Item 1. Financial Statements

Condensed Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)			Three Months Ended												Nine Months Ended
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Net sales from products			$	1,490					$	1,439					$	4,063					$	3,697
Net sales from services			1,066						934						3,066						2,708
Net sales			2,556						2,373						7,129						6,405
Costs of products sales			658						659						1,867						1,844
Costs of services sales			618						683						1,747						1,683
Costs of sales			1,276						1,342						3,614						3,527
Gross margin			1,280						1,031						3,515						2,878
Selling, general and administrative expenses			380						378						1,138						1,069
Research and development expenditures			215						197						640						577
Other charges			46						83						181						262
Operating earnings			639						373						1,556						970
Other income (expense):
Interest expense, net			(53)						(60)						(164)						(171)
Gains (losses) on sales of investments and businesses, net			(1)						1						—						3
Other, net			7						19						46						50
Total other expense			(47)						(40)						(118)						(118)
Net earnings before income taxes			592						333						1,438						852
Income tax expense			127						53						321						75
Net earnings			465						280						1,117						777
Less: Earnings attributable to non-controlling interests			1						1						4						3
Net earnings attributable to Motorola Solutions, Inc.			$	464					$	279					$	1,113					$	774
Earnings per common share:
Basic			$	2.78					$	1.67					$	6.66					$	4.62
Diluted			$	2.70					$	1.63					$	6.46					$	4.50
Weighted average common shares outstanding:
Basic			166.7						167.2						167.2						167.5
Diluted			171.7						171.5						172.2						171.9

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

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

			Three Months Ended												Nine Months Ended
(In millions)			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Net earnings			$	465					$	280					$	1,117					$	777
Foreign currency translation adjustments			(70)						(162)						(7)						(317)
Defined benefit plans			12						15						37						58
Total other comprehensive income (loss), net of tax			(58)						(147)						30						(259)
Comprehensive income			407						133						1,147						518
Less: Earnings attributable to non-controlling interests			1						1						4						3
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders			$	406					$	132					$	1,143					$	515

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

Condensed Consolidated Balance Sheets (Unaudited)

(In millions, except par value)			September 30, 2023						December 31, 2022
ASSETS
Cash and cash equivalents			$	910					$	1,325
Accounts receivable, net			1,667						1,518
Contract assets			1,092						974
Inventories, net			959						1,055
Other current assets			404						383
Total current assets			5,032						5,255
Property, plant and equipment, net			931						927
Operating lease assets			453						485
Investments			142						147
Deferred income taxes			1,047						1,036
Goodwill			3,278						3,312
Intangible assets, net			1,217						1,342
Other assets			336						310
Total assets			$	12,436					$	12,814
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt			$	1,313					$	1
Accounts payable			722						1,062
Contract liabilities			1,898						1,859
Accrued liabilities			1,355						1,638
Total current liabilities			5,288						4,560
Long-term debt			4,704						6,013
Operating lease liabilities			368						419
Other liabilities			1,700						1,691
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: 9/30/23—167.4; 12/31/22—168.5
Outstanding shares: 9/30/23—166.2; 12/31/22—167.5
Additional paid-in capital			1,539						1,306
Retained earnings			1,326						1,343
Accumulated other comprehensive loss			(2,505)						(2,535)
Total Motorola Solutions, Inc. stockholders’ equity			362						116
Non-controlling interests			14						15
Total stockholders’ equity			376						131
Total liabilities and stockholders’ equity			$	12,436					$	12,814

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

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In millions)			Shares						Common Stock and Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)						Retained Earnings						Noncontrolling Interests
Balance as of December 31, 2022			168.5						$	1,308					$	(2,535)					$	1,343					$	15
Net earnings																					278						1
Other comprehensive income															48
Issuance of common stock and stock options exercised			0.9						25
Share repurchase program			(0.5)																		(140)
Share-based compensation expenses									55
Dividends declared $0.88 per share																					(148)
Dividends paid to non-controlling interest on subsidiary common stock																											(1)
Balance as of April 1, 2023			168.9						$	1,388					$	(2,487)					$	1,333					$	15
Net earnings																					371						2
Other comprehensive income															40
Issuance of common stock and stock options exercised			0.2						10
Share repurchase program			(0.8)																		(224)
Share-based compensation expenses									53
Dividends declared $0.88 per share																					(147)
Dividends paid to non-controlling interest on subsidiary common stock																											(3)
Balance as of July 1, 2023			168.3						$	1,451					$	(2,447)					$	1,333					$	14
Net earnings																					464						1
Other comprehensive loss															(58)
Issuance of common stock and stock options exercised			0.2						38
Share repurchase program			(1.1)																		(325)
Share-based compensation expenses									52
Dividends declared $0.88 per share																					(146)
Dividends paid to non-controlling interest on subsidiary common stock																											(1)
Balance as of September 30, 2023			167.4						$	1,541					$	(2,505)					$	1,326					$	14

