Motorola Solutions Inc
For the period ended Jun 29, 2024. Filed Aug 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 29, 2024 · Filed Aug 1, 2024
MSI$514.51-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-30; filed 2024-05-02.
0000068505-24-000016
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-29; filed 2024-08-01.
0000068505-24-000024
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 118 previous paragraphs and 171 current paragraphs.
54 unchanged; 52 reworded; 53 added; 11 removed; 1 previous and 12 current paragraphs rearranged.
Tables are not compared: 14 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (53)
Current report
Second Quarter Financial Results
Current report
•Operating earnings were $644 million in the second quarter of 2024 compared to $518 million in the second quarter of 2023.
Current report
Net sales increased $225 million, or 9%, in the second quarter of 2024 compared to the second quarter of 2023. The $221 million, or 15%, increase in net sales within the Products and Systems Integration segment was driven by an increase of 21% in the North America region. The $4 million increase in net sales within the Software and Services segment was driven by an increase of 9% in the North America region and partially offset by a decrease of 15% in the International region. Net sales includes:
Current report
•inclusive of $5 million from unfavorable currency rates.
Current report
•a 7% decrease in the International region, inclusive of revenue from acquisitions, driven by a decrease in LMR due to the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN, partially offset by an increase in Video and Command Center.
Current report
The 15% increase in the Products and Systems Integration segment was driven by the following:
Current report
•$213 million, or 19% growth in LMR, driven by the North America and International regions, primarily due to an increase in devices;
Current report
•$8 million, or 3% growth in Video, inclusive of revenue from acquisitions, driven by the North America and International regions; and
Current report
The Software and Services segment was flat driven by the following:
Current report
•$48 million, or 8% decrease in LMR, driven by the International region, the revenue reduction on Airwave services in accordance with the Charge Control, and the exit of ESN, partially offset by growth in the North America region; and
Current report
•inclusive of $3 million from unfavorable currency rates.
Current report
SG&A expenses increased 10% in the second quarter of 2024 compared to the second quarter of 2023. The increase in SG&A expenses was primarily due to higher employee incentive costs and an expansion of headcount in the sales force. SG&A expenses were 16.4% of net sales in the second quarter of 2024 compared to 16.2% of net sales in the second quarter of 2023.
Current report
•$15 million of environmental reserve expense in the second quarter of 2023 that did not occur in the second quarter of 2024; and
Current report
•$4 million of acquisition-related transaction fees in the second quarter of 2024 that did not occur in the second quarter of 2023.
Current report
The $12 million increase in Interest expense, net in the second quarter of 2024 compared to the second quarter of 2023 was primarily driven by higher outstanding debt and an interest accrual related to audits with taxing authorities in foreign jurisdictions, partially offset by higher interest income.
Current report
•$11 million loss on assessments of uncertain tax positions in the second quarter of 2024 that did not occur in the second quarter of 2023; partially offset by
Current report
Income tax expense increased by $21 million in the second quarter of 2024 compared to the second quarter of 2023, resulting in an effective tax rate of 23%. Our effective tax rate for the three months ended June 29, 2024 of 23% was equal to the effective tax rate for the three months ended July 1, 2023 of 23%, primarily due to tax benefits recognized upon settlement of audits with taxing authorities in foreign jurisdictions in 2024, offset by lower excess tax benefits of share-based compensation in 2024.
Current report
Results of Operations—Six months ended June 29, 2024 compared to Six months ended July 1, 2023
Current report
Net Sales
Current report
The Products and Systems Integration segment's net sales represented 63% of our net sales in the first half of 2024 and 60% in the first half of 2023. Net sales from the Software and Services segment represented 37% of our net sales in the first half of 2024 and 40% in the first half of 2023.
Current report
•an increase in Software and Services, inclusive of $1 million of revenue from acquisitions, driven by an increase in Video and Command Center, partially offset by a decrease in LMR driven by the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN; and
Current report
•inclusive of $4 million from unfavorable currency rates.
