tax basis driven by the fair value of the transferred IP rights, resulting in a one-time net deferred benefit of $77 million in the quarter ended April 2, 2022. The determination of the fair value involves judgment on future revenue growth, operating margins and discount rates. The Company expects to realize the net deferred tax asset recorded as a result of the IP transfer and will periodically assess such realizability. The tax-deductible amortization related to the transferred IP rights will be recognized over a 15-year period.

The following table provides details of income taxes:

			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Net earnings before income taxes			$	333					$	405					$	852					$	1,034
Income tax expense			53						97						75						186
Effective tax rate			16		%				24		%				9		%				18		%

The effective tax rate for the three months ended October 1, 2022 of 16% was lower than the U.S. federal statutory tax rate of 21% primarily due to higher excess tax benefits of share-based compensation. The effective tax rate for the nine months ended October 1, 2022 of 9% was lower than the U.S. federal statutory tax rate of 21% primarily due to a net deferred tax benefit as a result of an intra-group transfer of certain IP rights (as described above) and the excess tax benefits of share-based compensation.

The effective tax rate for the three months ended October 2, 2021 of 24% was higher than the U.S. federal statutory tax rate of 21% due to state tax expense, offset by the excess tax benefits of share-based compensation. The effective tax rate for the nine months ended October 2, 2021 of 18% was lower than the U.S. federal statutory tax rate of 21% primarily due to a tax benefit related to a partial release of $33 million of a valuation allowance recorded on the U.S. foreign tax credit carryforward and the excess tax benefits of share-based compensation.

The effective tax rate for the three months ended October 1, 2022 of 16% was lower than the effective tax rate for the three months ended October 2, 2021 of 24%, primarily due to higher excess tax benefits of share-based compensation in 2022. The effective tax rate for the nine months ended October 1, 2022 of 9% was lower than the effective tax rate for the nine months ended October 2, 2021 of 18%, primarily due to a net deferred tax benefit as a result of an intra-group transfer of certain IP rights

(as described above) and higher excess tax benefits of share-based compensation in 2022, offset by a tax benefit due to a partial release of a valuation allowance in 2021.

8. Retirement and Other Employee Benefits

Pension and Postretirement Health Care Benefits Plans

The net periodic benefits for Pension and Postretirement Health Care Benefits Plans were as follows:

			U.S. Pension Benefit Plans												Non-U.S. Pension Benefit Plans												Postretirement Health Care Benefits Plan
Three Months Ended			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Service cost			$	—					$	—					$	1					$	—					$	—					$	—
Interest cost			32						29						8						5						—						—
Expected return on plan assets			(64)						(59)						(26)						(25)						(3)						(3)
Amortization of:
Unrecognized net loss			15						17						4						4						1						1
Unrecognized prior service benefit			—						—						(1)						(1)						—						(1)
Net periodic pension benefits			$	(17)					$	(13)					$	(14)					$	(17)					$	(2)					$	(3)

			U.S. Pension Benefit Plans												Non-U.S. Pension Benefit Plans												Postretirement Health Care Benefits Plan
Nine Months Ended			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Service cost			$	—					$	—					$	3					$	1					$	—					$	—
Interest cost			96						87						24						16						1						1
Expected return on plan assets			(191)						(177)						(77)						(75)						(9)						(8)
Amortization of:
Unrecognized net loss			46						51						11						12						3						2
Unrecognized prior service benefit			—						—						(3)						(2)						—						(4)
Net periodic pension benefits			$	(49)					$	(39)					$	(42)					$	(48)					$	(5)					$	(9)

9. Share-Based Compensation Plans

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

			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Share-based compensation expense included in:
Costs of sales			$	7					$	4					$	20					$	12
Selling, general and administrative expenses			26						22						72						58
Research and development expenditures			12						8						34						24
Share-based compensation expense included in Operating earnings			45						34						126						94
Tax benefit			(9)						(6)						(26)						(14)
Share-based compensation expense, net of tax			$	36					$	28					$	100					$	80
Decrease in basic earnings per share			$	(0.22)					$	(0.17)					$	(0.60)					$	(0.47)
Decrease in diluted earnings per share			$	(0.21)					$	(0.16)					$	(0.58)					$	(0.46)