(In millions)			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

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

Condensed Consolidated Statements of Cash Flows (Unaudited)

			Nine Months Ended
(In millions)			September 30, 2023						October 1, 2022
Operating
Net earnings			$	1,117					$	777
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization			271						331
Non-cash other charges			8						20
Loss on ESN fixed asset impairment			—						147
Share-based compensation expenses			160						126
Gain on sales of investments and businesses, net			—						(3)
Loss from the extinguishment of long-term debt			—						6
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable			(154)						5
Inventories			94						(360)
Other current assets and contract assets			(140)						(38)
Accounts payable, accrued liabilities and contract liabilities			(534)						(183)
Other assets and liabilities			(21)						(66)
Deferred income taxes			(2)						(212)
Net cash provided by operating activities			799						550
Investing
Acquisitions and investments, net			(12)						(590)
Proceeds from sales of investments and businesses, net			12						38
Capital expenditures			(172)						(183)
Net cash used for investing activities			(172)						(735)
Financing
Net proceeds from issuance of debt			—						595
Repayments of debt			(1)						(283)
Issuances of common stock			76						137
Purchases of common stock			(670)						(749)
Payments of dividends			(443)						(398)
Payments of dividends to non-controlling interests			(5)						(6)
Net cash used for financing activities			(1,043)						(704)
Effect of exchange rate changes on total cash and cash equivalents			1						(163)
Net decrease in total cash and cash equivalents			(415)						(1,052)
Cash and cash equivalents, beginning of period			1,325						1,874
Cash and cash equivalents, end of period			$	910					$	822
Supplemental Cash Flow Information
Cash paid during the period for:
Interest paid			$	165					$	157
Income and withholding taxes, net of refunds			$	477					$	270

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			18
Note 6			Risk Management			19
Note 7			Income Taxes			20
Note 8			Retirement and Other Employee Benefits			21
Note 9			Share-Based Compensation Plans			22
Note 10			Fair Value Measurements			22
Note 11			Sales of Receivables			23
Note 12			Commitments and Contingencies			23
Note 13			Segment Information			24
Note 14			Reorganization of Business			24
Note 15			Intangible Assets and Goodwill			25

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Dollars in millions, except as noted)

**1.**Basis of Presentation

The condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and October 1, 2022 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, 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, 2022 (the "Form 10-K"). The results of operations for the three and nine months ended September 30, 2023 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.

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

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

Recent Acquisitions

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 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.

Recently Adopted 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 Company adopted ASU 2022-04 on January 1, 2023. 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 related 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 September 30, 2023 and October 1, 2022, 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
			September 30, 2023																		October 1, 2022
(In millions)			Products and Systems Integration						Software and Services						Total						Products and Systems Integration						Software and Services						Total
Regions:
North America			$	1,155					$	628					$	1,783					$	1,166					$	521					$	1,687
International			457						316						773						363						323						686
			$	1,612					$	944					$	2,556					$	1,529					$	844					$	2,373
Major Products and Services:
LMR Communications			$	1,312					$	605					$	1,917					$	1,243					$	569					$	1,812
Video			300						153						453						286						133						419
Command Center			—						186						186						—						142						142
			$	1,612					$	944					$	2,556					$	1,529					$	844					$	2,373
Customer Types:
Direct			$	940					$	859					$	1,799					$	902					$	769					$	1,671
Indirect			672						85						757						627						75						702
			$	1,612					$	944					$	2,556					$	1,529					$	844					$	2,373