Current report
Regional results include:
Current report
•a 2% decrease in the International region, inclusive of revenue from acquisitions, driven by a decrease in LMR due to the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN, partially offset by an increase in Video and Command Center.
Current report
Products and Systems Integration
Current report
The 15% increase in the Products and Systems Integration segment was driven by the following:
Current report
•$390 million, or 17% growth in LMR, driven by both the North America and International regions, primarily due to an increase in devices;
Current report
•$19 million, or 4% growth in Video, inclusive of revenue from acquisitions, driven by both the North America and International regions; and
Current report
Software and Services
Current report
The 2% increase in the Software and Services segment was driven by the following:
Current report
•$63 million, or 22% growth in Video, inclusive of revenue from acquisitions, driven by the North America and International regions; and
Current report
•$59 million, or 5% decrease in LMR, driven by the International region due to the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN, partially offset by the North America region; and
Current report
Gross Margin
Current report
•lower gross margin as a percentage of net sales in the Software and Services segment, inclusive of acquisitions, driven by the revenue reduction on Airwave services in accordance with the Charge Control.
Current report
Selling, General and Administrative Expenses
Current report
Research and Development Expenditures
Current report
R&D expenditures increased 3% in the first half of 2024 compared to the first half of 2023 primarily due to higher employee incentive costs, including share-based compensation. R&D expenditures were 8.7% of net sales in the first half of 2024 compared to 9.3% of net sales in the first half of 2023.
Current report
•$15 million of environmental reserve expense in the first half of 2023 that did not occur in the first half of 2024; and
Current report
•$3 million of fixed asset impairments in the first half of 2023 that did not occur in the first half of 2024; partially offset by
Current report
•$7 million of acquisition-related transaction fees in the first half of 2024 compared to $2 million of acquisition-related transaction fees in the first half of 2023.
Showing the first 40 of 53 passages. Open the source sections for the rest.
Removed paragraphs (11)
Previous report
First Quarter Financial Results
Previous report
•Operating earnings were $519 million in the first quarter of 2024 compared to $399 million in the first quarter of 2023.
Previous report
•inclusive of $1 million from favorable currency rates.
Previous report
•a 3% increase in the International region, inclusive of revenue from acquisitions, driven by an increase in Video and LMR, partially offset by the revenue reduction on Airwave services in accordance with the Charge Control.
Previous report
The 14% increase in the Products and Systems Integration segment was driven by the following:
Previous report
•$175 million, or 16% growth in LMR, driven by the North America and International regions; and
Previous report
•$12 million, or 5% growth in Video, inclusive of revenue from acquisitions, driven by the International and North America regions.
Previous report
The 4% increase in the Software and Services segment was driven by the following:
Previous report
•inclusive of $1 million from favorable currency rates.
Previous report
Other Charges
Previous report
During the first quarter of 2023, we recorded net reorganization of business charges of $13 million, including $7 million of charges in Other charges and $6 million of charges in Costs of sales in our Condensed Consolidated Statements of Operations. Included in the $13 million were charges of $15 million related to employee separation costs, partially offset by $2 million of reversals for accruals no longer needed.
Reworded paragraphs (52)
Previous wording
This commentary should be read in conjunction with the condensed consolidated financial statements and related notes thereto of Motorola Solutions, Inc. (“Motorola Solutions,” the “Company,” “we,” “our,” or “us”) for the three months ended March 30, 2024 and April 1, 2023, as well as our consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "Form 10-K").
Current wording
This commentary should be read in conjunction with the condensed consolidated financial statements and related notes thereto of Motorola Solutions, Inc. (“Motorola Solutions,” the “Company,” “we,” “our,” or “us”) for the three and six months ended June 29, 2024 and July 1, 2023, as well as our consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2023 (the "Form 10-K").
