# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

# ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

# For	the	fiscal	year	ended	December	31,	2012

¨ TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

Commission	File	number	1-7221

# MOTOROLA	SOLUTIONS,	INC.

(Exact	name	of	registrant	as	specified	in	its	charter)

DELAWARE

(State	of	Incorporation)

Title	of	Each	Class

Common	Stock,	$.01	Par	Value	per	Share

(I.R.S.	Employer	Identification	No.)

1303	East	Algonquin	Road,	Schaumburg,	Illinois	60196

(Address	of	principal	executive	offices)

(Registrant's	telephone	number)

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Name	of	Each	Exchange	on	Which	Registered

New	York	Stock	Exchange

Chicago	Stock	Exchange

Securities	registered	pursuant	to	Section	12(g)	of	the	Act:

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.				Yes		 ý				No		¨

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934.				Yes ¨				No		ý

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the	preceding	12	months	(or	for such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90	days.				Yes		ý				No		¨

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to	be	submitted	and	posted	pursuant	to Rule	405	of	Regulation	S-T	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	and	post	such	files).				Yes		ý				No		¨

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of	registrant's	knowledge,	in definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.		¨

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.	See	the	definitions	of	"large	accelerated filer,"	"accelerated	filer"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.	(Check	one):

Large	accelerated	filer		x

Accelerated	filer		¨

Non-accelerated	filer		¨

Smaller	reporting	company		¨

(Do	not	check	if	a	smaller	reporting	company)

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Exchange	Act).				Yes		 ¨					No		ý

The	aggregate	market	value	of	voting	and	non-voting	common	equity	held	by	non-affiliates	of	the	registrant	as	of	June	30,	2012	(the	last	business	day	of	the	Registrant's	most	recently	completed second	quarter)	was	approximately	$13.8	billion.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Portions	of	the	registrant's	definitive	Proxy	Statement	to	be	delivered	to	stockholders	in	connection	with	its	Annual	Meeting	of	Stockholders	to	be	held	on	May	6,	2013,	are	incorporated	by reference	into	Part	III.

# Table	of	Contents

|  | Page |
| :--- | :--- |
| PART\tI | 1 |
| Item\t1.\tBusiness | 1 |
| General | 1 |
| Government\tSegment | 1 |
| Enterprise\tSegment | 3 |
| Other\tInformation | 4 |
| Backlog | 4 |
| Research\tand\tDevelopment | 4 |
| Payment\tTerms | 4 |
| Regulatory\tMatters | 4 |
| Intellectual\tProperty\tMatters,\tPatents,\tand\tTrademarks | 5 |
| Inventory,\tRaw\tMaterials,\tand\tRight\tof\tReturn\tand\tSeasonality | 6 |
| Environmental\tQuality | 6 |
| Employees | 6 |
| Financial\tInformation\tAbout\tGeographic\tAreas | 6 |
| Financial\tInformation\tAbout\tSegments | 6 |
| Available\tInformation | 7 |
| Item\t1A.\tRisk\tFactors | 8 |
| Item\t1B.\tUnresolved\tStaff\tComments | 19 |
| Item\t2.\tProperties | 19 |
| Item\t3.\tLegal\tProceedings | 19 |
| Item\t4.\tMine\tSafety\tDisclosures | 20 |
| Executive\tOfficers\tof\tthe\tRegistrant | 20 |
| PART\tII | 21 |
| Item\t\t5.\tMarket\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 21 |
| Item\t6.\tSelected\tFinancial\tData | 23 |
| Item\t7.\tManagement's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 24 |
| Item\t7A.\tQuantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 46 |
| Item\t8.\tFinancial\tStatements\tand\tSupplementary\tData | 49 |
| Item\t9.\tChanges\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 96 |
| Item\t9A.\tControls\tand\tProcedures | 96 |
| Item\t9B.\tOther\tInformation | 98 |
| PART\tIII | 98 |
| Item\t10.\tDirectors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 98 |
| Item\t11.\tExecutive\tCompensation | 98 |
| Item\t\t12.\tSecurity\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 98 |
| Item\t13.\tCertain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 98 |
| Item\t14.\tPrincipal\tAccounting\tFees\tand\tServices | 98 |
| PART\tIV | 99 |
| Item\t15.\tExhibits\tand\tFinancial\tStatement\tSchedules | 99 |
| 15(a)(1)\tFinancial\tStatements | 99 |
| 15(a)(2)\tFinancial\tStatement\tSchedule\tand\tIndependent\tAuditors'\tReport | 99 |
| 15(a)(3)\tExhibits | 99 |

# PART	I

Throughout	this	10-K	report	we	"incorporate	by	reference"	certain	information	in	parts	of	other	documents	filed	with	the	Securities	and	Exchange	Commission (the	"SEC").	The	SEC	allows	us	to	disclose	important	information	by	referring	to	it	in	that	manner.	Please	refer	to	such	information.

We	are	making	forward-looking	statements	in	this	report.	In	"Item	1A:	Risk	Factors"	we	discuss	some	of	the	risk	factors	that	could	cause	actual	results	to	differ materially	from	those	stated	in	the	forward-looking	statements.

"Motorola	Solutions"	(which	may	be	referred	to	as	the	"Company,"	"we,"	"us,"	or	"our")	means	Motorola	Solutions,	Inc.	or	Motorola	Solutions,	Inc.	and	its subsidiaries,	or	one	of	our	segments,	as	the	context	requires.	MOTOROLA,	MOTO,	MOTOROLA	SOLUTIONS	and	the	Stylized	M	Logo,	as	well	as	iDEN	are trademarks	or	registered	trademarks	of	Motorola	Trademark	Holdings,	LLC	and	are	used	under	license.

During	2011,	we	reclassified	the	historical	financial	results	of	the	following	businesses	as	discontinued	operations:	(i)	Motorola	Mobility	Holdings,	Inc. ("Motorola	Mobility"),	(ii)	Point-to-Point	(Orthogon)	and	Point-to-Multipoint	(Canopy)	wireless	broadband	businesses	("wireless	broadband	businesses"),	and	(iii)	the amateur,	marine	and	airband	radio	businesses.	Also	during	2011,	we	completed	the	sale	of	certain	assets	and	liabilities	of	the	Networks	business	to	Nokia	Siemens Networks	B.V.	("NSN"),	which	was	reclassified	to	discontinued	operations	during	2010.	The	results	from	discontinued	operations	are	discussed	in	further	detail	in	the "Discontinued	Operations"	section.

# Item	1:	Business

# General

We	are	a	leading	provider	of	mission	critical	communication	infrastructure,	devices,	software	and	services.	Our	products	and	services	help	government	and enterprise	customers	improve	their	operations	through	increased	effectiveness	and	efficiency	of	their	mobile	workforce.	Our	customers	benefit	from	our	global	footprint and	thought	leadership.	We	are	positioned	for	success	with	a	presence	in	over	100	countries,	an	industry	leadership	position,	an	unmatched	portfolio	of	products	and services	and	a	strong	patent	portfolio.

# We	report	financial	results	for	two	segments:

Government:	The	Government	segment	includes	sales	of	public	safety	communications	systems,	commercial	two-way	radio	systems,	devices,	and	software. Service	revenues	included	in	the	Government	segment	are	primarily	those	associated	with	the	design,	installation,	maintenance	and	optimization	of	equipment for	public	safety	networks.

Enterprise:	The	Enterprise	segment	includes	sales	of	rugged	and	enterprise-grade	mobile	computers	and	tablets,	laser/imaging/RFID	based	data	capture products,	wireless	local	area	network	("WLAN")	and	integrated	digital	enhanced	network	("iDEN")	infrastructure	and	software.	Service	revenues	included	in the	Enterprise	segment	are	primarily	maintenance	contracts	associated	with	the	above	products.

The	Company	is	a	corporation	organized	under	the	laws	of	the	State	of	Delaware	as	the	successor	to	an	Illinois	corporation,	Motorola,	Inc.,	organized	in	1928.	The Company	changed	its	name	from	Motorola,	Inc.	to	Motorola	Solutions,	Inc.	on	January	4,	2011.	The	Company's	principal	executive	offices	are	located	at	1303	East Algonquin	Road,	Schaumburg,	Illinois	60196.

# Government	segment

The	Government	segment	designs,	manufactures,	sells,	and	provides	services	around	voice	and	data	communications	systems,	devices,	security	products	and applications.	These	products	and	services	are	sold	to	a	wide	range	of	customers,	including	government,	public	safety	and	first	responder	agencies	as	well	as	commercial customers	who	operate	private	communications	networks	and	manage	a	mobile	workforce.	In	2012,	this	segment's	net	sales	represented	approximately	69%	of	our consolidated	net	sales.

# Our	Industry,	Products,	and	Services

Our	government,	public	safety	and	first	responder	customers	demand	mission-critical	and	interoperable	communications	to	effectively	serve	and	protect	the	public. Our	commercial	customers	demand	business-critical	communications	to	effectively	run	their	business.	Our	customers	are	facing	efficiency	challenges	which	are	driving technology	transitions	and	equipment	upgrades.	Our	sales	growth	is	driven	by	helping	our	customers	address	their	communication	needs.

We	offer	an	extensive	portfolio	of	network	infrastructure,	devices,	applications	and	services,	based	on	standards	including	Association	of	Public-Safety Communications	Officials	Project	25	("APCO	P-25"),	and	European	Telecommunications	Standards	Institute	("ETSI"),	Terrestrial	Trunked	Radio	("TETRA"),	Digital Mobile	Radio	("DMR")	and	Digital	Private	Mobile	Radio	("dPMR"),	as	well	as	broadband	technologies	(Long-Term	Evolution	("LTE"),	and	WiFi).	In	addition,	we offer	critical	applications	and	the	ability	to	integrate	application	platforms	in	the	public	safety	command	center,	including	voice,

computer	aided	dispatch,	and	multimedia/video.	Our	comprehensive	service	offering	in	this	segment	includes	mobility	consulting,	system	design	and	installation, network	and	device	management,	and	product	support.

# Our	Strategy

Our	strategy	in	the	Government	segment	is	to	partner	with	our	customers	to	enable	them	to	deliver	reliable	services	efficiently	through	innovative	products	and best-in-class	services.	Thought	leadership	and	innovation	are	core	to	the	effective	partnership	with	our	customers.	We	deliver	innovation	by:	(i)	developing	next- generation	public	safety	solutions	including	devices,	public	safety	LTE	systems,	and	critical	command	center	applications;	(ii)	leading	the	ongoing	migration	to	digital products;	(iii)	managing	the	potential	public/private	convergence	of	700MHz	public	safety	systems	in	the	U.S.	and	digital	dividend	spectrum	worldwide;	(iv)	continuing to	be	an	industry	leader	in	APCO	25	and	TETRA	standards-based	voice	and	data	communication	systems	around	the	world;	and	(v)	enhancing	our	services	offering through	network	and	application	integration,	and	network	management.	We	continue	to	actively	manage	our	product	and	services	portfolio,	investing	to	expand	into attractive	and	complementary	vertical	markets	to	strengthen	our	customer	relationships.

# Our	Customers

We	address	the	communication	needs	of	government	agencies,	state	and	local	public	safety	and	first	responder	agencies,	and	commercial	and	industrial	customers. Our	largest	customer	is	the	U.S.	government	(through	its	various	branches	and	agencies,	including	the	armed	services),	which	represented	approximately	10%	of	this segment's	net	sales,	and	7%	of	the	Company's	net	sales	in	2012.	The	loss	of	this	customer	could	have	a	material	adverse	effect	on	our	revenue	and	earnings	over	several quarters,	because	some	of	our	contracts	with	the	U.S.	government	are	long-term.	All	contracts	with	the	U.S.	government	are	subject	to	cancellation	at	the	convenience	of the	U.S.	government.	Net	sales	to	customers	in	North	America	represented	64%	of	this	segment's	net	sales	in	2012.

We	believe	that	there	are	a	large	number	of	government	and	commercial	customers	globally	who	have	yet	to	replace	aged	analog	infrastructure	with	next generation	digital	systems,	that	enables	enhanced	features	and	a	more	efficient	use	of	spectrum.	We	also	believe	government	and	commercial	customers	globally	have yet	to	experience	the	benefits	of	converged	wireless	communications,	mobility,	and	efficiencies	realized	through	applications	enabled	by	mobile	broadband.	In	addition to	serving	our	existing	customers,	we	believe	that	we	have	opportunities	to	pursue	profitable	growth	by	extending	our	reach	across	new	technologies,	including	public safety	LTE	systems.

Our	sales	model	includes	both	direct	sales	by	our	in-house	sales	force,	which	tends	to	focus	on	our	largest	accounts,	and	sales	through	our	channel	partner	program. Our	channel	partners	include	distributors,	value	added	resellers	and	independent	software	vendors.	Resellers	and	distributors	each	have	their	own	sales	organizations that	complement	and	extend	the	reach	of	our	sales	force.	With	deep	expertise	about	specific	customers'	operations,	resellers	are	very	effective	in	promoting	sales	of	our product	portfolio.	The	independent	software	vendors	in	our	channel	partner	program	offer	customized	applications	that	meet	specific	needs	in	the	vertical	market	we serve.

# Our	Competition

The	markets	in	which	we	operate	are	highly	competitive.	Continued	evolution	in	our	industry	and	technology	shifts	are	creating	opportunities	for	established	and new	competitors.	Key	competitive	factors	include:	product	performance,	product	features,	product	quality,	availability	and	warranty,	price,	availability	of	vendor financing,	quality	and	availability	of	service,	company	reputation	and	financial	strength,	partner	community,	and	relationships	with	key	customers.	Our	strong relationships	with	customers	and	partners,	technology	leadership,	breadth	of	portfolio,	product	performance	and	support	position	us	well	for	success.

We	experience	widespread	competition	from	a	growing	number	of	existing	and	new	competitors,	including	large	system	integrators	and	manufacturers	of	private and	public	wireless	network	equipment	and	devices.	Competitors	include:	Alcatel-Lucent,	Cassidian,	Harris,	Hytera,	Kenwood,	Sepura	and	Tait.

Large	system	integrators	are	seeking	to	move	further	into	the	government	customer	space.	We	and	our	competitors	may	serve	as	subcontractors	to	large	system integrators	and	are	selected	based	on	a	number	of	competitive	factors	and	customer	requirements.	Where	favorable,	we	may	partner	with	large	system	integrators	to make	available	our	portfolio	of	advanced	mission-critical	network	infrastructure,	devices,	applications	and	services.

Several	other	competitive	factors	may	have	an	impact	on	our	Government	segment,	including:	evolving	developments	in	the	700	MHz	band,	increasing encroachment	by	broadband	and	IP	solution	providers,	and	new	low-tier	vendors.	As	demand	for	fully	integrated	voice,	data,	and	broadband	systems	continue,	we	may face	additional	competition	from	public	telecommunications	carriers	and	telecommunications	equipment	providers.

# Enterprise	segment

The	Enterprise	segment	designs,	manufactures,	sells	and	provides	services	around	rugged	and	enterprise-grade	mobile	computers,	including	tablets,	data	capture devices,	security	products	and	applications,	and	WLAN	and	iDEN	infrastructure.	These	are	sold	to	a	wide	range	of	enterprise	customers,	including	those	in	retail, hospitality,	transportation	and	logistics,	manufacturing,	warehouse	and	distribution	centers,	energy	and	utilities,	education	and	healthcare.	In	2012,	this	segment's	net sales	represented	approximately	31%	of	our	consolidated	net	sales.

Our	enterprise	customers	are	continuously	looking	to	improve	their	operational	efficiency	as	well	as	to	increase	their	top	line	through	superior	customer	service. We	believe	that	long-term	growth	opportunities	exist	within	the	Enterprise	segment,	as	the	global	workforce	continues	to	become	more	mobile	and	enterprise	customers continue	to	focus	on	improving	their	workforce	efficiency	and	productivity.	Our	sales	growth	is	driven	by	helping	our	customers	mobilize	their	workforce	and	improve their	customer	service.

We	offer	a	comprehensive	portfolio	of	enterprise	grade	solutions,	including	devices,	infrastructure,	applications	and	services.	These	include	rugged	mobile computers	and	tablets,	laser/imager/RFID	based	data	capture	devices	and	kiosks,	WLAN	switches,	controllers	and	access	points,	network	and	device	management software,	network	and	device	security	software,	voice-based	integrated	solutions,	and	systems	based	on	iDEN	technology.	Our	service	offerings	in	this	segment	have been	primarily	related	to	product	support.	However,	we	are	expanding	our	services	offerings	to	also	include	network	integration	and	network	and	device	management,	as well	as	mobility	consulting.

Our	strategy	in	the	Enterprise	segment	is	to	deliver	the	next	generation	of	enterprise	mobility	to	empower	the	mobile	worker,	enable	real-time	asset	visibility	and engage	the	smart	consumer.	We	have	identified	key	areas	of	innovation	that	will	enable	successful	implementation	of	this	strategy.	These	include	advanced	devices, enhanced	information	capture	and	analysis,	adaptive	networking	solutions,	integrated	voice	and	data	communications,	applications	and	services.	We	are	expanding	our devices	portfolio	to	address	the	needs	of	an	increasingly	mobile	workforce.	Our	products	and	services	are	designed	to	improve	our	customers'	operations	through	real- time	asset	visibility	and	integrated/adaptive	communications	networking	solutions.	Our	portfolio	of	wireless	infrastructure	and	device	products	is	complemented	by applications	and	services,	which	are	designed	to	help	our	customers	achieve	their	business	objectives.	We	are	seeking	to	further	expand	our	services	offerings	over	the lifecycle	of	these	products.

We	address	the	communication	and	data	capture	needs	of	enterprise	customers	including	those	in	retail,	hospitality,	transportation	and	logistics,	manufacturing, warehouse	and	distribution	centers,	energy	and	utilities,	education	and	healthcare.	These	customers	operate	a	large	and	diverse	mobile	workforce	and	are	continuously focused	on	improving	their	operations	through	greater	employee	efficiency,	greater	asset	visibility	and	superior	customer	service.	Our	product	and	services	portfolio delivers	attractive	return	on	technology	investment	for	our	customers.	In	addition	to	serving	our	existing	customers,	we	believe	that	we	have	opportunities	to	pursue profitable	growth	by	extending	our	reach	across	new	vertical	markets.

Our	sales	model	includes	both	direct	sales	by	our	in-house	sales	force	and	sales	through	our	channel	partner	program.	Our	channel	partners	include	distributors, value	added	resellers	and	independent	software	vendors.	Resellers	and	distributors	each	have	their	own	sales	organizations	that	complement	and	extend	the	reach	of	our sales	force.	With	deep	expertise	about	specific	customers'	operations,	resellers	are	very	effective	in	promoting	sales	of	our	product	portfolio.	The	independent	software vendors	in	our	channel	partner	program	offer	customized	applications	that	meet	specific	needs	in	each	vertical	market	we	serve.	Our	Enterprise	segment	utilizes	our channel	partners	more	extensively	than	our	Government	segment,	as	the	products	of	this	segment	generally	support	a	broad	range	of	applications.

The	markets	in	which	we	operate	are	highly	competitive.		Economic	pressure,	growth	of	mobile	workers	worldwide,	industry	consolidation,	business	model evolution	and	technology	shifts	are	creating	opportunities	for	established	and	new	competitors.		Key	competitive	factors	include	product	and	services	portfolio	breadth, product	performance,	product	and	service	availability	and	warranty,	product	and	service	quality,	strength	of	company	relationships	with	customers	and	partners,	and company	reputation.		Our	strong	relationships	with	customers	and	partners,	strong	brand	and	history	of	innovation,	product	portfolio	breadth,	strong	position	in	data capture	technologies,	superior	product	design	and	performance,	evolving	services	offerings	and	business	model	flexibility	position	us	well	for	success.

We	experience	widespread	competition	from	a	growing	number	of	existing	and	new	competitors,	including	present	manufacturers	of	laser/imager/RFID	based	data capture	devices,	optical	instruments,	notebook	computers	and	tablets,	smart	phones,	cordless	phones,	and	cellular/WLAN/wired	infrastructure	equipment.	Competitors include:	Apple,	Aruba,	Bluebird,	Cisco,	Datalogic,	HP,	Honeywell,	Intermec,	Panasonic,	and	Samsung.

# Other	Information

# Backlog

During	2012,	we	changed	our	methodology	for	reporting	backlog.	Prior	to	the	first	quarter	of	2012,	we	excluded	from	backlog	service	orders	such	as	maintenance and	extended	warranty	contracts.	Additionally,	certain	product	and	system	installation	labor	orders	that	were	for	delivery	beyond	a	certain	time	frame,	typically	18 months,	were	excluded	from	backlog.	Our	new	methodology	now	includes	all	service,	product,	and	system	installation	orders	that	have	been	received,	and	are	believed to	be	firm.

The	Company's	backlog,	using	our	new	methodology	for	both	years,	as	of	December	31,	2012	and	December	31,	2011	was	as	follows:

Approximately	40%	of	the	Government	backlog	and	85%	of	the	Enterprise	backlog	is	expected	to	be	recognized	as	revenue	during	2013.	The	forward-looking estimate	of	the	firmness	of	such	orders	is	subject	to	future	events	that	may	cause	the	amount	recognized	to	change.

# Research	and	Development

	We	participate	in	very	competitive	industries	with	constant	changes	in	technology.	Throughout	our	history,	we	have	relied,	and	continue	to	rely,	primarily	on	our research	and	development	("R&D")	programs	for	the	development	of	new	products,	and	on	our	production	engineering	capabilities	for	the	improvement	of	existing products.	We	supplement	our	internal	R&D	spending	through	activities	with	joint	development	and	manufacturing	partners.	Management	believes,	looking	forward,	that our	commitment	to	R&D	programs	should	allow	us	to	remain	competitive.

R&D	expenditures	relating	to	new	product	development	or	product	improvement	were	$1.1	billion	in	2012,	compared	to	$1.0	billion	in	2011	and	in	2010.	We continue	to	believe	that	a	strong	commitment	to	R&D	is	required	to	drive	long-term	growth.	As	of	December	31,	2012,	we	had	approximately	7,000	professional employees	engaged	in	such	R&D	activities.

# Payment	Terms

Payment	terms	vary	worldwide,	depending	on	the	arrangement.	Generally,	contract	payment	terms	range	from	30	to	45	days	from	the	invoice	date	within	North America	and	typically	do	not	exceed	90	days	in	regions	outside	of	North	America.	A	portion	of	the	contracts	within	our	Government	segment	include	implementation milestones,	such	as	delivery,	installation	and	system	acceptance,	which	generally	take	30	to	180	days	to	complete.	Invoicing	the	customer	is	dependent	on	completion	of the	milestone.

We	generally	do	not	grant	extended	payment	terms.	As	required	for	competitive	reasons,	we	may	provide	long-term	financing	in	connection	with	equipment purchases.	Financing	may	cover	all	or	a	portion	of	the	purchase	price.

# Regulatory	Matters

The	use	of	wireless	voice,	data	and	video	communications	systems	requires	radio	spectrum,	which	is	regulated	by	governmental	agencies	throughout	the	world.	In the	U.S.,	the	Federal	Communications	Commission	("FCC")	and	the	National	Telecommunications	and	Information	Administration	("NTIA")	regulate	spectrum	use	by non-federal	entities	and	federal	entities,	respectively.	Similarly,	countries	around	the	world	have	one	or	more	regulatory	bodies	that	define	and	implement	the	rules	for use	of	the	radio	spectrum,	pursuant	to	their	respective	national	laws	and	international	coordination	under	the	International	Telecommunications	Union	("ITU").	We manufacture	and	market	products	in	spectrum	bands	already	made	available	by	regulatory	bodies.	These	include	voice	and	data	infrastructure,	mobile	radios	and	portable or	handheld	devices.	Consequently,	our	results	could	be	positively	or	negatively	affected	by	the	rules	and	regulations	adopted	from	time	to	time	by	the	FCC,	NTIA	or regulatory	agencies	in	other	countries.	Our	products	operate	both	on	licensed	and	unlicensed	spectrum.	The	availability	of	additional	radio	spectrum	may	provide	new business	opportunities,	and	consequently,	the	loss	of	available	radio	spectrum	may	result	in	the	loss	of	business	opportunities.	Regulatory	changes	in	current	spectrum bands	may	also	provide	opportunities	or	may	require	modifications	to	some	of	our	products	so	they	can	continue	to	be	manufactured	and	marketed.

As	television	transmission	and	reception	technology	transitions	from	analog	to	more	efficient	digital	modes,	various	countries	around	the	world	are	examining, and	in	some	cases	already	pursuing,	the	redevelopment	of	portions	of	the	television	spectrum.	In	the	U.S.,	pursuant	to	federal	legislation,	analog	television	stations ceased	operation	in	the	broadcast	television

spectrum	on	June	12,	2009.	As	a	result	of	this	transition,	108	MHz	of	spectrum	historically	used	for	broadcast	television,	known	as	the	700MHz	band,	is	being redeveloped	and	deployed	for	new	uses	(the	so-called	"digital	dividend"	spectrum),	including	broadband	and	narrowband	wireless	communications.	Now	that	the	700 MHz	band	spectrum	is	open	nationwide,	FCC	records	indicate	that	so	far	over	170	public	safety	agencies	throughout	over	30	states	have	been	deploying	narrowband operations	at	700	MHz	and	others	are	in	the	planning	stages.

Thirty-four	MHz	of	spectrum	in	the	700	MHz	band	is	now	allocated	to	support	new	public	safety	narrowband	and	broadband	communications	systems.	This includes	24	MHz	of	spectrum	previously	allocated	by	the	FCC	and	an	additional	ten	MHz	of	spectrum	(the	"D	block")	allocated	in	February	2012.	This	latter	ten	MHz allocation	is	the	result	of	Congressional	action	responding	to	public	safety	requests	for	additional	broadband	spectrum.

The	resulting	law,	Public	Law	112-96	also	identified	up	to	$7	billion	in	funding	for	the	nationwide	public	safety	broadband	network	with	$2	billion	of	that available	near-term.	Pursuant	to	this	law,	a	governance	structure	and	entity	known	as	the	First	Responder	Network	Authority	("FirstNet")	was	established	in	August 2012	to	manage	deployment	and	operation	of	the	network.	Additional	work,	currently	ongoing	in	FirstNet,	is	required	to	enable	deployment	of	the	nationwide	public safety	broadband	network.	As	a	result	of	the	legislation	and	establishment	of	FirstNet,	the	FCC	cancelled	21	conditional	waiver	grants	previously	issued	to	public	safety agencies	to	deploy	700	MHz	broadband	systems	and	instead	established	a	new	process	to	issue	special	temporary	authorizations	("STAs")	for	early	deployments.	This required	public	safety	entities	to	apply	for	early	deployment	using	the	new	process,	and	required	that	they	be	able	to	substantiate	progress	toward	deployment.		This creates	a	higher	standard	than	that	used	for	the	waivers,	potentially	affecting	several	of	our	customers.			In	September	2012,	one	such	customer,	the	State	of	Texas received	an	STA	for	deployment	of	14	broadband	sites	in	the	Harris	County	area	around	Houston,	and	we	are	in	the	process	of	implementing	that	broadband	system. FirstNet	is	considering	the	potential	for	additional	early	deployments,	some	by	other	of	our	customers,	such	as	the	State	of	Mississippi.		Such	early	deployments	would help	speed	interoperable	broadband	capabilities	for	first	responders	and	the	experience	gained	regarding	public	safety	broadband	operation	should	benefit	FirstNet	in developing	and	implementing	its	plan	to	deploy	the	nationwide	network.		The	planned	implementation	of	a	nationwide	public	safety	network	and	any	additional	early deployments	may	also	create	opportunities	for	our	broadband	solutions.

In	March,	2012,	Canada	released	a	decision	to	allocate	ten	MHz	of	spectrum	in	the	700	MHz	band	for	public	safety	broadband.	Subsequently,	in	August	2012, Canada	proposed	that	an	additional	and	adjacent	ten	MHz	also	be	allocated	to	public	safety	for	broadband	use.	A	decision	on	that	additional	ten	MHz	of	spectrum	is expected	in	2013.	If	adopted,	this	would	harmonize	Canada's	700	MHz	band	plan	with	that	in	the	U.S.

Internationally,	the	ITU	World	Radio	Conference	("WRC")	was	held	in	Geneva	during	the	first	quarter	of	2012.	During	this	conference,	leaders	from	United Nations	member	countries	considered	a	number	of	initiatives,	including	whether	to	allocate	additional	spectrum	for	commercial	broadband	use	as	well	as	whether	to allocate	spectrum	dedicated	for	public	safety	broadband.		The	WRC	agreed	to	consider	spectrum	for	public	safety	broadband.	Studies	are	underway	to	assess	whether	and how	much	spectrum	is	needed	and	to	develop	recommendations	on	where	in	the	spectrum	range	the	spectrum	should	be	allocated	(taking	into	account	regional	and global	harmonization	to	the	extent	practicable).		The	issue	made	it	onto	the	agenda	for	the	next	WRC	in	2015.	The	result	could	be	future	allocations	for	dedicated broadband	spectrum	for	public	safety	which	will	provide	opportunities	for	us	in	the	future.		In	addition,	certain	countries	already	have	spectrum	landscapes	that	would permit	country	administrations	to	allocate	public	safety	spectrum	today.		A	WRC	initiative	can	spur	individual	countries	to	act	sooner,	which	may	also	create opportunities	for	our	broadband	solutions	in	the	nearer	term.

Some	of	our	operations	use	substances	regulated	under	various	federal,	state,	local	and	international	laws	governing	the	environment	and	worker	health	and safety,	including	those	governing	the	discharge	of	pollutants	into	the	ground,	air	and	water,	the	management	and	disposal	of	hazardous	substances	and	wastes	and	the cleanup	of	contaminated	sites.	Certain	of	our	products	are	subject	to	various	federal,	state,	local	and	international	laws	governing	chemical	substances	in	electronic products.

# Intellectual	Property	Matters

Patent	protection	is	extremely	important	to	our	operations.	We	have	an	extensive	U.S.	and	international	portfolio	of	patents	relating	to	our	products,	systems	and technologies,	including	research	developments	in	radio	frequency	technology	and	circuits,	wireless	network	technologies,	over-the-air	protocols,	mission	critical	two- way	radio	communications	and	advanced	data	capture.	We	have	also	filed	additional	patent	applications	in	the	U.S.	Patent	and	Trademark	Office,	as	well	as	in	foreign patent	offices.

We	license	some	of	our	patents	to	third-parties,	but	this	revenue	is	not	significant.	We	are	also	licensed	to	use	certain	patents	owned	by	others.	Royalty	and licensing	fees	vary	from	year	to	year	and	are	subject	to	the	terms	of	the	agreements	and	sales	volumes	of	the	products	subject	to	licenses.	In	addition,	Motorola	Solutions has	a	royalty	free	license	under	all	of	the	patents	and	patent	applications	assigned	to	Motorola	Mobility	at	the	time	of	the	separation	of	the	two	businesses	and	will continue	to	enjoy	the	benefit	of	that	license	even	with	the	acquisition	of	Motorola	Mobility	by	Google.

We	actively	participate	in	the	development	of	standards	for	interoperable,	mission-critical	digital	two-way	radio	systems.	Our	patents	are	used	in	various	standards including	APCO	P-25,	ETSI,	TETRA,	DMR	and	dPMR.	We	offer	licenses	to	those	patents	on	fair,	reasonable	and	non-discriminatory	terms.

Notwithstanding	the	transfer	of	patents	to	Motorola	Mobility,	the	expiration	of	certain	patents	and	the	potential	for	increased	competition	for	some	of	our	products in	the	future,	we	believe	that	our	patent	portfolio	will	continue	to	provide	us	with	a	competitive	advantage	in	our	core	product	areas	as	well	as	provide	leverage	for future	technologies.	Furthermore,	we	believe	we	are	not	dependent	upon	a	single	patent	or	a	few	patents.	Our	success	depends	more	upon	our	extensive	know-how, innovative	culture,	technical	leadership	and	marketing	abilities.	We	do	not	rely	primarily	on	patents	or	other	intellectual	property	rights	to	protect	or	establish	our	market position;	however,	we	will	enforce	our	intellectual	property	rights	in	certain	technologies	when	attempts	to	negotiate	mutually	agreeable	licenses	are	not	successful.

# Patents	and	Trademarks

We	seek	to	obtain	patents	and	trademarks	to	protect	our	proprietary	position	whenever	possible	and	practical.	As	of	December	31,	2012,	we	owned	approximately 6,354	patents	in	the	U.S.	and	in	foreign	countries.	As	of	December	31,	2012,	we	and	our	wholly	owned	subsidiaries	had	approximately	2,648	U.S.	and	foreign	patent applications	pending.	These	foreign	patents	and	patent	applications	are	mostly	counterparts	of	our	U.S.	patents.	During	2012,	we	and	our	wholly	owned	subsidiaries were	granted	340	U.S.	patents	and	372	patents	in	other	countries.

We	no	longer	own	certain	logos	and	other	trademarks,	trade	names	and	service	marks,	including	MOTOROLA,	MOTO,	MOTOROLA	SOLUTIONS	and	the Stylized	M	logo	and	all	derivatives	and	formatives	thereof	("Motorola	Marks")	and	we	license	the	Motorola	Marks	from	Motorola	Mobility,	which	is	currently	owned by	Google.

# Inventory,	Raw	Materials,	Right	of	Return	and	Seasonality

Our	practice	is	to	carry	reasonable	amounts	of	inventory	to	meet	customers'	delivery	requirements	in	a	manner	consistent	with	industry	standards.	We	provide custom	products	which	require	the	stocking	of	inventories	and	large	varieties	of	piece	parts	and	replacement	parts	in	order	to	meet	delivery	and	warranty	requirements. To	the	extent	suppliers'	product	life	cycles	are	shorter	than	ours,	stocking	of	lifetime	buy	inventories	is	required	to	meet	long-term	warranty	and	contractual requirements.	In	addition,	replacement	parts	are	stocked	for	delivery	on	customer	demand	within	a	short	delivery	cycle.

Availability	of	materials	and	components	required	is	generally	dependable;	however,	fluctuations	in	supply	and	market	demand	could	cause	selective	shortages and	affect	our	results	of	operations.	We	currently	procure	certain	materials	and	components	from	single-source	vendors.	A	material	disruption	from	a	single-source vendor	may	have	a	material	adverse	impact	on	our	results	of	operations.	If	certain	single-source	suppliers	were	to	become	capacity	constrained	or	insolvent,	it	could result	in	a	reduction	or	interruption	in	supplies	or	an	increase	in	the	price	of	supplies	and	adversely	impact	our	financial	results.

Natural	gas,	electricity	and,	to	a	lesser	extent,	oil	are	the	primary	sources	of	energy	for	our	manufacturing	operations.	Each	of	these	resources	is	currently	in adequate	supply	for	our	operations.	In	addition,	the	cost	to	operate	our	facilities	and	freight	costs	are	dependent	on	world	oil	prices.	Labor	is	generally	available	in reasonable	proximity	to	our	manufacturing	facilities.	Difficulties	in	obtaining	any	of	the	aforementioned	resources	or	a	significant	cost	increase	could	affect	our	financial results.

