OTHER SELECTED FINANCIAL RESULTS
- Operating margin — GAAP operating margin was 9.9 percent of sales; non-GAAP operating margin was 14.4 percent. These results include $49 million in lower operating expenses compared with the second quarter of 2013 primarily due to ongoing cost-reduction initiatives. In the second quarter, the company achieved $75 million in cost reductions.
- Taxes — The 2014 GAAP effective tax rate was 20 percent compared with a negative effective tax rate in the second quarter of 2013. The 2014 non-GAAP effective tax rate was 25 percent compared with a negative tax rate in the second quarter of 2013. The GAAP and non-GAAP effective tax rates in the second quarter of 2013 were favorably impacted by benefits largely associated with excess foreign tax credits on undistributed foreign earnings in that quarter.
- Cash flow — The company generated $118 million in operating cash flow from continuing operations during the quarter. This is a $140 million improvement from the second quarter of 2013 primarily driven by improved collections and other improvements in working capital accounts.
- Cash and cash equivalents — The company ended the quarter with cash and cash equivalents of $2.9 billion while returning $495 million to shareholders through share repurchases and cash dividends. The company repurchased $416 million of its common stock in the second quarter, reflecting only two months of repurchase. On July 31, the company announced it would increase its quarterly cash dividend by 10 percent to 34 cents per share. The next quarterly dividend will be payable in cash on Oct. 15, 2014, to stockholders of record at the close of business on Sept. 15, 2014.
- Secured significant Product wins such as a $23 million contract with the Ecuador Ministry of Interior for its nationwide public safety system, a $10 million system contract with Denton County in Texas and a $10 million system contract with Marathon Galveston Bay Refinery
- Continued progress in Services with multiyear lifecycle support wins including a $19 million contract with Montgomery County in Maryland and a $19 million contract with Butler County in Ohio, as well as an $8 million multiyear managed services contract with Queensland Gas Company in Australia
- Launched the Intelligent Data Portal, which gives first responders in the field instant access to enhanced situational awareness through mobile apps
- Third quarter 2014 — Motorola Solutions expects a revenue decline of 7 to 9 percent compared with the third quarter of 2013, with non-GAAP earnings per share from continuing operations in the range of $0.35 to $0.41 per share.
- Full year 2014 — The company still expects a revenue decline of low- to mid- single digits, excluding IDEN, with non-GAAP operating margins from continuing operations of approximately 18.5 percent of sales, consistent with the previous outlook.
- The company has increased its target for cost reductions from $200 million to approximately $300 million by the end of 2015. This will result in a total reduction in operating expenses from $2 billion in 2013 to approximately $1.7 billion for 2015.
RESULTS FROM DISCONTINUED OPERATIONS
On April 15, Motorola Solutions announced that it had entered into a definitive agreement to sell its Enterprise business to Zebra Technologies in a $3.45 billion all-cash transaction, subject to customary closing conditions. The Enterprise business is reflected as discontinued operations.
Sales from discontinued operations were $560 million in the second quarter of 2014 compared with $610 million in the year-ago quarter. The sales decline reflects some supply chain and IT execution issues related to transitioning business processes as well as weaker demand in Asia.
CONFERENCE CALL AND WEBCAST
Motorola Solutions will host its quarterly conference call beginning at
7 a.m. U.S. Central Daylight Time (8 a.m. U.S. Eastern Daylight Time)
Tuesday, Aug. 5. The conference call will be webcast live with audio and