Previous wording
Statements in this Quarterly Report on Form 10-Q for the quarter ended March 30, 2024 (this “Form 10-Q”) which are not historical in nature are forward-looking statements within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “aims,” “estimates” and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this Form 10-Q. Some of these risks and uncertainties include, but are not limited to, those discussed in Part I, Item 1A “Risk Factors” of the Form 10-K, and those described elsewhere in our other SEC filings. Forward-looking statements include, but are not limited to, statements included in: (1) “Management's Discussion and Analysis of Financial Condition and Results of Operations,” about: (a) the impact of the United Kingdom's Competition and Markets Authority's legal order regarding Airwave (including our actions in response); (b) the impact of our proceedings in the UK High Court regarding the notice of contract extension from the UK Home Office relating to Airwave; (c) the impact of acquisitions on our business; (d) the return of capital to shareholders through dividends and/or repurchasing shares; (e) the impact and success of our business strategy and portfolio; (f) future payments, charges, and use of accruals associated with our reorganization of business programs and employee separation costs; (g) expected payments of exit costs related to our exit of the Emergency Services Network ("ESN") contract with the UK Home Office; (h) our ability and cost to repatriate funds; (i) the liquidity of our investments; (j) our ability and cost to access the capital markets; (k) our ability to borrow and the amount available under our credit facilities; (l) adequacy of internal resources to generate an adequate amount of cash to meet expected working capital, capital expenditure and cash requirements; (m) future cash flows generated from operations, and future uses of such cash; and (n) the impact of the adoption of accounting pronouncements on our financial results; (2) “Quantitative and Qualitative Disclosures about Market Risk,” about: (a) the impact of foreign currency risk; (b) the impact of interest rate risk; and (c) future hedging activity and expectations of the Company; and (3) “Legal Proceedings,” about the ultimate disposition of legal matters and timing. We undertake no obligation to publicly update any forward-looking statement, wh…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Statements in this Quarterly Report on Form 10-Q for the quarter ended June 29, 2024 (this “Form 10-Q”) which are not historical in nature are forward-looking statements within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “aims,” “estimates” and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this Form 10-Q. Some of these risks and uncertainties include, but are not limited to, those discussed in Part I, Item 1A “Risk Factors” of the Form 10-K, and those described elsewhere in our other SEC filings. Forward-looking statements include, but are not limited to, statements included in: (1) “Management's Discussion and Analysis of Financial Condition and Results of Operations,” about: (a) the impact of the United Kingdom's Competition and Markets Authority's legal order regarding Airwave (including our actions in response); (b) the impact of our proceedings in the UK High Court regarding the notice of contract extension from the UK Home Office relating to Airwave; (c) the impact of acquisitions on our business; (d) the return of capital to shareholders through dividends and/or repurchasing shares; (e) the impact and success of our business strategy and portfolio; (f) future payments, charges, and use of accruals associated with our reorganization of business programs and employee separation costs; (g) expected payments of exit costs related to our exit of the Emergency Services Network ("ESN") contract with the UK Home Office; (h) our ability and cost to repatriate funds; (i) the liquidity of our investments; (j) our ability and cost to access the capital markets; (k) our ability to borrow under our credit facilities; (l) adequacy of internal resources to generate an adequate amount of cash to meet expected working capital, capital expenditure and cash requirements; (m) future cash flows generated from operations, and future uses of such cash; and (n) the impact of the adoption of accounting pronouncements on our financial results; (2) “Quantitative and Qualitative Disclosures about Market Risk,” about: (a) the impact of foreign currency risk; (b) the impact of interest rate risk; and (c) future hedging activity and expectations of the Company; and (3) “Legal Proceedings,” about the ultimate disposition of legal matters and timing. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new i…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
•Net sales were $2.4 billion in the first quarter of 2024 compared to $2.2 billion in the first quarter of 2023.
Current wording
•Net sales were $2.6 billion in the second quarter of 2024 compared to $2.4 billion in the second quarter of 2023.
Previous wording
•Net loss attributable to Motorola Solutions, Inc. was $39 million, or $(0.23) per diluted common share, in the first quarter of 2024, compared to net earnings of $278 million, or $1.61 per diluted common share, in the first quarter of 2023.