Generally,	our	contracts	do	not	include	a	right	of	return,	other	than	for	standard	warranty	provisions;	however,	certain	distributor	partners	within	the	commercial enterprise	markets	do	maintain	limited	stock	rotation	rights.	Due	to	buying	patterns	in	the	markets	we	serve,	sales	tend	to	be	somewhat	higher	in	the	fourth	quarter.

# Environmental	Quality

During	2012,	compliance	with	U.S.	federal,	state	and	local,	and	foreign	laws	regulating	the	discharge	of	materials	into	the	environment,	or	otherwise	relating	to	the protection	of	the	environment,	did	not	have	a	material	effect	on	our	capital	expenditures,	earnings	or	competitive	position.

# Employees

# Financial	Information	About	Geographic	Areas

The	response	to	this	section	of	Item	1	incorporates	by	reference	Note	11,	"Commitments	and	Contingencies"	and	Note	12,	"Information	by	Segment	and Geographic	Region"	of	Part	II,	Item	8:	Financial	Statements	and	Supplementary	Data	of	this	document,	the	"Results	of	Operations—2012	Compared	to	2011"	and "Results	of	Operations—2011	Compared	to	2010"	sections	of	Part	II,	"Item	7:	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of Operations"	and	"Item	1A:	Risk	Factors"	of	this	document.

Financial	Information	About	Segments

The	response	to	this	section	of	Item	1	incorporates	by	reference	Note	12,	"Information	by	Segment	and	Geographic	Region,"	of	Part	II,	Item	8:	Financial Statements	and	Supplementary	Data	of	this	document.

# Available	Information

We	make	available	free	of	charge	through	our	website,	www.motorolasolutions.com/investors,	our	annual	reports	on	Form	10-K,	quarterly	reports	on	Form	10-Q, current	reports	on	Form	8-K,	proxy	statements,	other	reports	filed	under	the	Securities	Exchange	Act	of	1934	("Exchange	Act")	and	all	amendments	to	those	reports simultaneously	or	as	soon	as	reasonably	practicable	after	such	material	is	electronically	filed	with,	or	furnished	to,	the	SEC.	Our	reports	are	also	available	free	of	charge on	the	SEC's	website,	www.sec.gov.	Also	available	free	of	charge	on	our	website	are	the	following	corporate	governance	documents:

•Motorola	Solutions,	Inc.	Restated	Certificate	of

Incorporation

•Motorola	Solutions,	Inc.	Amended	and	Restated

# Bylaws

•Motorola	Solutions,	Inc.	Board	Governance

Guidelines

•Motorola	Solutions,	Inc.	Director	Independence

•Principles	of	Conduct	for	Members	of	the	Motorola	Solutions,	Inc.	Board	of Directors

•Motorola	Solutions	Code	of	Business	Conduct,	which	is	applicable	to	all	Motorola	Solutions	employees,	including	the	principal	executive	officers,	the	principal financial	officer	and	the	controller	(principal	accounting	officer)

•Audit	Committee	Charter

•Compensation	and	Leadership	Committee	Charter

•Governance	and	Nominating	Committee	Charter

All	of	our	reports	and	corporate	governance	documents	may	also	be	obtained	without	charge	by	contacting	Investor	Relations,	Motorola	Solutions,	Inc.,	Corporate Offices,	1303	East	Algonquin	Road,	Schaumburg,	Illinois	60196,	E-mail:	investors@motorolasolutions.com.	Our	Annual	Report	on	Form	10-K	and	Definitive	Proxy Statement	may	also	be	requested	in	hardcopy	by	clicking	on	"Printed	Materials"	at	www.motorolasolutions.com/investors.	Our	Internet	website	and	the	information contained	therein	or	incorporated	therein	are	not	intended	to	be	incorporated	into	this	Annual	Report	on	Form	10-K.

# Item	1A:	Risk	Factors

We	wish	to	caution	the	reader	that	the	following	important	risk	factors,	and	those	risk	factors	described	elsewhere	in	this	report	or	in	our	other	Securities	and Exchange	Commission	filings,	could	cause	our	actual	results	to	differ	materially	from	those	stated	in	forward-looking	statements	contained	in	this	document	and elsewhere.	These	risks	are	not	presented	in	order	of	importance	or	probability	of	occurrence.

We	continue	to	face	a	number	of	risks	related	to	current	global	economic	conditions,	including	adverse	credit	conditions,	low	economic	growth,	risk	of	sovereign defaults	and	high	levels	of	unemployment,	and	political	conditions	that	have	and	could	continue	to	unfavorably	impact	our	business.

Global	economic	conditions	continue	to	be	challenging	for	government	and	enterprise	communications	markets,	as	many	economies	and	financial	markets	remain in	a	recession	resulting	from	a	number	of	factors,	including	adverse	credit	conditions,	low	economic	growth	rates,	risk	of	sovereign	defaults,	particularly	in	certain European	countries,	continuing	high	rates	of	unemployment	and	reduced	corporate	capital	spending.	Economic	growth	in	the	U.S.	and	many	other	countries	has remained	low	and	the	length	of	time	these	adverse	economic	conditions	may	persist	are	unknown.	In	addition,	conflicts	in	the	Middle	East	and	elsewhere	have	created many	economic	and	political	uncertainties	that	have	impacted	worldwide	markets.	These	global	economic	and	political	conditions	have	impacted	and	could	continue	to impact	our	business	in	a	number	of	ways,	including:

•Budgeting	and	Forecasting	are	Difficult:	It	is	difficult	to	estimate	changes	in	various	parts	of	the	U.S.	and	world	economy,	including	the	markets	in which	we	participate.	Components	of	our	budgeting	and	forecasting	are	dependent	upon	estimates	of	demand	for	our	products,	the	prevailing	economic uncertainties	render	estimates	of	future	income	and	expenditures	difficult.

•Potential	Deferment	or	Cancellation	of	Purchases	and	Orders	by	Customers:	Uncertainty	about	current	and	future	global	economic	conditions	may cause,	and	in	some	cases	has	caused	businesses	and	in	some	cases	governments	to	defer	or	cancel	purchases	in	response	to	tighter	credit	and	decreased	cash availability	and	declining	consumer	confidence.	If	future	demand	for	our	products	declines	due	to	global	economic	conditions,	it	will	negatively	impact	our financial	results.

•Customers'	Inability	to	Obtain	Financing	to	Make	Purchases	from	Motorola	Solutions	and/or	Maintain	Their	Business:	Some	of	our	customers require	substantial	financing,	including	public	financing	or	government	grants,	in	order	to	fund	their	operations	and	make	purchases	from	us.	The	inability	of these	customers	to	obtain	sufficient	credit	or	other	funds	to	finance	purchases	of	our	products	and/or	meet	their	payment	obligations	to	us	could	have,	and	in some	cases	has	had,	a	negative	impact	on	our	financial	results.	In	addition,	if	global	economic	conditions	result	in	insolvencies	for	our	customers,	it	will negatively	impact	our	financial	results.

•Requests	by	Customers	for	Vendor	Financing	by	Motorola	Solutions:	Certain	of	our	customers,	particularly,	but	not	limited	to,	those	who	purchase large	infrastructure	systems,	request	that	their	suppliers	provide	financing	in	connection	with	equipment	purchases	or	the	provision	of	managed	services.	In response	to	reduced	tax	revenue	at	the	state	and	local	government	level	and	ongoing	tightening	of	credit	for	certain	enterprise	customers,	these	types	of	requests have	increased	in	volume	and	scope.	Motorola	Solutions	through	its	Government	segment	and	in	connection	with	its	global	solutions	and	services	offering,	has continued	to	provide	customer	financing	in	light	of	these	requests.	We	have	been	faced	with	and	expect	to	continue	to	be	faced	with	choosing	between	further increasing	our	level	of	vendor	financing	or	potentially	losing	sales	to	these	customers,	as	some	of	our	competitors,	particularly	those	in	Asia,	have	been	more willing	to	provide	vendor	financing	to	customers	around	the	world,	particularly	customers	in	Africa	and	Latin	America.	To	the	extent	we	are	unable	to	sell	these receivables	on	terms	acceptable	to	us	we	will	retain	exposure	to	the	credit	quality	of	our	customers	who	we	finance.

•Negative	Impact	from	Increased	Financial	Pressures	on	Third-Party	Dealers,	Distributors	and	Retailers:	We	offer	our	products	through	a	variety	of third-party	dealers,	distributors	and	retailers.	Some	of	these	third-parties	are	smaller	and	more	likely	to	be	impacted	by	the	significant	decrease	in	available credit	that	resulted	from	the	financial	crisis	that	continues	today.	If	credit	pressures	or	other	financial	difficulties	result	in	insolvency	for	third	party	dealers, distributors	or	retailers	and	we	are	unable	to	successfully	transition	end-customers	to	purchase	our	products	from	other	third	parties	or	from	us	directly,	it	may cause,	and	in	some	cases	has	caused,	a	negative	impact	on	our	financial	results.

•Negative	Impact	from	Increased	Financial	Pressures	on	Key	Suppliers:	Our	ability	to	meet	customers'	demands	depends,	in	part,	on	our	ability	to obtain	timely	and	adequate	delivery	of	quality	materials,	parts	and	components,	including	software	from	our	suppliers.	Certain	of	these	items	are	available	only from	a	single	source	or	limited	sources.	If	certain	single-source	or	limited-source	suppliers	were	to	become	capacity	constrained	or	insolvent,	it	could	result	in	a reduction	or	interruption	in	supplies	or	an	increase	in	the	price	of	supplies	and	negatively	impact

our	financial	results.	In	addition,	credit	constraints	at	single-source	suppliers	have	resulted	in	accelerated	payment	of	accounts	payable	by	us,	impacting	our cash	flow.

•Risk	of	Financial	Counterparty	Failures	Could	Negatively	Impact	our	Financial	Position:	A	significant	amount	of	our	international	business	in	2012 was	transacted	in	local	currency.	We	use	derivative	financial	instruments	to	reduce	our	overall	exposure	to	the	effects	of	currency	fluctuations	on	cash	flows. We	are	exposed	to	credit	loss	in	the	event	of	nonperformance	by	the	counterparties	to	these	derivative	financial	instruments.	Although	the	contracts	are distributed	among	several	leading	financial	institutions,	all	of	whom	presently	have	investment	grade	credit	ratings,	the	default	by	one	or	more	counterparties could	have	an	adverse	impact	on	our	financial	statements.

•Returns	on	Pension	and	Retirement	Plan	Assets	and	Interest	Rate	Changes	Could	Affect	Our	Earnings	and	Cash	Flow	in	Future	Periods:	We	have large	underfunded	pension	obligations,	in	part	resulting	from	the	fact	that	we	retained	almost	all	of	the	U.S.	pension	liabilities	and	a	major	portion	of	our	non- U.S.	pension	liabilities	following	our	divestitures,	including	the	distribution	of	Motorola	Mobility.	The	funding	position	of	our	pension	plans	is	affected	by	the performance	of	the	financial	markets,	particularly	the	equity	and	debt	markets,	and	the	interest	rates	used	to	calculate	our	pension	obligations	for	funding	and expense	purposes.	Minimum	annual	pension	contributions	are	determined	by	government	regulations	and	calculated	based	upon	our	pension	funding	status, interest	rates,	and	other	factors.	If	the	financial	markets	perform	poorly,	we	could	be	and	have	been	required	to	make	additional	large	contributions.	The	equity and	debt	markets	can	be	volatile,	and	therefore	our	estimate	of	future	contribution	requirements	can	change	dramatically	in	relatively	short	periods	of	time. Similarly,	changes	in	interest	rates	can	affect	our	contribution	requirements.	In	volatile	interest	rate	environments,	the	likelihood	of	material	changes	in	the future	minimum	required	contributions	increases.

We	have	direct	and	indirect	exposure	to	European	sovereign	and	non-sovereign	debt,	and	to	European	markets	and	our	revenues	and	cash	flows	are	exposed	to fluctuations	in	the	euro.

We	have	sizeable	operations	in	Europe,	which	have	been	and	will	be	impacted	by	the	ongoing	financial	situation	in	Europe	and	the	volatility	of	the	euro.	We	view our	exposures	to	the	euro	as	follows	as	of	December	31,	2012:

•Our	cash	and	cash	equivalents	include	approximately	$360	million	of	euro	denominated	currency.

•Our	accounts	receivables	balance	includes	approximately	$140	million	of	euro	denominated	receivables.

•In	2012,	approximately	10%	of	our	total	sales	were	euro	denominated.

•Company-sponsored	defined	benefit	plans	have	no	material	exposure	to	euro	sovereign	debt,	approximately	$70	million	exposure	to	euro	corporate bonds,	and	approximately	$325	million	exposure	to	euro	equity	investments.

A	significant	devaluation	of,	or	movement	away	from,	the	use	of	the	euro	could	have	a	material	adverse	effect	on	our	financial	condition	and	results	of	operations.

Our	success	depends	in	part	on	our	timely	introduction	of	new	products	and	technologies	and	our	results	can	be	impacted	by	the	effectiveness	of	our	significant investments	in	new	products	and	technologies.

The	markets	for	certain	of	our	products	are	characterized	by	rapidly	changing	technologies	and	evolving	industry	standards.	In	addition,	new	technologies	and associated	competitors	are	entering	our	markets	at	a	faster	pace	than	we	have	experienced	in	the	past,	including	consumer	grade	products.	New	products	are	expensive	to develop	and	bring	to	market.	Our	success	depends,	in	substantial	part,	on	the	timely	and	successful	introduction	of	new	products	and	upgrades	of	current	products	to comply	with	emerging	industry	standards	and	to	address	competing	technological	and	product	developments	carried	out	by	our	competitors.	The	research	and development	of	new,	technologically-advanced	products	is	a	complex	and	uncertain	process	requiring	high	levels	of	innovation	and	investment,	as	well	as	the	accurate anticipation	of	technology	and	market	trends.	Many	of	our	products	and	systems	are	complex	and	we	may	experience	delays	in	completing	development	and	introducing new	products	or	technologies	in	the	future.	We	may	focus	our	resources	on	technologies	that	do	not	become	widely	accepted	or	are	not	commercially	viable	or	involve compliance	obligations	with	additional	areas	of	regulatory	requirements.

Our	results	are	subject	to	risks	related	to	our	significant	investment	in	developing	and	introducing	new	products.	These	risks	include	among	others:	(i)	difficulties and	delays	in	the	development,	production,	testing	and	marketing	of	products;	(ii)	customer	acceptance	of	products;	(iii)	the	development	of,	approval	of,	and compliance	with	industry	standards	and	regulatory	requirements;	(iv)	the	significant	amount	of	resources	we	must	devote	to	the	development	of	new	technologies;	and (v)	the	ability	to	differentiate	our	products	and	compete	with	other	companies	in	the	same	markets.

We	are	exposed	to	risks	under	large,	multi-year	system	and	managed	services	contracts	that	may	negatively	impact	our	business.

We	enter	into	large,	multi-year	system	and	managed	services	contracts	with	large	municipal,	state,	nation-wide	government	and	enterprise	customers.	This	exposes us	to	risks,	including	among	others:	(i)	the	technological	risks,	especially

when	the	contracts	involve	new	technology;	(ii)	financial	risks,	including	the	estimates	inherent	in	projecting	costs	associated	with	large,	long	term	contracts	and	the related	impact	on	operating	results;	and	(iii)	political	risk,	especially	related	to	the	contracts	with	government	customers.	In	addition,	multi-year	awards	from governmental	customers	may	often	only	receive	partial	funding	initially	and	may	typically	be	cancelable	on	short	notice	with	limited	penalties.	The	termination	of funding	for	a	government	program	could	result	in	a	loss	of	anticipated	future	revenue	attributable	to	that	program,	which	could	have	an	adverse	impact	on	our profitability.

The	expansion	of	our	business	into	managed	services	creates	new	competitors	and	new	and	increased	areas	of	risk	that	we	have	not	been	exposed	to	in	the	past	and	that we	may	not	be	able	to	properly	assess	or	mitigate	against.

In	July	2011,	we	announced	the	formation	of	our	global	solutions	and	services	organization.	We	plan	to	continue	to	expand	our	business	by	offering	additional	and expanded	managed	services	for	existing	and	new	types	of	customers,	such	as	designing,	building,	operating,	managing	and	in	some	cases	owning	a	public-safety	system or	other	commercial	system.	The	offering	of	managed	services	involves	the	integration	of	multiple	services,	multiple	vendors	and	multiple	technologies,	requiring	that we	partner	with	other	systems	and	services	providers,	often	on	multi-year	projects.	In	some	cases	we	must	compete	in	some	business	areas	with	a	company	with	which we	have	a	partnership	and,	at	the	same	time,	cooperate	with	that	company	in	other	business	areas.	From	time	to	time	such	projects	may	require	that	we	form	a	joint venture	with	our	partners.	Risks	associated	with	expanding	our	managed	services	offerings	include:

•We	may	be	unable	to	recognize	revenue	from	the	sale	of	equipment	in	connection	with	managed	services	contracts	for	a	period	of	time,	which	may	be	several years.

•We	may	be	required	to	agree	to	specific	performance	metrics	that	meet	the	customer's	requirement	for	network	availability,	reliability,	maintenance	and	support and,	in	some	cases,	if	these	performance	metrics	are	not	met	we	may	not	be	paid.

•The	managed	services	business	is	one	characterized	by	large	subcontracting	arrangements	and	we	may	not	be	able	to	obtain	adequate	indemnities	or	other protections	from	our	subcontractors	to	adequately	mitigate	our	risk	to	our	customers.

•We	are	facing	increasing	competition	from	traditional	system	integrators	and	the	defense	industry	as	system	contracts	become	larger	and	more complicated.

•Expansion	will	bring	us	into	contact	with	new	regulatory	requirements	and	restrictions	with	which	we	will	have	to	comply	and	may	increase	the	costs	and	delay or	limit	the	range	of	new	services	which	we	will	be	able	to	offer.

A	portion	of	our	business	is	dependent	upon	U.S.	government	contracts	and	grants,	which	are	highly	regulated	and	subject	to	oversight	audits	by	U.S.	government representatives	and	subject	to	cancellations.	Such	audits	could	result	in	adverse	findings	and	negatively	impact	our	business.

Our	government	business	is	subject	to	specific	procurement	regulations	with	numerous	compliance	requirements.	These	requirements,	although	customary	in	U.S. government	contracting,	increase	our	performance	and	compliance	costs.	These	costs	may	increase	in	the	future,	thereby	reducing	our	margins,	which	could	have	an adverse	effect	on	our	financial	condition.	Failure	to	comply	with	these	regulations	could	lead	to	suspension	or	debarment	from	U.S.	government	contracting	or subcontracting	for	a	period	of	time,	and	the	inability	to	receive	future	grants.	Among	the	causes	for	debarment	are	violations	of	various	laws,	including	those	related	to procurement	integrity,	export	control,	U.S.	government	security	regulations,	employment	practices,	protection	of	the	environment,	accuracy	of	records,	proper	recording of	costs,	foreign	corruption	and	the	False	Claims	Act.

Generally,	U.S.	government	contracts	and	grants	are	subject	to	oversight	audits	by	U.S.	government	representatives.	Such	audits	could	result	in	adjustments	to	our contracts	or	grants.	Any	costs	found	to	be	improperly	allocated	to	a	specific	contract	or	grant	may	not	be	allowed,	and	such	costs	already	reimbursed	may	have	to	be refunded.	Future	audits	and	adjustments,	if	required,	may	materially	reduce	our	revenues	or	profits	upon	completion	and	final	negotiation	of	audits.	Negative	audit findings	could	also	result	in	investigations,	termination	of	a	contract	or	grant,	forfeiture	of	profits	or	reimbursements,	suspension	of	payments,	fines	and	suspension	or prohibition	from	doing	business	with	the	U.S.	government.	All	contracts	with	the	U.S.	government	are	subject	to	cancellation	at	the	convenience	of	the	U.S.	government.

In	addition,	contacts	with	government	officials	and	participation	in	political	activities	are	areas	that	are	tightly	controlled	by	federal,	state	and	local	laws.	Failure	to comply	with	these	laws	could	cost	us	opportunities	to	seek	certain	government	sales	opportunities	or	even	result	in	fines,	prosecution,	or	debarment.

We	derive	a	portion	of	our	revenue	from	government	customers	who	award	business	through	competitive	bidding	which	can	involve	significant	upfront	costs	and	risks. This	effort	may	not	result	in	awards	of	business	or	we	may	fail	to	accurately	estimate	the	costs	to	fulfill	contracts	awarded	to	us,	which	could	have	adverse	consequences on	our	future	profitability.

Many	government	customers,	including	most	U.S.	government	customers,	award	business	through	a	competitive	bidding	process,	which	results	in	greater competition	and	increased	pricing	pressure.	The	competitive	bidding	process	involves

significant	cost	and	managerial	time	to	prepare	bids	for	contracts	that	may	not	be	awarded	to	us.	Even	if	we	are	awarded	contracts,	we	may	fail	to	accurately	estimate	the resources	and	costs	required	to	fulfill	a	contract,	which	could	negatively	impact	the	profitability	of	any	contract	award	to	us.	In	addition,	following	a	contract	award,	we have	experienced	and	may	continue	to	experience	significant	expense	or	delay,	contract	modification	or	contract	rescission	as	a	result	of	customer	delay	or	our competitors	protesting	or	challenging	contracts	awarded	to	us	in	competitive	bidding.

We	enter	into	fixed-price	contracts	that	could	subject	us	to	losses	in	the	event	we	fail	to	properly	estimate	our	costs.

We	enter	into	a	number	of	firm	fixed-price	contracts.	If	our	initial	cost	estimates	are	incorrect,	we	can	lose	money	on	these	contracts.	Because	many	of	these contracts	involve	new	technologies	and	applications,	require	us	to	engage	subcontractors	and	can	last	multiple	years,	unforeseen	events,	such	as	technological difficulties,	fluctuations	in	the	price	of	raw	materials,	problems	with	our	subcontractors	or	suppliers	and	other	cost	overruns,	can	result	in	the	contract	pricing	becoming less	favorable	or	even	unprofitable	to	us	and	have	an	adverse	impact	on	our	financial	results.	In	addition,	a	significant	increase	in	inflation	rates	could	have	a	adverse impact	on	the	profitability	of	longer-term	contracts.

Government	regulation	of	radio	frequencies	may	limit	the	growth	of	public	safety	broadband	systems	or	reduce	barriers	to	entry	for	new	competitors.

Radio	frequencies	are	required	to	provide	wireless	services.	The	allocation	of	frequencies	is	regulated	in	the	U.S.	and	other	countries	and	limited	spectrum	space	is allocated	to	wireless	services	and	specifically	to	public	safety	users.	The	growth	of	public	safety	broadband	communications	systems	may	be	affected:	(i)	by	regulations relating	to	the	access	to	allocated	spectrum	for	public	safety	users,	(ii)	if	adequate	frequencies	are	not	allocated,	or	(iii)	if	new	technologies	are	not	developed	to	better utilize	the	frequencies	currently	allocated	for	such	use.	Industry	growth	may	also	be	affected	by	new	licensing	fees	required	to	use	frequencies.

The	U.S.	leads	the	world	in	allocating	spectrum	to	enable	wireless	communications	such	as	wireless	local	area	network	systems,	such	as	WiFi,	mesh	technologies and	wide	area	network	systems,	such	as	WiMAX	and	LTE.	Other	countries	have	also	allocated	spectrum	to	allow	deployment	of	these	and	other	technologies.	This changing	landscape	may	introduce	new	competition	and	new	opportunities	for	us.

The	Middle	Class	Tax	Relief	and	Job	Creation	Act	of	2012	(the	"Legislation")	authorized	an	additional	ten	MHz	of	broadband	spectrum	for	public	safety	use	(the "D-block")	for	a	total	of	20	MHz	of	contiguous	broadband	spectrum	for	public	safety.	In	addition,	public	safety	retained	14	MHz	of	the	700	MHz	narrowband	spectrum, subject	to	the	FCC's	authority	to	determine	whether	such	spectrum	should	be	authorized	for	future	broadband	use.	The	Legislation	further	provides	for	the	establishment of	a	centralized	governance	model	through	an	independent	authority	within	NTIA	designated	as	the	"First	Responder	Network	Authority"	or	"FirstNet"	but	allows	for states	to	opt	out	of	the	plan	to	develop	a	nationwide	public	safety	network	and	perform	their	own	competitive	procurements	if	certain	criteria	are	met.		States	that	opt	out would	still	be	eligible	for	funding	and	would	also	be	allowed	to	generate	revenue	through	leases	to	secondary	users.

Although	the	Legislation	has	been	enacted,	the	implementation	of	a	nationwide	public	safety	network	under	FirstNet	could	be	delayed	or	reduced	significantly	in scope	due	to:	(i)	complexities	in	the	acquisition	of	a	nationwide	network,	which	involves	regulatory	requirements,	(ii)	writing	of	the	specifications	and	statement	of work,	(iii)	decision	making	on	the	system	architecture	or	(iv)	potential	political	opposition	from	certain	states.	Any	such	delays	or	changes	in	scope	of	the	FirstNet initiative	could	negatively	impact	our	ability	to	further	develop	and	expand	our	public	safety	LTE	business.		For	example,	FirstNet	may	define	specifications	for	the nationwide	network	which	make	it	impossible	or	impractical	for	commercial	LTE	infrastructure	and	equipment	vendors	to	compete	for	contracts	to	build	out	the network.		Furthermore,	states	may	seek	alternative	means	to	deploy	public	safety	LTE	networks	if	a	centralized	architecture	inhibits	states'	ability	to	operationally	control its	first	responder	agencies.

Our	employees,	customers,	suppliers	and	outsource	partners	are	located	throughout	the	world	and,	as	a	result,	we	face	risks	that	other	companies	that	are	not	global may	not	face.

Our	customers	and	suppliers	are	located	throughout	the	world.	In	2012,	more	than	40%	of	our	revenue	was	generated	by	customers	outside	the	U.S.	In	addition,	we have	a	number	of	manufacturing,	research	and	development,	administrative	and	sales	facilities	outside	the	U.S.	and	more	than	50%	of	our	employees	are	employed outside	the	U.S.	Most	of	our	suppliers'	operations	are	outside	the	U.S.	and	most	of	our	products	are	manufactured	outside	the	U.S.

Because	we	have	sizeable	sales	and	operations	outside	the	U.S.,	including	outsourcing	and	procurement	arrangements	outside	of	the	U.S.,	we	have	more complexity	in	our	operations	and	are	exposed	to	a	unique	set	of	global	risks	that	could	negatively	impact	sales	or	profitability,	including	but	not	limited	to: (i)	import/export	regulations,	tariffs,	trade	barriers	and	trade	disputes,	customs	classifications	and	certifications,	including	but	not	limited	to	changes	in	classifications	or errors	or	omissions	related	to	such	classifications	and	certifications;	(ii)	changes	in	U.S.	and	non-U.S.	rules	related	to	trade,	environmental,	health	and	safety,	technical standards	and	consumer	protection;	(iii)	longer	payment	cycles;	(iv)	tax	issues,	such	as	tax	law	changes,	variations	in	tax	laws	from	country	to	country	and	as	compared to	the	U.S.,	obligations	under	tax	incentive

agreements,	difficulties	in	repatriating	cash	generated	or	held	abroad	in	a	tax-efficient	manner	and	difficulties	in	securing	local	country	approvals	for	cash	repatriations; (v)	currency	fluctuations,	particularly	in	the	euro,	the	British	pound,	Chinese	renminbi,	Norwegian	krone,	Israeli	shekel,	and	Japanese	yen	among	others;	(vi)	foreign exchange	regulations,	which	may	limit	our	ability	to	convert	or	repatriate	foreign	currency;	(vii)	challenges	in	collecting	accounts	receivable;	(viii)	cultural	and	language differences;	(ix)	employment	regulations	and	local	labor	conditions;	(x)	difficulties	protecting	intellectual	property	in	foreign	countries;	(xi)	instability	in	economic	or political	conditions,	including	inflation,	recession	and	actual	or	anticipated	military	or	political	conflicts;	(xii)	natural	disasters;	(xiii)	public	health	issues	or	outbreaks; (xiv)	changes	in	laws	or	regulations	that	negatively	impact	benefits	being	received	by	us	or	that	require	costly	modifications	in	products	sold	or	operations	performed	in such	countries;	and	(xv)		litigation	in	foreign	court	systems	and	foreign	administrative	proceedings.

Many	of	our	products	that	are	manufactured	outside	the	U.S.	are	manufactured	in	Asia	(primarily	Malaysia	and	China)	and	Latin	America	(primarily	Mexico).	If manufacturing	in	these	regions	is	disrupted,	our	overall	capacity	could	be	significantly	reduced	and	sales	or	profitability	could	be	negatively	impacted.	We	have engineering	resources	in	Israel	that	could	be	disrupted	as	a	result	of	hostilities	in	that	country.	We	also	sell	our	products	and	services	throughout	the	Middle	East	and demand	for	our	products	and	services	could	be	negatively	impacted	by	political	conflicts	and	hostilities	in	this	region.	The	potential	for	future	unrest,	terrorist	attacks, increased	global	conflicts	and	the	escalation	of	existing	conflicts	has	created	worldwide	uncertainties	that	have	negatively	impacted,	and	may	continue	to	negatively impact,	demand	for	certain	of	our	products.

We	also	are	subject	to	risks	that	our	operations	could	be	conducted	by	our	employees,	contractors,	representatives	or	agents	in	ways	that	violate	the	Foreign Corrupt	Practices	Act,	the	U.K.	Bribery	Act,	or	other	similar	anti-corruption	laws.	While	we	have	policies	and	procedures	to	comply	with	these	laws,	our	employees, contractors,	representatives	and	agents	may	take	actions	that	violate	our	policies.	Any	such	violations	could	have	a	negative	impact	on	our	business.	Moreover,	we	face additional	risks	that	our	anti-corruption	policies	and	procedures	may	be	violated	by	third-party	sales	representatives	or	other	third-parties	that	help	sell	our	products	or provide	other	services,	because	such	representatives	or	agents	are	not	our	employees	and	it	may	be	more	difficult	to	oversee	their	conduct.

We	may	not	continue	to	have	access	to	the	capital	markets	for	financing	on	acceptable	terms	and	conditions,	particularly	if	our	credit	ratings	are	downgraded.

From	time	to	time	we	access	the	capital	markets	to	obtain	financing.	Our	access	to	the	capital	markets	and	the	availability	of	acceptable	terms	and	conditions	are impacted	by	many	factors,	including:	(i)	our	credit	ratings,	(ii)	the	liquidity	of	the	overall	capital	markets,	and	(iii)	the	current	state	of	the	economy.	There	can	be	no assurances	that	we	will	continue	to	have	access	to	the	capital	markets	on	terms	acceptable	to	us.

We	are	rated	investment	grade	by	all	three	national	rating	agencies.	Any	downward	changes	by	the	rating	agencies	to	our	credit	rating	may	negatively	impact	the value	and	liquidity	of	both	our	debt	and	equity	securities.	Under	certain	circumstances,	if	our	credit	ratings	are	downgraded	or	other	negative	action	is	taken,	an	increase in	the	interest	rate	payable	by	us	under	our	revolving	credit	facility	could	result.	In	addition,	a	downgrade	in	our	credit	ratings	could	limit	our	ability	to:	access	the	debt markets;	provide	performance	bonds,	bid	bonds,	standby	letters	of	credit	and	surety	bonds;	hedge	foreign	exchange	risk;	fund	our	foreign	affiliates;	and	sell	receivables. A	downgrade	in	our	credit	rating	could	also	result	in	less	favorable	trade	terms	with	suppliers.	In	addition,	any	downgrades	in	our	credit	ratings	may	affect	our	ability	to obtain	additional	financing	in	the	future	and	may	affect	the	terms	of	any	such	financing.	Any	future	disruptions,	uncertainty	or	volatility	in	the	capital	markets	may	result in	higher	funding	costs	for	us	and	adversely	affect	our	ability	to	access	funds	and	other	credit	related	products.	In	addition,	we	may	avoid	taking	actions	that	would otherwise	benefit	us,	such	as	engaging	in	certain	acquisitions,	that	would	negatively	impact	our	credit	rating.

# Changes	in	our	effective	tax	rate	may	have	a	negative	impact	on	future	operating	results.

We	are	subject	to	income	taxes	in	the	U.S.	and	numerous	foreign	tax	jurisdictions.	Our	effective	tax	rate	may	be	negatively	impacted	by:	(i)	changes	in	the	mix	of earnings	taxable	in	jurisdictions	with	different	statutory	tax	rates,	(ii)	changes	in	tax	laws	and	accounting	principles,	(iii)	changes	in	the	valuation	of	our	deferred	tax assets	and	liabilities,	(iv)	failure	to	meet	commitments	under	tax	incentive	agreements,	(v)	discovery	of	new	information	during	the	course	of	tax	return	preparation,	(vi) increases	in	nondeductible	expenses,	or	(vii)	difficulties	in	repatriating	cash	held	abroad	in	a	tax-efficient	manner.

Tax	audits	may	also	negatively	impact	our	effective	tax	rate.	We	are	subject	to	continued	examination	of	our	income	tax	returns,	and	tax	authorities	may	disagree with	our	tax	positions	and	assess	additional	tax.	We	regularly	evaluate	the	likelihood	of	adverse	outcomes	resulting	from	these	examinations	to	determine	the	adequacy of	our	provision	for	income	taxes.	There	can	be	no	assurance	that	the	outcomes	from	these	continuing	examinations	will	not	have	a	negative	impact	on	future	operating results.

If	the	quality	of	our	products	does	not	meet	our	customers'	expectations	or	regulatory	or	industry	standards,	then	our	sales	and	operating	earnings,	and	ultimately	our reputation,	could	be	negatively	impacted.

Some	of	the	products	we	sell	may	have	quality	issues	resulting	from	the	design	or	manufacture	of	the	product,	or	from	the	software	used	in	the	product. Sometimes,	these	issues	may	be	caused	by	components	we	purchase	from	other	manufacturers	or	suppliers.	Often	these	issues	are	identified	prior	to	the	shipment	of	the products	and	may	cause	delays	in	shipping	products	to	customers,	or	even	the	cancellation	of	orders	by	customers.	Sometimes,	we	discover	quality	issues	in	the	products after	they	have	been	shipped	to	our	customers,	requiring	us	to	resolve	such	issues	in	a	timely	manner	that	is	the	least	disruptive	to	our	customers.	Such	pre-shipment	and post-shipment	quality	issues	can	have	legal	and	financial	ramifications,	including:	(i)	delays	in	the	recognition	of	revenue,	loss	of	revenue	or	future	orders,	(ii)	customer- imposed	penalties	on	us	for	failure	to	meet	contractual	requirements,	(iii)	increased	costs	associated	with	repairing	or	replacing	products,	and	(iv)	a	negative	impact	on our	goodwill	and	brand	name	reputation.

In	some	cases,	if	the	quality	issue	affects	the	product's	safety	or	regulatory	compliance,	then	such	a	"defective"	product	may	need	to	be	"stop-shipped"	or	recalled. Depending	on	the	nature	of	the	defect	and	the	number	of	products	in	the	field,	it	could	cause	us	to	incur	substantial	recall	costs,	in	addition	to	the	costs	associated	with the	potential	loss	of	future	orders	and	the	damage	to	our	goodwill	or	brand	reputation.	In	addition,	we	may	be	required,	under	certain	customer	contracts,	to	pay	damages for	failed	performance	that	might	exceed	the	revenue	that	we	receive	from	the	contracts.	Recalls	involving	regulatory	non-compliance	could	also	result	in	fines	and additional	costs.	Finally,	recalls	could	result	in	third-party	litigation	by	persons	or	companies	alleging	harm	or	economic	damage	as	a	result	or	the	use	of	the	products.