			Nine Months Ended
			September 30, 2023																		October 1, 2022
(In millions)			Products and Systems Integration						Software and Services						Total						Products and Systems Integration						Software and Services						Total
Regions:
North America			$	3,130					$	1,786					$	4,916					$	2,961					$	1,514					$	4,475
International			1,222						991						2,213						957						973						1,930
			$	4,352					$	2,777					$	7,129					$	3,918					$	2,487					$	6,405
Major Products and Services:
LMR Communications			$	3,542					$	1,807					$	5,349					$	3,190					$	1,684					$	4,874
Video			810						435						1,245						728						368						1,096
Command Center			—						535						535						—						435						435
			$	4,352					$	2,777					$	7,129					$	3,918					$	2,487					$	6,405
Customer Types:
Direct			$	2,459					$	2,529					$	4,988					$	2,271					$	2,259					$	4,530
Indirect			1,893						248						2,141						1,647						228						1,875
			$	4,352					$	2,777					$	7,129					$	3,918					$	2,487					$	6,405

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 September 30, 2023 was $9.3 billion. A total of $4.9 billion was from Products and Systems Integration performance obligations that were not yet satisfied as of September 30, 2023, of which $3.1 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 $4.4 billion was from Software and Services performance obligations that were not yet satisfied as of September 30, 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 service 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 $1.5 billion from unsatisfied Software and Services performance obligations over the next twelve months, with the remaining performance obligations generally to be recognized over time as services are performed and software is implemented.

Contract Balances

(In millions)			September 30, 2023						December 31, 2022
Accounts receivable, net			$	1,667					$	1,518
Contract assets			1,092						974
Contract liabilities			1,898						1,859
Non-current contract liabilities			394						363

Revenue recognized during the three months ended September 30, 2023 which was previously included in Contract liabilities as of July 1, 2023 was $475 million, compared to $437 million of revenue recognized during the three months ended October 1, 2022 which was previously included in Contract liabilities as of July 2, 2022. Revenue recognized during the nine months ended September 30, 2023 which was previously included in Contract liabilities as of December 31, 2022 was $1.1 billion, compared to $939 million recognized during the nine months ended October 1, 2022 which was previously included in Contract liabilities as of December 31, 2021. The Company did not reverse any revenue during the three months ended September 30, 2023 related to performance obligations satisfied, or partially satisfied, in previous periods, compared to $3 million of reversals for the three months ended October 1, 2022, primarily driven by changes in the estimates of progress on system contracts. Revenue of $18 million was reversed during the nine months ended September 30, 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 $23 million of reversals for the nine months ended October 1, 2022.

There were no material expected credit losses recorded on contract assets during each of the three and nine months ended September 30, 2023 and October 1, 2022.

Contract Cost Balances

(In millions)			September 30, 2023						December 31, 2022
Current contract cost assets			$	89					$	61
Non-current contract cost assets			109						130

Amortization of contract cost assets was $10 million and $35 million for the three and nine months ended September 30, 2023, respectively, and $14 million and $41 million for the three and nine months ended October 1, 2022, respectively.

3. Leases

Components of Lease Expense

			Three Months Ended												Nine Months Ended
(in millions)			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Lease expense:
Operating lease cost			$	35					$	32					$	103					$	98
Finance lease cost
Amortization of right-of-use assets			$	1					$	1					$	2					$	5
Short-term lease cost			$	—					$	—					$	1					$	1
Variable cost			10						9						28						26
Sublease income			(1)						(1)						(3)						(4)
Net lease expense			$	45					$	41					$	131					$	126

Lease Assets and Liabilities

(in millions)						Statement Line Classification						September 30, 2023						December 31, 2022
Assets:
Operating lease assets						Operating lease assets						$	453					$	485
Finance lease assets						Property, plant and equipment, net						8						9
												$	461					$	494
Current liabilities:
Operating lease liabilities						Accrued liabilities						$	118					$	118
Finance lease liabilities						Current portion of long-term debt						—						1
												$	118					$	119
Non-current liabilities:
Operating lease liabilities						Operating lease liabilities						$	368					$	419

Other Information Related to Leases

			Nine Months Ended
(in millions)			September 30, 2023						October 1, 2022
Supplemental cash flow information:
Net cash used for operating activities related to operating leases			$	103					$	124
Net cash used for financing activities related to finance leases			1						4
Assets obtained in exchange for lease liabilities:
Operating leases			$	52					$	77

Assets obtained in exchange for lease liabilities for the nine months ended September 30, 2023 included $20 million of additional leases due to a renewal of a large managed services contract. Assets obtained in exchange for lease liabilities for the nine months ended October 1, 2022 included $34 million of additional leases acquired in connection with the Company's acquisition of TETRA Ireland.