Current wording
•Net earnings attributable to Motorola Solutions, Inc. was $443 million, or $2.60 per diluted common share, in the second quarter of 2024, compared to net earnings of $371 million, or $2.15 per diluted common share, in the second quarter of 2023.
Previous wording
•Operating cash flow increased $390 million to $382 million in the first quarter of 2024 compared to $8 million used in the first quarter of 2023.
Current wording
•Operating cash flow increased $477 million to $562 million in the first half of 2024 compared to $85 million in the first half of 2023.
Previous wording
In 2023, the CMA imposed a legal order on Airwave which implemented a prospective price control on Airwave (the "Charge Control"). After the Competition Appeal Tribunal ("CAT") dismissed our appeal of the CMA's final decision on December 22, 2023, we filed an application with the United Kingdom Court of Appeal on February 13, 2024, requesting that it hear our appeal of the CAT judgment; the Court of Appeal has not yet responded to this request. Since August 1, 2023, revenue under the Airwave contract has been recognized in accordance with the Charge Control, and will continue to be unless the United Kingdom Court of Appeal were to reverse the CAT's judgment and overturn the Charge Control.
Current wording
In 2023, the CMA imposed a legal order on Airwave which implemented a prospective price control on Airwave (the "Charge Control"). After the Competition Appeal Tribunal ("CAT") dismissed our appeal of the CMA's final decision on December 22, 2023, we filed an application with the United Kingdom Court of Appeal on February 13, 2024, requesting that it hear our appeal of the CAT judgment. On June 21, 2024, the United Kingdom Court of Appeal ordered a hearing on our application to be held later this year; which was subsequently set for November 11 and 12, 2024. Since August 1, 2023, revenue under the Airwave contract has been recognized in accordance with the Charge Control, and will continue to be unless the United Kingdom Court of Appeal were to reverse the CAT's judgment and overturn the Charge Control.
Previous wording
Our backlog for Airwave services contracted with the UK Home Office through December 31, 2026 was previously reduced by $777 million to align with the Charge Control. In the first quarter of 2024, as a result of the UK Home Office's notice of a contract extension pursuant to their Deferred National Shutdown Notice, we have recorded additional backlog of $748 million to reflect the incremental three years of services. On April 11, 2024, we filed proceedings in the UK High Court challenging the decision of the UK Home Office to issue the Deferred National Shutdown Notice as being in breach of applicable UK procurement and public law. The backlog related to the incremental years of service contemplated in the Deferred National Shutdown Notice could change depending on the outcome of the proceedings.
Current wording
Our backlog for Airwave services contracted with the UK Home Office through December 31, 2026 was previously reduced by $777 million to align with the Charge Control. In the first quarter of 2024, as a result of the UK Home Office's notice of a contract extension pursuant to their Deferred National Shutdown Notice, we have recorded additional backlog of $748 million to reflect the incremental three years of services. On April 11, 2024, we filed proceedings in the UK High Court challenging the decision of the UK Home Office to issue the Deferred National Shutdown Notice as being in breach of applicable UK procurement and public law. The hearing on this matter has been set to commence on April 22, 2025. The backlog related to the incremental years of service contemplated in the Deferred National Shutdown Notice could change depending on the outcome of the proceedings.
Previous wording
The results of operations for the first quarter of 2024 are not necessarily indicative of the operating results to be expected for the full year. Historically, we have experienced higher revenues in the fourth quarter as compared to the rest of the quarters of our fiscal year as a result of the purchasing patterns of our customers.
Current wording
The results of operations for the second quarter of 2024 are not necessarily indicative of the operating results to be expected for the full year. Historically, we have experienced higher revenues in the fourth quarter as compared to the rest of the quarters of our fiscal year as a result of the purchasing patterns of our customers.
Previous wording
The Products and Systems Integration segment’s net sales represented 62% of our net sales in the first quarter of 2024 and 60% in the first quarter of 2023. The Software and Services segment’s net sales represented 38% of our net sales in the first quarter of 2024 and 40% in the first quarter of 2023.