Many	of	our	components	and	products,	including	software,	are	designed,	developed	or	manufactured	by	third-parties	and	if	such	third-parties	lack	sufficient	quality control	or	if	there	are	significant	changes	in	the	financial	or	business	condition	of	such	third-parties,	it	may	have	a	negative	impact	on	our	business.

We	rely	on	third-parties	to	design,	develop	or	manufacture	many	of	our	components	and	finished	products,	as	well	as	software.	We	could	have	difficulties	fulfilling our	orders	and	our	sales	and	profits	could	decline	if	(i)	we	are	not	able	to	engage	such	third-parties	with	the	capabilities	or	capacities	required	by	our	business,	(ii)	such third-parties	lack	sufficient	quality	control	and	fail	to	deliver	quality	components	or	products	on	time	and	at	reasonable	prices	or	deliver	products	that	do	not	meet regulatory	or	industry	standards	or	requirements,	or	(iii)	if	there	are	significant	changes	in	the	financial	or	business	condition	of	such	third-parties.

We	utilize	the	services	of	subcontractors	to	perform	under	many	of	our	contracts	and	the	inability	of	our	subcontractors	to	perform	could	cause	our	products	or	services to	be	produced	or	delivered	in	an	untimely	or	unsatisfactory	manner.

We	engage	subcontractors	on	many	of	our	contracts	and	as	we	expand	our	global	solutions	and	services	organization	our	use	of	subcontractors	has	and	will continue	to	increase.	We	may	have	disputes	with	our	subcontractors,	including	disputes	regarding	the	quality	and	timeliness	of	work	performed	by	the	subcontractor.	We are	not	always	successful	in	passing	down	customer	requirements	to	our	subcontractors,	and	thus	in	some	cases	may	be	required	to	absorb	contractual	risks	from	our customers	without	corresponding	back-to-back	coverage	from	our	subcontractor.	Our	subcontractors	may	not	be	able	to	acquire	or	maintain	the	quality	of	the	materials, components,	subsystems	and	services	they	supply,	which	might	result	in	greater	product	returns,	service	problems	and	warranty	claims	and	regulatory	compliance	issues and	could	harm	our	business,	financial	condition	and	results	of	operations.

Failure	of	our	suppliers,	subcontractors,	distributors,	resellers	and	representatives	to	use	acceptable	legal	or	ethical	business	practices	could	negatively	impact	our business.

It	is	our	policy	to	require	our	suppliers,	subcontractors,	distributors,	resellers,	and	third-party	sales	representatives	("TPSRs")	to	operate	in	compliance	with applicable	laws,	rules	and	regulations	regarding	working	conditions,	employment	practices,	environmental	compliance,	anti-corruption	and	trademark	and	copyright licensing.	However,	we	do	not	control	their	labor	and	other	business	practices.	If	one	of	our	suppliers,	subcontractors,	distributors,	resellers,	or	TPSRs	violates	labor	or other	laws	or	implements	labor	or	other	business	practices	that	are	regarded	as	unethical,	the	shipment	of	finished	products	to	us	could	be	interrupted,	orders	could	be canceled,	relationships	could	be	terminated	and	our	reputation	could	be	damaged.	If	one	of	our	suppliers	or	subcontractors	fails	to	procure	necessary	license	rights	to trademarks,	copyrights	or	patents,	legal	action	could	be	taken	against	us	that	could	impact	the	salability	of	our	products	and	expose	us	to	financial	obligations	to	a	third- party.	Any	of	these	events	could	have	a	negative	impact	on	our	sales	and	results	of	operations.

We	rely	on	third-party	dealers,	distributors,	and	retailers	to	sell	certain	of	our	products.

In	addition	to	our	own	sales	force,	we	offer	our	products	through	a	variety	of	third-party	dealers,	distributors	and	retailers.	These	third-parties	may	also	market other	products	that	compete	with	our	products.	Failure	of	one	or	more	of	our	dealers,	distributors	or	retailers	to	effectively	promote	our	products	could	affect	our	ability to	bring	products	to	market	and	have	a	negative	impact	on	our	results	of	operations.

Our	future	operating	results	depend	on	our	ability	to	purchase	a	sufficient	amount	of	materials,	parts	and	components	to	meet	the	demands	of	our	customers	and	any reduction	or	interruption	in	supplies	or	significant	increase	in	the	price	of	supplies	could	have	a	negative	impact	on	our	results	of	operations.

Our	ability	to	meet	customers'	demands	depends,	in	part,	on	our	ability	to	obtain	timely	and	adequate	delivery	of	quality	materials,	parts	and	components	from	our suppliers.	If	demand	for	our	products	increases	from	our	current	expectations	or	if	suppliers	are	unable	to	meet	our	demand	for	other	reasons,	including	as	a	result	of natural	disasters	or	financial	issues,	we	could	experience	shortages.	We	have	experienced	shortages	in	the	past	that	have	negatively	impacted	our	results	of	operations and	may	experience	such	shortages	in	the	future.

Furthermore,	certain	of	our	components	are	available	only	from	a	single	source	or	limited	sources.	We	may	not	be	able	to	diversify	sources	in	a	timely	manner.	A reduction	or	interruption	in	supplies	or	a	significant	increase	in	the	price	of	supplies	could	have	a	negative	impact	on	our	business.	In	addition,	our	current	contractual arrangements	with	certain	suppliers	may	be	cancelled	or	not	extended	by	such	suppliers	and,	therefore,	not	afford	us	with	sufficient	protection	against	a	reduction	or interruption	in	supplies.	Moreover,	in	the	event	any	of	these	single	source	or	limited	source	suppliers	breach	their	contracts	with	us,	our	legal	remedies	associated	with such	a	breach	may	be	insufficient	to	compensate	us	for	any	damages	we	may	suffer.

We	rely	on	complex	information	technology	systems	and	networks	to	operate	our	business.	Any	significant	system	or	network	disruption,	including	as	a	result	of	third- party	attacks,	could	have	a	negative	impact	on	our	operations,	sales	and	operating	results.

We	rely	on	the	efficient	and	uninterrupted	operation	of	complex	information	technology	systems	and	networks,	some	of	which	are	within	the	Company	and	some of	which	are	outsourced,	including	to	India.	All	information	technology	systems	are	potentially	vulnerable	to	damage	or	interruption	from	a	variety	of	sources,	including but	not	limited	to	computer	viruses,	security	breach,	energy	blackouts,	natural	disasters,	terrorism,	war	and	telecommunication	failures.	As	a	provider	of	high	technology emergency	response	systems,	we	face	additional	risk	as	a	target	of	sophisticated	attacks	aimed	at	compromising	our	intellectual	property	and	our	customer	information, referred	to	as	advanced	persistent	threats.	We	implemented	a	number	of	significant	business	systems	upgrades	in	2012	and	plan	to	implement	a	number	of	additional significant	business	systems	upgrades	in	2013	which,	if	defective	or	improperly	installed	or	implemented	may	result	in	a	business	disruption.	In	addition,	we	currently rely	on	a	number	of	older	legacy	information	systems	that	are	harder	to	maintain.	A	system	failure	or	security	breach	could	negatively	impact	our	operations	and financial	results.	We	may	incur	additional	costs	to	remedy	the	damages	caused	by	these	disruptions	or	security	breaches.

There	has	been	a	sharp	increase	in	laws	in	Europe,	the	U.S.	and	elsewhere	imposing	requirements	for	the	handling	of	personal	data,	including	data	of	employees, consumers	and	business	contacts.	There	is	a	risk	that	failures	in	systems	designed	to	protect	private,	personal	or	proprietary	data	held	by	us	will	allow	such	data	to	be disclosed	to	or	seen	by	others,	resulting	in	application	of	regulatory	penalties,	enforcement	actions,	remediation	obligations	and/or	private	litigation	by	parties	whose	data were	improperly	disclosed.	There	is	also	a	risk	that	our	Company	(directly	or	as	the	result	of	some	third-party	service	provider	we	use)	could	be	found	to	have	failed	to comply	with	the	laws	or	regulations	of	some	country	regarding	the	collection,	consent,	handling,	transfer,	or	disposal	of	such	personal	data,	and	therefore	subject	the Company	to	fines	or	other	sanctions,	as	well	as	adverse	reputational	impact.

# We	face	many	risks	relating	to	intellectual	property	rights.

Our	business	will	be	harmed	if:	(i)	we,	our	customers	and/or	our	suppliers	are	found	to	have	infringed	intellectual	property	rights	of	third-parties,	(ii)	the intellectual	property	indemnities	in	our	supplier	agreements	are	inadequate	to	cover	damages	and	losses	due	to	infringement	of	third-party	intellectual	property	rights	by supplier	products,	(iii)	we	are	required	to	provide	broad	intellectual	property	indemnities	to	our	customers,	(iv)	our	intellectual	property	protection	is	inadequate	to protect	against	threats	of	misappropriation	from	internal	or	external	sources	or	otherwise	inadequate	to	protect	our	proprietary	rights,	or	(v)	our	competitors	negotiate significantly	more	favorable	terms	for	licensed	intellectual	property.	We	may	be	harmed	if	we	are	forced	to	make	publicly	available,	under	the	relevant	open-source licenses,	certain	internally	developed	software-related	intellectual	property	as	a	result	of	either	our	use	of	open-source	software	code	or	the	use	of	third-party	software that	contains	open-source	code.

Since	our	products	are	comprised	of	complex	technology,	much	of	which	we	acquire	from	suppliers	through	the	purchase	of	components	or	licensing	of	software, we	are	often	involved	in	or	impacted	by	assertions,	including	both	requests	for	licenses	and	litigation,	regarding	patent	and	other	intellectual	property	rights.	Third- parties	have	asserted,	and	in	the	future	may	assert,	intellectual	property	infringement	claims	against	us	and	against	our	customers	and	suppliers.	These	assertions	against us,	and	our	customers	and	suppliers	have	been	increasing	as	the	complexity	of	our	products	has	increased.	Many	of	these	assertions	are	brought	by	non-practicing entities	whose	principle	business	model	is	to	secure	patent	licensing-based	revenue	from	product	manufacturing	companies.	The	patent	holders	often	make	broad	and sweeping	claims	regarding	the	applicability	of	their	patents	to	our	products,	seeking	a	percentage	of	sales	as	licenses	fees,	seeking	injunctions	to	pressure	us	into	taking	a license,	or	a	combination	thereof.	Defending	claims	may	be	expensive	and	divert	the	time	and	efforts	of	our	management	and	employees.	Increasingly,	third-parties	have sought	broad	injunctive	relief	which	could	limit	our	ability	to	sell	our	products	in	the	U.S.	or	elsewhere	with	intellectual	property	subject	to	the	claims.	If	we	do	not succeed	in	any	such	litigation,	we	could	be	required	to	expend	significant	resources	to	pay	damages,	develop	non-infringing	products	or	to	obtain	licenses	to	the intellectual	property	that	is	the	subject	of	such	litigation,	each	of	which	could	have	a	negative	impact	on	our	financial	results.	However,	we	cannot

be	certain	that	any	such	licenses,	if	available	at	all,	will	be	available	to	us	on	commercially	reasonable	terms.	In	some	cases,	we	might	be	forced	to	stop	delivering certain	products	if	we	or	our	customer	or	supplier	are	subject	to	a	final	injunction.

We	attempt	to	negotiate	favorable	intellectual	property	indemnities	with	our	suppliers	for	infringement	of	third-party	intellectual	property	rights.	However,	there	is no	assurance	that	we	will	be	successful	in	our	negotiations	or	that	a	supplier's	indemnity	will	cover	all	damages	and	losses	suffered	by	us	and	our	customers	due	to	the infringing	products	or	that	a	supplier	will	choose	to	accept	a	license	or	modify	or	replace	its	products	with	non-infringing	products	which	would	otherwise	mitigate	such damages	and	losses.	Further,	we	may	not	be	able	to	participate	in	intellectual	property	litigation	involving	a	supplier	and	may	not	be	able	to	influence	any	ultimate resolution	or	outcome	that	may	negatively	impact	our	sales	if	a	court	enters	an	injunction	that	enjoins	the	supplier's	products	or	if	the	International	Trade	Commission issues	an	exclusionary	order	that	blocks	our	products	from	importation	into	the	U.S.	Intellectual	property	disputes	involving	our	suppliers	have	resulted	in	our involvement	in	International	Trade	Commission	proceedings	from	time	to	time.	These	proceedings	are	costly	and	entail	the	risk	that	we	will	be	subjected	to	a	ban	on	the importation	of	our	products	into	the	U.S.	solely	as	a	result	of	our	use	of	a	supplier's	components.

In	addition,	our	customers	increasingly	demand	that	we	indemnify	them	broadly	from	all	damages	and	losses	resulting	from	intellectual	property	litigation	against them.	These	demands	stem	from	the	increasing	trend	of	the	non-practicing	entities	that	engage	in	patent	enforcement	and	litigation	targeting	the	end	users	of	our products.	End	users	are	targeted	so	the	non-practicing	entities	can	seek	royalties	and	litigation	judgments	in	proportion	to	the	value	of	the	use	of	our	products,	rather	than in	proportion	to	the	cost	of	our	products.	Such	demands	can	amount	to	many	times	the	selling	price	of	our	products.

Our	patent	and	other	intellectual	property	rights	are	important	competitive	tools	and	may	generate	income	under	license	agreements.	We	regard	our	intellectual property	as	proprietary	and	attempt	to	protect	it	with	patents,	copyrights,	trademarks,	trade	secret	laws,	confidentiality	agreements	and	other	methods.	We	also	generally restrict	access	to	and	distribution	of	our	proprietary	information.	Despite	these	precautions,	it	may	be	possible	for	a	third-party	to	obtain	and	use	our	proprietary information	or	develop	similar	technology	independently.	In	addition,	effective	patent,	copyright,	trademark	and	trade	secret	protection	may	be	unavailable	or	limited	in certain	foreign	countries.	Unauthorized	use	of	our	intellectual	property	rights	by	third-parties	and	the	cost	of	any	litigation	necessary	to	enforce	our	intellectual	property rights	could	have	a	negative	impact	on	our	financial	results.

As	we	expand	our	business,	including	through	acquisitions,	and	compete	with	new	competitors	in	new	markets,	the	breadth	and	strength	of	our	intellectual property	portfolio	in	those	new	areas	may	not	be	as	developed	as	in	our	longer-standing	businesses.	This	may	expose	us	to	a	heightened	risk	of	litigation	and	other challenges	from	competitors	in	these	new	markets.	Further,	competitors	may	be	able	to	negotiate	significantly	more	favorable	terms	for	licensed	intellectual	property than	we	are	able	to,	which	puts	them	at	a	competitive	advantage.	As	our	products	become	more	like	commercial	products,	through	the	adoption	of	industry-standard technologies,	for	instance,	our	intellectual	property-related	risks	may	increase.

We	no	longer	own	certain	logos	and	other	trademarks,	trade	names	and	service	marks,	including	MOTOROLA,	MOTO,	MOTOROLA	SOLUTIONS	and	the	Stylized	M logo	and	all	derivatives	and	formatives	thereof	("Motorola	Marks")	and	we	license	the	Motorola	Marks	from	Motorola	Mobility,	which	is	currently	owned	by	Google. Our	joint	use	of	the	Motorola	Marks	could	result	in	product	and	market	confusion	and	negatively	impact	our	ability	to	expand	our	business	under	the	Motorola	brand. In	addition,	if	we	do	not	comply	with	the	terms	of	the	license	agreement	we	could	lose	our	rights	to	the	Motorola	Marks.	A	further	change	of	control	of	or	bankruptcy	of Motorola	Mobility	could	result	in	an	incompatible	third-party	owning	the	Motorola	Marks.

We	have	a	worldwide,	perpetual	and	royalty-free	license	from	Motorola	Mobility	to	use	the	Motorola	Marks	as	part	of	our	corporate	name	and	in	connection	with the	manufacture,	sale,	and	marketing	of	our	current	products	and	services.	The	license	of	the	Motorola	Marks	is	important	to	us	because	of	the	reputation	of	the	Motorola brand	for	our	products	and	services.	There	are	risks	associated	with	both	Motorola	Mobility	and	the	Company	using	the	Motorola	Marks	and	with	this	loss	of	ownership. As	both	Motorola	Mobility	and	the	Company	will	be	using	the	Motorola	Marks,	confusion	could	arise	in	the	market,	including	customer	and	investor	confusion regarding	the	products	offered	by	and	the	actions	of	the	two	companies.	This	risk	could	increase	as	both	Motorola	Mobility's	and	our	products	continue	to	converge. Also,	any	negative	publicity	associated	with	either	company	in	the	future	could	adversely	affect	the	public	image	of	the	other.	In	addition	because	our	license	of	the Motorola	Marks	will	be	limited	to	products	and	services	within	our	specified	fields	of	use,	we	will	not	be	permitted	to	use	the	Motorola	Marks	in	other	fields	of	use without	the	approval	of	Motorola	Mobility.	In	the	event	that	we	desire	to	expand	our	business	into	any	other	fields	of	use,	we	may	need	to	do	so	with	a	brand	other	than Motorola.	Developing	a	brand	as	well-known	and	with	as	much	brand	equity	as	Motorola	could	take	considerable	time	and	expense.	The	risk	of	needing	to	develop	a second	brand	increases	as	Motorola	Mobility's	and	our	products	continue	to	converge	and	as	our	business	expands	into	other	fields	of	use.	In	addition,	we	could	lose	our rights	to	use	the	Motorola	Marks	if	we	do	not	comply	with	the	terms	of	the	license	agreement.	Such	a	loss	could	negatively	affect	our	business,	results	of	operations	and financial	condition.	Furthermore,	Motorola	Mobility	has	the	right	to	license	the	brand	to	third-parties	and	either	Motorola	Mobility	or	licensed	third	parties	may	use	the brand	in	ways	that	make	the	brand	less	attractive	for	customers	of	Motorola	Solutions,	creating	increased	risk	that	Motorola	Solutions	may

need	to	develop	an	alternate	or	additional	brand.	Motorola	Mobility	was	acquired	by	Google	in	May	2012,	which	results	in	Google	having	effective	control	over	the Motorola	Marks.

In	the	event	either	Motorola	Mobility	or	Google	is	acquired,	the	acquiring	entity	would	gain	control	of	the	Motorola	Marks.	In	addition,	neither	Motorola	Mobility nor	Google	are	prohibited	from	selling	the	Motorola	Marks.	In	the	event	of	a	liquidation	of	Motorola	Mobility	or	the	then	owner	of	the	Motorola	Marks,	it	is	possible that	a	bankruptcy	court	would	permit	the	Motorola	Marks	to	be	assigned	to	a	third-party.	While	our	right	to	use	the	Motorola	Marks	under	our	license	should	continue	in our	specified	field	of	use	in	such	situations,	it	is	possible	that	we	could	be	party	to	a	license	arrangement	with	a	third-party	whose	interests	are	incompatible	with	ours, thereby	potentially	making	the	license	arrangement	difficult	to	administer,	and	increasing	the	costs	and	risks	associated	with	sharing	the	Motorola	Marks.	In	addition, there	is	a	risk	that,	in	the	event	of	a	bankruptcy	of	Motorola	Mobility	or	the	then	owner	of	the	Motorola	Marks,	Motorola	Mobility,	the	then	owner	or	its	bankruptcy trustee	may	attempt	to	reject	the	license,	or	a	bankruptcy	court	may	refuse	to	uphold	the	license	or	certain	of	its	terms.	Such	a	loss	could	negatively	affect	our	business, results	of	operations	and	financial	condition.

We	may	continue	to	make	strategic	acquisitions	of	other	companies	or	businesses	and	these	acquisitions	introduce	significant	risks	and	uncertainties,	including	risks related	to	integrating	the	acquired	businesses	and	achieving	benefits	from	the	acquisitions.

In	order	to	position	ourselves	to	take	advantage	of	growth	opportunities	or	to	meet	other	strategic	needs	such	as	product	or	technology	gaps,	we	have	made,	and expect	to	continue	to	make,	strategic	acquisitions	that	involve	significant	risks	and	uncertainties,	such	as	the	acquisition	of	Psion	PLC.	These	risks	and	uncertainties include:	(i)	the	difficulty	in	integrating	newly-acquired	businesses	and	operations	in	an	efficient	and	effective	manner;	(ii)	the	challenges	in	achieving	strategic objectives,	cost	savings	and	other	benefits	from	acquisitions;	(iii)	the	risk	that	our	markets	do	not	evolve	as	anticipated	and	that	the	technologies	acquired	do	not	prove	to be	those	needed	to	be	successful	in	those	markets;	(iv)	the	potential	loss	of	key	employees	of	the	acquired	businesses;	(v)	the	risk	of	diverting	the	attention	of	senior management	from	our	operations;	(vi)	the	risks	of	entering	new	markets	in	which	we	have	limited	experience;	(vii)	risks	associated	with	integrating	financial	reporting and	internal	control	systems;	(viii)	difficulties	in	expanding	information	technology	systems	and	other	business	processes	to	accommodate	the	acquired	businesses;	and (ix)	future	impairments	of	goodwill	of	an	acquired	business.	In	particular,	failure	to	achieve	targeted	cost	and	revenue	synergies	could	negatively	impact	our	business performance.

Certain	acquisition	candidates	in	the	industries	in	which	we	participate	may	carry	higher	relative	valuations	(based	on	earnings	multiples)	than	we	do.	This	is particularly	evident	in	software	and	services	businesses.	Acquiring	a	business	that	has	a	higher	valuation	than	Motorola	Solutions	may	be	dilutive	to	our	earnings, especially	if	the	acquired	business	has	little	or	no	revenue.	In	addition,	we	may	not	pursue	opportunities	that	are	highly	dilutive	to	near-term	earnings.

Key	employees	of	acquired	businesses	may	receive	substantial	value	in	connection	with	a	transaction	in	the	form	of	change-in-control	agreements,	acceleration	of stock	options	and	the	lifting	of	restrictions	on	other	equity-based	compensation	rights.	To	retain	such	employees	and	integrate	the	acquired	business,	we	may	offer additional	retention	incentives,	but	it	may	still	be	difficult	to	retain	certain	key	employees.

We	have	completed	a	number	of	large	divestitures	over	the	last	several	years	and	have	ongoing	potential	liability	associated	with	those	transactions	and	the	businesses we	divested.	We	may	complete	future	divestitures	with	similar	risks.

Over	the	last	several	years	we	have	spun-off	or	sold	a	number	of	businesses,	including	Motorola	Mobility	and	our	Networks	business	and	we	may	divest	other businesses	in	the	future.	In	connection	with	many	of	our	divestitures	we	remain	liable	for	certain	pre-closing	liabilities	associated	with	the	divested	business,	such	as pension	liabilities,	taxes,	environmental	liabilities	and	litigation.	In	certain	situations,	such	as	our	spin-off	transactions,	we	may	retain	risk	for	pre-closing	liabilities	in the	event	of	a	liquidation	or	bankruptcy	of	the	company	we	spun	off,	even	if	they	assumed	certain	liabilities	because	they	were	incurred	when	they	were	part	of	the Company	and	a	third-party	may	not	have	consented	to	the	assumption.	In	addition,	although	we	often	assign	contracts	associated	with	the	divested	business	to	a	buyer	in a	divestiture,	often	that	assignment	will	be	subject	to	the	consent	of	the	contractual	counterparty,	which	may	not	be	obtained	or	may	be	conditioned,	resulting	in	the company	remaining	liable	under	the	contract.	In	addition,	in	most	of	our	divestitures	we	make	representations	and	warranties	and	agree	to	covenants	relating	to	the business	divested.	We	remain	liable	for	a	period	of	time	for	breaches	of	representations,	warranties	and	covenants	and	we	also	indemnify	buyers	in	the	event	of	such breaches	and	for	other	specific	risks.	Even	though	we	establish	reserves	for	any	expected	ongoing	liability	associated	with	divested	businesses,	those	reserves	may	not be	sufficient	if	unexpected	liabilities	arise	and	this	could	negatively	impact	our	financial	condition	and	future	results	of	operations.

As	part	of	our	transformation	efforts	over	the	last	several	years	we	have	outsourced	portions	of	certain	business	operations	like	IT,	manufacturing,	repair	and distribution	and	may	outsource	additional	business	operations	which	limits	our	control	over	these	business	operations	and	exposes	us	to	additional	risk	as	a	result	of the	actions	of	our	outsource	partners.

As	we	outsource	more	of	our	business	operations	we	are	not	able	to	directly	control	these	activities.	Our	outsource	partners	may	not	prioritize	our	business	over that	of	their	other	customers	and	they	may	not	meet	our	desired	level	of	service,	cost	reductions	or	other	metrics.	In	some	cases	their	actions	may	result	in	our	being found	to	be	in	violation	of	laws	or

regulations	like	import	or	export	regulations.	As	many	of	our	outsource	partners	operate	outside	of	the	U.S.,	our	outsourcing	activity	increases	our	global	risks.	In addition,	we	are	exposed	to	the	financial	viability	of	our	outsource	partners.	Once	a	business	activity	is	outsourced	we	may	be	contractually	prohibited	from	or	may	not practically	be	able	to	bring	such	activity	back	within	the	Company	or	move	it	to	another	outsource	partner.	The	actions	of	our	outsource	partners	could	result	in reputational	damage	to	us	and	could	negatively	impact	our	financial	results.

We	may	be	required	to	record	additional	goodwill	or	other	long-lived	asset	impairment	charges,	which	could	result	in	an	additional	significant	charge	to	earnings.

Under	generally	accepted	accounting	principles,	we	review	our	long-lived	assets	for	impairment	when	events	or	changes	in	circumstances	indicate	the	carrying value	may	not	be	recoverable.	Goodwill	is	assessed	for	impairment	at	least	annually.	Factors	that	may	be	considered	in	assessing	whether	goodwill	or	intangible	assets may	not	be	recoverable	include	a	decline	in	our	stock	price	or	market	capitalization,	reduced	estimates	of	future	cash	flows	and	slower	growth	rates	in	our	industry.	No goodwill	or	long-lived	assets	impairment	charges	were	recorded	during	2012,	2011	or	2010.	Declines	in	our	stock	price	or	reductions	in	our	future	cash	flow	estimates and	future	operating	results	may	require	us	to	record	significant	additional	goodwill	or	other	long-lived	asset	impairment	charges	in	our	financial	statements	in	future periods,	which	could	negatively	impact	our	financial	results.

Changes	in	our	operations	or	sales	outside	the	U.S.	markets	could	result	in	lost	benefits	in	impacted	countries	and	increase	our	cost	of	doing	business.

We	have	entered	into	various	agreements	with	non-U.S.	governments,	agencies	or	similar	organizations	under	which	we	receive	certain	benefits	relating	to	its operations	and/or	sales	in	the	jurisdiction.	If	our	circumstances	change,	and	operations	or	sales	are	not	at	levels	originally	anticipated,	we	may	be	at	risk	of	having	to reimburse	benefits	already	granted,	and	losing	some	or	all	of	these	benefits	and	increasing	our	cost	of	doing	business.

Our	success	depends	in	part	upon	our	ability	to	attract,	retain	and	prepare	succession	plans	for	senior	management	and	key	employees.

The	performance	of	our	CEO,	senior	management	and	other	key	employees	is	critical	to	our	success.	If	we	are	unable	to	retain	talented,	highly	qualified	senior management	and	other	key	employees	or	attract	them	when	needed,	it	could	negatively	impact	us.	We	rely	on	the	experience	of	our	senior	management,	who	have specific	knowledge	relating	to	us	and	our	industry	that	is	difficult	to	replace	and	competition	for	management	with	experience	in	the	communications	industry	is	intense. A	loss	of	the	CEO,	a	member	of	senior	management	or	key	employee	particularly	to	a	competitor	could	also	place	us	at	a	competitive	disadvantage.	Further,	if	we	fail	to adequately	plan	for	the	succession	of	our	CEO,	senior	management	and	other	key	employees,	the	Company	could	be	negatively	impacted.

It	may	be	difficult	for	us	to	recruit	and	retain	the	types	of	engineers	and	other	highly-skilled	employees	that	are	necessary	to	remain	competitive.

Competition	for	key	technical	personnel	in	high-technology	industries	is	intense.	We	believe	that	our	future	success	depends	in	large	part	on	our	continued	ability to	hire,	assimilate,	retain	and	leverage	the	skills	of	qualified	engineers	and	other	highly-skilled	personnel	needed	to	develop	successful	new	products.	We	may	not	be	as successful	as	our	competitors	at	recruiting,	assimilating,	retaining	and	utilizing	these	highly-skilled	personnel.

The	unfavorable	outcome	of	any	pending	or	future	litigation,	arbitration	or	administrative	action	could	have	a	material	adverse	effect	on	our	financial	condition	or results	of	operations.

From	time	to	time	we	are	made	a	party	to	litigation,	arbitration	or	administrative	actions.	Our	financial	results	and	reputation	could	be	negatively	impacted	by unfavorable	outcomes	to	any	pending	or	future	litigation	or	administrative	actions,	including	those	related	to	the	Foreign	Corrupt	Practices	Act	and	other	anti-corruption laws.	There	can	be	no	assurances	as	to	the	favorable	outcome	of	any	litigation	or	administrative	proceedings.	In	addition,	it	can	be	very	costly	to	defend	litigation	or administrative	proceedings	and	these	costs	could	negatively	impact	our	financial	results.

It	is	important	that	we	are	able	to	obtain	many	different	types	of	insurance,	and	if	we	are	not	able	to	obtain	insurance	or	we	exhaust	our	coverage	we	are	forced	to retain	the	risk.

We	have	many	types	of	insurance	coverage	and	are	also	self-insured	for	some	risks	and	obligations.	While	the	cost	and	availability	of	most	insurance	is	stable, there	are	still	certain	types	and	levels	of	insurance	that	remain	difficult	to	obtain.	For	example,	we	recently	purchased	professional	liability	insurance,	which	is	expensive to	obtain	for	the	amount	of	coverage	often	requested	by	certain	customers.	As	we	grow	our	global	solutions	and	services	organization	we	are	being	asked	to	obtain	higher amounts	of	professional	liability	insurance,	which	could	result	in	higher	costs	to	do	business.	Natural	disasters	and	certain	risks	arising	from	securities	claims, professional	liability	and	public	liability	are	potential	self-insured	events	that	could	negatively	impact	our	financial	results.	In	addition,	while	we	maintain	insurance	for certain	risks,	the	amount	of	our	insurance	coverage	may	not	be	adequate	to	cover	all	claims	or	liabilities,	and	we	may	be	forced	to	bear	substantial	costs	from	an accident,	incident	or	claim.

# We	are	subject	to	a	wide	range	of	product	regulatory	and	safety,	consumer,	worker	safety	and	environmental	laws.

Our	operations	and	the	products	we	manufacture	and/or	sell	are	subject	to	a	wide	range	of	product	regulatory	and	safety,	consumer,	worker	safety	and environmental	laws.	Compliance	with	such	existing	or	future	laws	could	subject	us	to	future	costs	or	liabilities,	impact	our	production	capabilities,	constrict	our	ability	to sell,	expand	or	acquire	facilities,	restrict	what	products	and	services	we	can	offer,	and	generally	impact	our	financial	performance.	Some	of	these	laws	are	environmental and	relate	to	the	use,	disposal,	clean	up	of,	and	exposure	to	certain	substances.	For	example,	in	the	United	States,	laws	often	require	parties	to	fund	remedial	studies	or actions	regardless	of	fault	and	often	times	in	response	to	action	or	omissions	that	were	legal	at	the	time	they	occurred.	We	continue	to	incur	disposal	costs	and	have ongoing	remediation	obligations.	Changes	to	environmental	laws	or	our	discovery	of	additional	obligations	under	these	laws	could	have	a	negative	impact	on	our financial	performance.

Laws	focused	on:	the	energy	efficiency	of	electronic	products	and	accessories;	recycling	of	both	electronic	products	and	packaging;	reducing	or	eliminating	certain hazardous	substances	in	electronic	products;	and	the	transportation	of	batteries	continue	to	expand	significantly.	Laws	pertaining	to	accessibility	features	of	electronic products,	standardization	of	connectors	and	power	supplies,	the	transportation	of	lithium-ion	batteries	and	other	aspects	are	also	proliferating.	There	are	also	demanding and	rapidly	changing	laws	around	the	globe	related	to	issues	such	as	product	safety,	radio	interference,	radio	frequency	radiation	exposure,	and	consumer	and	social mandates	pertaining	to	use	of	wireless	or	electronic	equipment.	These	laws,	and	changes	to	these	laws,	could	have	a	substantial	impact	on	whether	we	can	offer	certain products,	solutions	and	services,	on	product	costs,	and	on	what	capabilities	and	characteristics	our	products	or	services	can	or	must	include.

These	laws	impact	our	products	and	negatively	affect	our	ability	to	manufacture	and	sell	products	competitively.	We	expect	these	trends	to	continue.	In	addition, we	anticipate	that	we	will	see	increased	demand	to	meet	voluntary	criteria	related	to	reduction	or	elimination	of	certain	constituents	from	products,	increasing	energy efficiency,	and	providing	additional	accessibility.

We	may	be	unable	to	obtain	a	sufficient	supply	of	components	and	parts	that	are	verified	free	of	conflict	minerals	mined	from	the	Democratic	Republic	of	Congo	and adjoining	countries,	which	could	result	in	a	shortage	of	such	components	and	parts	or	reputational	damages	if	we	are	unable	to	determine	that	our	products	are	free	of such	minerals.

The	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	included	disclosure	requirements	regarding	the	use	of	"conflict"	minerals	mined	from	the Democratic	Republic	of	Congo	and	adjoining	countries	("DRC")	and	procedures	regarding	a	manufacturer's	efforts	to	prevent	the	sourcing	of	such	"conflict" minerals.	The	final	rules	implementing	these	requirements	were	released	in	August	2012.	The	short	implementation	time	frame	may	limit	the	pool	of	suppliers who	can	provide	us	verifiable	DRC	Conflict	Free	components	and	parts,	and	we	are	not	certain	that	we	will	be	able	to	obtain	products	in	sufficient	quantities	that	meet the	DRC	Conflict	Free	determination	as	required	by	the	rule	to	declare	our	products	DRC	Conflict	Free.	Also,	since	our	supply	chain	is	complex,	we	may	face reputational	challenges	with	our	customers,	other	stockholders	and	the	activist	community	if	we	are	required	to	publically	state	that	we	are	unable	to	sufficiently	verify the	origins	for	the	defined	"conflict"	metals	used	in	our	products.

A	large	percentage	of	our	cash	and	cash	equivalents	are	held	outside	of	the	United	States	and	we	could	be	subject	to	repatriation	delays	and	costs	which	could	reduce our	financial	flexibility.

A	large	percentage	of	our	cash	and	cash	equivalents	is	currently	held	outside	the	U.S.,	while	many	of	our	liabilities,	such	as	our	public	debt,	the	majority	of	our pension	liabilities	and	certain	other	cash	payments,	such	as	dividends	and	share	repurchases,	are	payable	in	the	U.S.	While	we	regularly	repatriate	funds	with	minimal adverse	financial	impact,	repatriation	of	some	of	the	funds	has	been	and	could	continue	to	be	subject	to	delay	for	local	country	approvals	and	could	have	potential adverse	tax	consequences.	As	a	result	of	having	a	lower	amount	of	the	cash	and	cash	equivalents	in	the	U.S.,	our	financial	flexibility	may	be	reduced.