			September 30, 2023						December 31, 2022
Weighted average remaining lease terms (years):
Operating leases			5						5
Finance leases			0						1
Weighted average discount rate:
Operating leases			4.26		%				4.07		%
Finance leases			—		%				3.23		%

Future Lease Payments

			September 30, 2023
(in millions)			Operating Leases
Remainder of 2023			$	29
2024			135
2025			119
2026			102
2027			56
Thereafter			97
Total lease payments			$	538
Less: Interest			52
Present value of lease liabilities			$	486

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
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Other charges:
Intangibles amortization (Note 15)			$	39					$	63					$	137					$	194
Environmental reserve expense			—						—						15						—
Reorganization of business (Note 14)			4						2						16						14
Operating lease asset impairments			—						4						4						16
Acquisition-related transaction fees			1						2						3						16
Legal settlements			1						12						1						23
Fixed asset impairments			—						1						3						12
Gain on Hytera legal settlement			—						—						—						(13)
Other			1						(1)						2						—
			$	46					$	83					$	181					$	262

During the nine months ended September 30, 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 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. During the nine months ended September 30, 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 $4 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 Condensed Consolidated Balance Sheets.

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
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Interest income (expense), net:
Interest expense			$	(60)					$	(62)					$	(186)					$	(179)
Interest income			7						2						22						8
			$	(53)					$	(60)					$	(164)					(171)
Other, net:
Net periodic pension and postretirement benefit (Note 8)			$	24					$	28					$	73					$	91
Loss from the extinguishment of long-term debt (Note 5)			—						—						—						(6)
Investment impairments			(7)						—						(16)						(1)
Foreign currency gain (loss)			23						45						(16)						95
Loss on derivative instruments (Note 6)			(26)						(54)						(9)						(111)
Loss on equity method investments			—						—						—						(2)
Fair value adjustments to equity investments			(7)						(5)						12						(35)
Gain on TETRA Ireland equity method investment			—						—						—						21
Other			—						5						2						(2)
			$	7					$	19					$	46					$	50

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
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Basic earnings per common share:
Earnings			$	464					$	279					$	1,113					$	774
Weighted average common shares outstanding			166.7						167.2						167.2						167.5
Per share amount			$	2.78					$	1.67					$	6.66					$	4.62
Diluted earnings per common share:
Earnings			$	464					$	279					$	1,113					$	774
Weighted average common shares outstanding			166.7						167.2						167.2						167.5
Add effect of dilutive securities:
Share-based awards			3.5						3.6						3.6						3.8
1.75% senior convertible notes			1.5						0.7						1.4						0.6
Diluted weighted average common shares outstanding			171.7						171.5						172.2						171.9
Per share amount			$	2.70					$	1.63					$	6.46					$	4.50

In the computation of diluted earnings per common share for the three months ended and nine months ended September 30, 2023, the assumed exercise of 0.3 million options, inclusive of 0.2 million options 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 three months ended October 1, 2022, the assumed exercise of 0.4 million options, inclusive of 0.2 million options 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, inclusive of 0.1 million options subject to market based contingent option agreements, were excluded because their inclusion would have been antidilutive.

As of September 30, 2023, the Company had $1.0 billion of 1.75% senior convertible notes outstanding, which mature on September 15, 2024 (the "Senior Convertible Notes"). The notes are convertible based on a conversion rate of 4.9670 per $1,000 principal amount (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, 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 September 30, 2023. The value by which the Senior Convertible Notes exceeded their principal amount if converted as of September 30, 2023 was $398 million.

Balance Sheet Information

Accounts Receivable, Net

Accounts receivable, net, consists of the following:

			September 30, 2023						December 31, 2022
Accounts receivable			$	1,728					$	1,579
Less allowance for credit losses			(61)						(61)
			$	1,667					$	1,518

Inventories, Net

Inventories, net, consist of the following:

			September 30, 2023						December 31, 2022
Finished goods			$	337					$	354
Work-in-process and production materials			763						829
			1,100						1,183
Less inventory reserves			(141)						(128)
			$	959					$	1,055

Other Current Assets

Other current assets consist of the following:

			September 30, 2023						December 31, 2022
Current contract cost assets (Note 2)			$	89					$	61
Contractor receivables			38						47
Tax-related deposits			32						33
Other			245						242
			$	404					$	383