Current wording
The Products and Systems Integration segment’s net sales represented 63% of our net sales in the second quarter of 2024 and 60% in the second quarter of 2023. The Software and Services segment’s net sales represented 37% of our net sales in the second quarter of 2024 and 40% in the second quarter of 2023.
Previous wording
•an increase in the Products and Systems Integration segment, inclusive of $10 million of revenue from acquisitions, driven by an increase in LMR and Video;
Current wording
•an increase in the Products and Systems Integration segment, inclusive of $12 million of revenue from acquisitions, driven by an increase in LMR and Video;
Previous wording
•an increase in the Software and Services segment, driven by an increase in Video and Command Center, partially offset by a decrease LMR services; and
Current wording
•an increase in the Software and Services segment, inclusive of $1 million of revenue from acquisitions, driven by an increase in Video and Command Center, partially offset by a decrease LMR services due to the revenue reduction on Airwave services in accordance with the Charge Control and the exit of ESN; and
Previous wording
•a 13% increase in the North America region, inclusive of revenue from acquisitions, driven by an increase in LMR, Video and Command Center; and
Current wording
•a 17% increase in the North America region, inclusive of revenue from acquisitions, driven by an increase in LMR, Video and Command Center; and
Previous wording
•$27 million, or 20% growth in Video, driven by the North America and International regions;
Current wording
•$35 million, or 24% growth in Video, driven by the North America and International regions; and
Previous wording
•$14 million, or 9% growth in Command Center, driven by the North America region, partially offset by the International region; partially offset by
Current wording
•$17 million, or 9% growth in Command Center, driven by the North America and International regions; partially offset by
Previous wording
Gross margin was 49.9% of net sales in the first quarter of 2024 compared to 48.2% in the first quarter of 2023. The primary drivers of this increase in gross margin as a percentage of net sales were:
Current wording
Gross margin was 51.0% of net sales in the second quarter of 2024 compared to 49.5% in the second quarter of 2023. The primary drivers of this increase in gross margin as a percentage of net sales were:
Previous wording
•lower gross margin as a percentage of net sales in the Software and Services segment, primarily driven by the revenue reduction on Airwave services in accordance with the Charge Control and partially offset by higher sales.
Current wording
•lower gross margin as a percentage of net sales in the Software and Services segment, inclusive of acquisitions, primarily driven by the revenue reduction on Airwave services in accordance with the Charge Control.
Previous wording
R&D expenditures increased 4% in the first quarter of 2024 compared to the first quarter of 2023 primarily due to higher employee incentive costs and higher expenses associated with acquired businesses. R&D expenditures were 9.1% of net sales in the first quarter of 2024 compared to 9.7% of net sales in the first quarter of 2023.
Current wording
R&D expenditures increased 2% in the second quarter of 2024 compared to the second quarter of 2023 primarily due to higher employee incentive costs including share-based compensation. R&D expenditures were 8.4% of net sales in the second quarter of 2024 compared to 8.9% of net sales in the second quarter of 2023.
Previous wording
Other charges decreased by $11 million in the first quarter of 2024 compared to the first quarter of 2023. The change was driven primarily by the following:
Current wording
Other charges decreased by $21 million in the second quarter of 2024 compared to the second quarter of 2023. The change was driven primarily by the following:
Previous wording
•$39 million of intangible asset amortization expense in the first quarter of 2024 compared to $55 million of intangible asset amortization expense in the first quarter of 2023; partially offset by
Current wording
•$36 million of intangible asset amortization expense in the second quarter of 2024 compared to $43 million of intangible asset amortization expense in the second quarter of 2023; partially offset by
Previous wording
Operating earnings increased $120 million, or 30%, in the first quarter of 2024 compared to the first quarter of 2023. The increase in Operating earnings was due to:
Current wording
Operating earnings increased $126 million, or 24%, in the second quarter of 2024 compared to the second quarter of 2023. The increase in Operating earnings was due to:
Previous wording
•$10 million, or 2% decrease in LMR, driven by the International region and the revenue reduction on Airwave services in accordance with the Charge Control, partially offset by the North America region; and
Current wording
•$41 million decrease in the Software and Services segment, driven by the revenue reduction on Airwave services in accordance with the Charge Control, partially offset by improved operating leverage.