In	connection	with	the	distribution	of	Motorola	Mobility,	Motorola	Mobility	indemnified	us	for	certain	liabilities	and	we	indemnified	Motorola	Mobility	for	certain liabilities.	This	indemnity	may	not	be	sufficient	to	insure	us	against	the	full	amount	of	the	liabilities	assumed	by	Motorola	Mobility	and	Motorola	Mobility	may	be unable	to	satisfy	its	indemnification	obligations	to	us	in	the	future.

Pursuant	to	the	Master	Separation	and	Distribution	Agreement	and	certain	other	agreements	with	Motorola	Mobility,	Motorola	Mobility	agreed	to	indemnify	us	for certain	liabilities,	and	we	agreed	to	indemnify	Motorola	Mobility	for	certain	liabilities,	in	each	case	for	uncapped	amounts.	Motorola	Mobility	was	acquired	by	Google in	May	2012.	This	indemnity	obligation	did	not	change	as	a	result	of	the	acquisition	of	Motorola	Mobility	by	Google.	There	can	be	no	assurance	that	the	indemnity	from Motorola	Mobility	will	be	sufficient	to	protect	us	against	the	full	amount	of	such	liabilities,	or	that	Motorola	Mobility	will	be	able	to	fully	satisfy	its	indemnification obligations,	even	if	it	continues	to	be	owned	by	Google.	Third-parties	could	also	seek	to	hold	us	responsible	for	any	of	the	liabilities	that	Motorola	Mobility	has	agreed to	assume.	Even	if	we	ultimately	succeed	in	recovering	from	Motorola	Mobility	any	amounts	for	which	we	are	held	liable,	we	may	be	temporarily	required	to	bear	these losses	ourselves.	In	addition,	indemnities	that	we	may	be	required	to	provide	Motorola	Mobility	are	not	subject	to	any	cap,	may	be	significant	and	could	negatively impact	our	business.	Each	of	these	risks	could	negatively	affect	our

business,	results	of	operations	and	financial	condition.	For	more	detailed	information,	see	the	Amended	and	Restated	Master	Separation	and	Distribution	Agreement which	was	filed	as	an	exhibit	to	our	Form	10-Q	for	the	third	quarter	2010.

We	contributed	a	significant	portfolio	of	intellectual	property	rights,	including	patents,	to	Motorola	Mobility	and	we	are	unable	to	leverage	these	intellectual	property rights	as	we	did	prior	to	the	distribution	of	Motorola	Mobility.

We	contributed	approximately	17,200	granted	patents	and	approximately	8,000	pending	patent	applications	worldwide	to	Motorola	Mobility	in	connection	with	the distribution.	Although	we	have	a	perpetual,	royalty	free	license	to	these	patents	and	other	intellectual	property	rights,	we	no	longer	own	them.	As	a	result	we	are	unable to	leverage	these	intellectual	property	rights	for	purposes	of	generating	licensing	revenue	or	entering	into	favorable	licensing	arrangements	with	third-parties.	As	a	result we	may	incur	increased	license	fees	or	litigation	costs.	Although	we	cannot	predict	the	extent	of	such	unanticipated	costs,	it	is	possible	such	costs	could	negatively impact	our	financial	results.

# Item	1B:	Unresolved	Staff	Comments

None.

# Item	2:	Properties

Motorola	Solutions'	principal	executive	offices	are	located	at	1303	East	Algonquin	Road,	Schaumburg,	Illinois	60196.	Motorola	Solutions	also	operates manufacturing	facilities	and	sales	offices	in	other	U.S.	locations	and	in	many	other	countries.

As	of	December	31,	2012,	we	owned	19	facilities	(manufacturing,	sales,	service	and	office),	14	of	which	were	located	in	the	Americas	Region	(USA,	Canada, Mexico,	Central	and	South	America)	and	five	of	which	were	located	in	other	countries.	As	of	December	31,	2012,	the	Company	leased	227	facilities,	97	of	which	were located	in	the	Americas	Region	and	130	of	which	were	located	in	other	countries.	As	of	December	31,	2012,	we	primarily	utilized	five	major	facilities	for	the manufacturing	and	distribution	of	our	products,	and	these	facilities	were	located	in:	Penang,	Malaysia;	Reynosa,	Mexico;	Schaumburg,	Illinois;	Berlin,	Germany;	and Suzhou,	China.

We	generally	consider	the	productive	capacity	of	the	plants	to	be	adequate	and	sufficient	for	our	requirements.	The	extent	of	utilization	of	each	manufacturing facility	varies	throughout	the	year.

In	2012,	a	substantial	portion	of	our	products	were	manufactured	in	facilities	in	Mexico	and	Malaysia.	A	portion	of	our	manufacturing	is	done	by	a	small	number of	non-affiliated	electronics	manufacturing	suppliers	and	distribution	and	logistics	services	providers,	most	of	which	are	outside	the	United	States.	We	rely	on	these third-party	providers	in	order	to	enhance	our	ability	to	lower	costs	and	deliver	products	that	meet	consumer	demands.	If	manufacturing	in	either	Mexico	or	Malaysia,	or by	third-parties	who	manufacture	and	assemble	approximately	33%	of	our	products	were	disrupted,	our	overall	productive	capacity	could	be	significantly	reduced.

# Item	3:	Legal	Proceedings

The	proceedings	referenced	below	refer	to	Motorola,	Inc.,	our	former	name,	and	we	have	not	changed	the	court	descriptions	to	refer	to	Motorola	Solutions,	Inc.

# Silverman	Federal	Securities	Class	Action	Case

A	purported	class	action	lawsuit	on	behalf	of	the	purchasers	of	Motorola	securities	between	July	19,	2006	and	January	5,	2007,	Silverman	v.	Motorola,	Inc.,	et	al., was	filed	against	the	Company	and	certain	current	and	former	officers	and	directors	of	the	Company	on	August	9,	2007,	in	the	United	States	District	Court	for	the Northern	District	of	Illinois.	The	complaint	alleges	violations	of	Section	10(b)	and	Rule	10b-5	of	the	Securities	Exchange	Act	of	1934,	as	well	as,	in	the	case	of	the individual	defendants,	the	control	person	provisions	of	the	Securities	Exchange	Act.	The	operative	amended	complaint	primarily	alleges	that	the	defendants	knowingly made	incorrect	statements	concerning	Motorola's	projected	revenues	for	the	third	and	fourth	quarter	of	2006.	The	complaint	also	challenges	Motorola's	accounting	and disclosures	for	certain	transactions	entered	into	in	the	third	quarter	of	2006.	The	complaint	seeks	unspecified	damages	and	other	relief	relating	to	the	purported	inflation in	the	price	of	Motorola	shares	during	the	class	period.	On	August	25,	2009,	the	district	court	granted	plaintiff's	motion	for	class	certification.	On	February	1,	2012,	the parties	in	the	Silverman	litigation	signed	a	settlement	agreement	to	resolve	all	claims	in	that	case	for	$200	million,	$150	million	of	which	was	paid	by	the	Company's insurance	carriers.	The	district	court	approved	the	settlement	agreement	on	May	9,	2012.	Two	appeals	have	been	filed	from	the	judgment	entered	pursuant	to	the settlement	-	one	challenging	the	court's	approval	of	certain	terms	of	the	settlement,	and	the	other	challenging	the	fee	award	to	the	attorneys	for	the	class.		The	appeals court	has	heard	the	appeals	but	has	not	issued	a	decision.

The	Company	is	a	defendant	in	various	other	suits,	claims	and	investigations	that	arise	in	the	normal	course	of	business.	In	the	opinion	of	management,	the ultimate	disposition	of	the	Company's	pending	legal	proceedings	will	not	have	a	material	adverse	effect	on	the	Company's	consolidated	financial	position,	liquidity	or results	of	operations.	However,	an	unfavorable	resolution	could	have	a	material	adverse	effect	on	the	Company's	consolidated	financial	position,	liquidity	or	results	of

operations	in	the	periods	in	which	the	matters	are	ultimately	resolved,	or	in	the	periods	in	which	more	information	obtained	changes	management's	opinion	of	the ultimate	disposition.

# Item	4:	Mine	Safety	Disclosures

Not	applicable.

# Executive	Officers	of	the	Registrant

Following	are	the	persons	who	were	the	executive	officers	of	Motorola	Solutions	as	of	February	12,	2013,	their	ages	as	of	January	1,	2013,	their	current	titles	and positions	they	have	held	during	the	last	five	years	with	the	Company,	unless	otherwise	noted:

Gregory	Q.	Brown;	age	52;	Chairman	and	Chief	Executive	Officer,	since	May	3,	2011;	President	and	Chief	Executive	Officer	from	January	2011	to	May	2011; Co-Chief	Executive	Officer,	and	Chief	Executive	Officer	of	Broadband	Mobility	Solutions	business	from	August	2008	to	January	2011;	President	and	Chief	Executive Officer	from	January	2008	to	August	2008.

Michele	A.	Carlin;	age	51;	Senior	Vice	President,	Human	Resources	since	January	4,	2011;	Senior	Vice	President,	Human	Resources	from	November	2009	to January	2011;	Corporate	Vice	President,	Human	Resources,	Global	Rewards	and	HR	Shared	Services	from	July	2008	to	October	2009;	Vice	President,	Global Compensation,	Benefits	&	HR	Technology,	Campbell	Soup	Company	from	June	2006	to	July	2008.

Eduardo	F.	Conrado;	age	46;	Senior	Vice	President,	Marketing	and	IT	since	January	7,	2013;	Senior	Vice	President,	Chief	Marketing	Officer	from	January		2011 to	January	2013;	Senior	Vice	President	and	Chief	Marketing	Officer,	Motorola	Solutions	business	from	September	2010	to	January	2011;	Senior	Vice	President,	Chief Marketing	Officer,	Enterprise	Mobility	Solutions	business	and	Home	and	Networks	business	from	March	2009	to	September	2010;	Corporate	Vice	President,	Marketing and	Communications,	Home	and	Networks	Mobility	business	from	December	2007	to	March	2009.

Edward	J.	Fitzpatrick;	age	46;	Executive	Vice	President,	Chief	Financial	Officer	since	May	3,	2011;	Senior	Vice	President,	Chief	Financial	Officer	from	October 2009	to	May	2011;	Senior	Vice	President,	Corporate	Controller	and	Acting	Chief	Financial	Officer	from	February	2009	to	October	2009;	Senior	Vice	President	and Corporate	Controller	from	January	2009	to	February	2009;	Corporate	Vice	President,	Finance,	Home	and	Networks	Mobility	business	from	January	2008	to	January 2009.

Mark	F.	Moon;	age	49;	Executive	Vice	President	and	President,	Sales	&	Product	Operations	since	January	7,	2013;	Executive	Vice	President,	Sales	and	Field Operations	from	May	2011	to	January	2013;	Senior	Vice	President,	Sales	and	Field	Operations	from	January	2011	to	May	2011;	Senior	Vice	President,	Sales	and	Field Operations,	Motorola	Solutions	business	from	August	2010	to	January	2011;	Senior	Vice	President,	Worldwide	Field	Operations,	Enterprise	Mobility	Solutions business	from	April	2009	to	August	2010;	Senior	Vice	President,	Government	and	Commercial	Markets-Americas,	ASTRO	Product	Management,	Enterprise	Mobility Solutions	business	from	January	2008	to	April	2009;	Senior	Vice	President,	NA	and	LAC	Biometrics,	ASTRO,	PCR	Product	Management,	Government	and	Public Safety	business,	Enterprise	Mobility	Solutions	business	from	July	2007	to	January	2008.

Lewis	A.	Steverson;	age	49;	Senior	Vice	President,	General	Counsel	and	Secretary	to	the	Board	since	January	4,	2011;	Senior	Vice	President	and	General Counsel,	Motorola	Solutions	business	from	August	2010	to	January	2011;	Senior	Vice	President,	Law,	Enterprise	Mobility	Solutions	business	from	April	2010	to August	2010;	Corporate	Vice	President,	Law,	Broadband	Mobility	business	from	May	2007	to	April	2010.

John	K.	Wozniak;	age	41;	Corporate	Vice	President	and	Chief	Accounting	Officer	since	November	3,	2009;	Vice	President	and	Assistant	Controller	from	March 2008	to	November	2009;	Senior	Director	of	Technical	Accounting	and	International	Controller,	Home	and	Networks	Mobility	business	from	June	2007	to	March	2008.

The	above	executive	officers	will	serve	as	executive	officers	of	Motorola	Solutions	until	the	regular	meeting	of	the	Board	of	Directors	in	May	2013	or	until	their respective	successors	shall	have	been	elected.	There	is	no	family	relationship	between	any	of	the	executive	officers	listed	above.

# PART	II

# Item	5:	Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities

Motorola	Solutions'	common	stock	is	listed	on	the	New	York	and	Chicago	Stock	Exchanges.	The	number	of	stockholders	of	record	of	its	common	stock	on January	31,	2013	was	49,815.

Information	regarding	securities	authorized	for	issuance	under	equity	compensation	plans	is	incorporated	by	reference	to	the	information	under	the	caption "Equity	Compensation	Plan	Information"	of	Motorola	Solutions'	Proxy	Statement	for	the	2013	Annual	Meeting	of	Stockholders.	The	remainder	of	the	response	to	this Item	incorporates	by	reference	Note	16,	"Quarterly	and	Other	Financial	Data	(unaudited)"	of	the	Notes	to	Consolidated	Financial	Statements	appearing	under	"Item	8: Financial	Statements	and	Supplementary	Data.''

The	following	table	provides	information	with	respect	to	acquisitions	by	the	Company	of	shares	of	its common	stock	during	the	quarter	ended	December	31,	2012.

# ISSUER	PURCHASES	OF	EQUITY	SECURITIES

| Period | (a)	Total	Number<br>of	Shares<br>Purchased | (b)	Average	Price<br>Paid	per<br>Share	(1) | (c)	Total	Number<br>of	Shares	Purchased<br>as	Part	of	Publicly<br>Announced	Plans<br>or	Program	(2) | (d)	Approximate	Dollar<br>Value	of	Shares	that<br>May	Yet	Be	Purchased<br>Under	the	Plans	or<br>Program	(2) |
| :--- | :--- | :--- | :--- | :--- |
| 9/30/12\tto\t10/26/12 | — | $— | — | $1,777,794,222 |
| 10/27/12\tto\t11/23/12 | 3,429,478 | $53.12 | 3,429,478 | $1,595,688,839 |
| 11/24/12\tto\t12/31/12 | 2,641,924 | $54.43 | 2,641,924 | $1,451,951,491 |
| Total | 6,071,402 | $53.69 | 6,071,402 |  |

(1) Average	price	paid	per	share	of	common	stock	repurchased	is	the	execution	price,	including	commissions	paid	to	brokers.

(2) Through	actions	taken	on	July	28,	2011,	January	30,	2012	and	July	25,	2012,	the	Board	of	Directors	has	authorized	the	Company	to	repurchase	an	aggregate amount	of	up	to	$5.0	billion	of	its	outstanding	shares	of	common	stock	(the	"share	repurchase	program").	The	share	repurchase	program	does	not	have	an expiration	date.

# PERFORMANCE	GRAPH

The	following	graph	compares	the	five-year	cumulative	total	returns	of	Motorola	Solutions,	Inc.,	the	S&P	500	Index	and	the	S&P	Communications	Equipment

# Index.

This	graph	assumes	$100	was	invested	in	the	stock	or	the	Index	on	December	31,	2007	and	reflects	the	payment	of	dividends,	including	the	Company's	distribution to	its	shareholders	of	one	share	of	Motorola	Mobility	for	every	eight	shares	of	its	common	stock	on	January	4,	2011.	For	purposes	of	this	graph,	the	Motorola	Mobility distribution	is	treated	as	a	dividend	of	$26.46	(per	share	post	the	1-for-7	reverse	stock	split	)	paid	at	the	close	of	business	January	4,	2011.

# Item	6:	Selected	Financial	Data

# Motorola	Solutions,	Inc.	and	Subsidiaries

# Five-Year	Financial	Summary

| (Dollars	in	millions,	except	as	noted) | 2012 | 2011 | 2010 | 2009 | 2008 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\tResults |  |  |  |  |  |
| Net\tsales\tfrom\tproducts | $6,363 | $6,068 | $5,616 | $5,026 | $6,026 |
| Net\tsales\tfrom\tservices | 2,335 | 2,135 | 2,001 | 1,921 | 1,835 |
| Net\tsales | 8,698 | 8,203 | 7,617 | 6,947 | 7,861 |
| Cost\tof\tproduct\tsales | 2,844 | 2,723 | 2,523 | 2,221 | 2,703 |
| Cost\tof\tservice\tsales | 1,506 | 1,334 | 1,282 | 1,249 | 1,181 |
| Costs\tof\tsales | 4,350 | 4,057 | 3,805 | 3,470 | 3,884 |
| Gross\tmargin | 4,348 | 4,146 | 3,812 | 3,477 | 3,977 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 1,963 | 1,912 | 1,874 | 1,662 | 1,800 |
| Research\tand\tdevelopment\texpenditures | 1,075 | 1,035 | 1,037 | 993 | 1,062 |
| Other\tcharges | 54 | 341 | 150 | 255 | 1,819 |
| Operating\tearnings\t(loss) | 1,256 | 858 | 751 | 567 | (704) |
| Other\tincome\t(expense): |  |  |  |  |  |
| Interest\tincome\t(expense),\tnet | (66) | (74) | (129) | (133) | 35 |
| Gains\ton\tsales\tof\tinvestments\tand\tbusinesses,\tnet | 39 | 23 | 49 | 108 | 64 |
| Other | (14) | (69) | (7) | 91 | (415) |
| Total\tother\tincome\t(expense) | (41) | (120) | (87) | 66 | (316) |
| Earnings\t(loss)\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes | 1,215 | 738 | 664 | 633 | (1,020) |
| Income\ttax\texpense\t(benefit) | 337 | (3) | 403 | 188 | 2,470 |
| Earnings\t(loss)\tfrom\tcontinuing\toperations | 878 | 741 | 261 | 445 | (3,490) |
| Earnings\t(loss)\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 3 | 411 | 389 | (473) | (750) |
| Net\tearnings\t(loss) | 881 | 1,152 | 650 | (28) | (4,240) |
| Less:\tEarnings\t(loss)\tattributable\tto\tnoncontrolling\tinterests | — | (6) | 17 | 23 | 4 |
| Net\tearnings\t(loss)\tattributable\tto\tMotorola\tSolutions,\tInc. | $881 | $1,158 | $633 | $(51) | $(4,244) |
| Amounts\tattributable\tto\tMotorola\tSolutions,\tInc.\tcommon\nshareholders |  |  |  |  |  |
| Earnings\t(loss)\tfrom\tcontinuing\toperations,\tnet\tof\ttax | $878 | $747 | $244 | $422 | $(3,494) |
| Earnings\t(loss)\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 3 | 411 | 389 | (473) | (750) |
| Net\tearnings\t(loss) | $881 | $1,158 | $633 | $(51) | $(4,244) |
| Per\tShare\tData\t(in\tdollars) |  |  |  |  |  |
| Diluted\tearnings\t(loss)\tfrom\tcontinuing\toperations\tper\tcommon |  |  |  |  |  |
| share | 2.95 | 2.20 | 0.72 | 1.28 | (10.80) |
| Diluted\tearnings\t(loss)\tper\tcommon\tshare | 2.96 | 3.41 | 1.87 | (0.15) | (13.11) |
| Diluted\tweighted\taverage\tcommon\tshares\toutstanding\t(in\tmillions) | 297.4 | 339.7 | 338.1 | 329.9 | 323.6 |
| Dividends\tdeclared\tper\tshare | $0.96 | $0.22 | $— | $— | $1.40 |
| Balance\tSheet |  |  |  |  |  |
| Total\tassets | $12,679 | $13,929 | $25,577 | $25,603 | $27,869 |
| Long-term\tdebt | 1,859 | 1,130 | 2,098 | 3,258 | 3,982 |
| Total\tdebt | 1,863 | 1,535 | 2,703 | 3,794 | 4,074 |
| Total\tstockholders'\tequity | 3,290 | 5,274 | 10,987 | 9,883 | 9,595 |
| Other\tData |  |  |  |  |  |
| Capital\texpenditures | $187 | $186 | $192 | $136 | $257 |
| %\tof\tsales | 2.1% | 2.3% | 2.5% | 2.0% | 3.3% |
| Research\tand\tdevelopment\texpenditures | $1,075 | $1,035 | $1,037 | $993 | $1,062 |
| %\tof\tsales | 12.4% | 12.6% | 13.6% | 14.3% | 13.5% |
| Year-end\temployment\t(in\tthousands) | 22 | 23 | 51 | 53 | 64 |

# Item	7:	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations

The	following	is	a	discussion	and	analysis	of	our	financial	position	and	results	of	operations	for	each	of	the	three	years	in	the	period	ended	December	31,	2012. This	commentary	should	be	read	in	conjunction	with	our	consolidated	financial	statements	and	the	notes	thereto	appearing	under	"Item	8:	Financial	Statements	and Supplementary	Data."

# Executive	Overview

# What	businesses	are	we	in?

Government:	Our	Government	segment	includes	sales	of	public	safety	communications	systems,	commercial	two-way	radio	systems,	devices,	and	software. Service	revenues	included	in	the	Government	segment	are	primarily	those	associated	with	the	design,	installation,	maintenance	and	optimization	of	equipment for	public	safety	networks.

Enterprise:	Our	Enterprise	segment	includes	sales	of	rugged	and	enterprise-grade	mobile	computers	and	tablets,	laser/imaging/RFID	based	data	capture products,	WLAN	and	iDEN	infrastructure	and	software.	Service	revenues	included	in	the	Enterprise	segment	are	primarily	maintenance	contracts	associated with	the	above	products.

# What	were	our	2012	financial	results?

•We	had	earnings	from	continuing	operations	of	$878	million,	or	$2.95	per	diluted	common	share,	in	2012,	compared	to	earnings	from	continuing	operations	of $747	million,	or	$2.20	per	diluted	common	share,	in	2011.

•We	generated	cash	from	operating	activities	of	$1.1	billion	in	2012,	compared	to	$848	million	of	cash	from	operating	activities	in 2011.

•We	returned	$2.4	billion	in	cash	to	shareholders	through	share	repurchases	and	$270	million	in	cash	dividends	during 2012.

# What	were	the	financial	results	for	our	two	operating	segments	in	2012?

•In	the	Government	segment:	Net	sales	were	$6.0	billion	in	2012,	an	increase	of	12%	compared	to	net	sales	of	$5.4	billion	in	2011.	On	a	geographic	basis,	net sales	increased	in	all	regions.	Operating	margin	improved	in	2012	to	16.1%	from	11.5%	in	2011,	primarily	due	to	the	12%	increase	in	net	sales	and	increased leverage	in	operating	expenses.	Operating	earnings	were	$965	million	in	2012,	compared	to	operating	earnings	of	$616	million	in	2011.

•In	the	Enterprise	segment:	Net	sales	were	$2.7	billion	in	2012,	a	decrease	of	5%	compared	to	net	sales	of	$2.8	billion	in	2011.	On	a	geographic	basis,	net	sales increased	in	Asia	and	decreased	in	North	America,	Latin	America	and	Europe,	Middle	East,	and	Africa	("EMEA").	Operating	earnings	were	$291	million	in 2012,	compared	to	operating	earnings	of	$242	million	in	2011.	Operating	margin	increased	in	2012	compared	to	2011,	due	to	a	decrease	in	Other	charges	driven by	lower	intangible	amortization,	partially	offset	by	decreased	gross	margins	due	to	lower	sales	levels.

# What	were	our	major	accomplishments	in	2012?

•In	the	Government	segment:	In	2012,	sales,	operating	earnings,	and	operating	leverage	increased	compared	to	2011.	We	saw	strong	growth	across	all	of	our major	product	lines,	including	systems	infrastructure	and	subscribers.	The	12%	increase	in	net	sales	was	primarily	driven	by	the	continued	transition	from analog	to	digital,	the	replacement	of	aged	public	safety	infrastructure,	and	the	tiered	expansion	of	our	product	portfolio.	Additionally,	in	North	America	we benefited	from	U.S.	narrowbanding,	as	many	existing	public	safety,	professional	and	commercial	analog	systems	were	replaced	with	next	generation	digital systems,	with	enhanced	features	and	a	more	efficient	use	of	spectrum,	providing	additional	channels	and	enabling	new	users	to	be	added.

During	2012,	our	APCO	P-25	based	Astro	technology	continued	to	extend	beyond	North	America,	as	we	now	have	deployments	in	over	60	countries. Additionally,	we	shipped	our	two	millionth	TETRA	terminal,	and	continued	to	expand	our	digital	professional	and	commercial	radio	solution	MOTOTRBO. Additionally,	our	services	portfolio	saw	significant	growth	with	the	completion	of	the	agreement	with	NSN	to	take	over	responsibility	to	implement	and manage	Norway´s	TETRA	public	safety	network.

•In	the	Enterprise	segment:	Our	sales	decline	in	2012	was	driven	by	a	challenging	macro	environment	as	many	large	customers	continued	to	postpone deployments	in	the	face	of	soft	economic	conditions.	Despite	challenges	in	the	macro	environment,	our	engagement	with	customers	who	continue	to	invest	in our	mobile	technologies,	remains	strong.

Our	R&D	and	capital	investments	resulted	in	many	new	enhancements	to	our	product	portfolio,	including	the	acquisition	of	Psion	plc	("Psion"),	a	U.K.	based leader	in	mobile	computing	solutions.	We	extended	retail	thought	leadership	with	innovative	new	products	like	the	SB1,	MC40	and	ET1	tablet	that	help provide	customer	support	while	delivering	significant	operational	efficiencies.	Within	the	data	capture	solutions	product	group	we	continued	to	strengthen	our product	portfolio	by	executing	on	the	laser	to	imager	transition,	including	the	recent	announcement	of	the	MP6000	multi-plane	imager	based	scanner,	which sits	inside	the	check-out	counters	used	by	retailers.

# Looking	Forward

In	2012,	we	achieved	a	number	of	key	accomplishments,	including	solid	sales	growth,	operating	earnings	expansion	and	earnings	per	share	growth,	generating strong	operating	cash	flow	and	significant	capital	returns	to	our	shareholders,	which	positions	us	well	as	we	begin	2013.	The	demand	drivers	for	our	business	remain solid	and	we	remain	focused	on	improving	operating	leverage	through	targeted	investments	and	disciplined	cost	management.

In	the	Government	segment,	our	focused	R&D	investments	have	led	to	the	introduction	of	over	100	new	products	across	both	our	subscriber	and	infrastructure portfolios	since	2009,	giving	us	the	broadest	portfolio	in	the	industry.	We	believe	that	while	regulatory	mandates	to	improve	spectrum	efficiency	have	encouraged	some of	our	U.S.	customers	to	upgrade,	our	new	product	introductions	and	expanded	portfolio	will	continue	to	be	a	driver	for	growth	across	our	U.S.	and	international markets,	as	customers	will	continue	to	invest	in	our	next-generation	systems	with	the	assurance	that	new	radios	with	enhanced	features	remain	interoperable	and backward-compatible.

In	addition	to	our	investment	in	our	radio	communication	systems,	we	have	been	investing	in	R&D	for	next	generation	public	safety.	Private	public	safety broadband	networks	based	on	the	LTE	standard	are	an	important	next	generation	tool	for	our	first-responder	customers,	and	we	believe	our	expertise	in	both	public	and private	networks	makes	us	uniquely	qualified	to	provide	LTE	solutions.	The	development	of	this	market	is	an	important	part	of	our	overall	global	growth	strategy	for	the Government	segment.

Our	government	customer	base	is	composed	of	thousands	of	customers,	predominantly	at	the	U.S.	state	and	local	level	with	various	funding	sources.	In	addition, these	customers	are	at	different	stages	of	network	evolution	and	aging	in	a	long	cycle	business.	We	believe	the	fundamentals	for	our	business	and	customer	base	provide a	significant	degree	of	resiliency	for	this	segment	even	if	sequestration	cuts	were	to	occur.

In	the	Enterprise	segment,	sales	declined	in	2012	due	to	a	challenging	macro	environment,	unfavorable	foreign	currency	fluctuations	and	uncertainty	around operating	system	roadmaps.	These	factors	led	to	suppressed	information	technology	("IT")	spend	and	fewer	large	deals	as	compared	to	2011	in	the	key	verticals	we serve,	including	retail	and	transportation	and	logistics.	Although	our	2012	results	were	impacted	by	these	factors,	we	believe	customers	will	continue	to	invest	in	our mobile	computing,	data	capture,	and	WLAN	technologies,	which	yield	high	return	on	investment	and	enable	real-time	information	to	their	workforce.	In	addition,	we believe	information	technology	("IT")	and	IT	hardware	spend	will	increase	during	2013.

We	feel	well	equipped	to	address	the	uncertainty	around	operating	system	roadmaps	with	our	R&D	investment	in	mobile	computing	technologies,	which	enables us	to	accommodate	applications	through	a	variety	of	different	enterprise	environments,	including	devices	on	Microsoft	with	Windows	Embedded	8,	Android,	and	at	the web-browser	level,	HTML5.	Outside	of	our	investment	in	mobile	computing,	we	continue	to	invest	in	new	products	across	the	Enterprise	portfolio	that	serve	many existing	customers,	but	address	market	opportunities	that	are	new	to	us.

Beyond	investment	in	R&D,	in	2012,	we	made	acquisitions	that	are	complimentary	to	our	existing	portfolio,	including	Psion.	We	expect	that	the	financial	results	of Psion,	which	we	report	in	the	Enterprise	segment,	will	be	accretive	to	earnings	by	2014,	as	we	integrate	their	technology	into	our	current	Enterprise	product	and	services offering.

For	the	iDEN	infrastructure	portfolio,	which	we	report	in	the	Enterprise	segment,	we	expect	to	see	a	continued	decline	in	iDEN	infrastructure	and	related	services.

We	continue	to	expand	our	current	services	offerings,	as	both	our	government	and	enterprise	customers	are	looking	for	end-to-end	solutions	that	combine	managed services	and	comprehensive	device	and	network	management	with	our	existing	portfolio.	We	believe	we	are	uniquely	positioned	to	provide	our	customers	products	and services	that	meet	mobile	workforce	needs,	as	well	as	build	successful	long	term	relationships.

We	are	committed	to	employing	disciplined	financial	policies,	achieving	our	financial	plan,	and	optimizing	our	capital	structure.	In	2013,	we	intend	to	continue the	quarterly	dividends	that	were	initiated	in	2011	and	intend	to	continue	to	invest

organically	in	capital	expenditures.	We	will	also	evaluate	our	acquisition	opportunities	along	with	the	opportunities	to	return	capital	to	shareholders	via	share repurchases.	As	of	December,	31,	2012	we	had	approximately	$1.5	billion	of	authority	available	for	repurchases.

We	conduct	our	business	in	competitive	markets,	facing	both	new	and	established	competitors.	The	markets	for	many	of	our	products	are	characterized	by	rapidly changing	technologies	and	evolving	industry	standards.	Market	disruptions	caused	by	new	technologies,	the	entry	of	new	competitors,	consolidations	among	our customers	and	competitors,	and	changes	in	regulatory	requirements,	among	other	matters,	can	introduce	volatility	into	our	businesses.	Meeting	all	of	these	challenges requires	consistent	operational	planning	and	execution	and	investment	in	technology,	resulting	in	innovative	solutions	that	meet	the	needs	of	our	customers	globally.	As we	execute	on	meeting	these	objectives,	we	remain	focused	on	taking	the	necessary	action	to	design	and	deliver	differentiated	and	innovative	products	and	services	that serve	the	needs	of	our	government	and	enterprise	customers.

# Results	of	Operations

| Cost	of	product	sales | 2,844 | 44.7	% | 2,723 | 44.9	% | 2,523 | 44.9	% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cost\tof\tservice\tsales | 1,506 | 64.5\t% | 1,334 | 62.5\t% | 1,282 | 64.1\t% |
| Costs\tof\tsales | 4,350 | 50.0\t% | 4,057 | 49.5\t% | 3,805 | 50.0\t% |
| Gross\tmargin | 4,348 | 50.0\t% | 4,146 | 50.5\t% | 3,812 | 50.0\t% |
| Selling,\tgeneral\tand\tadministrative\texpenses | 1,963 | 22.6\t% | 1,912 | 23.2\t% | 1,874 | 24.5\t% |
| Research\tand\tdevelopment\texpenditures | 1,075 | 12.4\t% | 1,035 | 12.6\t% | 1,037 | 13.6\t% |
| Other\tcharges | 54 | 0.6\t% | 341 | 4.2\t% | 150 | 2.0\t% |
| Operating\tearnings | 1,256 | 14.4\t% | 858 | 10.5\t% | 751 | 9.9\t% |
| Other\tincome\t(expense): |  |  |  |  |  |  |
| Interest\texpense,\tnet | (66) | (0.8)% | (74) | (0.9)% | (129) | (1.7)% |
| Gains\ton\tsales\tof\tinvestments\tand\tbusinesses,\tnet | 39 | 0.4\t% | 23 | 0.3\t% | 49 | 0.6\t% |
| Other | (14) | (0.2)% | (69) | (0.8)% | (7) | (0.1)% |
| Total\tother\tincome\t(expense) | (41) | (0.5)% | (120) | (1.5)% | (87) | (1.2)% |
| Earnings\tfrom\tcontinuing\toperations\tbefore\nincome\ttaxes | 1,215 | 14.0\t% | 738 | 9.0\t% | 664 | 8.7\t% |
| Income\ttax\texpense\t(benefit) | 337 | 3.9\t% | (3) | —\t% | 403 | 5.3\t% |
| Earnings\tfrom\tcontinuing\toperations | 878 | 10.1\t% | 741 | 9.0\t% | 261 | 3.4\t% |
| Less:\tEarnings\t(loss)\tattributable\tto\tnoncontrolling\ninterests | — | —\t% | (6) | (0.1)% | 17 | 0.2\t% |
| Earnings\tfrom\tcontinuing\toperations* | 878 | 10.1\t% | 747 | 9.1\t% | 244 | 3.2\t% |
| Earnings\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 3 | —\t% | 411 | 5.0\t% | 389 | 5.1\t% |
| Net\tearnings* | $881 | 10.1\t% | $1,158 | 14.1\t% | $633 | 8.3\t% |
| Earnings\tper\tdiluted\tcommon\tshare: |  |  |  |  |  |  |
| Continuing\toperations | $2.95 |  | $2.20 |  | $0.72 |  |
| Discontinued\toperations | 0.01 |  | 1.21 |  | 1.15 |  |
|  | $2.96 |  | $3.41 |  | $1.87 |  |

*				Amounts	attributable	to	Motorola	Solutions,	Inc.	common	shareholders.