Property, Plant and Equipment, Net

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

			September 30, 2023						December 31, 2022
Land			$	5					$	5
Leasehold improvements			459						456
Machinery and equipment			2,295						2,303
			2,759						2,764
Less accumulated depreciation			(1,828)						(1,837)
			$	931					$	927

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 Emergency Services Network ("ESN") service contract with the Home Office of the United Kingdom (the "Home Office"). The recognized impairment was based on the Company's 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 as a result of the Company's early exit from its ESN contract with the Home Office. 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 September 30, 2023 and October 1, 2022 was $47 million and $45 million, respectively. Depreciation expense for the nine months ended September 30, 2023 and October 1, 2022 was $134 million and $137 million, respectively.

Investments

Investments consist of the following:

			September 30, 2023						December 31, 2022
Common stock			$	30					$	21
Strategic investments			28						45
Company-owned life insurance policies			71						69
Equity method investments			13						12
			$	142					$	147

During the nine months ended September 30, 2023, the Company recognized a gain of $13 million in Other income (expense) within the Condensed Consolidated Statement of Operations related to an increase in the fair value of its investment in Evolv Technologies, Inc. During the nine months ended September 30, 2023, the Company recorded a $16 million investment impairment charge, representing an other-than-temporary decline in the value of the Company's strategic equity investment portfolio. The investment impairment charge is classified within Other income (expense) within the Condensed Consolidated Statement of Operations.

Other Assets

Other assets consist of the following:

			September 30, 2023						December 31, 2022
Defined benefit plan assets			$	168					$	164
Non-current contract cost assets (Note 2)			109						130
Other			59						16
			$	336					$	310

Accounts Payable

The Company utilizes a supplier finance program which provides our suppliers 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 our 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 $31 million and $37 million as of September 30, 2023 and December 31, 2022, respectively. Supplier finance program obligations are classified as Accounts payable within the Condensed Consolidated Balance Sheets.

Accrued Liabilities

Accrued liabilities consist of the following:

			September 30, 2023						December 31, 2022
Compensation			$	299					$	374
Tax liabilities			208						367
Dividend payable			146						148
Trade liabilities			137						145
Operating lease liabilities (Note 3)			118						118
Customer reserves			83						78
Other			364						408
			$	1,355					$	1,638

Other Liabilities

Other liabilities consist of the following:

			September 30, 2023						December 31, 2022
Defined benefit plans			$	915					$	1,004
Non-current contract liabilities (Note 2)			394						363
Unrecognized tax benefits (Note 7)			29						29
Deferred income taxes (Note 7)			72						73
Environmental reserve			123						108
Other			167						114
			$	1,700					$	1,691

Stockholders’ Equity

Share Repurchase Program: During the three and nine months ended September 30, 2023, the Company repurchased approximately 1.1 million and 2.5 million shares at an average price of $281.79 and $277.96 per share for an aggregate amount of $322 million and $686 million, respectively, excluding transaction costs and excise tax. The Company paid $306 million and $670 million to settle share repurchases during the three and nine months ended September 30, 2023, respectively. 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 $3 million as of September 30, 2023.

Payment of Dividends: During the three months ended September 30, 2023 and October 1, 2022, the Company paid $147 million and $132 million, respectively, in cash dividends to holders of its common stock. During the nine months ended September 30, 2023 and October 1, 2022, the Company paid $443 million and $398 million, respectively, in cash dividends to holders of its common stock. Subsequent to the quarter, the Company paid an additional $146 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 September 30, 2023 and October 1, 2022:

			Three Months Ended												Nine Months Ended
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Foreign Currency Translation Adjustments:
Balance at beginning of period			$	(476)					$	(539)					$	(539)					$	(384)
Other comprehensive income (loss) before reclassification adjustment			(62)						(153)						(8)						(304)
Tax benefit (expense)			(8)						(9)						1						(13)
Other comprehensive income (loss), net of tax			(70)						(162)						(7)						(317)
Balance at end of period			$	(546)					$	(701)					$	(546)					$	(701)
Defined Benefit Plans:
Balance at beginning of period			$	(1,971)					$	(1,952)					$	(1,996)					$	(1,995)
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)			15						20						45						60
Reclassification adjustment - Prior service benefits into Other income (Note 8)			1						(1)						3						(3)
Tax expense			(4)						(4)						(11)						(13)
Reclassification adjustments into Net earnings, net of tax			12						15						37						44
Other comprehensive income, net of tax			12						15						37						58
Balance at end of period			$	(1,959)					$	(1,937)					$	(1,959)					$	(1,937)
Total Accumulated other comprehensive loss			$	(2,505)					$	(2,638)					$	(2,505)					$	(2,638)

5. Debt and Credit Facilities

As of September 30, 2023, $1.0 billion of Senior Convertible Notes and $313 million of 4.0% senior notes, which both mature in September 2024, were reclassified from Long-term debt to the Current portion of long-term debt statement line within the Company's Condensed Consolidated Balance Sheets, as the notes are due within the next twelve months.