Previous wording
The $577 million decrease in Other, net in the first quarter of 2024 compared to the first quarter of 2023 was primarily driven by:
Current wording
The $21 million decrease in Other, net in the second quarter of 2024 compared to the second quarter of 2023 was primarily driven by:
Previous wording
•$2 million loss on fair value adjustments to equity investments in the first quarter of 2024 compared to a $3 million gain on fair value adjustments to equity investments in the first quarter of 2023; partially offset by
Current wording
•$11 million loss on fair value adjustments to equity investments in the second quarter of 2024 compared to a $16 million gain on fair value adjustments to equity investments in the second quarter of 2023;
Previous wording
•$10 million loss on derivatives in the first quarter of 2024 compared to a $7 million gain on derivatives in the first quarter of 2023; and
Current wording
•$5 million loss on derivatives in the second quarter of 2024 compared to a $9 million gain on derivatives in the second quarter of 2023; and
Previous wording
•$1 million of foreign currency gains in the first quarter of 2024 compared to $19 million of foreign currency losses in the first quarter of 2023;
Current wording
•$3 million of foreign currency gains in the second quarter of 2024 compared to $21 million of foreign currency losses in the second quarter of 2023;
Previous wording
•$32 million of net periodic pension and postretirement benefit in the first quarter of 2024 compared to $25 million of net periodic pension and postretirement benefit in the first quarter of 2023; and
Current wording
•$31 million of net periodic pension and postretirement benefit in the second quarter of 2024 compared to $24 million of net periodic pension and postretirement benefit in the second quarter of 2023; and
Previous wording
•$3 million loss on investment impairments in the first quarter of 2024 compared to a $6 million loss on investment impairments in the first quarter of 2023.
Current wording
•$3 million loss on investment impairments in the second quarter of 2023 that did not occur in the second quarter of 2024.
Previous wording
Net sales increased $218 million, or 10%, in the first quarter of 2024 compared to the first quarter of 2023. The $187 million, or 14%, increase in net sales within the Products and Systems Integration segment was driven by an increase of 14% in the North America region and an increase of 16% in the International region. The $31 million, or 4%, increase in net sales within the Software and Services segment was driven by an increase of 13% in the North America region and partially offset by a decrease of 12% in the International region. Net sales includes:
Current wording
Net sales increased $443 million, or 10%, in the first half of 2024 compared to the first half of 2023. The $409 million, or 15%, increase in net sales within the Products and Systems Integration segment was driven by an increase of 18% in the North America region and an increase of 7% in the International region. The $34 million, or 2%, increase in net sales within the Software and Services segment was driven by an increase of 11% in the North America region, partially offset by a decrease of 13% in the International region. Net sales includes:
Previous wording
SG&A expenses increased 8% in the first quarter of 2024 compared to the first quarter of 2023. The increase in SG&A expenses was primarily due to higher employee incentive costs and higher expenses associated with acquired businesses. SG&A expenses were 16.6% of net sales in the first quarter of 2024 compared to 17.0% of net sales in the first quarter of 2023.
Current wording
SG&A expenses increased 9% in the first half of 2024 compared to the first half of 2023. The increase in SG&A expenses was primarily due to higher employee incentive costs, including share-based compensation, higher legal costs, including settlements, and higher expenses associated with acquired businesses. SG&A expenses were 16.5% of net sales in the first half of 2024 compared to 16.6% of net sales in the first half of 2023.
Previous wording
•$6 million of legal settlement charges in the first quarter of 2024 that did not occur in the first quarter 2023.