**				Percentages	may	not	add	due	to	rounding.

Geographic	market	sales	measured	by	the	locale	of	the	end	customer	as	a	percent	of	total	net	sales	for	2012,	2011	and	2010	are	as	follows:

# Geographic	Market	Sales	by	Locale	of	End	Customer

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| North\tAmerica | 58% | 57% | 58% |
| Latin\tAmerica | 8% | 9% | 9% |
| EMEA | 21% | 21% | 21% |
| Asia | 13% | 13% | 12% |
|  | 100% | 100% | 100% |

# Results	of	Operations—2012	Compared	to	2011

# Net	Sales

Net	sales	were	$8.7	billion	in	2012,	a	6%	increase	compared	to	net	sales	of	$8.2	billion	in	2011.	The	increase	in	net	sales	reflects:	(i)	a	$631	million,	or	12%	increase in	net	sales	in	the	Government	segment	driven	by	broad	based	growth	across	the	product	portfolio,	and	(ii)	a	$136	million,	or	5%	decrease	in	net	sales	in	the	Enterprise segment	driven	by	the	anticipated	decline	in	iDEN	infrastructure	sales,	reduced	information	technology	spending	driven	by	macroeconomic	uncertainty,	and	unfavorable foreign	currency	fluctuations.

# Gross	Margin

Gross	margin	was	$4.3	billion,	or	50.0%	of	net	sales	in	2012,	compared	to	$4.1	billion,	or	50.5%	of	net	sales,	in	2011.	The	gross	margin	increase	was	driven	by	the 12%	increase	in	net	sales	in	our	Government	segment,	offset	by	lower	gross	margin	in	our	Enterprise	segment,	primarily	related	to	a	decline	in	volume,	including	the decline	in	iDEN	infrastructure	sales,	and	unfavorable	foreign	currency	fluctuations.	The	decrease	in	gross	margin	as	a	percent	of	sales	reflects	higher	gross	margin percent	from	product	sales	and	lower	gross	margin	percent	from	service	sales.	The	decline	in	gross	margin	percentage	from	service	sales	primarily	relates	to:	(i)	the expansion	of	managed	services,	which	generally	have	lower	gross	margin	than	our	traditional	service	contracts,	and	(ii)	unfavorable	foreign	currency	fluctuations.

# Selling,	General	and	Administrative	Expenses

Selling,	general	and	administrative	("SG&A")	expenses	increased	3%	to	$2.0	billion,	or	22.6%	of	net	sales	in	2012,	compared	to	$1.9	billion,	or	23.2%	of	net	sales in	2011.	The	increase	in	SG&A	expenses	is	driven	by	an	increase	in	pension	and	employee	benefit-related	expenses,	as	well	as	the	Psion	acquisition	that	closed	in	the fourth	quarter	of	2012.

# Research	and	Development	Expenditures

Research	and	development	("R&D")	expenditures	increased	4%	to	$1.1	billion,	or	12.4%	of	net	sales	in	2012,	compared	to	$1.0	billion,	or	12.6%	of	net	sales,	in 2011.	The	increase	in	R&D	expenditures	reflects	higher	R&D	expenditures	in	both	segments,	primarily	due	to:	(i)	an	increase	in	employee	benefit-related	expenses,	and (ii)	increased	investment	in	next-generation	technology,	including	strategic	acquisitions.

# Other	Charges

We	recorded	net	charges	of	$54	million	in	Other	charges	in	2012,	compared	to	net	charges	of	$341	million	in	2011.	The	charges	in	2012	included:	(i)	$41	million	of charges	relating	to	the	reorganization	of	business	charges,	and	(ii)	$29	million	of	charges	relating	to	amortization	of	intangibles,	partially	offset	by	$16	million	of income	related	to	a	legal	matter.	The	charges	in	2011	included:	(i)	$200	million	of	charges	relating	to	the	amortization	of	intangibles,	(ii)	$88	million	of	net	charges relating	to	legal	matters,	(iii)	$52	million	of	net	reorganization	of	business	charges,	and	(iv)	$10	million	related	to	a	long	term	financing	receivable	reserve,	partially offset	by	$9	million	in	gains	related	to	pension	plan	adjustments.	The	net	reorganization	of	business	charges	are	discussed	in	further	detail	in	the	"Reorganization	of Businesses"	section.

# Net	Interest	Expense

Net	interest	expense	was	$66	million	in	2012,	compared	to	net	interest	expense	of	$74	million	in	2011.	Net	interest	expense	in	2012	included	interest	expense	of $108	million,	partially	offset	by	interest	income	of	$42	million.	Net	interest	expense	in	2011	includes	interest	expense	of	$132	million,	partially	offset	by	interest	income of	$58	million.	The	decrease	in	net	interest	expense	in	2012	compared	to	2011	is	primarily	attributable	to	lower	interest	expense	driven	by	lower	average	debt outstanding,	partially	offset	by	a	decrease	in	interest	income	due	to	lower	average	cash	and	cash	equivalents	during	2012	compared	to	2011.

# Gains	on	Sales	of	Investments	and	Businesses

Gains	on	sales	of	investments	and	businesses	were	$39	million	in	2012,	compared	to	$23	million	in	2011.	In	2012	and	2011,	the	net	gains	were	primarily	comprised of	gains	related	to	sales	of	certain	of	our	equity	investments.

# Other

Net	Other	expense	was	$14	million	in	2012,	compared	to	net	Other	expense	of	$69	million	in	2011.	The	net	Other	expense	in	2012	was	primarily	comprised	of:	(i) $13	million	foreign	currency	expense,	(ii)	$6	million	loss	from	the	extinguishment	of	debt,	and	(iii)	a	$8	million	investment	write	down	expense,	partially	offset	by	$13 million	of	other	net	investment	earnings.	The	net	Other	expense	in	2011	was	primarily	comprised	of	an	$81	million	loss	from	the	extinguishment	of	a	portion	of	our outstanding	long-term	debt,	partially	offset	by	an	$8	million	foreign	currency	gain.

# Effective	Tax	Rate

We	recorded	$337	million	of	net	tax	expense	in	2012,	resulting	in	an	effective	tax	rate	of	28%,	compared	to	a	$3	million	net	tax	benefit	in	2011,	resulting	in	a negative	effective	tax	rate.	Our	effective	tax	rate	in	2012	is	lower	than	the	U.S.	statutory	tax	rate	of	35%	primarily	due	to:	(i)	a	$60	million	tax	benefit	related	to	the reversal	of	a	significant	portion	of	the	valuation	allowance	established	on	certain	foreign	deferred	tax	assets,	and	(ii)	a	$13	million	reduction	in	unrecognized	tax	benefits for	facts	that	now	indicate	the	extent	to	which	certain	tax	positions	are	more-likely-than-not	of	being	sustained.	Our	negative	effective	tax	rate	in	2011	was	primarily	due to:	(i)	a	$274	million	tax	benefit	related	to	the	reversal	of	a	significant	portion	of	the	valuation	allowance	established	on	the	U.S.	deferred	tax	assets,	and	(ii)	reductions in	unrecognized	tax	benefits	for	facts	that	now	indicate	the	extent	to	which	certain	tax	positions	are	more-likely-than-not	of	being	sustained,	partially	offset	by	an increase	in	the	U.S.	federal	income	tax	accrual	for	repatriation	of	undistributed	foreign	earnings.

While	our	effective	tax	rate	may	change	from	period	to	period	due	to	non-recurring	events,	such	as	settlements	of	income	tax	audits	and	changes	in	valuation allowances,	we	generally	expect	our	effective	tax	rate	to	be	close	to	the	U.S.	statutory	tax	rate	primarily	due	to	our	current	repatriation	strategy	and	the	U.S.	federal income	tax	accrual	on	undistributed	foreign	earnings.		During	2012,	the	Company	began	to	reorganize	certain	of	its	non-U.S.	subsidiaries	under	a	holding	company structure	in	order	to	facilitate	the	efficient	movement	of	non-U.S.	cash	and	provide	a	platform	to	fund	foreign	investments,	such	as	potential	acquisitions	and	capital expenditures.		When	the	reorganization	is	complete,	the	tax	impact	of	future	cash	repatriations	from	these	subsidiaries	may	be	more	favorable	than	under	the	existing structure.

The	valuation	allowances	on	our	deferred	tax	assets	are	discussed	further	in	Note	6,	"Income	Taxes,"	of	our	consolidated	financial	statements.	Our	effective	tax rate	will	change	from	period	to	period	based	on	non-recurring	events,	such	as	the	settlement	of	income	tax	audits,	changes	in	valuation	allowances	and	the	tax	impact	of significant	unusual	or	extraordinary	items,	as	well	as	recurring	factors	including	changes	in	the	geographic	mix	of	income	and	effects	of	various	global	income	tax strategies.

# Earnings	from	Continuing	Operations

After	taxes,	and	excluding	earnings	attributable	to	noncontrolling	interests,	we	had	net	earnings	from	continuing	operations	of	$878	million,	or	$2.95	per	diluted share,	in	2012,	compared	to	$747	million,	or	$2.20	per	diluted	share,	in	2011.	The	increase	in	earnings	from	continuing	operations	in	2012	compared	to	2011	was primarily	attributable	to:	(i)	$287	million	decrease	in	other	charges	related	to	lower	intangible	asset	amortization	and	net	legal	and	related	insurance	matters,	and	(ii) $202	million	increase	in	gross	margin,	partially	offset	by	the	$274	million	benefit	for	the	valuation	allowance	reversal	recorded	during	2011.	The	increase	in	earnings	per diluted	share	was	primarily	due	to	the	increase	in	earnings	from	continuing	operations	and	the	reduction	in	shares	outstanding	as	a	result	of	our	share	repurchase program.

# Earnings	from	Discontinued	Operations

After	taxes,	we	had	earnings	from	discontinued	operations	of	$3	million,	or	$0.01	per	diluted	share,	in	2012,	compared	to	earnings	from	discontinued	operations	of $411	million,	or	$1.21	per	diluted	share,	in	2011.	The	earnings	from	discontinued	operations	in	2011	were	primarily	from	the	operations	of	and	the	gain	on	the	sale	of	the Networks	business.

# Results	of	Operations—2011	Compared	to	2010

increase	in	net	sales	in	the	Government	segment	and	(ii)	a	$277	million,	or	11%	increase	in	net	sales	in	the	Enterprise	segment.

Gross	margin	was	$4.1	billion,	or	50.5%	of	net	sales	in	2011,	compared	to	$3.8	billion,	or	50.0%	of	net	sales,	in	2010.	Gross	margin	dollars	increased	in	both segments.	The	increase	in	gross	margin	as	a	percent	of	sales	reflects	higher	gross	margin	in	the	Government	segment,	driven	by	the	increase	in	sales	and	favorable product	mix,	with	margins	remaining	flat	in	the

Enterprise	segment	driven	by	margin	gains	in	certain	product	lines	offset	by	the	anticipated	decline	in	iDEN,	which	has	historically	yielded	strong	margins.

SG&A	expenses	increased	2%	to	$1.9	billion,	or	23.2%	of	net	sales,	in	2011,	compared	to	$1.9	billion,	or	24.5%	of	net	sales,	in	2010.	The	increase	in	SG&A expenses	reflects	higher	SG&A	expenses	in	both	segments,	primarily	due	to	(i)	increased	sales	incentives	related	to	the	increase	in	net	sales	and	(ii)	increased	employee benefit-related	expenses.	The	increases	in	employee	benefit-related	expenses	are	primarily	due	to	an	increase	in	pension-related	expenses	and	the	reinstatement	of	our 401(k)	matching	contributions.

R&D	expenditures	of	$1.0	billion,	or	12.6%	of	net	sales	were	relatively	flat	in	2011,	compared	to	$1.0	billion,	or	13.6%	of	net	sales	in	2010.	R&D	expenditures were	flat	in	2011	compared	to	2010,	which	reflects	higher	R&D	expenditures	in	the	Enterprise	segment	and	lower	R&D	expenditures	in	the	Government	segment.	The slight	increase	in	the	Enterprise	segment	was	primarily	due	to	investment	in	next-generation	technologies	and	increased	employee	benefit-related	expenses.	The	decrease in	R&D	expenditures	in	the	Government	segment	was	primarily	due	to	savings	from	cost	reduction	initiatives	related	to	non	employee	expenses,	partially	offset	by increased	employee	benefit	expenses.

We	recorded	net	charges	of	$341	million	in	Other	charges	in	2011,	compared	to	net	charges	of	$150	million	in	2010.	The	charges	in	2011	included:	(i)	$200	million of	charges	relating	to	the	amortization	of	intangibles,	(ii)	$88	million	of	net	charges	relating	to	legal	matters,	(iii)	$52	million	of	net	reorganization	of	business	charges included	in	Other	charges,	and	(iv)	$10	million	related	to	a	long	term	financing	receivable	reserve,	partially	offset	by	$9	million	of	gains	related	to	pension	plan adjustments.	The	charges	in	2010	included:	(i)	$203	million	of	charges	relating	to	the	amortization	of	intangibles,	and	(ii)	$54	million	of	net	reorganization	of	business charges	included	in	Other	charges,	partially	offset	by:	(i)	$78	million	of	gains	related	to	intellectual	property	settlements	and	reserve	adjustments,	and	(ii)	$29	million	of income	related	to	a	legal	settlement.	The	net	reorganization	of	business	charges	are	discussed	in	further	detail	in	the	"Reorganization	of	Businesses"	section.

Net	interest	expense	was	$74	million	in	2011,	compared	to	net	interest	expense	of	$129	million	in	2010.	Net	interest	expense	in	2011	included	interest	expense	of $132	million,	partially	offset	by	interest	income	of	$58	million.	Net	interest	expense	in	2010	includes	interest	expense	of	$217	million,	partially	offset	by	interest	income of	$88	million.	The	decrease	in	net	interest	expense	in	2011	compared	to	2010	is	primarily	attributable	to	lower	interest	expense	driven	by	lower	average	debt outstanding	partially	offset	by	a	decrease	in	lower	interest	income	driven	by	lower	average	cash	and	cash	equivalents	and	lower	yields	during	2011	compared	to	2010.

Gains	on	sales	of	investments	and	businesses	were	$23	million	in	2011,	compared	to	a	gain	of	$49	million	in	2010.	In	2011,	the	net	gain	was	primarily	comprised	of gains	related	to	sales	of	certain	of	our	equity	investments.	In	2010,	the	net	gain	was	primarily	comprised	of	a	gain	on	the	sale	of	a	single	investment.

Net	Other	expense	was	$69	million	in	2011,	compared	to	net	Other	expense	of	$7	million	in	2010.	The	net	Other	expense	in	2011	was	primarily	comprised	of	an $81	million	loss	from	the	extinguishment	of	a	portion	of	our	outstanding	long-term	debt,	partially	offset	by	an	$8	million	foreign	currency	gain.	The	net	expense	in	2010 was	primarily	comprised	of:	(i)	$21	million	of	investment	impairments,	and	(ii)	a	$12	million	loss	from	the	extinguishment	of	a	portion	of	our	outstanding	long-term debt,	partially	offset	by:	(i)	a	$12	million	foreign	currency	gain,	and	(ii)	an	$11	million	gain	from	Sigma	Fund	investments.

We	recorded	$3	million	of	net	tax	benefit	in	2011,	resulting	in	a	negative	effective	tax	rate	on	continuing	operations	compared	to	$403	million	of	net	tax	expense	in 2010,	resulting	in	an	effective	tax	rate	of	61%.	Our	negative	effective	tax	rate	in	2011	was	primarily	due	to:	(i)	a	$274	million	tax	benefit	related	to	the	reversal	of	a significant	portion	of	the	valuation	allowance	established	on	the	U.S.	deferred	tax	assets,	and	(ii)	reductions	in	unrecognized	tax	benefits	for	facts	that	now	indicate	the extent	to	which	certain	tax	positions	are	more-likely-than-not	of	being	sustained,	partially	offset	by	an	increase	in	the	U.S.	federal	income	tax	accrual	for	repatriation	of undistributed	foreign	earnings.

Our	effective	tax	rate	for	2010	was	higher	than	the	U.S.	statutory	tax	rate	of	35%	primarily	due	to	(i)	an	increase	in	the	U.S.	federal	income	tax	accrual	for repatriation	of	undistributed	foreign	earnings	related	to	the	realignment	of	our	investment	structure	in	preparation	of	the	distribution	of	Motorola	Mobility,	and	(ii)	a non-cash	tax	charge	related	to	the	Medicare	Part	D

subsidy	tax	law	change,	partially	offset	by	reductions	in	unrecognized	tax	benefits	for	facts	that	now	indicate	the	extent	to	which	certain	tax	positions	are	more-likely- than-not	of	being	sustained.

After	taxes,	and	excluding	earnings	attributable	to	noncontrolling	interests,	we	had	net	earnings	from	continuing	operations	of	$747	million,	or	$2.20	per	diluted share,	in	2011,	compared	to	$244	million,	or	$0.72	per	diluted	share,	in	2010.	The	improvement	in	the	earnings	from	continuing	operations	in	2011	compared	to	2010 was	primarily	attributable	to	a	$334	million	increase	in	gross	margin	and	a	$406	million	decrease	in	tax	expense.	These	improvements	were	partially	offset	by	a	$191 million	increase	in	other	charges,	and	a	$38	million	increase	in	SG&A	expenses.

After	taxes,	we	had	earnings	from	discontinued	operations	of	$411	million,	or	$1.21	per	diluted	share,	in	2011,	compared	to	earnings	from	discontinued	operations of	$389	million,	or	$1.15	per	diluted	share,	in	2010.	The	earnings	from	discontinued	operations	in	2011	was	primarily	from	the	operations	and	gain	from	the	sale	of	the Networks	business.	The	earnings	from	discontinued	operations	in	2010	were	primarily	from	the	Networks	business,	partially	offset	by	losses	from	Motorola	Mobility.

# Segment	Information

The	following	commentary	should	be	read	in	conjunction	with	the	financial	results	of	each	operating	business	segment	as	detailed	in	Note	12,	"Information	by Segment	and	Geographic	Region,"	to	our	consolidated	financial	statements.	Net	sales	and	operating	results	for	our	two	reporting	segments	for	2012,	2011,	and	2010	are presented	below.

|  |  | Years	Ended	December	31 |  | Percent	Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Dollars\tin\tmillions) | 2012 | 2011 | 2010 | 2012—2011 | 2011—2010 |
| Segment\tnet\tsales | $5,989 | $5,358 | $5,049 | 12% | 6% |
| Operating\tearnings | 965 | 616 | 534 | 57% | 15% |

In	2012,	the	segment's	net	sales	were	$6.0	billion,	a	12%	increase	compared	to	net	sales	of	$5.4	billion	in	2011.	The	12%	increase	in	net	sales	in	the	Government segment	reflects	broad	based	growth	across	the	portfolio	and	in	all	regions.	Net	sales	in	North	America	continued	to	comprise	a	significant	portion	of	the	segment's business,	accounting	for	approximately	63%	of	the	segment's	net	sales	in	both	2012	and	2011.	The	segment's	backlog	was	$4.9	billion	at	December	31,	2012	and	$4.4 billion	at	December	31,	2011.

The	segment	had	operating	earnings	of	$965	million	in	2012,	compared	to	operating	earnings	of	$616	million	in	2011.	The	increase	in	operating	earnings	was primarily	due	to:	(i)	an	increase	in	gross	margin,	driven	by	the	12%	increase	in	net	sales,	and	(ii)	a	decline	in	Other	charges,	driven	by	net	legal	matters	that	occurred	in 2011,	partially	offset	by	an	increase	in	SG&A	expenses	and	R&D	expenditures.	The	increase	in	SG&A	expenses	was	due	to	increases	in	pension	and	employee	benefit related	expenses,	and	the	increase	in	R&D	expenditures	was	driven	by	higher	employee	benefit	related	expenses	and	increased	investment	in	next-generation technologies.	As	a	percentage	of	net	sales	in	2012	as	compared	to	2011,	gross	margin	increased	slightly	due	to	favorable	mix,	and	operating	leverage	increased	primarily due	to	the	12%	increase	in	net	sales	while	improving	the	segment's	fixed	cost	structure.

In	2011,	the	segment's	net	sales	were	$5.4	billion,	a	6%	increase	compared	to	net	sales	of	$5.0	billion	in	2010.	The	6%	increase	in	net	sales	in	the	Government segment	reflects	an	increase	in	sales	of	mission	critical	and	professional	commercial	radio	products	and	services.	The	increase	in	net	sales	for	the	segment	reflects	higher net	sales	in	North	America,	Latin	America,	and	Asia,	while	EMEA	was	down	slightly	due	to	continued	macro-economic	challenges	in	Western	Europe.	Net	sales	in North	America	continued	to	comprise	a	significant	portion	of	the	segment's	business,	accounting	for	approximately	63%	of	the	segment's	net	sales	in	both	2011	and 2010.	The	segment's	backlog	was	$4.4	billion	at	December	31,	2011	and	$3.9	billion	at	December	31,	2010.

The	segment	had	operating	earnings	of	$616	million	in	2011,	compared	to	operating	earnings	of	$534	million	in	2010.	As	a	percentage	of	net	sales	in	2011	as compared	to	2010,	gross	margin	increased,	and	SG&A	expenses	and	R&D	expenditures	decreased.	The	increase	in	operating	earnings	was	primarily	due	to	an	increase in	gross	margin,	driven	by	the	6%	increase	in	net	sales	and	a	favorable	product	mix,	partially	offset	by:	(i)	increased	SG&A	expenses	primarily	due	to	an	increase	in sales	incentives	related	to	the	increase	in	net	sales	and	increased	employee	benefit-related	expenses,	and	(ii)	an	increase	in	Other

charges	primarily	from	net	charges	related	to	legal	matters.	The	decrease	in	R&D	expenditures	was	primarily	due	to	savings	from	cost	reduction	initiatives	related	to	non employee	expenses	partially	offset	by	an	increase	in	investment	in	next-generation	technologies	and	increased	employee	benefit-related	expenses.

|  |  | Years	Ended	December	31 |  | Percent	Change |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Dollars\tin\tmillions) | 2012 | 2011 | 2010 | 2012—2011 | 2011—2010 |
| Segment\tnet\tsales | $2,709 | $2,845 | $2,568 | (5)% | 11% |
| Operating\tearnings | 291 | 242 | 217 | 20\t% | 12% |

In	2012,	the	segment's	net	sales	were	$2.7	billion,	a	5%	decrease	compared	to	net	sales	of	$2.8	billion	in	2011.	The	5%	decrease	in	net	sales	in	the	Enterprise segment	reflects	a	decrease	in	sales	of:	(i)	iDEN	infrastructure,	(ii)	mobile	computing,	and	(iii)WLAN,	partially	offset	by	an	increase	in	data	capture	equipment	sales. The	decrease	in	net	sales	for	the	segment	reflects	a	decline	in	North	America,	Latin	America,	and	EMEA,	and	an	increase	in	Asia.	Net	sales	in	North	America	continued to	comprise	a	significant	portion	of	the	segment's	business,	accounting	for	approximately	47%	of	the	segment's	net	sales	in	2012,	and	approximately	46%	in	2011.	The segment's	backlog	was	$782	million	at	December	31,	2012,	compared	to	$875	million	at	December	31,	2011.	The	decline	in	backlog	is	primarily	related	to	the anticipated	decline	in	iDEN	infrastructure	and	reduced	information	technology	spending	driven	by	macroeconomic	uncertainty.

The	segment	had	operating	earnings	of	$291	million	in	2012,	compared	to	operating	earnings	of	$242	million	in	2011.	The	increase	in	operating	earnings	was primarily	due	to	a	decrease	in	Other	charges	as	a	result	of	a	reduction	in	intangibles	amortization	as	certain	intangible	assets	are	fully	amortized,	as	well	as	a	decline from	net	legal	matters	that	occurred	in	2011.	The	decrease	in	Other	charges	was	partially	offset	by:	(i)	a	decrease	in	gross	margin,	primarily	attributable	to	a	decline	in volume,	and	unfavorable	foreign	currency	fluctuations,	(ii)	increased	SG&A	expenses	due	to	increases	in	pension	and	employee	benefit	related	expenses	and	the acquisition	of	Psion,	and	(iii)	an	increase	in	R&D	expenditures,	driven	by	higher	employee	benefit	expenses	and	increased	investment	in	next-generation	technologies, including	the	acquisition	of	Psion.	As	a	percentage	of	net	sales	in	2012	as	compared	to	2011,	gross	margin	decreased	primarily	related	to	unfavorable	foreign	currency fluctuations	and	product	mix,	and	operating	leverage	decreased	due	to	the	5%	decline	in	net	sales.

In	2011,	the	segment's	net	sales	were	$2.8	billion,	an	11%	increase	compared	to	net	sales	of	$2.6	billion	in	2010.	The	11%	increase	in	net	sales	in	the	Enterprise segment	reflects	an	increase	in	mobile	computing,	WLAN	and	data	capture	equipment	sales,	partially	offset	by	a	decline	in	iDEN.	The	increase	in	net	sales	for	the segment	reflects	higher	net	sales	in	all	regions.	Net	sales	in	North	America	continued	to	comprise	a	significant	portion	of	the	segment's	business,	accounting	for approximately	46%	of	the	segment's	net	sales	in	2011,	and	approximately	48%	in	2010.	The	segment's	backlog	was	$875	million	at	December	31,	2012,	compared	to $881	million	at	December	31,	2011.

The	segment	had	operating	earnings	of	$242	million	in	2011,	compared	to	operating	earnings	of	$217	million	in	2010.	As	a	percentage	of	net	sales	in	2011	as compared	to	2010,	gross	margin	was	relatively	flat	and	SG&A	expenses	and	R&D	expenditures	decreased.	The	increase	in	operating	earnings	was	primarily	due	to	an increase	in	gross	margin,	driven	by	the	11%	increase	in	net	sales,	partially	offset	by:	(i)	increased	SG&A	expenses	primarily	due	to	an	increase	in	sales	incentives	related to	the	increase	in	net	sales	and	increased	employee	benefit-related	expenses,	(ii)	an	increase	in	Other	charges	primarily	from	net	charges	related	to	legal	matters,	and	(iii) an	increase	in	R&D	expenditures	primarily	due	to	an	increased	investment	in	next-generation	technologies	and	increased	employee	benefit-related	expenses.

# Reorganization	of	Businesses

During	2012	we	implemented	various	productivity	improvement	plans	aimed	at	achieving	long	term,	sustainable	profitability	by	driving	efficiencies	and	reducing operating	costs.	In	2012,	we	recorded	net	reorganization	of	business	charges	of	$50	million	relating	to	the	separation	of	1,000	employees,	of	which	700	were	indirect employees	and	300	were	direct	employees.	These	charges	included	$9	million	recorded	to	Costs	of	sales	and	$41	million	of	charges	within	Other	charges	in	our consolidated	statements	of	operations.	Included	in	the	aggregate	$50	million	are	charges	of:	(i)	$54	million	for	employee	separation	costs,	and	(ii)	building	impairment charges	of	$7	million,	partially	offset	by	$11	million	of	reversals	for	accruals	no	longer	needed.

We	realized	cost-saving	benefits	of	approximately	$17	million	in	2012	from	the	plans	that	were	initiated	during	2012,	primarily	in	operating	expenses.	Beyond 2012,	we	expect	the	reorganization	plans	initiated	during	2012	to	provide	annualized

cost	savings	of	approximately	$70	million,	consisting	of	$15	million	of	savings	in	Cost	of	sales,	and	$55	million	of	savings	in	operating	expenses.

During	2011,	we	recorded	net	reorganization	of	business	charges	of	$58	million,	including	$41	million	for	employee	separation	costs	and	$19	million	for	exit costs,	partially	offset	by	$2	million	for	reversals	of	accruals	no	longer	needed.	During	2010	we	recorded	net	reorganization	of	business	charges	of	$73	million,	including $73	million	for	employee	separation	costs	and	$16	million	for	exit	costs,	partially	offset	by	$16	million	of	reversals	of	accruals	no	longer	needed.

The	following	table	displays	the	net	charges	incurred	by	business	segment:

| Year	Ended	December	31, | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Government | $33 | $40 | $57 |
| Enterprise | 17 | 18 | 16 |
|  | $50 | $58 | $73 |

Cash	payments	for	exit	costs	and	employee	separations	in	connection	with	these	reorganization	plans	were	$55	million	in	2012,	as	compared	to	$81	million	in 2011,	and	$53	million	in	2010.	The	$35	million	reorganization	of	businesses	accrual	at	December	31,	2012,	includes:	(i)	$31	million	relating	to	employee	separation costs	that	are	expected	to	be	paid	in	2013,	and	(ii)	$4	million	relating	to	lease	termination	obligations	that	are	expected	to	be	paid	over	a	number	of	years.

# Liquidity	and	Capital	Resources

We	decreased	the	aggregate	of	our	(i)	cash	and	cash	equivalent	balances,	and	(ii)	Sigma	Fund	and	short-term	investments	by	$1.5	billion	from	$5.1	billion	as	of December	31,	2011	to	$3.6	billion	as	of	December	31,	2012.	This	decrease	was	primarily	due	to:	(i)	the	return	of	$2.7	billion	of	capital	to	shareholders	through	share repurchases	and	dividends	paid	during	2012,	and	(ii)	the	$413	million	used	for	the	retirement	of	debt,	partially	offset	by:	(i)	$747	million	of	net	proceeds	from	the issuance	of	debt,	and	(ii)	$1.1	billion	of	operating	cash	flow.

# Cash	and	Cash	Equivalents

At	December	31,	2012,	our	cash	and	cash	equivalents	(which	are	highly-liquid	investments	with	an	original	maturity	of	three	months	or	less)	were	$1.5	billion,	a decrease	of	$413	million	compared	to	$1.9	billion	at	December	31,	2011.	At	December	31,	2012,	approximately	$400	million	of	this	amount	was	held	in	the	U.S.	and $1.1	billion	was	held	in	other	countries	(including	$322	million	in	China).	At	both	December	31,	2012	and	December	31,	2011,	restricted	cash	was	$63	million (including	$3	million	held	outside	the	U.S.).

We	continue	to	analyze	and	review	various	repatriation	strategies	to	continue	to	efficiently	repatriate	cash.	In	2012,	we repatriated	approximately	$1.0	billion	in	cash	to	the	U.S.	from	international	jurisdictions.	We	have	approximately	$1.3	billion	of	earnings	in	foreign	subsidiaries	that	are not	permanently	reinvested	and	may	be	repatriated	without	an	additional	income	tax	charge	to	our	consolidated	statements	of	operations,	given	the	U.S.	federal	and foreign	income	tax	provisions	accrued	on	undistributed	earnings	and	the	utilization	of	available	foreign	tax	credits.	On	a	cash	basis,	certain	of	these	repatriations	from our	non-U.S.	subsidiaries	will	require	the	payment	of	additional	taxes.	Repatriation	of	some	of	these	funds	could	be	subject	to	delay	for	local	country	approvals	and could	have	potential	adverse	tax	consequences.

On	January	4,	2011,	the	distribution	of	Motorola	Mobility	from	Motorola	Solutions	was	completed.	As	part	of	the	distribution,	we	contributed	$3.2	billion	of	cash and	cash	equivalents	to	Motorola	Mobility.	We	had	an	obligation	to	fund	an	additional	$300	million,	upon	receipt	of	cash	distributions	as	a	result	of	future	capital reductions	of	an	overseas	subsidiary,	of	which	$225	million	was	paid	during	2011	and	$73	million	was	paid	during	2012.	These	contributions	are	reflected	as	financing activities	in	our	consolidated	statements	of	cash	flows	for	the	years	ended,	December	31,	2012	and	2011.

# Operating	Activities

Cash	provided	by	operating	activities	from	continuing	operations	in	2012	was	$1.1	billion,	compared	to	$848	million	in	2011	and	$803	million	in	2010.	Operating cash	flows	in	2012,	as	compared	to	2011,	were	positively	impacted	by:	(i)	our	increased	sales	and	the	expansion	of	our	operating	margins,	(ii)	a	$156	million	decrease	in contributions	to	our	pension	plans,	and	(iii)	improvements	in	our	working	capital	management,	including	approximately	$100	million	of	sold	or	collected	long-term receivables	related	to	the	Networks	divestiture	that	were	retained	after	the	sale.		Operating	cash	flows	in	2011,	as	compared	to	2010,	were	negatively	impacted	by	timing differences	within	our	working	capital	accounts,	as	well	as	an	increase	of	$329	million	in	contributions	to	our	pension	plans,	partially	offset	by	$150	million	of	sold	or collected	long-term	receivables	related	to	the	Networks	divestiture	that	were	retained	after	the	sale.

We	contributed	$340	million	to	our	U.S.	pension	plans	during	2012	compared	to	$489	million	in	2011.	We	contributed	$31	million	to	our	non-U.S.	pension	plans during	2012	compared	to	$38	million	contributed	in	2011.	In	January	2011,	the	Pension	Benefit	Guaranty	Corporation	("PBGC")	announced	an	agreement	with Motorola	Solutions	under	which	we	would

contribute	$100	million	above	and	beyond	our	legal	requirement	to	our	U.S.	pension	plans	over	the	next	five	years.	We	and	the	PBGC	entered	into	this	agreement	as	we were	in	the	process	of	separating	Motorola	Mobility	and	pursuing	the	sale	of	certain	assets	of	the	Networks	business.	We	made	$250	million	of	pension	contributions	to our	U.S.	pension	plans	over	the	amounts	required	in	2011,	of	which	$100	million	fulfilled	the	PBGC	financial	obligation.	As	a	result,	we	have	no	further	financial obligations	under	this	agreement	with	the	PBGC.	During	2013,	we	expect	to	make	cash	contributions	of	approximately	$300	million	to	our	U.S.	pension	plans	and approximately	$30	million	to	our	non-U.S.	pension	plans.

Our	pension	deficit	is	impacted	by	the	volatility	of	corporate	bond	rates	which	are	used	to	determine	the	plan	discount	rate	as	well	as	returns	on	the	pension	plan asset	portfolio.	The	discount	rate	used	to	measure	the	U.S.	liability	at	the	end	of	2012	was	4.35%,	compared	to	5.1%	in	the	prior	year.	As	a	result	of	the	decrease	in	the discount	rate,	net	of	contributions	and	other	factors,	our	total	underfunded	U.S.	pension	at	year	end	increased	to	approximately	$2.9	billion.	As	of	December	31,	2012, changing	the	U.S.	pension	plans	discount	rate	by	one	percentage	point	would	change	the	U.S.	pension	plans	net	period	expense	by:

Based	on	the	December	31,	2012	valuation	of	the	U.S.	pension	plans,	we	expect	a	decrease	in	net	periodic	pension	costs	in	2013	as	compared	to	2012.	The decrease	is	primarily	due	to	changes	in	our	loss	amortization	period,	which	was	increased	from	nine	years,	the	previous	estimated	remaining	service	period,	to	28	years, the	average	remaining	participant	lifetime.		The	increase	in	amortization	period	reflects	the	change	in	mix	of	active	and	non-active	employees	remaining	in	the	plan,	as almost	all	of	our	plan	participants	are	no	longer	actively	employed	by	the	Company	due	to	significant	employee	exits	as	a	result	of	our	recent	divestitures,	including	the distribution	of	Motorola	Mobility	and	the	sale	of	certain	assets	and	liabilities	of	the	Networks	business.