During the nine months ended October 1, 2022, the Company granted 0.7 million restricted stock units (RSUs), 0.1 million performance stock units (PSUs) and 0.1 million market stock units (MSUs) with an aggregate grant-date fair value of $156

million, $17 million and $10 million, respectively, and 0.1 million stock options and 0.1 million performance options (POs) with an aggregate grant-date fair value of $8 million and $10 million, respectively. The share-based compensation expense will generally be recognized over the vesting period of three years.

During the nine months ended October 1, 2022, the Company granted 0.1 million shares of restricted stock with an aggregate grant-date fair value of $10 million to certain key employees of Ava, Calipsa and Videotec in connection with the acquisitions of such entities. The share-based compensation for Ava and Calipsa will each be expensed over an average service period of two years, while the share-based compensation for Videotec will be expensed over an average service period of one year.

10. Fair Value Measurements

The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of October 1, 2022 and December 31, 2021 were as follows:

October 1, 2022			Level 1						Level 2												Total
Assets:
Foreign exchange derivative contracts			$	—					$	17											$	17
Common stock			23						—												23
Liabilities:
Foreign exchange derivative contracts			$	—					$	32											$	32

December 31, 2021			Level 1						Level 2												Total
Assets:
Foreign exchange derivative contracts			$	—					$	7											$	7
Common stock			69						—												69
Liabilities:
Foreign exchange derivative contracts			$	—					$	5											$	5

The Company had no foreign exchange derivative contracts or common stock investments in Level 3 holdings as of October 1, 2022 or December 31, 2021.

At October 1, 2022 and December 31, 2021, the Company had $237 million and $685 million, respectively, of investments in money market government and U.S. treasury funds classified (Level 1) as Cash and cash equivalents in its Condensed Consolidated Balance Sheets. The money market funds had quoted market prices that are equivalent to par.

Using quoted market prices and market interest rates, the fair value of the Company's long-term debt as of October 1, 2022 was $5.7 billion, of which the Senior Convertible Notes were $1.2 billion (Level 2). The fair value of long-term debt at December 31, 2021 was $6.2 billion (Level 2).

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

11. Sales of Receivables

Sales of Receivables

The following table summarizes the proceeds received from sales of accounts receivable and long-term receivables for the three and nine months ended October 1, 2022 and October 2, 2021:

			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Contract-specific discounting facility			$	—					$	66					$	49					$	173
Accounts receivable sales proceeds			—						15						62						23
Long-term receivables sales proceeds			42						56						64						140
Total proceeds from receivable sales			$	42					$	137					$	175					$	336

At October 1, 2022, the Company had retained servicing obligations for $860 million of long-term receivables, compared to $940 million at December 31, 2021. Servicing obligations are limited to collection activities related to the sales of accounts receivables and long-term receivables. The Company had outstanding commitments to provide long-term financing to third parties totaling $127 million at October 1, 2022, compared to $56 million at December 31, 2021.

During the nine months ended October 1, 2022, the Company completed its final draw against a cost-efficient receivables discounting facility, implemented in 2020 to neutralize the impact of increased payment terms under a renegotiated and extended long-term contract in Europe. The proceeds of the Company's receivable sales are included in Operating activities within the Company's Condensed Consolidated Statements of Cash Flows.

12. Commitments and Contingencies

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 in the Court 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. On December 17, 2020, the Court denied the Company’s motion for a permanent injunction, finding instead that Hytera must pay the Company a forward-looking reasonable royalty on products that use the Company’s stolen trade secrets. As the parties were unable to agree on a reasonable royalty rate, the Court entered an order favorable to the Company on December 15, 2021, and, consistent with the Company's requests, 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. 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.