As of September 30, 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. Borrowings under the facility bear interest at the prime rate plus the applicable margin, or at a spread above the Secured Overnight Financing Rate ("SOFR"), at the Company's option. 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 September 30, 2023. On February 8, 2023, the Company entered into an amendment to the 2021 Motorola Solutions Credit Agreement to replace the interest rate benchmark from London Interbank Offered Rate (LIBOR) to SOFR.

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 September 30, 2023 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 $1.3 billion and $1.1 billion for periods ended September 30, 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 five largest net notional amounts of the positions to buy or sell foreign currency as of September 30, 2023, and the corresponding positions as of December 31, 2022:

			Notional Amount
Net Buy (Sell) by Currency			September 30, 2023						December 31, 2022
British pound			$	262					$	290
Euro			250						185
Australian dollar			(124)						(130)
Canadian dollar			75						—
Chinese renminbi			(68)						(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 September 30, 2023, all of the counterparties had investment grade credit ratings. As of September 30, 2023, the Company had $10 million of exposure to aggregate credit risk with all counterparties.

Derivative Financial Instruments

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 September 30, 2023 and December 31, 2022:

			Fair Values of Derivative Instruments
September 30, 2023			Other Current Assets						Accrued Liabilities
Derivatives designated as hedging instruments:
Foreign exchange contracts			$	9					$	—
Derivatives not designated as hedging instruments:
Foreign exchange contracts			1						19
Equity swap contracts			—						1
Total derivatives			$	10					$	20

			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 condensed consolidated financial statements for the three and nine months ended September 30, 2023 and October 1, 2022:

			Financial Statement Location			Three Months Ended												Nine Months Ended
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Derivatives designated as hedging instruments:
Foreign exchange contracts			Accumulated other comprehensive gain (loss)			$	9					$	12					$	5					$	24
Forward points recognized			Other income (expense)			1						1						2						1
Derivatives not designated as hedging instruments:
Foreign exchange contracts			Other income (expense)			(26)						(54)						(9)						(111)
Equity swap contracts			Selling, general and administrative expenses			(1)						—						(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 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 September 30, 2023, the Company had €100 million of net investment hedges in certain Euro functional subsidiaries and £70 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 forward points recognized will be amortized on a straight line basis and recognized through interest expense within Other income (expense) in the Condensed Consolidated Statement of Operations.

Equity Swap Contracts

During the three months ended September 30, 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 Condensed Consolidated Statements of Operations. The notional amount of these contracts as of September 30, 2023 was $15 million.

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.

The following table provides details of income taxes:

			Three Months Ended												Nine Months Ended
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Net earnings before income taxes			$	592					$	333					$	1,438					$	852
Income tax expense			127						53						321						75
Effective tax rate			21		%				16		%				22		%				9		%

The effective tax rate for the three months ended September 30, 2023 of 21% was equal to the U.S. federal statutory tax rate of 21% primarily due to state tax expense, offset by the excess tax benefits of share-based compensation and favorable US return-to-provision adjustments. The effective tax rate for the nine months ended September 30, 2023 of 22% was higher than the U.S. federal statutory tax rate of 21% primarily due to state tax expense, partially offset by the excess tax benefits of share-based compensation and favorable US return-to-provision adjustments.

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 the 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 of

$77 million as a result of an intra-group transfer of certain intellectual property ("IP") rights and the excess tax benefits of share-based compensation.