We	maintained	all	of	the	U.S.	pension	liabilities	and	the	majority	of	the	non-U.S.	pension	liabilities	following	the	distribution	of	Motorola	Mobility	on	January	4, 2011,	and	following	the	sale	of	certain	assets	and	liabilities	of	the	Networks	business	to	NSN	on	April	29,	2011.	Retirement	benefits	are	further	discussed	in	the "Accounting	Policies	-	Retirement	Benefits"	section.

# Investing	Activities

Net	cash	provided	by	investing	activities	was	$797	million	in	2012,	compared	to	$2.4	billion	in	2011	and	net	cash	provided	for	investing	activities	of	$523	million in	2010.	The	$1.6	billion	decrease	in	net	cash	provided	by	investing	activities	from	2011	to	2012	was	primarily	due	to:	(i)	a	$1.2	billion	decrease	in	cash	received	from sales	of	investments	and	businesses	relating	to	the	sale	of	certain	assets	and	liabilities	of	the	Networks	business,	and	(ii)	$433	million	decrease	in	cash	received	from	net sales	of	Sigma	Fund	investments.	The	$1.9	billion	increase	in	net	cash	provided	by	investing	activities	in	2011	from	2010	was	primarily	due	to:	(i)	$1.1	billion	increase in	cash	received	from	net	sales	of	Sigma	Fund	investments,	and	(ii)	$860	million	increase	in	cash	received	from	sales	of	investments	and	businesses	relating	to	the	sale	of certain	assets	and	liabilities	of	the	Networks	business.

Sigma	Fund:				We	and	our	wholly-owned	subsidiaries	invest	most	of	our	U.S.	dollar-denominated	cash	in	a	fund	(the	"Sigma	Fund")	that	allows	us	to	efficiently invest	our	cash	around	the	world.	We	had	net	proceeds	of	$1.1	billion	from	sales	of	Sigma	Fund	investments	in	2012,	compared	to	$1.5	billion	in	net	proceeds	from	sales of	Sigma	Fund	investments	in	2011	and	$453	million	from	sales	of	Sigma	Fund	investments	in	2010.	The	aggregate	fair	value	of	Sigma	Fund	investments	was	$2.1 billion	at	December	31,	2012	(including	$969	million	held	outside	the	U.S.),	compared	to	$3.2	billion	at	December	31,	2011	(including	$1.3	billion	held	outside	the U.S.).

The	Sigma	Fund	portfolio	is	managed	by	four	independent	investment	management	firms.	The	investment	guidelines	of	the	Sigma	Fund	require	that	purchased investments	must	be	in	high-quality,	investment	grade	(rated	at	least	A/A-1	by	Standard	&	Poor's	or	A2/P-1	by	Moody's	Investors	Service),	U.S.	dollar-denominated fixed	income	obligations,	including	certificates	of	deposit,	commercial	paper,	government	bonds,	corporate	bonds	and	asset-	and	mortgage-backed	securities.	Under	the Sigma	Fund's	investment	policies,	except	for	obligations	of	the	U.S.	government,	agencies	and	government-sponsored	enterprises,	no	more	than	5%	of	the	Sigma	Fund portfolio	is	to	consist	of	securities	of	any	one	issuer.	The	Sigma	Fund's	investment	policies	further	require	that	floating	rate	investments	must	have	a	maturity	at	purchase date	that	does	not	exceed	thirty-six	months	with	an	interest	rate	that	is	reset	at	least	annually.	The	average	interest	rate	reset	of	the	investments	held	by	the	funds	must	be 120	days	or	less.	The	actual	average	maturity	of	the	portfolio	(excluding	cash)	was	less	than	one	month	at	both	December	31,	2012,	and	December	31,	2011.

At	December	31,	2012,	100%	of	the	Sigma	Fund	investments	were	invested	in	cash	and	U.S.	government,	agency	and	government-sponsored	enterprise obligations.	This	reflects	a	strategic	decision	to	prioritize	capital	preservation	rather	than	investment	income.

We	continuously	assess	our	cash	needs	and	continue	to	believe	that	the	balance	of	cash	and	cash	equivalents,	short-term	investments	and	investments	in	the	Sigma Fund	are	more	than	adequate	to	meet	our	operating	requirements	over	the	next	twelve	months.

Acquisitions	and	Investments:		We	used	$109	million	cash	for	acquisitions	and	new	investment	activities	in	2012,	compared	to	$32	million	in	2011	and	$23	million in	2010.	The	cash	used	in	2012	was	primarily	for	the	acquisition	of	Psion	plc,	a	U.K.	based	leader	in	mobile	computing	solutions,	for	approximately	$200	million, primarily	utilizing	foreign	cash,	partially	offset	by	net	proceeds	received	related	to	the	agreement	with	NSN	to	take	over	responsibility	to	implement	Norway´s	TETRA public	safety	network.	The	cash	used	in	2011	and	2010	was	for	small	strategic	investments.

Capital	Expenditures:				Capital	expenditures	were	$187	million	in	2012,	compared	to	$186	million	in	2011	and	$192	million	in	2010.	Capital	spending	in	2012 was	primarily	focused	on	updating	our	information	technology	infrastructure,	managed	services	opportunities,	and	engineering	projects.	Capital	spending	in	2011	as compared	to	2010	was	generally	flat	across	all	functions	except	for	a	slight	decrease	in	our	services	function,	offset	by	higher	information	technology	capital	spend.

Sales	of	Investments	and	Businesses:			We	made	$38	million	of	disbursements	related	to	a	divested	business	and	sales	of	investments	in	2012,	compared	to proceeds	received	of	$1.1	billion	in	2011	and	proceeds	received	of	$264	million	in	2010.	The	$38	million	of	disbursements	in	2012	were	primarily	comprised	of payments	to	NSN	related	to	the	purchase	price	adjustment	from	the	sale	of	the	Networks	business,	partially	offset	by	proceeds	from	sales	of	certain	of	our	equity investments.	The	$1.1	billion	in	proceeds	in	2011	were	primarily	comprised	of	net	proceeds	received	in	connection	with	sales	of:	(i)	certain	assets	of	the	Networks business,	(ii)	the	Wireless	Broadband	businesses,	(iii)	certain	of	our	equity	investments,	and	(iv)	the	Israel-based	module	business.	The	$264	million	in	proceeds	in	2010 were	related	to	the	sale	of	our	Israel-based	wireless	network	operator	business.

# Financing	Activities

Net	cash	used	for	financing	activities	was	$2.3	billion	in	2012,	compared	to	$5.5	billion	in	2011	and	$40	million	in	2010.	Cash	used	for	financing	activities	in	2012 was	primarily	comprised	of:	(i)	$2.4	billion	used	for	purchases	of	our	common	stock	under	our	share	repurchase	program,	(ii)	$413	million	of	cash	used	for	the repayment	of	debt,	and	(iii)	$270	million	of	cash	used	for	the	payment	of	dividends,	partially	offset	by:	(i)	$747	million	of	net	proceeds	from	the	issuance	of	debt,	and (ii)	$133	million	of	net	cash	received	from	the	issuance	of	common	stock	in	connection	with	our	employee	stock	option	plans	and	employee	stock	purchase	plan.

Cash	used	for	financing	activities	in	2011	was	primarily	comprised	of:	(i)	$3.4	billion	of	contributions	to	Motorola	Mobility,	(ii)	$1.2	billion	used	for	repayment	of long-term	debt,	(iii)	$1.1	billion	of	cash	used	for	repurchases	of	shares,	and	(iv)	$72	million	of	cash	used	for	payment	of	dividends,	partially	offset	by	$192	million	of	net cash	received	from	the	issuance	of	common	stock	in	connection	with	our	employee	stock	option	plans	and	employee	stock	purchase	plan.

Cash	used	for	financing	activities	in	2010	was	primarily	$1.0	billion	of	cash	used	for	the	repayment	of	long-term	debt,	partially	offset	by:	(i)	$797	million	of	cash provided	by	distributions	from	discontinued	operations,	and	(ii)	$179	million	of	cash	received	from	the	issuance	of	common	stock	in	connection	with	our	employee stock	option	plans	and	employee	stock	purchase	plan.

Current	portion	of	Long-Term	Debt:		At	December	31,	2012,	our	current	portion	of	long-term	debt	was	$4	million,	compared	to	$405	million	at	December	31, 2011.	In	May	2012,	we	retired	early	the	$400	million	aggregate	principal	outstanding	of	our	5.375%	Senior	Notes	due	November	2012.	In	November	2011,	we	repaid,	at maturity,	the	entire	$600	million	aggregate	principal	amount	outstanding	of	our	8.0%	Notes.

Long-term	portion	of	Long-Term	Debt:		At	December	31,	2012,	we	had	outstanding	long-term	debt	of	$1.9	billion,	compared	to	$1.1	billion	at	December	31,	2011.

During	the	year	ended	2012,	we	issued	an	aggregate	face	principal	amount	of	$750	million	of	3.750%	Senior	Notes	due	May	15,	2022	(the	"2022	Senior	Notes"). We	also	called	for	the	redemption	of	the	$400	million	aggregate	principal	amount	outstanding	of	our	5.375%	Senior	Notes	due	November	2012	(the	"2012	Senior Notes").		All	of	the	2012	Senior	Notes	were	redeemed	for	an	aggregate	purchase	price	of	approximately	$408	million.		This	debt	was	repurchased	with	a	portion	of	the proceeds	from	the	issuance	of	the	2022	Senior	Notes.

During	the	year	ended	2011,	we	repurchased	$540	million	of	our	outstanding	long-term	debt	for	a	purchase	price	of	$615	million,	excluding	approximately $6	million	of	accrued	interest,	all	of	which	occurred	during	the	three	months	ended	July	2,	2011.	The	$540	million	of	long-term	debt	repurchased	included	principal amounts	of:	(i)	$196	million	of	the	$314	million	then	outstanding	of	the	6.50%	Debentures	due	2025,	(ii)	$174	million	of	the	$210	million	then	outstanding	of	the	6.50% Debentures	due	2028,	and	(iii)	$170	million	of	the	$225	million	then	outstanding	of	the	6.625%	Senior	Notes	due	2037.

After	accelerating	the	amortization	of	debt	issuance	costs	and	debt	discounts,	we	recognized	a	loss	of	approximately	$81	million	related	to	this	debt	tender	in	Other within	Other	income	(expense)	in	the	consolidated	statements	of	operations.

The	three	largest	U.S.	national	ratings	agencies	rate	our	senior	unsecured	long-term	debt	investment	grade.	We	believe	that	we	will	be	able	to	maintain	sufficient access	to	the	capital	markets	at	our	current	ratings.	Any	future	disruptions,	uncertainty	or	volatility	in	the	capital	markets	may	result	in	higher	funding	costs	for	us	and adversely	affect	our	ability	to	access	funds.

We	may,	from	time	to	time,	seek	to	retire	certain	of	our	outstanding	debt	through	open	market	cash	purchases,	privately-negotiated	transactions	or	otherwise.	Such repurchases,	if	any,	will	depend	on	prevailing	market	conditions,	our	liquidity	requirements,	contractual	restrictions	and	other	factors.

Share	Repurchase	Program:		Through	actions	taken	in	July	2011	and	January	2012,	the	Board	of	Directors	authorized	us	to	repurchase	an	aggregate	amount	of	up to	$3.0	billion	of	our	outstanding	common	stock	through	December	31,	2012.	On	February	26,	2012,	we	entered	into	a	stock	purchase	agreement	with	Carl	C.	Icahn	and certain	of	his	affiliates	to	purchase	23,739,362	shares	of	our	common	stock	for	approximately	$1.2	billion.	On	July	25,	2012,	the	Board	of	Directors	authorized	up	to $2.0	billion	in	additional	funds	for	share	repurchase,	bringing	the	aggregate	amount	of	the	share	repurchase	program	to	$5.0	billion,	and	extended	the	entire	share repurchase	program	indefinitely	with	no	expiration	date.	During	2012,	we	paid	an	aggregate	of	$2.4	billion,	including	transaction	costs,	to	repurchase	49.6	million	shares at	an	average	price	of	$49.14	per	share.	As	of	December	31,	2012,	we	had	used	approximately	$3.5	billion	of	the	share	repurchase	authority,	including	transaction	costs, to	repurchase	shares,	leaving	approximately	$1.5	billion	available	for	future	repurchases.	All	repurchased	shares	have	been	retired.

Payment	of	Dividends:		We	paid	$270	million	and	$72	million	in	cash	dividends	to	holders	of	our	common	stock	during	the	years	ended	December	31,	2012	and December	31,	2011,	respectively.	During	the	year	ended	December	31,	2010,	we	did	not	pay	cash	dividends	to	holders	of	our	common	stock.	Subsequent	to	December 31,	2012,	we	paid	$72	million	in	cash	dividends	to	holders	of	our	common	stock.

During	the	years	ended	December	31,	2011,	and	2010,	we	paid	$8	million	and	$23	million,	respectively,	of	dividends	to	minority	shareholders	in	connection	with subsidiary	common	stock.

# Credit	Facilities

As	of	December	31,	2012,	we	had	a	$1.5	billion	unsecured	syndicated	revolving	credit	facility	(the	"2011	Motorola	Solutions	Credit	Agreement")	that	is	scheduled to	expire	on	June	30,	2014.	The	2011	Motorola	Solutions	Credit	Agreement	includes	a	provision	for	which	we	can	increase	the	aggregate	credit	facility	size	up	to	a maximum	of	$2.0	billion	by	adding	lenders	or	having	existing	lenders	increase	their	commitments.	We	must	comply	with	certain	customary	covenants,	including maintaining	maximum	leverage	and	minimum	interest	coverage	ratios	as	defined	in	the	2011	Motorola	Solutions	Credit	Agreement.	We	were	in	compliance	with	our financial	covenants	as	of	December	31,	2012.	As	of	and	during	the	year	ended	December	31,	2012,	there	were	no	outstanding	borrowings	under	the	2011	Motorola Solutions	Credit	Agreement.

# Contractual	Obligations	and	Other	Purchase	Commitments

Summarized	in	the	table	below	are	our	obligations	and	commitments	to	make	future	payments	under	long-term	debt	obligations	(assuming	earliest	possible exercise	of	put	rights	by	holders),	lease	obligations,	purchase	obligations,	tax	obligations	and	other	obligations	as	of	December	31,	2012.

| (in	millions) | Total | 2013 | 2014 | 2015 | 2016 | 2017 | Timeframe | Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Long-Term\tDebt\tObligations | $1,864 | $4 | $4 | $4 | $5 | $405 | $— | $1,442 |
| Lease\tObligations | 356 | 69 | 54 | 36 | 28 | 20 | — | 149 |
| Purchase\tObligations | 50 | 22 | 19 | 9 | — | — | — | — |
| Tax\tObligations | 161 | 25 | — | — | — | — | 136 | — |
| Total\tContractual\tObligations | $2,431 | $120 | $77 | $49 | $33 | $425 | $136 | $1,591 |

Amounts	included	represent	firm,	non-cancelable	commitments.

Long-Term	Debt	Obligations:			Our	long-term	debt	obligations,	including	the	current	portion	of	long-term	debt,	totaled	$1.9	billion	at	December	31,	2012, compared	to	$1.5	billion	at	December	31,	2011.

Lease	Obligations:		We	lease	certain	office,	factory	and	warehouse	space,	land,	information	technology	and	other	equipment,	principally	under	non-cancelable operating	leases.	Our	future	minimum	lease	obligations,	net	of	minimum	sublease	rentals,	totaled	$356	million.	Rental	expense,	net	of	sublease	income,	was	$65	million in	2012,	$92	million	in	2011,	and	$123	million	in	2010.

Tax	Obligations:		We	have	approximately	$161	million	of	unrecognized	income	tax	benefits	relating	to	multiple	tax	jurisdictions	and	tax	years.	Based	on	the potential	outcome	of	our	global	tax	examinations,	or	the	expiration	of	the	statute	of	limitations	for	specific	jurisdictions,	it	is	reasonably	possible	that	the	unrecognized tax	benefits	will	change	within	the	next	twelve	months.	The	associated	net	tax	impact	on	the	effective	tax	rate,	exclusive	of	valuation	allowance	changes,	is	estimated	to be	in	the	range	of	a	$50	million	tax	charge	to	a	$50	million	tax	benefit,	with	cash	payments	not	expected	to	exceed	$25	million.

Purchase	Obligations:		We	have	entered	into	agreements	for	the	purchase	of	inventory,	license	of	software,	promotional	activities	and	research	and	development, which	are	firm	commitments	and	are	not	cancelable.	As	of	December	31,	2012	our	obligations	in	connection	with	these	agreements	run	through	2015,	and	the	total payments	expected	to	be	made	by	us	under	these	agreements	totaled	$50	million,	of	which	$32	million	relate	to	take	or	pay	obligations	from	arrangements	with	suppliers for	the	sourcing	of	inventory	supplies	and	materials.	We	do	not	anticipate	the	cancellation	of	any	of	our	take	or	pay	agreements	in	the	future	and	estimate	that	purchases from	these	suppliers	will	exceed	the	minimum	obligations	during	the	agreement	periods.

Commitments	Under	Other	Long-Term	Agreements:		We	have	entered	into	certain	long-term	agreements	to	purchase	software,	components,	supplies	and	materials from	suppliers	which	are	not	"take	or	pay"	in	nature.	Most	of	the	agreements	extend	for	periods	of	one	to	three	years	(three	to	five	years	for	software).	Generally,	these agreements	do	not	obligate	us	to	make	any	purchases,	and	many	permit	us	to	terminate	the	agreement	with	advance	notice	(usually	ranging	from	60	to	180	days).	If	we were	to	terminate	these	agreements,	we	generally	would	be	liable	for	certain	termination	charges,	typically	based	on	work	performed	and	supplier	on-hand	inventory	and raw	materials	attributable	to	canceled	orders.	Our	liability	would	only	arise	in	the	event	we	terminate	the	agreements	for	reasons	other	than	"cause."

We	outsource	certain	corporate	functions,	such	as	benefit	administration	and	information	technology-related	services.	These	contracts	are	expected	to	expire	in 2017.	Our	remaining	payments	under	these	contracts	are	approximately	$603	million	over	the	remaining	life	of	the	contracts;	however,	these	contracts	can	be	terminated. Termination	would	result	in	a	penalty	substantially	less	than	the	remaining	annual	contract	payments.	We	would	also	be	required	to	find	another	source	for	these services,	including	the	possibility	of	performing	them	in-house.

As	is	customary	in	bidding	for	and	completing	certain	projects	and	pursuant	to	a	practice	we	have	followed	for	many	years,	we	have	a	number	of	performance/bid bonds,	standby	letters	of	credit	and	surety	bonds	outstanding	(collectively,	referred	to	as	"Performance	Bonds"),	primarily	relating	to	projects	of	the	Government segment.	These	Performance	Bonds	normally	have	maturities	of	multiple	years	and	are	standard	in	the	industry	as	a	way	to	give	customers	a	convenient	mechanism	to seek	resolution	if	a	contractor	does	not	satisfy	certain	requirements	under	a	contract.	Typically,	a	customer	can	draw	on	the	Performance	Bond	only	if	we	do	not	fulfill	all terms	of	a	project	contract.	If	such	an	occasion	occurred,	we	would	be	obligated	to	reimburse	the	institution	that	issued	the	Performance	Bond	for	the	amounts	paid.	In our	long	history,	it	has	been	rare	for	us	to	have	a	Performance	Bond	drawn	upon.	At	December	31,	2012,	outstanding	Performance	Bonds	totaled	approximately	$891 million,	compared	to	$1.1	billion	at	December	31,	2011.	Any	future	disruptions,	uncertainty,	or	volatility	in	bank,	insurance	or	capital	markets,	or	a	change	in	our	credit ratings	could	adversely	affect	our	ability	to	obtain	Performance	Bonds	and	may	result	in	higher	funding	costs.

Off-Balance	Sheet	Arrangements:		Under	the	definition	contained	in	Item	303(a)(4)(ii)	of	Regulation	S-K,	we	do	not	have	any	off-balance	sheet	arrangements.

# Long-term	Customer	Financing	Commitments

Outstanding	Commitments:		Certain	purchasers	of	our	infrastructure	equipment	may	request	that	we	provide	long-term	financing	(defined	as	financing	with	a	term of	greater	than	one	year)	in	connection	with	the	sale	of	equipment.	These	requests	may	include	all	or	a	portion	of	the	purchase	price	of	the	equipment.	Our	obligation	to provide	long-term	financing	may	be	conditioned	on	the	issuance	of	a	letter	of	credit	in	favor	of	us	by	a	reputable	bank	to	support	the	purchaser's	credit	or	a	pre-existing commitment	from	a	reputable	bank	to	purchase	the	long-term	receivables	from	us.	We	had	outstanding	commitments	to	provide	long-term	financing	to	third-parties totaling	$84	million	at	December	31,	2012,	compared	to	$138	million	at	December	31,	2011.

Outstanding	Long-Term	Receivables:		We	had	net	non-current	long-term	receivables	of	$60	million	at	December	31,	2012,	compared	to	net	non-current	long-term receivables	of	$37	million	(net	of	allowances	for	losses	of	$10	million)	at	December	31,	2011.	These	long-term	receivables	are	generally	interest	bearing,	with	interest rates	ranging	from	1%	to	13%.

# Sales	of	Receivables

From	time	to	time,	we	sell	accounts	receivable	and	long-term	receivables	on	a	non-recourse	basis	to	third	parties	under	one-time	arrangements	while	others	have been	sold	to	third-parties	under	committed	facilities	that	involve	contractual	commitments.	We	may	or	may	not	retain	the	obligation	to	service	the	sold	accounts receivable	and	long-term	receivables.	We	had	no	significant	committed	facilities	for	the	sale	of	long-term	receivables	at	December	31,	2012	or	at	December	31,	2011.

The	following	table	summarizes	the	proceeds	received	from	non-recourse	sales	of	accounts	receivable	and	long-term	receivables	for	the	years	ended	December	31, 2012,	2011,	and	2010:

| Years	Ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Cumulative\tannual\tproceeds\treceived\tfrom\tone-time\tsales: |  |  |  |
| Accounts\treceivable\tsales\tproceeds | $12 | $8 | $30 |
| Long-term\treceivables\tsales\tproceeds | 178 | 224 | 67 |
| Total\tproceeds\tfrom\tone-time\tsales | 190 | 232 | 97 |
| Cumulative\tannual\tproceeds\treceived\tfrom\tsales\tunder\tcommitted\tfacilities | — | — | 70 |
| Total\tproceeds\tfrom\treceivables\tsales | $190 | $232 | $167 |

At	December	31,	2012,	the	Company	had	retained	servicing	obligations	for	$375	million	of	long-term	receivables,	compared	to	$263	million	of	long-term receivables	at	December	31,	2011.	Servicing	obligations	are	limited	to	collection	activities	of	the	non-recourse	sales	of	accounts	receivables	and	long-term	receivables.

# Adequate	Internal	Funding	Resources

We	believe	that	we	have	adequate	internal	resources	available	to	fund	expected	working	capital	and	capital	expenditure	requirements	for	the	next	twelve	months as	supported	by	the	level	of	cash,	cash	equivalents,	short-term	investments	and	Sigma	Fund	balances	in	the	U.S.	and	the	ability	to	repatriate	funds	from	foreign jurisdictions.

# Other	Contingencies

Potential	Contractual	Damage	Claims	in	Excess	of	Underlying	Contract	Value:		In	certain	circumstances,	our	businesses	may	enter	into	contracts	with	customers pursuant	to	which	the	damages	that	could	be	claimed	by	the	other	party	for	failed	performance	might	exceed	the	revenue	we	receive	from	the	contract.	Contracts	with these	types	of	uncapped	damage	provisions	are	fairly	rare,	but	individual	contracts	could	still	represent	meaningful	risk.	There	is	a	possibility	that	a	damage	claim	by	a counterparty	to	one	of	these	contracts	could	result	in	expenses	to	us	that	are	far	in	excess	of	the	revenue	received	from	the	counterparty	in	connection	with	the	contract.

Indemnification	Provisions:		In	addition,	we	may	provide	indemnifications	for	losses	that	result	from	the	breach	of	general	warranties	contained	in	certain commercial,	intellectual	property	and	divestiture	agreements.	Historically,	we	have	not	made	significant	payments	under	these	agreements,	nor	have	there	been significant	claims	asserted	against	us.	However,	there	is	an	increasing	risk	in	relation	to	intellectual	property	indemnities	given	the	current	legal	climate.	In indemnification	cases,	payment	by	us	is	conditioned	on	the	other	party	making	a	claim	pursuant	to	the	procedures	specified	in	the	particular	contract,	which	procedures typically	allow	us	to	challenge	the	other	party's	claims.	In	some	instances	we	may	have	recourse	against	third-parties	for	certain	payments	made	by	us.	Further,	our obligations	under	divestiture	agreements	for	indemnification	based	on	breach	of	representations	and	warranties	are	generally	limited	in	terms	of	duration,	typically	not more	than	24	months,	and	for	amounts	not	in	excess	of	a	percentage	of	the	contract	value.

Intellectual	Property	Matters:		During	2010,	we	entered	into	a	settlement	agreement	with	another	company	to	resolve	certain	intellectual	property	disputes between	the	two	companies.	As	a	result	of	the	settlement	agreement,	we	received	$65	million	in	cash	and	were	assigned	certain	patent	properties.	As	a	result	of	this agreement,	we	recorded	a	pre-tax	gain	of	$39	million	(and	$55	million	was	allocated	to	discontinued	operations)	during	the	year	ended	December	31,	2010,	related	to the	settlement	of	the	outstanding	litigation	between	the	parties.

Legal	Matters:		We	are	a	defendant	in	various	lawsuits,	claims	and	actions,	which	arise	in	the	normal	course	of	business.	In	the	opinion	of	management,	the ultimate	disposition	of	these	matters	will	not	have	a	material	adverse	effect	on	our	consolidated	financial	position,	liquidity	or	results	of	operations.	However,	an unfavorable	resolution	could	have	a	material	adverse	effect	on	our	consolidated	financial	position,	liquidity	or	results	of	operations	in	the	periods	in	which	the	matters are	ultimately	resolved.

# Significant	Accounting	Policies

Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	discusses	our	consolidated	financial	statements,	which	have	been prepared	in	accordance	with	U.S.	generally	accepted	accounting	principles.	The	preparation	of	these	financial	statements	requires	management	to	make	estimates	and assumptions	that	affect	the	reported	amounts	of	assets	and	liabilities	and	the	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements,	as	well as	the	reported	amounts	of	revenues	and	expenses	during	the	reporting	period.

Management	bases	its	estimates	and	judgments	on	historical	experience,	current	economic	and	industry	conditions	and	on	various	other	factors	that	are	believed	to be	reasonable	under	the	circumstances.	This	forms	the	basis	for	making	judgments

about	the	carrying	values	of	assets	and	liabilities	that	are	not	readily	apparent	from	other	sources.	Actual	results	may	differ	from	these	estimates	under	different assumptions	or	conditions.	Management	believes	the	following	significant	accounting	policies	require	significant	judgment	and	estimates:

—Revenue	recognition

—Inventory	valuation

—Income	taxes

—Valuation	of	Sigma	Fund	and	investment	portfolios

—Restructuring	activities

—Retirement-related	benefits

—Valuation	and	recoverability	of	goodwill

Net	sales	consist	of	a	wide	range	of	activities	including	the	delivery	of	stand-alone	equipment	or	services,	custom	design	and	installation	over	a	period	of	time,	and bundled	sales	of	equipment,	software	and	services.	We	enter	into	revenue	arrangements	that	may	consist	of	multiple	deliverables	of	our	product	and	service	offerings	due to	the	needs	of	our	customers.	We	recognize	revenue	when	persuasive	evidence	of	an	arrangement	exists,	delivery	has	occurred,	the	sales	price	is	fixed	or	determinable, and	collectability	of	the	sales	price	is	reasonably	assured.	We	recognize	revenue	from	the	sale	of	equipment,	software	bundled	with	equipment	that	is	essential	to	the functionality	of	the	equipment,	and	most	services	in	accordance	with	general	revenue	recognition	accounting	principles.	We	recognize	revenue	in	accordance	with software	accounting	guidance	for	the	following	types	of	sales	transactions:	(i)	standalone	sales	of	software	products	or	software	upgrades,	(ii)	standalone	sales	of software	maintenance	agreements	and	(iii)	sales	of	software	bundled	with	hardware	not	essential	to	the	functionality	of	that	hardware.

Products	—For	product	sales,	revenue	recognition	occurs	when	products	have	been	shipped,	risk	of	loss	has	transferred	to	the	customer,	objective	evidence	exists that	customer	acceptance	provisions	have	been	met,	no	significant	obligations	remain	and	allowances	for	discounts,	price	protection,	returns	and	customer	incentives	can be	reliably	estimated.	Recorded	revenues	are	reduced	by	these	allowances.	We	base	our	estimates	of	these	allowances	on	historical	experience	taking	into	consideration the	type	of	products	sold,	the	type	of	customer,	and	the	specific	type	of	transaction	in	each	arrangement.	Where	customer	incentives	cannot	be	reliably	estimated,	we defer	revenue	until	the	incentive	has	been	finalized	with	the	customer.

We	sell	software	and	equipment	obtained	from	other	companies.	We	establish	our	own	pricing	and	retain	related	inventory	risk,	are	the	primary	obligor	in	sales transactions	with	customers,	and	assume	the	credit	risk	for	amounts	billed	to	customers.	Accordingly,	we	generally	recognize	revenue	for	the	sale	of	products	obtained from	other	companies	based	on	the	gross	amount	billed.

Within	our	Enterprise	segment,	products	are	primarily	sold	through	distributors	and	value-added	resellers	(collectively	"channel	partners").		Channel	partners	may provide	a	service	or	add	componentry	in	order	to	resell	our	products	to	end	customers.		For	sales	to	channel	partners	where	we	cannot	reliably	estimate	the	final	sales price	or	when	a	channel	partner	is	unable	to	pay	for	our	products	without	reselling	them	to	their	customers,	revenue	is	not	recognized	until	the	products	are	resold	by	the channel	partner	to	the	end	customer.

Long-Term	Contracts—For	long-term	contracts	that	involve	customization	of	equipment	and/or	software,	we	generally	recognize	revenue	using	the	percentage	of completion	method	based	on	the	percentage	of	costs	incurred	to	date	compared	to	the	total	estimated	costs	to	complete	the	contract.	In	certain	instances,	when	revenues or	costs	associated	with	long-term	contracts	cannot	be	reliably	estimated	or	the	contract	contains	other	inherent	uncertainties,	revenues	and	costs	are	deferred	until	the project	is	complete	and	customer	acceptance	is	obtained.	When	current	estimates	of	total	contract	revenue	and	contract	costs	indicate	a	contract	loss,	the	loss	is recognized	in	the	period	it	becomes	evident.

Services—Revenue	for	services	is	generally	recognized	ratably	over	the	contract	term	as	services	are	performed.

Software	and	Licenses—Revenue	from	pre-paid	perpetual	licenses	is	recognized	at	the	inception	of	the	arrangement,	presuming	all	other	relevant	revenue recognition	criteria	are	met.	Revenue	from	non-perpetual	licenses	or	term	licenses	is	recognized	ratably	over	the	period	that	the	licensee	uses	the	license.	Revenues	from software	maintenance,	technical	support	and	unspecified	upgrades	are	recognized	over	the	period	that	these	services	are	delivered.

Multiple-Element	Arrangements—Arrangements	with	customers	may	include	multiple	deliverables,	including	any	combination	of	products,	services	and	software. These	multiple	element	arrangements	could	also	include	an	element	accounted	for	as	a	long-term	contract	coupled	with	other	products,	services	and	software.	For multiple-element	arrangements	that	include	products	containing	software	essential	to	the	equipment's	functionality,	undelivered	software	elements	that	relate	to	the product's	essential	software,	and	undelivered	non-software	services,	deliverables	are	separated	into	more	than	one	unit	of

accounting	when	(i)	the	delivered	element(s)	have	value	to	the	customer	on	a	stand-alone	basis,	and	(ii)	delivery	of	the	undelivered	element(s)	is	probable	and substantially	in	our	control.	In	these	arrangements,	we	allocate	revenue	to	all	deliverables	based	on	their	relative	selling	prices.	We	use	the	following	hierarchy	to determine	the	selling	price	to	be	used	for	allocating	revenue	to	deliverables:	(i)	vendor-specific	objective	evidence	of	fair	value	("VSOE"),	(ii)	third-party	evidence	of selling	price	("TPE")	and	(iii)	best	estimate	of	selling	price	("ESP").

•VSOE—In	many	instances,	products	are	sold	separately	in	stand-alone	arrangements	as	customers	may	support	the	products	themselves	or	purchase	support	on a	time	and	materials	basis.	Additionally,	advanced	services	such	as	general	consulting,	network	management	or	advisory	projects	are	often	sold	in	stand-alone engagements.	Technical	support	services	are	also	often	sold	separately	through	renewals	of	annual	contracts.	We	determine	VSOE	based	on	our	normal	pricing and	discounting	practices	for	the	specific	product	or	service	when	sold	separately.	In	determining	VSOE,	we	require	that	a	substantial	majority	of	the	selling prices	for	a	product	or	service	fall	within	a	reasonably	narrow	pricing	range,	generally	evidenced	by	the	pricing	rates	of	approximately	80%	of	such	historical stand-alone	transactions	falling	within	plus	or	minus	15%	of	the	median	rate.	In	addition,	we	consider	the	geographies	in	which	the	products	or	services	are sold,	major	product	and	service	groups,	customer	classification,	and	other	environmental	or	marketing	variables	in	determining	VSOE.

•TPE—VSOE	exists	only	when	we	sell	the	deliverable	separately.	When	VSOE	does	not	exist,	we	attempt	to	determine	TPE	based	on	competitor	prices	for similar	deliverables	when	sold	separately.	Generally,	our	go-to-market	strategy	for	many	of	our	products	differs	from	that	of	our	peers	and	our	offerings contain	a	significant	level	of	customization	and	differentiation	such	that	the	comparable	pricing	of	products	with	similar	functionality	sold	by	other	companies cannot	be	obtained.	Furthermore,	we	are	unable	to	reliably	determine	what	similar	competitor	products'	selling	prices	are	on	a	stand-alone	basis.	Therefore,	we are	typically	not	able	to	determine	TPE.

•ESP—The	objective	of	ESP	is	to	determine	the	price	at	which	we	would	transact	a	sale	if	the	product	or	service	were	sold	on	a	stand-alone	basis.	When	both VSOE	and	TPE	do	not	exist,	we	determine	ESP	by	first	collecting	all	reasonably	available	data	points	including	sales,	cost	and	margin	analysis	of	the	product, and	other	inputs	based	on	our	normal	pricing	practices.	Second,	we	make	any	reasonably	required	adjustments	to	the	data	based	on	market	and	Company- specific	factors.	Third,	we	stratify	the	data	points,	when	appropriate,	based	on	customer,	magnitude	of	the	transaction	and	sales	volume.

Once	elements	of	an	arrangement	are	separated	into	more	than	one	unit	of	accounting,	revenue	is	recognized	for	each	separate	unit	of	accounting	based	on	the nature	of	the	revenue	as	described	above.