In response to the Court's decision to award the Company $764.6 million in compensatory and punitive damages, Hytera motioned for certain equitable relief, which the Court granted on January 8, 2021, reducing the $764.6 million judgment award to $543.7 million. That same day, the Court also granted the Company’s motion for pre-judgment interest. On August 10, 2021, the Court ruled that Hytera must pay the Company $51.1 million in pre-judgment interest and $2.6 million in costs. On March 25, 2021, the Court entered rulings favorable to the Company with respect to several of the Company's post-trial motions, including the Company's motion for attorneys' fees and its motion to require Hytera to turn over certain assets in satisfaction of the Company’s judgment award. On October 15, 2021, the Court granted the Company’s request for $34.2 million in attorneys’ fees against Hytera. On September 29, 2021, the Company filed two additional motions with the Court, requesting the Court to reconsider its order denying the Company’s request for an injunction, and requesting that the Court enforce its ruling requiring Hytera to turn over certain assets in satisfaction of the Company's judgment award, or, in the alternative, hold Hytera in contempt. On July 5, 2022, the Court denied both motions.

On September 7, 2021, Hytera filed a notice of appeal of the Court’s judgment with the U.S. Court of Appeals for the Seventh Circuit (the "Court of Appeals"). The Court of Appeals dismissed the notice of appeal on February 16, 2022 after determining that such appeal was premature. On August 2, 2022, after the Court denied the motions described above on July 5, 2022, Hytera filed a renewed notice of appeal in the Court of Appeals. The Company filed its cross-appeal on August 5, 2022.

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”). The Company filed motions in the Bankruptcy Court to dismiss the bankruptcy proceedings in July 2020. On January 22, 2021, the Bankruptcy Court entered an agreed order, allowing a partial sale of Hytera's U.S. assets in the bankruptcy proceedings. The proposed sale does not include Hytera inventory accused of including the Company’s intellectual property. 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. The gain was recorded to Other charges (income) in the Company's Condensed Consolidated Statements of Operations.

13. Segment Information

Net Sales by Segment

			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Products and Systems Integration			$	1,529					$	1,325					$	3,918					$	3,538
Software and Services			844						782						2,487						2,313
			$	2,373					$	2,107					$	6,405					$	5,851

Operating Earnings by Segment

			Three Months Ended												Nine Months Ended
			October 1, 2022						October 2, 2021						October 1, 2022						October 2, 2021
Products and Systems Integration			$	303					$	224					$	460					$	440
Software and Services			70						227						510						678
Operating earnings			373						451						970						1,118
Total other expense			(40)						(46)						(118)						(84)
Earnings before income taxes			$	333					$	405					$	852					$	1,034

14. Reorganization of Business

2022 Charges

During the three months ended October 1, 2022, the Company recorded net reorganization of business charges of $14 million, including $2 million of charges in Other charges and $12 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $14 million were charges of $7 million related to employee separation costs and $10 million related to exit costs, partially offset by $3 million of reversals for accruals no longer needed.

During the nine months ended October 1, 2022, the Company recorded net reorganization of business charges of $31 million, including $14 million of charges in Other charges and $17 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $31 million were charges of $30 million related to employee separation costs and $10 million related to exit costs, partially offset by $9 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by segment:

October 1, 2022			Three Months Ended						Nine Months Ended
Products and Systems Integration			$	3					$	17
Software and Services			11						14
			$	14					$	31

Reorganization of Businesses Accruals

			January 1, 2022						Additional Charges						Adjustments						Amount Used						October 1, 2022
Employee separation costs			$	34					$	30					$	(9)					$	(27)					$	28
Exit costs			—						10						—						—						10
			$	34					$	40					$	(9)					$	(27)					$	38

Employee Separation Costs

At January 1, 2022, the Company had an accrual of $34 million for employee separation costs. The 2022 additional charges of $30 million represent severance costs for approximately 380 employees. The adjustment of $9 million reflects reversals for accruals no longer needed. The $27 million used reflects cash payments to severed employees. The remaining accrual of $28 million, which is included in Accrued liabilities in the Company’s Condensed Consolidated Balance Sheets at October 1, 2022, is expected to be paid, primarily within one year, to approximately 450 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments.