The effective tax rate for the three months ended September 30, 2023 of 21% was higher than the effective tax rate for the three months ended October 1, 2022 of 16%, primarily due to lower excess tax benefits of share-based compensation in 2023, partially offset by more favorable US return-to-provision adjustments in 2023. The effective tax rate for the nine months ended September 30, 2023 of 22% was higher than the effective tax rate for the nine months ended October 1, 2022 of 9%, primarily due to a net deferred tax benefit in 2022 as a result of an intra-group transfer of certain IP rights, lower excess tax benefits of share-based compensation in 2023 and a lower foreign derived intangible income deduction in 2023, partially offset by more favorable US return-to-provision adjustments in 2023.

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			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Service cost			$	—					$	—					$	—					$	1					$	—					$	—
Interest cost			47						32						2						8						2						—
Expected return on plan assets			(73)						(64)						(16)						(26)						(3)						(3)
Amortization of:
Unrecognized net loss			5						15						9						4						1						1
Unrecognized prior service cost (benefit)			—						—						—						(1)						1						—
Net periodic pension cost (benefits)			$	(21)					$	(17)					$	(5)					$	(14)					$	1					$	(2)

			U.S. Pension Benefit Plans												Non-U.S. Pension Benefit Plans												Postretirement Health Care Benefits Plan
Nine Months Ended			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Service cost			$	—					$	—					$	—					$	3					$	—					$	—
Interest cost			141						96						6						24						5						1
Expected return on plan assets			(219)						(191)						(46)						(77)						(9)						(9)
Amortization of:
Unrecognized net loss			15						46						27						11						3						3
Unrecognized prior service cost (benefit)			—						—						—						(3)						3						—
Net periodic pension cost (benefits)			$	(63)					$	(49)					$	(13)					$	(42)					$	2					$	(5)

9. Share-Based Compensation Plans

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

			Three Months Ended												Nine Months Ended
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Share-based compensation expense included in:
Costs of sales			$	10					$	7					$	30					$	20
Selling, general and administrative expenses			28						26						87						72
Research and development expenditures			14						12						43						34
Share-based compensation expense included in Operating earnings			52						45						160						126
Tax benefit			(11)						(9)						(33)						(26)
Share-based compensation expense, net of tax			$	41					$	36					$	127					$	100
Decrease in basic earnings per share			$	(0.25)					$	(0.22)					$	(0.76)					$	(0.60)
Decrease in diluted earnings per share			$	(0.24)					$	(0.21)					$	(0.74)					$	(0.58)

During the nine months ended September 30, 2023, 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 $172 million, $24 million and $13 million, respectively, and 0.1 million stock options and 0.1 million performance options (POs) with an aggregate grant-date fair value of $7 million and $13 million, respectively. The share-based compensation expense will generally be recognized over the vesting period of three years.

10. Fair Value Measurements

The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of September 30, 2023 and December 31, 2022 were as follows:

September 30, 2023			Level 1						Level 2												Total
Assets:
Foreign exchange derivative contracts			$	—					$	10											$	10
Common stock			30						—												30
Liabilities:
Foreign exchange derivative contracts			—						19												19
Equity swap contracts			1						—												1

December 31, 2022			Level 1						Level 2												Total
Assets:
Foreign exchange derivative contracts			$	—					$	15											$	15
Common stock			21						—												21
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 September 30, 2023 or December 31, 2022.

At September 30, 2023 and December 31, 2022, the Company had $510 million and $490 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 September 30, 2023 was $5.9 billion, of which the Senior Convertible Notes were $1.4 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).

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 September 30, 2023 and October 1, 2022:

			Three Months Ended												Nine Months Ended
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Contract-specific discounting facility			$	—					$	—					$	—					$	49
Accounts receivable sales proceeds			—						—						—						62
Long-term receivables sales proceeds			65						42						123						64
Total proceeds from receivable sales			$	65					$	42					$	123					$	175

At September 30, 2023, the Company had retained servicing obligations for $844 million of long-term receivables, compared to $891 million at December 31, 2022. 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 $97 million at September 30, 2023, compared to $65 million at December 31, 2022.

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 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 regular quarterly royalty payments into the third-party escrow from October 2022 through October 2023. The aggregate amount paid into escrow will not be recognized until all contingencies are resolved and such amount is released from escrow.

On August 2, 2022, Hytera appealed the Court's July 5, 2022 judgment to the U.S. Court of Appeals for the Seventh Circuit (the "Court of Appeals"). The Company filed its cross-appeal on August 5, 2022. The parties have now submitted all briefs and responses on Hytera's appeal and the Company's cross-appeal. The Court of Appeals set an oral argument date of 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 Condensed Consolidated Statements of Operations.