Our	arrangements	with	multiple	deliverables	may	also	contain	a	stand-alone	software	deliverable	that	is	subject	to	software	revenue	recognition	guidance.	The revenue	for	these	multiple-element	arrangements	is	allocated	to	the	software	deliverable	and	the	non-software	deliverable(s)	based	on	the	relative	selling	prices	of	all	of the	deliverables	in	the	arrangement	using	the	fair	value	hierarchy	outlined	above.	In	circumstances	where	we	cannot	determine	VSOE	or	TPE	of	the	selling	price	for	any of	the	deliverables	in	the	arrangement,	ESP	is	used	for	the	purpose	of	allocating	the	arrangement	consideration.

We	account	for	multiple	element	arrangements	that	consist	entirely	of	software	or	software-related	products,	including	the	sale	of	software	upgrades	or	software support	agreements	to	previously	sold	software,	in	accordance	with	software	accounting	guidance.	For	such	arrangements,	revenue	is	allocated	to	the	deliverables	based on	the	relative	fair	value	of	each	element,	and	fair	value	is	determined	using	VSOE.	Where	VSOE	does	not	exist	for	the	undelivered	software	element,	revenue	is deferred	until	either	the	undelivered	element	is	delivered	or	VSOE	is	established,	whichever	occurs	first.	When	VSOE	of	a	delivered	element	has	not	been	established, but	VSOE	exists	for	the	undelivered	elements,	we	use	the	residual	method	to	recognize	revenue	when	the	fair	value	of	all	undelivered	elements	is	determinable.	Under the	residual	method,	the	fair	value	of	the	undelivered	elements	is	deferred	and	the	remaining	portion	of	the	arrangement	consideration	is	allocated	to	the	delivered elements	and	is	recognized	as	revenue.

Changes	in	cost	estimates	and	the	fair	values	of	certain	deliverables	could	negatively	impact	our	operating	results.	In	addition,	unforeseen	conditions	could	arise over	the	contract	term	that	may	have	a	significant	impact	on	operating	results.

We	record	valuation	reserves	on	our	inventory	for	estimated	excess	or	obsolescence.	The	amount	of	the	reserve	is	equal	to	the	difference	between	the	cost	of	the inventory	and	the	estimated	market	value	based	upon	assumptions	about	future	demand	and	market	conditions.	On	a	quarterly	basis,	management	performs	an	analysis	of the	underlying	inventory	to	identify	reserves	needed	for	excess	and	obsolescence.	We	use	our	best	judgment	to	estimate	appropriate	reserves	based	on	this	analysis.	In addition,	we	adjust	the	carrying	value	of	inventory	if	the	current	market	value	of	that	inventory	is	below	our	cost.

At	December	31,	2012	and	2011,	Inventories	consisted	of	the	following:

| December	31 | 2012 | 2011 |
| :--- | :--- | :--- |
| Finished\tgoods | $244 | $319 |
| Work-in-process\tand\tproduction\tmaterials | 432 | 363 |
|  | 676 | 682 |
| Less\tinventory\treserves | (163) | (170) |
|  | $513 | $512 |

We	balance	the	need	to	maintain	strategic	inventory	levels	to	ensure	competitive	delivery	performance	to	our	customers	against	the	risk	of	inventory	obsolescence due	to	rapidly	changing	technology	and	customer	requirements.	As	reflected	above,	our	inventory	reserves	represented	24%	of	the	gross	inventory	balance	at December	31,	2012,	compared	to	25%	of	the	gross	inventory	balance	at	December	31,	2011.	We	have	inventory	reserves	for	excess	inventory,	pending	cancellations	of product	lines	due	to	technology	changes,	long-life	cycle	products,	lifetime	buys	at	the	end	of	supplier	production	runs,	business	exits,	and	a	shift	of	production	to outsourced	manufacturing.

If	future	demand	or	market	conditions	are	less	favorable	than	those	projected	by	management,	additional	inventory	writedowns	may	be	required.

Our	effective	tax	rate	is	based	on	pre-tax	income	and	the	tax	rates	applicable	to	that	income	in	the	various	jurisdictions	in	which	we	operate.	An	estimated effective	tax	rate	for	a	year	is	applied	to	our	quarterly	operating	results.	In	the	event	that	there	is	a	significant	unusual	or	discrete	item	recognized,	or	expected	to	be recognized,	in	our	quarterly	operating	results,	the	tax	attributable	to	that	item	would	be	separately	calculated	and	recorded	at	the	same	time	as	the	unusual	or	discrete item.	We	consider	the	resolution	of	prior-year	tax	matters	to	be	such	items.	Significant	judgment	is	required	in	determining	our	effective	tax	rate	and	in	evaluating	our tax	positions.	We	establish	reserves	when	it	is	not	more-likely-than-not	that	we	will	realize	the	full	tax	benefit	of	the	position.	We	adjust	these	reserves	in	light	of changing	facts	and	circumstances.

Tax	regulations	may	require	items	of	income	and	expense	to	be	included	in	a	tax	return	in	different	periods	than	the	items	are	reflected	in	the	consolidated financial	statements.	As	a	result,	the	effective	tax	rate	reflected	in	the	consolidated	financial	statements	may	be	different	than	the	tax	rate	reported	in	the	income	tax return.	Some	of	these	differences	are	permanent,	such	as	expenses	that	are	not	deductible	on	the	tax	return,	and	some	are	temporary	differences,	such	as	depreciation expense.	Temporary	differences	create	deferred	tax	assets	and	liabilities.	Deferred	tax	assets	generally	represent	items	that	can	be	used	as	a	tax	deduction	or	credit	in	the tax	return	in	future	years	for	which	we	have	already	recorded	the	tax	benefit	in	the	consolidated	financial	statements.	Deferred	tax	liabilities	generally	represent	tax expense	recognized	in	the	consolidated	financial	statements	for	which	the	tax	payment	has	been	deferred	or	expense	for	which	we	have	already	taken	a	deduction	on	an income	tax	return,	but	has	not	yet	been	recognized	in	the	consolidated	financial	statements.

We	account	for	income	taxes	by	recognizing	deferred	tax	assets	and	liabilities	using	enacted	tax	rates	for	the	effect	of	the	temporary	differences	between	the	book and	tax	basis	of	recorded	assets	and	liabilities.	We	make	estimates	and	judgments	with	regard	to	the	calculation	of	certain	income	tax	assets	and	liabilities.	Deferred	tax assets	are	reduced	by	valuation	allowances	if,	based	on	the	consideration	of	all	available	evidence,	it	is	more-likely-than-not	that	some	portion	of	the	deferred	tax	asset will	not	be	realized.	Significant	weight	is	given	to	evidence	that	can	be	objectively	verified.

We	evaluate	deferred	income	taxes	on	a	quarterly	basis	to	determine	if	valuation	allowances	are	required	by	considering	available	evidence,	including	historical and	projected	taxable	income	and	tax	planning	strategies	that	are	both	prudent	and	feasible.		During	2012,	we	recorded	$60	million	of	tax	benefits	related	to	the	reversal of	a	significant	portion	of	the	valuation	allowance	established	on	certain	foreign	deferred	tax	assets.

During	2011,	we	reassessed	our	valuation	allowance	requirements	taking	into	consideration	the	distribution	of	Motorola	Mobility.	We	evaluated	all	available evidence	in	our	analysis,	including	the	historical	and	projected	pre-tax	profits	generated	by	our	U.S.	operations.	We	also	considered	tax	planning	strategies	that	are prudent	and	can	be	reasonably	implemented.	Based	on	our	assessment,	we	recorded	$274	million	of	tax	benefits	related	to	the	reversal	of	a	valuation	allowance established	on	U.S.	deferred	tax	assets.	During	2010,	the	U.S.	valuation	allowance	was	reduced	by	$39	million,	primarily	for	certain	of	our	state	tax	carryforwards	that we	expect	to	utilize.	The	U.S.	valuation	allowance	as	of	December	31,	2012	relates	to	state	tax	carryforwards	and	deferred	tax	assets	of	a	U.S.	subsidiary	that	we	expect to	expire	unutilized.

We	have	a	total	deferred	tax	asset	valuation	allowance	of	approximately	$308	million	against	gross	deferred	tax	assets	of	approximately	$4.7	billion	as	of December	31,	2012,	compared	to	total	deferred	tax	asset	valuation	allowance	of	approximately	$366	million	against	net	deferred	tax	assets	of	approximately	$5.1	billion as	of	December	31,	2011.

Investments	in	Sigma	Fund	primarily	consist	of	fixed	income	securities	with	an	average	maturity	of	less	than	one	month	at	both	December	31,	2012	and	2011.

These	securities	are	carried	at	fair	value.	Investments	not	held	in	Sigma	Fund	generally	consist	of	equity	and	fixed	income	securities,	which	are	classified	as	available- for-sale	and	are	carried	at	fair	value.	Fair	value	is	defined	as	the	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an	orderly	transaction between	market	participants	as	of	the	measurement	date.	Fair	value	is	determined	in	accordance	with	the	authoritative	guidance	for	fair	value	measurements	and disclosures	using	the	prescribed	fair	value	hierarchy.

Publicly	traded	common	stock	and	equivalents	within	our	investment	portfolios	where	quoted	market	prices	in	active	markets	are	available	are	classified	as	Level	1 fair	value	measurements	within	the	prescribed	fair	value	hierarchy.

The	securities	classified	as	Level	2	are	primarily	those	that	are	professionally	managed	within	the	Sigma	Fund.		Level	2	securities	are	priced	using	pricing	services, bid/offer,	and	last	trade.	Prices	may	also	be	obtained	from	brokers,	counterparties,	fund	administrators,	online	securities	data	services,	or	investment	managers.		Fixed income	securities,	including	short-term	instruments,	may	be	priced	using	pricing	models	comprised	of	observable	inputs	which	include,	but	are	not	limited	to,	market quotations,	yields,	maturities,	call	features,	and	the	security's	terms	and	conditions.		We	review	these	prices	and	pricing	procedures	as	well	as	amounts	realized	as	a	basis for	validating	our	fair	value	price	estimates.

As	of	December	31,	2012	and	December	31,	2011,	there	are	no	Level	3	securities	within	the	Sigma	Fund	or	our	investment	portfolio.

We	cannot	predict	the	occurrence	of	future	events	that	might	have	an	impact	on	the	fair	values	of	our	investments	in	Sigma	Fund	or	other	investments	carried	at	fair value.

We	maintain	a	formal	Involuntary	Severance	Plan	(the	"Severance	Plan"),	which	permits	us	to	offer	eligible	employees	severance	benefits	based	on	years	of service	and	employment	grade	level	in	the	event	that	employment	is	involuntarily	terminated	as	a	result	of	a	reduction-in-force	or	restructuring.	We	recognize termination	benefits	based	on	formulas	per	the	Severance	Plan	at	the	point	in	time	that	future	settlement	is	probable	and	can	be	reasonably	estimated	based	on	estimates prepared	at	the	time	a	restructuring	plan	is	approved	by	management.	Exit	costs	consist	of	future	minimum	lease	payments	on	vacated	facilities	and	other	contractual terminations.	At	each	reporting	date,	we	evaluate	our	accruals	for	employee	separation	and	exit	costs	to	ensure	the	accruals	are	still	appropriate.	In	certain circumstances,	accruals	are	no	longer	needed	because	of	efficiencies	in	carrying	out	the	plans	or	because	employees	previously	identified	for	separation	resigned	from the	Company	and	did	not	receive	severance	or	were	redeployed	due	to	circumstances	not	foreseen	when	the	original	plans	were	approved.	In	these	cases,	we	reverse accruals	through	the	consolidated	statements	of	operations	where	the	original	charges	were	recorded	when	it	is	determined	they	are	no	longer	needed.

# Retirement	Benefits

Our	noncontributory	pension	plan	(the	"Regular	Pension	Plan")	covers	U.S.	employees	who	became	eligible	after	one	year	of	service.	The	benefit	formula	is dependent	upon	employee	earnings	and	years	of	service.	Effective	January	1,	2005,	newly-hired	employees	are	not	eligible	to	participate	in	the	Regular	Pension	Plan. We	also	provide	defined	benefit	plans	which	cover	non-U.S.	employees	in	certain	jurisdictions,	principally	the	United	Kingdom,	Germany	and	Japan	(the	"Non-U.S. Plans").	Other	pension	plans	are	not	material	to	us	either	individually	or	in	the	aggregate.

We	also	have	a	noncontributory	supplemental	retirement	benefit	plan	(the	"Officers'	Plan")	for	our	elected	officers.	The	Officers'	Plan	contains	provisions	for vesting	and	funding	the	participants'	expected	retirement	benefits	when	the	participants	meet	the	minimum	age	and	years	of	service	requirements.	Elected	officers	who were	not	yet	vested	in	the	Officers'	Plan	as	of	December	31,	1999	had	the	option	to	remain	in	the	Officers'	Plan	or	elect	to	have	their	benefit	bought	out	in	restricted stock	units.	Effective	December	31,	1999,	newly	elected	officers	are	not	eligible	to	participate	in	the	Officers'	Plan.	Effective	June	30,	2005,	salaries	were	frozen	for	this plan.

We	have	an	additional	noncontributory	supplemental	retirement	benefit	plan,	the	Motorola	Supplemental	Pension	Plan	("MSPP"),	which	provides	supplemental benefits	to	individuals	by	replacing	the	Regular	Pension	Plan	benefits	that	are	lost	by	such	individuals	under	the	retirement	formula	due	to	application	of	the	limitations imposed	by	the	Internal	Revenue	Code.	However,	elected	officers	who	are	covered	under	the	Officers'	Plan	or	who	participated	in	the	restricted	stock	buy-out	are	not eligible	to	participate	in	the	MSPP.	Effective	January	1,	2007,	eligible	compensation	was	capped	at	the	IRS	limit	plus	$175,000	(the	"Cap")	or,	for	those	already	in excess	of	the	Cap	as	of	January	1,	2007,	the	eligible	compensation	used	to	compute	such	employee's	MSPP	benefit	for	all	future	years	will	be	the	greater	of:	(i)	such employee's	eligible	compensation	as	of	January	1,	2007	(frozen	at	that	amount),	or	(ii)	the	relevant	Cap	for	the	given	year.	Additionally,	effective	January	1,	2009,	the MSPP	was	frozen	to	new	participants	unless	such	participation	was	due	to	a	prior	contractual	entitlement.

In	February	2007,	we	amended	the	Regular	Pension	Plan	and	the	MSPP,	modifying	the	definition	of	average	earnings.	For	years	ended	prior	to	December	31, 2007,	benefits	were	calculated	using	the	rolling	average	of	the	highest	annual	earnings	in	any	five	years	within	the	previous	ten	calendar	year	period.	Beginning	in January	2008,	the	benefit	calculation	was	based	on	the	set	of	the	five	highest	years	of	earnings	within	the	ten	calendar	years	prior	to	December	31,	2007,	averaged	with earnings	from	each	year	after	2007.	Also	effective	January	2008,	we	amended	the	Regular	Pension	Plan,	modifying	the	vesting	period	from	five	years	to	three	years.

In	December	2008,	we	amended	the	Regular	Pension	Plan,	the	Officers'	Plan	and	the	MSPP	(collectively,	the	"2008	Amended	Pension	Plans")	such	that,	effective March	1,	2009:	(i)	no	participant	shall	accrue	any	benefit	or	additional	benefit	on	or	after	March	1,	2009,	and	(ii)	no	compensation	increases	earned	by	a	participant	on	or after	March	1,	2009	shall	be	used	to	compute	any	accrued	benefit.

Certain	healthcare	benefits	are	available	to	eligible	domestic	employees	meeting	certain	age	and	service	requirements	upon	termination	of	employment	(the "Postretirement	Health	Care	Benefits	Plan").	For	eligible	employees	hired	prior	to	January	1,	2002,	we	offset	a	portion	of	the	postretirement	medical	costs	to	the	retired participant.	As	of	January	1,	2005,	the	Postretirement	Health	Care	Benefits	Plan	has	been	closed	to	new	participants.

During	the	year	ended	December	31,	2012,	the	Company	announced	an	amendment	to	the	Postretirement	Health	Care	Benefits	Plan.		Starting	January	1,	2013, benefits	under	the	plan	to	participants	over	age	65	will	be	paid	to	a	retiree	health	reimbursement	account	instead	of	directly	providing	health	insurance	coverage	to	the participants.		Covered	retirees	will	be	able	to	use	the	annual	subsidy	they	receive	through	this	account	toward	the	purchase	of	their	own	health	care	coverage	from private	insurance	companies	and	for	reimbursement	of	eligible	health	care	expenses.		This	change	has	resulted	in	a	remeasurement	of	the	plan	where	$139	million	of	the net	liability	was	reduced	through	a	decrease	in	accumulated	other	comprehensive	loss	of	$87	million,	net	of	taxes.	The	majority	of	the	reduced	liability	will	be recognized	over	approximately	three	years,	which	is	the	period	in	which	the	remaining	employees	eligible	for	the	plan	will	qualify	for	benefits	under	the	plan.

Accounting	methodologies	use	an	attribution	approach	that	generally	spreads	the	effects	of	individual	events	over	the	service	lives	of	the	participants	in	the	plan, or	estimated	average	lifetime	when	almost	all	of	the	plan	participants	are	considered	"inactive."	Examples	of	"events"	are	plan	amendments	and	changes	in	actuarial assumptions	such	as	discount	rate,	expected	long-term	rate	of	return	on	plan	assets,	and	rate	of	compensation	increases.

There	are	various	assumptions	used	in	calculating	the	net	periodic	benefit	expense	and	related	benefit	obligations.	One	of	these	assumptions	is	the	expected	long- term	rate	of	return	on	plan	assets.	The	required	use	of	the	expected	long-term	rate	of	return	on	plan	assets	may	result	in	recognized	pension	income	that	is	greater	or	less than	the	actual	returns	of	those	plan	assets	in	any	given	year.	Over	time,	however,	the	expected	long-term	returns	are	designed	to	approximate	the	actual	long-term returns	and	therefore	result	in	a	pattern	of	income	and	expense	recognition	that	more	closely	matches	the	pattern	either	of	the	service	life	or	average	lifetime	of	the employees.	Differences	between	actual	and	expected	returns	are	recognized	in	the	net	periodic	pension	calculation	over	five	years.

We	use	long-term	historical	actual	return	experience	with	consideration	of	the	expected	investment	mix	of	the	plans'	assets,	as	well	as	future	estimates	of	long- term	investment	returns,	to	develop	our	expected	rate	of	return	assumption	used	in	calculating	the	net	periodic	pension	cost	and	the	net	retirement	healthcare	expense. Our	investment	return	assumption	for	the	Regular	Pension	Plan	and	Postretirement	Healthcare	Benefits	Plan	was	8.25%	in	both	2012	and	2011.	At	December	31,	2012, the	Regular	Pension	Plan	and	the	Postretirement	Health	Care	Benefits	Plan	investment	portfolios	were	predominantly	equity	investments	and	the	Officers'	Plan investment	portfolio	was	predominantly	fixed-income	securities.

A	second	key	assumption	is	the	discount	rate.	The	discount	rate	assumptions	used	for	pension	benefits	and	postretirement	health	care	benefits	reflect,	at December	31	of	each	year,	the	prevailing	market	rates	for	high-quality,	fixed-income	debt	instruments	that,	if	the	obligation	was	settled	at	the	measurement	date,	would provide	the	necessary	future	cash	flows	to	pay	the	benefit	obligation	when	due.	Our	discount	rates	for	measuring	our	U.S.	pension	obligations	were	4.35%	and	5.10%	at December	2012	and	2011,	respectively.	Our	discount	rates	for	measuring	the	Postretirement	Health	Care	Benefits	Plan	obligation	were	3.80%	and	4.75%	at December	31,	2012	and	2011,	respectively.

A	final	set	of	assumptions	involves	the	cost	drivers	of	the	underlying	benefits.	The	rate	of	compensation	increase	is	a	key	assumption	used	in	the	actuarial	model for	pension	accounting	and	is	determined	by	us	based	upon	our	long-term	plans	for	such	increases.	Our	2012	and	2011	rate	for	future	compensation	increase	for	the Regular	Pension	Plan	and	Officers'	Plan	was	0%,	as	the	salaries	to	be	utilized	for	calculation	of	benefits	under	these	plans	have	been	frozen.	For	the	Postretirement Health	Care	Benefits	Plan,	we	review	external	data	and	our	own	historical	trends	for	health	care	costs	to	determine	the	health	care	cost	trend	rates.	The	health	care	cost trend	rate	used	to	determine	the	December	31,	2012,	accumulated	postretirement	benefit	obligation	is	8.50%	for	2013,	then	grading	down	to	a	rate	of	5%	in	2020.		The health	care	cost	trend	rate	used	to	determine	the	December	31,	2011	accumulated	postretirement	benefit	obligation	was	7.25%	for	2012,	remaining	flat	at	7.25%	through 2015,	then	grading	down	to	a	rate	of	5%	in	2019.

For	the	year	ended	December	31,	2012,	we	recognized	net	periodic	pension	expense	of	$188	million	related	to	our	U.S.	pension	plans,	compared	to	$151	million for	the	year	ended	December	31,	2011.	Cash	contributions	of	$340	million	were	made	to	the	U.S.	pension	plans	during	2012	as	compared	to	$489	million	in	2011.	In January	2011,	the	Pension	Benefit	Guaranty	Corporation	("PBGC")	announced	an	agreement	with	Motorola	Solutions	under	which	we	would	contribute	$100	million above	and	beyond	our	legal	requirement	to	our	U.S.	pension	plans	over	the	next	five	years.	The	Company	and	the	PBGC	entered	into	the	agreement	as	the	Company	was in	the	process	of	separating	Motorola	Mobility	and	pursuing	the	sale	of	certain	assets	of	the	Networks	business.	The	Company	made	$250	million	of	pension contributions	to	our	U.S.	pension	plans	over	the	amounts	required	in	the	fourth	quarter	2011,	of	which	$100	million	fulfilled	the	PBGC	financial	obligation.	As	a	result, the	Company	has	no	further	financial	obligations	under	this	agreement	with	the	PBGC.	We	maintained	all	of	the	U.S.	pension	liabilities	and	the	majority	of	the	non-U.S. pension	liabilities	following	the	distribution	of	Motorola	Mobility	on	January	4,	2011,	and	following	the	sale	of	certain	assets	and	liabilities	of	the	Networks	business	to NSN	on	April	29,	2011.

We	recognized	net	postretirement	health	care	expense	of	$3	million	and	$20	million	for	the	years	ended	December	31,	2012	and	2011,	respectively.	No	cash contributions	were	made	to	this	plan	in	2012.	We	expect	to	make	no	cash	contributions	to	the	Postretirement	Health	Care	Benefits	Plan	in	2013.

The	measurement	date	of	all	of	our	retirement	plans	assets	and	obligations	is	December	31.

We	assess	the	recorded	amount	of	goodwill	for	recovery	on	an	annual	basis	in	the	fourth	quarter	of	each	fiscal	year.	Goodwill	is	assessed	more	frequently	if	an event	occurs	or	circumstances	change	that	would	indicate	it	is	more-likely-than-not	that	the	fair	value	of	a	reporting	unit	is	below	its	carrying	amount.	We	continually assess	whether	any	such	events	and	circumstances	have	occurred,	which	requires	a	significant	amount	of	judgment.	Such	events	and	circumstances	may	include:	adverse changes	in	macroeconomic	conditions,	adverse	changes	in	the	entity's	industry	or	market,	changes	in	cost	factors	negatively	impacting	earnings	and	cash	flows,	negative or	declining	overall	financial	performance,	events	affecting	the	carrying	value	or	composition	of	a	reporting	unit,	or	a	sustained	decrease	in	share	price,	among	others. Any	such	adverse	event	or	change	in	circumstances	could	have	a	significant	impact	on	the	recoverability	of	goodwill	and	could	have	a	material	impact	on	our	combined financial	statements.

The	goodwill	impairment	assessment	is	performed	at	the	reporting	unit	level.	A	reporting	unit	is	an	operating	segment	or	one	level	below	an	operating	segment (referred	to	as	a	"component").	A	component	of	an	operating	segment	is	a	reporting	unit	if	the	component	constitutes	a	business	for	which	discrete	financial	information is	available	and	segment	management	regularly	reviews	the	operating	results	of	that	component.	When	two	or	more	components	of	an	operating	segment	have	similar economic	characteristics,	the	components	are	aggregated	and	deemed	a	single	reporting	unit.	An	operating	segment	is	deemed	to	be	a	reporting	unit	if	all	of	its components	are	similar,	if	none	of	its	components	is	a	reporting	unit,	or	if	the	segment	comprises	only	a	single	component.	Based	on	this	guidance,	we	have	determined that	our	Government	and	Enterprise	segments	each	meet	the	definition	of	a	reporting	unit.

In	September	2011,	the	Financial	Accounting	Standards	Board	(the	"FASB")	issued	guidance	which	provides	an	entity	with	the	option	to	first	perform	a qualitative	assessment	to	determine	whether	it	is	more-likely-than-not	that	the	fair	value	of	a	reporting	unit	is	less	than	its	carrying	amount.	If	an	entity	determines	this	is the	case,	it	is	required	to	perform	the	two-step	goodwill	impairment	test	to	identify	potential	goodwill	impairment	and	measure	the	amount	of	goodwill	impairment	loss to	be	recognized.	If	an	entity	determines	that	it	is	more-likely-than-not	that	the	fair	value	of	a	reporting	is	greater	than	its	carrying	amount,	the	two-step	goodwill impairment	test	is	not	required.	We	adopted	this	guidance	as	of	the	fourth	quarter	of	2011.

We	performed	a	qualitative	assessment	to	determine	whether	it	was	more-likely-than-not	that	the	fair	value	of	each	reporting	unit	was	less	than	its	carrying	amount for	fiscal	year	2012	and	fiscal	year	2011.	In	performing	this	qualitative	assessment,	we	assessed	relevant	events	and	circumstances	including	macroeconomic	conditions, industry	and	market	conditions,	cost	factors,	overall	financial	performance,	changes	in	share	price,	and	entity-specific	events.	In	addition,	we	considered	the	fair	value derived	for	each	reporting	unit	in	conjunction	with	the	2010	goodwill	impairment	test.	We	compared	this	prior	fair	value	against	the	current	carrying	value	of	each reporting	unit	noting	fair	value	significantly	exceeded	carrying	value	for	both	reporting	units.	We	performed	a	sensitivity	analysis	on	the	fair	value	determined	for	each reporting	unit	in	conjunction	with	the	2010	goodwill	impairment	test	for	changes	in	significant	assumptions	including	the	weighted	average	cost	of	capital	used	in	the income	approach	and	changes	in	expected	cash	flows.	For	fiscal	year	2012,	these	changes	in	assumptions	and	estimated	cash	flows	resulted	in	an	increase	in	fair	value	for the	Government	reporting	unit	and	a	slight	decrease	in	fair	value	for	the	Enterprise	reporting	unit.	In	spite	of	this	small	decrease	in	estimated	fair	value	of	the	Enterprise reporting	unit,	the	reporting	unit's	fair	value	significantly	exceeds	its	carrying	value.	For	fiscal	year	2011,	these	changes	in	assumptions	and	estimated	cash	flows resulted	in	an	increase	in	fair	value	for	each	reporting	unit	from	the	2010	fair	values.	As	such,	for	fiscal	years	2012	and	2011,	we	concluded	it	is	more-likely-than-not that	the	fair	value	of	each	reporting	unit	exceeds	its	carrying	value.	Therefore,	the	two-step	goodwill	impairment	test	was	not	required	for	fiscal	year	2012	or	fiscal	year 2011.

The	goodwill	impairment	test	for	fiscal	2010	was	performed	using	the	two	step	goodwill	impairment	analysis.	In	step	one,	the	fair	value	of	each	reporting	unit	was compared	to	its	book	value.	Fair	value	was	determined	using	a	combination	of	present	value	techniques	and	quoted	market	prices	of	comparable	businesses.	If	the	fair value	of	the	reporting	unit	exceeds	its	book	value,	goodwill	is	not	deemed	to	be	impaired	for	that	reporting	unit,	and	no	further	testing	would	be	necessary.	If	the	fair value	of	the	reporting	unit	is	less	than	its	book	value,	we	perform	step	two.	Step	two	uses	the	calculated	fair	value	of	the	reporting	unit	to	perform	a	hypothetical purchase	price	allocation	to	the	fair	value	of	the	assets	and	liabilities	of	the	reporting	unit.	The	difference	between	the	fair	value	of	the	reporting	unit	calculated	in	step one	and	the	fair	value	of	the	underlying	assets	and	liabilities	of	the	reporting	unit	was	the	implied	fair	value	of	the	reporting	unit's	goodwill.	A	charge	is	recorded	in	the financial	statements	if	the	carrying	value	of	the	reporting	unit's	goodwill	is	greater	than	its	implied	fair	value.

The	following	describes	the	valuation	methodologies	used	to	derive	the	fair	value	of	the	reporting	units:

•Income	Approach:	To	determine	fair	value,	we	discounted	the	expected	future	cash	flows	of	the	reporting	units.	The	discount	rate	used	represents	the	estimated weighted	average	cost	of	capital,	which	reflects	the	overall	level	of	inherent	risk	involved	in	our	operations	and	the	rate	of	return	a	market	participant	would expect	to	earn.	To	estimate	cash	flows	beyond	the	final	year	of	our	model,	we	used	a	terminal	value	approach.	Under	this	approach,	we	used	estimated operating	income	before	interest,	taxes,	depreciation	and	amortization	in	the	final	year	of	the	model,	adjusted	it	to	estimate	a	normalized	cash	flow,	applied	a perpetuity	growth	assumption	and	discounted	it	by	a	perpetuity	discount	factor	to	determine	the	terminal	value.	We	incorporated	the	present	value	of	the resulting	terminal	value	into	the	estimate	of	fair	value.

•Market-Based	Approach:	To	corroborate	the	results	of	the	income	approach	described	above,	we	estimated	the	fair	value	of	our	reporting	units	using	several market-based	approaches,	including	the	value	that	is	derived	based	on	Motorola	Solutions'	consolidated	stock	price	as	described	above.	We	also	used	the guideline	company	method,	which	focuses	on	comparing	our	risk	profile	and	growth	prospects	to	select	reasonably	similar/guideline	publicly	traded companies.

The	determination	of	fair	value	of	the	reporting	units	and	assets	and	liabilities	within	the	reporting	units	requires	us	to	make	significant	estimates	and	assumptions. These	estimates	and	assumptions	primarily	included,	the	discount	rate,	terminal	growth	rates,	earnings	before	depreciation	and	amortization,	and	capital	expenditures forecasts.

We	evaluated	the	merits	of	each	significant	assumption,	both	individually	and	in	the	aggregate,	used	to	determine	the	fair	value	of	each	reporting	unit,	as	well	as the	fair	values	of	the	corresponding	assets	and	liabilities	within	the	reporting	unit,	and	concluded	they	are	reasonable.	We	weighted	the	valuation	of	our	reporting	units at	75%	based	on	the	income	approach	and	25%	based	on	the	market-based	approach,	consistent	with	prior	periods.

The	accounting	principles	regarding	goodwill	acknowledge	that	the	observed	market	prices	of	individual	trades	of	a	company's	stock	(and	thus	its	computed market	capitalization)	may	not	be	representative	of	the	fair	value	of	the	company	as	a	whole.	Additional	value	may	arise	from	the	ability	to	take	advantage	of	synergies and	other	benefits	that	flow	from	control	over	another	entity.	Consequently,	measuring	the	fair	value	of	a	collection	of	assets	and	liabilities	that	operate	together	in	a controlled	entity	is	different	from	measuring	the	fair	value	of	that	entity's	individual	common	stock.	In	most	industries,	including	ours,	an	acquiring	entity	typically	is willing	to	pay	more	for	equity	securities	that	give	it	a	controlling	interest	than	an	investor	would	pay	for	a	number	of	equity	securities	representing	less	than	a	controlling interest.

For	the	purpose	of	determining	the	implied	control	premium	calculation	in	the	overall	goodwill	analysis,	we	applied	assumptions	for	determining	the	fair	value	of corporate	assets.	Corporate	assets	primarily	consisted	of	cash	and	cash	equivalents,	Sigma	Fund	balances,	short-term	investments,	investments,	deferred	tax	assets	and corporate	facilities.	Judgments	about	the	fair	value	of	corporate	assets	include,	among	others,	an	assumption	that	deferred	tax	assets	should	be	discounted	to	reflect	their economic	lives,	that	a	significant	portion	of	the	corporate	assets	are	required	to	pay	off	debt,	fund	our	retirement	obligations,	and	market	participants'	perceptions	of	the likely	restructuring	costs,	including	severance	and	exit	costs,	that	might	be	incurred	if	our	strategy	is	not	successful.	The	results	of	our	impairment	analysis	resulted	in	an implied	control	premium	commensurate	with	historical	transactions	observed	in	our	industry.

Based	on	the	results	of	our	2012,	2011,	and	2010	annual	assessments	of	the	recoverability	of	goodwill,	there	were	no	goodwill	impairments.

Differences	in	our	actual	future	cash	flows,	operating	results,	growth	rates,	capital	expenditures,	cost	of	capital	and	discount	rates	as	compared	to	the	estimates utilized	for	the	purpose	of	calculating	the	fair	value	of	each	reporting	unit,	as	well	as	a	decline	in	macroeconomic	conditions,	the	industry,	the	market,	overall	financial performance	or	our	stock	price	and	related	market	capitalization,	could	affect	the	results	of	our	annual	goodwill	assessment	and,	accordingly,	potentially	lead	to	future goodwill	impairment	charges.

# Recent	Accounting	Pronouncements

In	December	2011,	the	FASB	issued	Accounting	Standards	Update	("ASU")	No.	2011-11	"Disclosures	about	Offsetting	Assets	and	Liabilities."	The	standard requires	additional	disclosure	to	enhance	the	comparability	of	U.S.	GAAP	and	International	Financial	Reporting	Standards	financial	statements.	In	January	2013,	the FASB	issued	Accounting	Standards	Update	2013-01	"Clarifying	the	Scope	of	Disclosures	about	Offsetting	Assets	and	Liabilities."	This	standard	provided	additional guidance	on	the	scope	of	ASU	2011-11.	The	new	standards	are	effective	for	annual	and	interim	periods	beginning	January	1,	2013.	Retrospective	application	is	required. The	guidance	concerns	disclosure	only	and	will	not	have	an	impact	on	our	consolidated	financial	position	or	results	of	operations.

In	February	2013,	the	FASB	issued	ASU	No.	2013-02,	"Reporting	of	Amounts	Reclassified	Out	of	Accumulated	Other	Comprehensive	Income."	Under	ASU	2013- 02,	an	entity	is	required	to	provide	information	about	the	amounts	reclassified	out	of	Accumulated	Other	Comprehensive	Income	("AOCI")	by	component.	In	addition, an	entity	is	required	to	present,	either	on	the	face	of	the	financial	statements	or	in	the	notes,	significant	amounts	reclassified	out	of	AOCI	by	the	respective	line	items	of net	income,	but	only	if	the	amount	reclassified	is	required	to	be	reclassified	in	its	entirety	in	the	same	reporting	period.	For	amounts	that	are	not	required	to	be reclassified	in	their	entirety	to	net	income,	an	entity	is	required	to	cross-reference	to	other	disclosures	that	provide	additional	details	about	those	amounts.	ASU	2013-02 does	not	change	the	current	requirements	for	reporting	net	income	or	other	comprehensive	income	in	the	financial	statements.	ASU	2013-02	is	effective	for	us	on January	1,	2013.