Current wording
•$6 million of legal settlement charges in the first half of 2024 that did not occur in the first half of 2023; and
Previous wording
•$134 million increase in the Products and Systems Integration segment, primarily driven by higher sales and favorable change in year-over-year mix, partially offset by higher employee incentive costs and higher expenses associated with acquired businesses; partially offset by
Current wording
•$301 million increase in the Products and Systems Integration segment, primarily driven by higher sales, favorable mix, and a reduction in intangible asset amortization, partially offset by higher employee incentive costs and higher expenses associated with acquired businesses; partially offset by
Previous wording
•$14 million decrease in the Software and Services segment, primarily driven by lower revenue as a result of the revenue reduction on Airwave services in accordance with the Charge Control and higher employee incentive costs, partially offset by higher sales and a reduction in intangible amortization expenses.
Current wording
•$55 million decrease in the Software and Services segment, primarily driven by the revenue reduction on Airwave services in accordance with the Charge Control and higher employee incentive costs, partially offset by a reduction in intangible amortization expenses.
Previous wording
The $10 million decrease in Interest expense, net in the first quarter of 2024 compared to the first quarter of 2023 was primarily driven by higher interest income earned on cash.
Current wording
The $2 million increase in net interest expense in the first half of 2024 compared to the first half of 2023 was primarily driven by higher outstanding debt and an interest accrual related to the settlement of audits with taxing authorities in foreign jurisdictions, partially offset by higher interest income earned on cash.
Previous wording
•We repurchased $39 million of common stock and paid $163 million in dividends in the first quarter of 2024. Additionally, we extinguished the $1.0 billion of 1.75% senior convertible notes issued to Silver Lake Partners and scheduled to mature in September 2024 (the "Silver Lake Convertible Debt") for $1.59 billion in cash, inclusive of the conversion premium.
Current wording
•$585 million loss from the extinguishment of the $1.0 billion of 1.75% senior convertible notes issued to Silver Lake Partners and scheduled to mature in September 2024 (the "Silver Lake Convertible Debt") in the first half of 2024;
Previous wording
Income tax expense decreased by $131 million in the first quarter of 2024 compared to the first quarter of 2023, resulting in an effective tax rate of 58%. Our effective tax rate for the three months ended March 30, 2024 of 58% was higher than the effective tax rate for the three months ended April 1, 2023 of 22%, primarily due to the non-tax deductible loss on the extinguishment of Silver Lake Convertible Debt in 2024, offset by the tax benefit recognized due to our ability to utilize additional foreign tax credit carryforwards and a higher federal derived intangible income deduction on our 2023 U.S. tax return as a result of our decision to implement a business initiative in 2024.
Current wording
Income tax expense decreased by $111 million in the first half of 2024 compared to the first half of 2023, resulting in an effective tax rate of 17%. Our effective tax rate of 17% for the six months ended June 29, 2024 was lower than the effective tax rate for the six months ended July 1, 2023 of 23%, primarily due to the tax benefit recognized upon the Company's decision to implement a business initiative in 2024 which allows for additional utilization of foreign tax credit carryforwards and a higher foreign derived intangible income deduction on its 2023 U.S. tax return, offset by the non-tax deductible loss on the extinguishment of Silver Lake Convertible Debt in 2024.
Previous wording
During the first quarter of 2024, we recorded net reorganization of business charges of $10 million, including $7 million of charges recorded within Other charges and $3 million of charges recorded in Costs of sales in our Condensed Consolidated Statements of Operations. Included in the $10 million were charges of $12 million related to employee separation costs, partially offset by $2 million of reversals for employee separation accruals no longer needed.
Current wording
During the second quarter of 2024, we recorded net reorganization of business charges of $4 million, including $4 million of charges recorded within Other charges in our Condensed Consolidated Statements of Operations. Included in the $4 million were charges of $10 million related to employee separation costs, partially offset by $2 million of reversals for employee separation accruals and $4 million of reversals for exit costs that are no longer needed.