13. Segment Information

Net Sales by Segment

			Three Months Ended												Nine Months Ended
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Products and Systems Integration			$	1,612					$	1,529					$	4,352					$	3,918
Software and Services			944						844						2,777						2,487
			$	2,556					$	2,373					$	7,129					$	6,405

Operating Earnings by Segment

			Three Months Ended												Nine Months Ended
			September 30, 2023						October 1, 2022						September 30, 2023						October 1, 2022
Products and Systems Integration			$	364					$	303					$	752					$	460
Software and Services			275						70						804						510
Operating earnings			639						373						1,556						970
Total other expense			(47)						(40)						(118)						(118)
Earnings before income taxes			$	592					$	333					$	1,438					$	852

14. Reorganization of Business

2023 Charges

During the three months ended September 30, 2023, the Company recorded net reorganization of business charges of $6 million, including $4 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 $6 million were charges of $8 million related to employee separation costs, partially offset by $2 million of reversals for employee separation accruals no longer needed.

During the nine months ended September 30, 2023, the Company recorded net reorganization of business charges of $22 million, including $16 million of charges in Other charges and $6 million of charges in Costs of sales in the Company's Condensed Consolidated Statements of Operations. Included in the $22 million were charges of $32 million related to employee separation costs, partially offset by $5 million of reversals for exit cost accruals no longer needed and $5 million of reversals for employee separation accruals no longer needed.

The following table displays the net charges incurred by segment:

September 30, 2023			Three Months Ended						Nine Months Ended
Products and Systems Integration			$	5					$	22
Software and Services			1						—
			$	6					$	22

Reorganization of Businesses Accruals

			January 1, 2023						Additional Charges						Adjustments						Amount Used						September 30, 2023
Employee separation costs			$	26					$	32					$	(5)					$	(28)					$	25
Exit costs			10						—						(5)						—						5
			$	36					$	32					$	(10)					$	(28)					$	30

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 in 2022. During the three months ended September 30, 2023, 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 Condensed Consolidated Balance Sheets at September 30, 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 $32 million represent severance costs for approximately 560 employees. The adjustment of $5 million reflects reversals for accruals no longer needed. The $28 million used reflects cash payments to severed employees. The remaining accrual of $25 million, which is included in Accrued liabilities in the Company’s Condensed Consolidated Balance Sheets at September 30, 2023, is expected to be paid, primarily within one year, to approximately 530 employees, who have either been severed or have been notified of their severance and have begun or will begin receiving payments.

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

15. Intangible Assets and Goodwill

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 $399 million of goodwill, $212 million of identifiable intangible assets and $58 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 years, seventeen years and seventeen 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, net liabilities and goodwill may be subject to change.

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 Company recognized $10 million of goodwill, $11 million of identifiable intangible assets 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 is not yet complete and as such, the final allocation among income tax accounts, net assets and goodwill may be subject to change.

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 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 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.

Intangible Assets

Amortized intangible assets were comprised of the following:

			September 30, 2023												December 31, 2022
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Developed technology			$	1,095					$	423					$	1,083					$	358
Customer-related			1,517						1,001						1,519						935
Other intangibles			98						69						99						66
			$	2,710					$	1,493					$	2,701					$	1,359

Amortization expense on intangible assets was $39 million and $137 million for the three and nine months ended September 30, 2023, respectively. Amortization expense on intangible assets was $63 million and $194 million for the three and nine months ended October 1, 2022, respectively. As of September 30, 2023, annual amortization expense is estimated to be $176 million in 2023, $138 million in 2024, $125 million in 2025, $117 million in 2026, $107 million in 2027 and $106 million in 2028.

Amortized intangible assets were comprised of the following by segment:

			September 30, 2023												December 31, 2022
			Gross Carrying Amount						Accumulated Amortization						Gross Carrying Amount						Accumulated Amortization
Products and Systems Integration			$	912					$	319					$	913					$	261
Software and Services			1,798						1,174						1,788						1,098
			$	2,710					$	1,493					$	2,701					$	1,359

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, 2023 to September 30, 2023:

			Products and Systems Integration						Software and Services						Total
Balance as of January 1, 2023			$	1,461					$	1,851					$	3,312
Purchase accounting adjustments			(2)						(30)						(32)
Foreign currency			—						(2)						(2)
Balance as of September 30, 2023			$	1,459					$	1,819					$	3,278