Motorola Solutions reported its earnings results for the third quarter of 2015. Sales decreased 1 percent, including $54 million of unfavorable foreign currency impact.
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Sales grew 3 percent in constant currency terms. These results reflect 5 percent growth in North America, which delivered improvements in both Products and Services sales in state and local governments along with strong performance in the U.S. Federal business.
Overall company product sales were flat due to currency headwinds and weakness in the Latin America region. The Services business declined 3 percent primarily due to currency headwinds, lower iDEN revenue and a decline in systems integration revenues in Norway.
Operating margin - GAAP operating margin was 16.2 percent of sales in the third quarter of 2015, compared with 14.4 percent in the third quarter of 2014; non-GAAP operating margin was 20.5 percent of sales, compared with 18.0 percent in the third quarter of 2014, reflecting $39 million in lower operating expenses compared with the third quarter of 2014, due to the company's cost reduction initiatives, lower pension expense and a stronger dollar.
Taxes - The third quarter of 2015 GAAP effective tax rate was 36 percent. This compares with a tax rate of 56 percent in the third quarter of 2014, which included a $55 million tax expense related to a valuation allowance.
The third quarter of 2015 non-GAAP tax rate was 35 percent, compared with a tax rate of 33 percent in the third quarter of 2014. The full-year non-GAAP tax rate is expected to be approximately 33 percent. The full-year cash tax rate3 is expected to be approximately 15 percent.
Cash flow - The company generated $300 million in operating cash from continuing operations during the quarter, reflecting an increase of $415 million over the prior year.
Free cash flow was $250 million in the quarter. The increase was largely driven by $397 million in lower pension contributions and improved earnings performance.
Cash and cash equivalents - The company ended the quarter with cash and cash equivalents of $2.2 billion and a net debt position of approximately $2.2 billion4. The company repurchased approximately $2.1 billion of its common stock in the third quarter of 2015 and paid approximately $70 million in cash dividends. ■