2021 Charges

During the three months ended October 2, 2021, the Company recorded net reorganization of business charges of $4 million, including $2 million of charges in Other charges and $2 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $4 million were charges of $6 million related to employee separation costs, partially offset by $2 million of reversals for accruals no longer needed.

During the nine months ended October 2, 2021, the Company recorded net reorganization of business charges of $29 million, including $22 million of charges in Other charges and $7 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $29 million were charges of $36 million related to employee separation costs, partially offset by $7 million of reversals for accruals no longer needed.

The following table displays the net charges incurred by segment:

October 2, 2021			Three Months Ended						Nine Months Ended
Products and Systems Integration			$	3					$	23
Software and Services			1						6
			$	4					$	29

15. Intangible Assets and Goodwill

Subsequent to quarter end, 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 radio network and device portfolios. The business is a part of the Products and Systems Integration segment. Due to the timing of the acquisition, the initial accounting for the acquisition is incomplete. As such, the Company is not able to disclose certain information relating to the acquisition, including the preliminary fair value of assets acquired and liabilities assumed.

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 $6 million of goodwill and $12 million of net assets. The goodwill is not deductible for tax purposes. The business is 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 assets and goodwill may be subject to change.

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 identifiable intangible assets, 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 is not yet complete and as such, the final allocation among income tax accounts, intangible assets, net assets and goodwill may be subject to change.

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 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 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 is not yet complete and as such, the final allocation among income tax accounts, net assets and goodwill may be subject to change.

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 is not yet complete and as such, the final allocation among income tax accounts, net liabilities and goodwill may be subject to change.

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 $9 million of customer relationships and $7 million of developed technology that will be amortized over a period of fourteen years and nine years, respectively. The business is a part of the Software and Services segment. The purchase accounting is not yet complete and as such, the final allocation among income tax accounts and goodwill may be subject to change.

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 to be 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 is not yet complete and as such, the final allocation among income tax accounts and goodwill may be subject to change.

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 also includes 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 estimated 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 $232 million of goodwill, $73 million of identifiable intangible assets, and $7 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.

Intangible Assets

Amortized intangible assets were comprised of the following:

			October 1, 2022												December 31, 2021
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Developed technology			$	997					$	336					$	828					$	278
Customer-related			1,299						807						1,367						836
Other intangibles			84						60						84						60
			$	2,380					$	1,203					$	2,279					$	1,174

Amortization expense on intangible assets was $63 million and $194 million for the three and nine months ended October 1, 2022, respectively. Amortization expense on intangible assets was $56 million and $172 million for the three and nine months ended October 2, 2021, respectively. As of October 1, 2022, annual amortization expense is estimated to be $255 million in 2022, $156 million in 2023, $122 million in 2024, $109 million in 2025, $101 million in 2026, and $92 million in 2027.

Amortized intangible assets were comprised of the following by segment:

			October 1, 2022												December 31, 2021
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Products and Systems Integration			$	898					$	241					$	766					$	184
Software and Services			1,482						962						1,513						990
			$	2,380					$	1,203					$	2,279					$	1,174

Goodwill

The Company performed its annual assessment of goodwill for impairment as of the last day of the third quarter. The following table displays a roll-forward of the carrying amount of goodwill by segment from January 1, 2022 to October 1, 2022:

			Products and Systems Integration						Software and Services						Total
Balance as of January 1, 2022			$	1,236					$	1,329					$	2,565
Goodwill acquired			215						143						358
Purchase accounting adjustments			4						(26)						(22)
Foreign currency			(1)						(49)						(50)
Balance as of October 1, 2022			$	1,454					$	1,397					$	2,851