Previous wording
Cash payments for employee severance in connection with the reorganization of business plans were $9 million in the first quarter of 2024 and $10 million in the first quarter of 2023. The reorganization of business accrual at March 30, 2024 was $24 million related to employee separation costs that are expected to be paid within one year.
Current wording
Cash payments for employee severance in connection with the reorganization of business plans were $17 million in the first half of 2024 and $19 million in the first half of 2023. The reorganization of business accrual at June 29, 2024 was $24 million related to employee separation costs that are expected to be paid within one year.
Previous wording
At January 1, 2024, we had an accrual of $5 million for exit costs related to our exit of the ESN contract with the UK Home Office. The $5 million of exit costs are recorded in Accrued liabilities in our Condensed Consolidated Balance Sheets at March 30, 2024, and are expected to be paid within one year.
Current wording
At January 1, 2024, we had an accrual of $5 million for exit costs related to our exit of the ESN contract with the UK Home Office. The $1 million of exit costs are recorded in Accrued liabilities in our Condensed Consolidated Balance Sheets at June 29, 2024, and are expected to be paid within one year.
Previous wording
At March 30, 2024, $1.2 billion of the $1.5 billion cash and cash equivalents balance was held in the U.S. and $317 million was held in other countries.
Current wording
At June 29, 2024, $1.0 billion of the $1.4 billion cash and cash equivalents balance was held in the U.S. and $403 million was held in other countries.
Previous wording
The increase in cash flows provided by operating activities from the first quarter of 2023 to the first quarter of 2024 was driven primarily by higher earnings, net of cash adjustments, improved working capital and lower income taxes due to a one time payment in the first quarter of 2023 of $70 million which did not recur in 2024.
Current wording
The increase in cash flows provided by operating activities from the first half of 2023 to the first half of 2024 was driven primarily by higher earnings, net of non-cash adjustments, and improved working capital, offset by higher incentive payments.
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Current report — wording carried from elsewhere
•We repurchased $110 million of common stock and paid $326 million in dividends in the first half of 2024.
Current report — wording carried from elsewhere
•$167 million increase in the Products and Systems Integration segment, primarily driven by higher sales, favorable change in year-over-year mix, and improved operating leverage, partially offset by higher employee incentive costs; partially offset by
Current report — wording carried from elsewhere
•an increase in the Products and Systems Integration segment, inclusive of $21 million of revenue from acquisitions, driven by an increase in LMR and Video;
Current report — wording carried from elsewhere
•a 15% increase in the North America region, inclusive of revenue from acquisitions, driven by an increase in LMR, Video and Command Center; and
Current report — wording carried from elsewhere
•$30 million, or 9% growth in Command Center, driven by the North America and International regions; partially offset by
Current report — wording carried from elsewhere
Gross margin was 50.4% of net sales in the first half of 2024 compared to 48.9% in the first half of 2023. The primary drivers of this increase in gross margin as a percentage of net sales were:
Current report — wording carried from elsewhere
•higher gross margin as a percentage of net sales in the Products and Systems Integration segment, inclusive of acquisitions, primarily driven by higher sales and favorable mix; partially offset by
Current report — wording carried from elsewhere
Other charges decreased by $31 million in the first half of 2024 compared to the first half of 2023. The change was driven primarily by the following:
Current report — wording carried from elsewhere
•$76 million of intangible asset amortization expense in the first half of 2024 compared to $98 million of intangible asset amortization expense in the first half of 2023;
Current report — wording carried from elsewhere
•$13 million loss on fair value adjustments to equity investments in the first half of 2024 compared to a $19 million gain on fair value adjustments to equity investments in the first half of 2023; and
Current report — wording carried from elsewhere
•$4 million of foreign currency gains in the first half of 2024 compared to $40 million of foreign currency losses in the first half of 2023;
Current report — wording carried from elsewhere
•$63 million of net periodic pension and postretirement benefit in the first half of 2024 compared to $49 million of net periodic pension and postretirement benefit in the first half 2023; and
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•$585 million loss from the extinguishment of Silver Lake Convertible Debt in the first quarter of 2024;