# Forward-Looking	Statements

Except	for	historical	matters,	the	matters	discussed	in	this	Form	10-K	are	forward-looking	statements	that	involve	risks	and	uncertainties.	Forward-looking statements	include,	but	are	not	limited	to,	statements	under	the	following	headings:	(1)	"Business,"	about:	(a)	industry	growth	and	demand,	including	opportunities resulting	from	such	growth,	(b)	customer	spending,	(c)	the	impact	of	each	segment's	strategy,	(d)	the	impact	from	the	loss	of	key	customers,	(e)	competitive	position, (f)	increased	competition,	(g)	the	impact	of	regulatory	matters,	(h)	the	impact	from	the	allocation	and	regulation	of	spectrum,	(i)	the	availability	of	materials	and components,	energy	supplies	and	labor,	(j)	the	seasonality	of	the	business,	(k)	the	firmness	of	each	segment's	backlog,	(l)	the	competitiveness	of	the	patent	portfolio,	and (m)	the	impact	of	research	and	development;	(2)	"Properties,"	about	the	consequences	of	a	disruption	in	manufacturing;	(3)	"Legal	Proceedings,"	about	the	ultimate disposition	of	pending	legal	matters	and	timing;	(4)	"Management's	Discussion	and	Analysis,"	about:	(a)	market	growth/contraction,	demand,	spending	and	resulting opportunities,	(b)	the	financial	results	of	Psion	and	the	impact	to	earnings	in	2014,	(c)	the	decline	in	the	iDEN	infrastructure	portfolio,	(d)	the	return	of	capital	to shareholders	through	dividends	and/or	repurchasing	shares,	(e)	the	success	of	our	business	strategy	and	portfolio,	(f)	future	payments,	charges,	use	of	accruals	and expected	cost-saving	and	profitability	benefits	associated	with	our	reorganization	of	business	programs	and	employee	separation	costs,	(g)	our	ability	and	cost	to repatriate	funds,	(h)	the	impact	of	the	timing	and	level	of	sales	and	the	geographic	location	of	such	sales,	(i)	the	impact	of	maintaining	inventory,	(j)	future	cash contributions	to	pension	plans	or	retiree	health	benefit	plans,	(k)	our	ability	to	collect	on	our	Sigma	Fund	and	other	investments,	(l)	our	ability	and	cost	to	access	the capital	markets,	(m)	our	ability	to	borrow	and	the	amount	available	under	our	credit	facilities,	(n)	our	ability	to	retire	outstanding	debt,	(o)	our	ability	and	cost	to	obtain performance	related	bonds,	(p)	adequacy	of	resources	to	fund	expected	working	capital	and	capital	expenditure	measurements,	(q)	expected	payments	pursuant	to commitments	under	long-term	agreements,	(r)	the	ability	to	meet	minimum	purchase	obligations,	(s)	our	ability	to	sell	accounts	receivable	and	the	terms	and	amounts	of such	sales,	(t)	the	outcome	and	effect	of	ongoing	and	future	legal	proceedings,	(u)	the	impact	of	recent	accounting	pronouncements	on	our	financial	statements,	(v)	the impact	of	the	loss	of	key	customers,	and	(w)	the	expected	effective	tax	rate	and	deductibility	of	certain	items;	and	(5)	"Quantitative	and	Qualitative	Disclosures	about Market	Risk,"	about:	(a)	the	impact	of	foreign	currency	exchange	risks,	(b)	future	hedging	activity	and	expectations	of	the	Company,	and	(c)	the	ability	of	counterparties to	financial	instruments	to	perform	their	obligations.

Some	of	the	risk	factors	that	affect	the	Company's	business	and	financial	results	are	discussed	in	"Item	1A:	Risk	Factors."	We	wish	to	caution	the	reader	that the	risk	factors	discussed	in	"Item	1A:	Risk	Factors,"	and	those	described	elsewhere	in	this	report	or	in	our	other	Securities	and	Exchange	Commission	filings, could	cause	our	actual	results	to	differ	materially	from	those	stated	in	the	forward-looking	statements.

# Item	7A.	Quantitative	and	Qualitative	Disclosures	About	Market	Risk

# Interest	Rate	Risk

As	of	December	31,	2012,	we	have	$1.9	billion	of	long-term	debt,	including	the	current	portion	of	long-term	debt,	which	is	primarily	priced	at	long-term,	fixed interest	rates.	Of	this	total	long-term	debt	amount,	a	$36	million	Euro-denominated	variable	interest	loan	has	a	hedge	that	changes	the	interest	rate	characteristics	from variable	to	fixed-rate.	A	hypothetical	unfavorable	movement	of	10%	in	the	interest	rates	would	have	an	immaterial	impact	on	the	hedge's	fair	value.

# Foreign	Currency	Risk

We	use	financial	instruments	to	reduce	our	overall	exposure	to	the	effects	of	currency	fluctuations	on	cash	flows.	Our	policy	prohibits	speculation	in	financial instruments	for	profit	on	exchange	rate	price	fluctuations,	trading	in	currencies	for	which	there	are	no	underlying	exposures,	or	entering	into	transactions	for	any currency	to	intentionally	increase	the	underlying	exposure.	Instruments	that	are	designated	as	part	of	a	hedging	relationship	must	be	effective	at	reducing	the	risk associated	with	the	exposure	being	hedged	and	are	designated	as	part	of	a	hedging	relationship	at	the	inception	of	the	contract.	Accordingly,	changes	in	the	market	values of	hedge	instruments	must	be	highly	correlated	with	changes	in	market	values	of	the	underlying	hedged	items	both	at	the	inception	of	the	hedge	and	over	the	life	of	the hedge	contract.

Our	strategy	related	to	foreign	exchange	exposure	management	is	to	offset	the	gains	or	losses	on	the	financial	instruments	against	losses	or	gains	on	the	underlying operational	cash	flows	or	investments	based	on	our	operating	assessment	of	risk.	We	enter	into	derivative	contracts	for	some	of	our	non-functional	currency	cash, receivables,	and	payables,	which	are	primarily	denominated	in	major	currencies	that	can	be	traded	on	open	markets.	We	typically	use	forward	contracts	and	options	to hedge	these	currency	exposures.	In	addition,	we	enter	into	derivative	contracts	for	some	forecasted	transactions,	which	are	designated	as	part	of	a	hedging	relationship	if it	is	determined	that	the	transaction	qualifies	for	hedge	accounting	under	the	provisions	of	the	authoritative	accounting	guidance	for	derivative	instruments	and	hedging activities.	A	portion	of	our	exposure	is	from	currencies	that	are	not	traded	in	liquid	markets	and	these	are	addressed,	to	the	extent	reasonably	possible,	by	managing	net asset	positions,	product	pricing	and	component	sourcing.

At	December	31,	2012,	we	had	outstanding	foreign	exchange	contracts	totaling	$523	million,	compared	to	$524	million	outstanding	at	December	31,	2011. Management	believes	that	these	financial	instruments	should	not	subject	us	to	undue	risk	due	to	foreign	exchange	movements	because	gains	and	losses	on	these contracts	should	generally	offset	losses	and	gains	on	the	underlying	assets,	liabilities	and	transactions,	except	for	the	ineffective	portion	of	the	instruments,	which	are charged	to	Other	within	Other	income	(expense)	in	our	consolidated	statements	of	operations.

The	following	table	shows	the	five	largest	net	notional	amounts	of	the	positions	to	buy	or	sell	foreign	currency	as	of	December	31,	2012	and	the	corresponding positions	as	of	December	31,	2011:

|  | Notional	Amount |  |
| :--- | :--- | :--- |
| Net\tBuy\t(Sell)\tby\tCurrency | December\t31,\t2012 | December\t31,\t2011 |
| British\tPound | $225 | $55 |
| Chinese\tRenminbi | (99) | (283) |
| Norwegian\tKrone | (48) | — |
| Israeli\tShekel | (35) | 8 |
| Japanese\tYen | 32 | 46 |

Foreign	exchange	financial	instruments	that	are	subject	to	the	effects	of	currency	fluctuations,	which	may	affect	reported	earnings,	include	derivative	financial instruments	and	other	monetary	assets	and	liabilities	denominated	in	a	currency	other	than	the	functional	currency	of	the	legal	entity	holding	the	instrument.	Derivative financial	instruments	consist	primarily	of	currency	forward	contracts	and	options.	Other	monetary	assets	and	liabilities	denominated	in	a	currency	other	than	the functional	currency	of	the	legal	entity	consist	primarily	of	cash,	cash	equivalents,	Sigma	Fund	investments	and	short-term	investments,	as	well	as	accounts	payable	and receivable.	Accounts	payable	and	receivable	are	reflected	at	fair	value	in	the	financial	statements.	Assuming	the	amounts	of	the	outstanding	foreign	exchange	contracts represent	our	underlying	foreign	exchange	risk	related	to	monetary	assets	and	liabilities,	a	hypothetical	unfavorable	10%	movement	in	the	foreign	exchange	rates,	from current	levels,	would	reduce	the	value	of	those	monetary	assets	and	liabilities	by	approximately	$54	million.	Our	market	risk	calculation	represents	an	estimate	of reasonably	possible	net	losses	that	would	be	recognized	assuming	hypothetical	10%	movements	in	future	currency	market	pricing	and	is	not	necessarily	indicative	of actual	results,	which	may	or	may	not	occur.	It	does	not	represent	the	maximum	possible	loss	or	any	expected	loss	that	may	occur,	since	actual	future	gains	and	losses will	differ	from	those	estimated,	based	upon,	among	other	things,	actual	fluctuation	in	market	rates,	operating	exposures,	and	the	timing	thereof.	We	believe,	however, that	any	such	loss	incurred	would	be	offset	by	the	effects	of	market	rate	movements	on	the	respective	underlying	derivative	financial	instruments	transactions.	The foreign	exchange	financial	instruments	are	held	for	purposes	other	than	trading.

At	December	31,	2012,	the	maximum	term	of	derivative	instruments	that	hedge	forecasted	transactions	was	seven	months.	The	weighted	average	duration	of	our derivative	instruments	that	hedge	forecasted	transactions	was	three	months.

®	Reg.	U.S.	Patent	&	Trademark	Office.

MOTOROLA	MOTO,	MOTOROLA	SOLUTIONS	and	the	Stylized	M	Logo,	as	well	as	iDEN	are	trademarks	or	registered	trademarks	of	Motorola	Trademark Holdings,	LLC	and	are	used	under	license.	All	other	products	or	service	names	are	the	property	of	their	respective	owners.

# Item	8:	Financial	Statements	and	Supplementary	Data

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# The	Board	of	Directors	and	Stockholders

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Motorola	Solutions,	Inc.	and	Subsidiaries	as	of	December	31,	2012	and	2011,	and	the	related consolidated	statements	of	operations,	comprehensive	income,	stockholders'	equity,	and	cash	flows	for	each	of	the	years	in	the	three-year	period	ended	December	31, 2012.	These	consolidated	financial	statements	are	the	responsibility	of	Motorola	Solutions,	Inc.'s	management.	Our	responsibility	is	to	express	an	opinion	on	these consolidated	financial	statements	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	financial	position	of	Motorola	Solutions,	Inc.	and Subsidiaries	as	of	December	31,	2012	and	2011,	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	years	in	the	three-year	period	ended	December	31, 2012,	in	conformity	with	U.S.	generally	accepted	accounting	principles.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	Motorola	Solutions,	Inc.'s	internal control	over	financial	reporting	as	of	December	31,	2012,	based	on	criteria	established	in	Internal	Control	–	Integrated	Framework	issued	by	the	Committee	of Sponsoring	Organizations	of	the	Treadway	Commission	(COSO),	and	our	report	dated	February	12,	2013	expressed	an	unqualified	opinion	on	the	effectiveness	of	the Company's	internal	control	over	financial	reporting.

Chicago,	Illinois

# Consolidated	Statements	of	Operations

| (In	millions,	except	per	share	amounts) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Net\tsales\tfrom\tproducts | $6,363 | $6,068 | $5,616 |
| Net\tsales\tfrom\tservices | 2,335 | 2,135 | 2,001 |
| Net\tsales | 8,698 | 8,203 | 7,617 |
| Cost\tof\tproduct\tsales | 2,844 | 2,723 | 2,523 |
| Cost\tof\tservice\tsales | 1,506 | 1,334 | 1,282 |
| Costs\tof\tsales | 4,350 | 4,057 | 3,805 |
| Gross\tmargin | 4,348 | 4,146 | 3,812 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 1,963 | 1,912 | 1,874 |
| Research\tand\tdevelopment\texpenditures | 1,075 | 1,035 | 1,037 |
| Other\tcharges | 54 | 341 | 150 |
| Operating\tearnings | 1,256 | 858 | 751 |
| Other\tincome\t(expense): |  |  |  |
| Interest\texpense,\tnet | (66) | (74) | (129) |
| Gain\ton\tsales\tof\tinvestments\tand\tbusinesses,\tnet | 39 | 23 | 49 |
| Other | (14) | (69) | (7) |
| Total\tother\texpense | (41) | (120) | (87) |
| Earnings\tfrom\tcontinuing\toperations\tbefore\tincome\ttaxes | 1,215 | 738 | 664 |
| Income\ttax\texpense\t(benefit) | 337 | (3) | 403 |
| Earnings\tfrom\tcontinuing\toperations | 878 | 741 | 261 |
| Earnings\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 3 | 411 | 389 |
| Net\tearnings | 881 | 1,152 | 650 |
| Less:\tEarnings\t(loss)\tattributable\tto\tnoncontrolling\tinterests | — | (6) | 17 |
| Net\tearnings\tattributable\tto\tMotorola\tSolutions,\tInc. | $881 | $1,158 | $633 |
| Amounts\tattributable\tto\tMotorola\tSolutions,\tInc.\tcommon\tshareholders: |  |  |  |
| Earnings\tfrom\tcontinuing\toperations,\tnet\tof\ttax | 878 | 747 | 244 |
| Earnings\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 3 | 411 | 389 |
| Net\tearnings | 881 | 1,158 | 633 |
| Earnings\tper\tcommon\tshare: |  |  |  |
| Basic: |  |  |  |
| Continuing\toperations | $3.01 | $2.24 | $0.73 |
| Discontinued\toperations | — | 1.23 | 1.17 |
|  | $3.01 | $3.47 | $1.90 |
| Diluted: |  |  |  |
| Continuing\toperations | $2.95 | $2.20 | $0.72 |
| Discontinued\toperations | 0.01 | 1.21 | 1.15 |
|  | $2.96 | $3.41 | $1.87 |
| Weighted\taverage\tcommon\tshares\toutstanding: |  |  |  |
| Basic | 292.1 | 333.8 | 333.3 |
| Diluted | 297.4 | 339.7 | 338.1 |
| Dividends\tdeclared\tper\tshare | 0.96 | 0.22 | — |

# Consolidated	Statements	of	Comprehensive	Income

|  | Years	ended	December	31 | Years	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| (In\tmillions) | 2012 | 2011 | 2010 |
| Net\tearnings | $881 | $1,152 | $650 |
| Other\tcomprehensive\tincome\t(loss): |  |  |  |
| Amortization\tof\tretirement\tbenefit\tadjustments,\tnet\tof\ttax\tof\t$99,\t$73\tand\t$57 | 177 | 132 | 112 |
| Mid-year\tremeasurement\tof\tretirement\tbenefits\tand\tother\tamendment,\tnet\tof\ttax\tof\t$52,\t$9\tand\t$(13) | 87 | (77) | (6) |
| Year-end\tand\tother\tretirement\tadjustments,\tnet\tof\ttax\tof\t$(419),\t$(332),\tand\t$(14) | (707) | (723) | 81 |
| Foreign\tcurrency\ttranslation\tadjustment,\tnet\tof\ttax\tof\t$(4),\t$(8)\tand\t$46 | 14 | 19 | (63) |
| Net\tgain\t(loss)\ton\tderivative\thedging\tinstruments,\tnet\tof\ttax\tof\t$(1),\t$0\tand\t$(1) | 4 | (3) | (2) |
| Net\tunrealized\tgain\t(loss)\ton\tsecurities,\tnet\tof\ttax\tof\t$1,\t$(1)\tand\t$(34) | 1 | (2) | (58) |
| Total\tother\tcomprehensive\tincome\t(loss) | (424) | (654) | 64 |
| Comprehensive\tincome | 457 | 498 | 714 |
| Less:\tEarnings\t(loss)\tattributable\tto\tnoncontrolling\tinterest | — | (6) | 17 |
| Comprehensive\tincome\tattributable\tto\tMotorola\tSolutions,\tInc.\tcommon\tshareholders | $457 | $504 | $697 |

See	accompanying	notes	to	consolidated	financial	statements.

# Consolidated	Balance	Sheets

|  | December	31 | December	31 |
| :--- | :--- | :--- |
| (In\tmillions,\texcept\tper\tshare\tamounts) | 2012 | 2011 |
| ASSETS |  |  |
| Cash\tand\tcash\tequivalents | $1,468 | $1,881 |
| Sigma\tFund\tand\tshort-term\tinvestments | 2,135 | 3,210 |
| Accounts\treceivable,\tnet | 1,881 | 1,866 |
| Inventories,\tnet | 513 | 512 |
| Deferred\tincome\ttaxes | 604 | 613 |
| Other\tcurrent\tassets | 800 | 686 |
| Total\tcurrent\tassets | 7,401 | 8,768 |
| Property,\tplant\tand\tequipment,\tnet | 839 | 896 |
| Investments | 144 | 166 |
| Deferred\tincome\ttaxes | 2,416 | 2,375 |
| Goodwill | 1,510 | 1,428 |
| Other\tassets | 369 | 296 |
| Total\tassets | $12,679 | $13,929 |
| LIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY |  |  |
| Current\tportion\tof\tlong-term\tdebt | $4 | $405 |
| Accounts\tpayable | 705 | 677 |
| Accrued\tliabilities | 2,626 | 2,733 |
| Total\tcurrent\tliabilities | 3,335 | 3,815 |
| Long-term\tdebt | 1,859 | 1,130 |
| Other\tliabilities | 4,195 | 3,710 |
| Stockholders'\tEquity |  |  |
| Preferred\tstock,\t$100\tpar\tvalue | — | — |
| Common\tstock:\t12/31/12—$.01\tpar\tvalue;\t12/31/11—$.01\tpar\tvalue | 3 | 3 |
| Authorized\tshares:\t12/31/12—600.0;\t12/31/11—600.0 |  |  |
| Issued\tshares:\t12/31/12—277.3;\t12/31/11—320.0 |  |  |
| Outstanding\tshares:\t12/31/12—276.1;\t12/31/11—318.8 |  |  |
| Additional\tpaid-in\tcapital | 4,937 | 7,071 |
| Retained\tearnings | 1,625 | 1,016 |
| Accumulated\tother\tcomprehensive\tloss | (3,300) | (2,876) |
| Total\tMotorola\tSolutions,\tInc.\tstockholders'\tequity | 3,265 | 5,214 |
| Noncontrolling\tinterests | 25 | 60 |
| Total\tstockholders'\tequity | 3,290 | 5,274 |
| Total\tliabilities\tand\tstockholders'\tequity | $12,679 | $13,929 |

# Consolidated	Statements	of	Stockholders'	Equity

|  |  | Common	Stock	and | Accumulated	Other |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Additional\tPaid-In | Comprehensive\tIncome | Retained | Noncontrolling |
| (In\tmillions,\texcept\tper\tshare\tamounts) | Shares | Capital | (Loss),\tNet\tof\tTax | Earnings | Interests |
| Balance\tat\tJanuary\t1,\t2010: | 330.6 | $8,234 | $(2,286) | $3,827 | $108 |
| Net\tearnings |  |  |  | 633 | 17 |
| Net\tunrealized\tloss\ton\tsecurities,\tnet\tof\ttax\tof\t$(34) |  |  | (58) |  |  |
| Foreign\tcurrency\ttranslation\tadjustments,\tnet\tof\ttax\tof\t$46 |  |  | (63) |  |  |
| Amortization\tof\tretirement\tbenefit\tadjustments,\tnet\tof\ttax\tof\t$57 |  |  | 112 |  |  |
| Mid-year\tremeasurement\tof\tretirement\tbenefits,\tnet\tof\ttax\tof\t$(13) |  |  | (28) |  |  |
| Plan\tamendment,\tnet\tof\ttax\tof\t$0 |  |  | 22 |  |  |
| Year-end\tand\tother\tretirement\tadjustments,\tnet\tof\ttax\tof\t$(14) |  |  | 81 |  |  |
| Issuance\tof\tcommon\tstock\tand\tstock\toptions\texercised | 6.6 | 144 |  |  |  |
| Tax\tshortfalls\tfrom\tstock-based\tcompensation |  | (63) |  |  |  |
| Share-based\tcompensation\texpense |  | 308 |  |  |  |
| Net\tloss\ton\tderivative\tinstruments,\tnet\tof\ttax\tof\t$(1) |  |  | (2) |  |  |
| Dividends\tpaid\tto\tnoncontrolling\tinterest\ton\tsubsidiary\tcommon\tstock |  |  |  |  | (23) |
| Reclassification\tof\tshare-based\tawards\tfrom\tliability\tto\tequity |  | 24 |  |  |  |
| Balance\tat\tDecember\t31,\t2010: | 337.2 | $8,647 | $(2,222) | $4,460 | $102 |
| Net\tearnings\t(loss) |  |  |  | 1,158 | (6) |
| Net\tunrealized\tloss\ton\tsecurities;\tnet\tof\ttax\tof\t$(1) |  |  | (2) |  |  |
| Foreign\tcurrency\ttranslation\tadjustments,\tnet\tof\ttax\tof\t$(8) |  |  | 19 |  |  |
| Amortization\tof\tretirement\tbenefit\tadjustments,\tnet\tof\ttax\tof\t$73 |  |  | 132 |  |  |
| Mid-year\tremeasurement\tof\tretirement\tbenefits,\tnet\tof\ttax\tof\t$9 |  |  | (77) |  |  |
| Year-end\tand\tother\tretirement\tadjustments,\tnet\tof\ttax\tof\t$(332) |  |  | (723) |  |  |
| Issuance\tof\tcommon\tstock\tand\tstock\toptions\texercised | 9.4 | 152 |  |  |  |
| Share\trepurchase\tprogram | (26.6) | (1,110) |  |  |  |
| Excess\ttax\tbenefit\tfrom\tstock-based\tcompensation |  | 42 |  |  |  |
| Share-based\tcompensation\texpense |  | 181 |  |  |  |
| Net\tloss\ton\tderivative\tinstruments,\tnet\tof\ttax\tof\t$(0) |  |  | (3) |  |  |
| Distribution\tof\tMotorola\tMobility |  | (836) |  | (4,460) |  |
| Dividends\tpaid\tto\tnoncontrolling\tinterest\ton\tsubsidiary\tcommon\tstock |  |  |  |  | (8) |
| Sale\tof\tnoncontrolling\tinterest\tin\tsubsidiary\tcommon\tstock |  |  |  |  | (27) |
| Purchase\tof\tnoncontrolling\tinterest\tin\tsubsidiary\nReclassification\tof\tshare-based\tawards\tfrom\tliability\tto\tequity |  | (2) |  |  | (1) |
| Dividends\tdeclared |  |  |  | (142) |  |
| Balance\tat\tDecember\t31,\t2011: | 320.0 | $7,074 | $(2,876) | $1,016 | $60 |
| Net\tearnings |  |  |  | 881 | — |
| Net\tunrealized\tgain\ton\tsecurities,\tnet\tof\ttax\tof\t$1 |  |  | 1 |  |  |
| Foreign\tcurrency\ttranslation\tadjustments,\tnet\tof\ttax\tof\t$(4) |  |  | 14 |  |  |
| Amortization\tof\tretirement\tbenefit\tadjustments,\tnet\tof\ttax\tof\t$99 |  |  | 177 |  |  |
| Mid-year\tremeasurement\tof\tretirement\tbenefits,\tnet\tof\ttax\tof\t$52 |  |  | 87 |  |  |
| Year-end\tand\tother\tretirement\tadjustments,\tnet\tof\ttax\tof\t$(419) |  |  | (707) |  |  |
| Issuance\tof\tcommon\tstock\tand\tstock\toptions\texercised | 6.9 | 80 |  |  |  |
| Share\trepurchase\tprogram | (49.6) | (2,438) |  |  |  |
| Excess\ttax\tbenefit\tfrom\tshare-based\tcompensation |  | 20 |  |  |  |
| Share-based\tcompensation\texpense |  | 184 |  |  |  |
| Net\tgain\ton\tderivative\thedging\tinstruments,\tnet\tof\ttax\tof\t$(1) |  |  | 4 |  |  |
| Acquisition\tof\tnoncontrolling\tinterest\tfrom\tJapanese\tsubsidiary |  | 20 |  |  | (35) |
| Dividends\tdeclared |  |  |  | (272) |  |
| Balance\tat\tDecember\t31,\t2012: | 277.3 | $4,940 | $(3,300) | $1,625 | $25 |

# Consolidated	Statements	of	Cash	Flows

| (In	millions) | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Operating |  |  |  |
| Net\tearnings\tattributable\tto\tMotorola\tSolutions,\tInc. | $881 | $1,158 | $633 |
| Earnings\t(loss)\tattributable\tto\tnoncontrolling\tinterests | — | (6) | 17 |
| Net\tearnings | 881 | 1,152 | 650 |
| Earnings\tfrom\tdiscontinued\toperations | 3 | 411 | 389 |
| Earnings\tfrom\tcontinuing\toperations | 878 | 741 | 261 |
| Adjustments\tto\treconcile\tearnings\tfrom\tcontinuing\toperations\tto\tnet\tcash\tprovided\tby\t(used\tfor)\toperating\nactivities: |  |  |  |
| Depreciation\tand\tamortization | 208 | 366 | 353 |
| Non-cash\tother\tcharges\t(income) | 11 | 34 | (74) |
| Share-based\tcompensation\texpense | 184 | 168 | 144 |
| Gain\ton\tsales\tof\tinvestments\tand\tbusinesses,\tnet | (39) | (23) | (49) |
| Loss\tfrom\textinguishment\tof\tlong-term\tdebt | 6 | 81 | 12 |
| Deferred\tincome\ttaxes | 242 | 63 | 384 |
| Changes\tin\tassets\tand\tliabilities,\tnet\tof\teffects\tof\tacquisitions\tand\tdispositions: |  |  |  |
| Accounts\treceivable | 81 | (250) | (83) |
| Inventories | (3) | (14) | (111) |
| Other\tcurrent\tassets | (118) | 61 | (48) |
| Accounts\tpayable\tand\taccrued\tliabilities | (162) | (191) | 333 |
| Other\tassets\tand\tliabilities | (220) | (188) | (319) |
| Net\tcash\tprovided\tby\toperating\tactivities | 1,068 | 848 | 803 |
| Investing |  |  |  |
| Acquisitions\tand\tinvestments,\tnet | (109) | (32) | (23) |
| Proceeds\tfrom\t(used\tfor)\tsales\tof\tinvestments\tand\tbusinesses,\tnet | (38) | 1,124 | 264 |
| Capital\texpenditures | (187) | (186) | (192) |
| Proceeds\tfrom\tsales\tof\tproperty,\tplant\tand\tequipment | 56 | 6 | 27 |
| Proceeds\tfrom\tsales\tof\tSigma\tFund\tinvestments,\tnet | 1,075 | 1,508 | 453 |
| Proceeds\tfrom\tsales\t(purchases)\tof\tshort-term\tinvestments,\tnet | — | 6 | (6) |
| Net\tcash\tprovided\tby\tinvesting\tactivities | 797 | 2,426 | 523 |
| Financing |  |  |  |
| Repayment\tof\tshort-term\tborrowings,\tnet | — | — | (5) |
| Repayment\tof\tdebt | (413) | (1,219) | (1,011) |
| Proceeds\tfrom\tissuance\tof\tdebt | 747 | — | — |
| Contributions\tto\tMotorola\tMobility | (73) | (3,425) | — |
| Issuance\tof\tcommon\tstock | 133 | 192 | 179 |
| Repurchase\tof\tcommon\tstock | (2,438) | (1,110) | — |
| Excess\ttax\tbenefits\tfrom\tshare-based\tcompensation | 20 | 42 | — |
| Payment\tof\tdividends | (270) | (72) | — |
| Distributions\t(to)\tfrom\tdiscontinued\toperations | (11) | 64 | 797 |
| Net\tcash\tused\tfor\tfinancing\tactivities | (2,305) | (5,528) | (40) |
| Net\tcash\tprovided\tby\toperating\tactivities\tfrom\tdiscontinued\toperations | 2 | 26 | 1,169 |
| Net\tcash\tused\tfor\tinvesting\tactivities\tfrom\tdiscontinued\toperations | — | (8) | (343) |
| Net\tcash\tprovided\tby\t(used\tfor)\tfinancing\tactivities\tfrom\tdiscontinued\toperations | 11 | (64) | (797) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents\tfrom\tdiscontinued\toperations | (13) | 46 | (29) |
| Net\tcash\tprovided\tby\t(used\tfor)\tdiscontinued\toperations | — | — | — |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents\tfrom\tcontinuing\toperations | 27 | (73) | 53 |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | (413) | (2,327) | 1,339 |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tyear | 1,881 | 4,208 | 2,869 |
| Cash\tand\tcash\tequivalents,\tend\tof\tyear | $1,468 | $1,881 | $4,208 |
| Cash\tFlow\tInformation |  |  |  |
| Cash\tpaid\tduring\tthe\tyear\tfor: |  |  |  |
| Interest\texpense | $109 | $166 | $240 |
| Income\ttaxes,\tnet\tof\trefunds | 127 | 107 | 259 |

# Notes	to	Consolidated	Financial	Statements

# (Dollars	in	millions,	except	as	noted)

# 1.				Summary	of	Significant	Accounting	Policies

Principles	of	Consolidation:				The	consolidated	financial	statements	include	the	accounts	of	Motorola	Solutions,	Inc.	(the	"Company"	or	"Motorola	Solutions") and	all	controlled	subsidiaries.	All	intercompany	transactions	and	balances	have	been	eliminated.

The	consolidated	financial	statements	as	of	December	31,	2012	and	2011	and	for	the	years	ended	December	31,	2012,	2011	and	2010,	include,	in	the	opinion	of management,	all	adjustments	(consisting	of	normal	recurring	adjustments	and	reclassifications)	necessary	to	present	fairly	the	Company's	consolidated	financial	position, results	of	operations,	statements	of	comprehensive	income,	statement	of	stockholder's	equity,	and	cash	flows	for	all	periods	presented.

The	preparation	of	financial	statements	in	conformity	with	U.S.	Generally	Accepted	Accounting	Principles	("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.

# Changes	in	Presentation

# Reverse	Stock	Split	and	Name	Change

On	November	30,	2010,	Motorola	Solutions	announced	the	timing	and	details	regarding	the	distribution	of	Motorola	Mobility	Holdings,	Inc.	("Motorola Mobility")	and	the	approval	of	a	reverse	stock	split	at	a	ratio	of	1-for-7	("the	Reverse	Stock	Split").	On	January	4,	2011,	immediately	following	the	distribution	of Motorola	Mobility	common	stock,	the	Company	completed	a	the	Reverse	Stock	Split	and	changed	its	name	to	Motorola	Solutions,	Inc.	All	consolidated	share	and	per share	information	presented	gives	effect	to	the	distribution	of	Motorola	Mobility	and	Reverse	Stock	Split.

Revenue	Recognition:	Net	sales	consist	of	a	wide	range	of	activities	including	the	delivery	of	stand-alone	equipment	or	services,	custom	design	and	installation over	a	period	of	time,	and	bundled	sales	of	equipment,	software	and	services.	The	Company	enters	into	revenue	arrangements	that	may	consist	of	multiple	deliverables	of its	product	and	service	offerings	due	to	the	needs	of	its	customers.	The	Company	recognizes	revenue	when	persuasive	evidence	of	an	arrangement	exists,	delivery	has occurred,	the	sales	price	is	fixed	or	determinable,	and	collectability	of	the	sales	price	is	reasonably	assured.	The	Company	recognizes	revenue	from	the	sale	of equipment,	software	bundled	with	equipment	that	is	essential	to	the	functionality	of	the	equipment,	and	most	services	in	accordance	with	general	revenue	recognition accounting	principles.	The	Company	recognizes	revenue	in	accordance	with	software	accounting	guidance	for	the	following	types	of	sales	transactions:	(i)	standalone sales	of	software	products	or	software	upgrades,	(ii)	standalone	sales	of	software	maintenance	agreements,	and	(iii)	sales	of	software	bundled	with	hardware	not	essential to	the	functionality	of	that	hardware.

Products	—For	product	sales,	revenue	recognition	occurs	when	products	have	been	shipped,	risk	of	loss	has	transferred	to	the	customer,	objective	evidence	exists that	customer	acceptance	provisions	have	been	met,	no	significant	obligations	remain	and	allowances	for	discounts,	price	protection,	returns	and	customer	incentives	can be	reliably	estimated.	Recorded	revenues	are	reduced	by	these	allowances.	The	Company	bases	its	estimates	of	these	allowances	on	historical	experience	taking	into consideration	the	type	of	products	sold,	the	type	of	customer,	and	the	specific	type	of	transaction	in	each	arrangement.	Where	customer	incentives	cannot	be	reliably estimated,	the	Company	defers	revenue	until	the	incentive	has	been	finalized	with	the	customer.

The	Company	sells	software	and	equipment	obtained	from	other	companies.	The	Company	establishes	its	own	pricing	and	retains	related	inventory	risk,	is	the primary	obligor	in	sales	transactions	with	customers,	and	assumes	the	credit	risk	for	amounts	billed	to	customers.	Accordingly,	the	Company	generally	recognizes revenue	for	the	sale	of	products	obtained	from	other	companies	based	on	the	gross	amount	billed.

Within	the	Enterprise	segment,	products	are	primarily	sold	through	distributors	and	value-added	resellers	(collectively	"channel	partners").		Channel	partners	may provide	a	service	or	add	componentry	in	order	to	resell	the	Company's	products	to	end	customers.		For	sales	to	channel	partners	where	the	Company	cannot	reliably estimate	the	final	sales	price	or	when	a	channel	partner	is	unable	to	pay	for	the	Company's	products	without	reselling	them	to	their	customers,	revenue	is	not	recognized until	the	products	are	resold	by	the	channel	partner	to	the	end	customer.

Long-Term	Contracts—For	long-term	contracts	that	involve	customization	of	equipment	and/or	software,	the	Company	generally	recognizes	revenue	using	the percentage	of	completion	method	based	on	the	percentage	of	costs	incurred	to	date	compared	to	the	total	estimated	costs	to	complete	the	contract.	In	certain	instances, when	revenues	or	costs	associated	with	long-term	contracts	cannot	be	reliably	estimated	or	the	contract	contains	other	inherent	uncertainties,	revenues	and	costs	are

deferred	until	the	project	is	complete	and	customer	acceptance	is	obtained.	When	current	estimates	of	total	contract	revenue	and	contract	costs	indicate	a	contract	loss, the	loss	is	recognized	in	the	period	it	becomes	evident.

Multiple-Element	Arrangements—Arrangements	with	customers	may	include	multiple	deliverables,	including	any	combination	of	products,	services	and	software. These	multiple	element	arrangements	could	also	include	an	element	accounted	for	as	a	long-term	contract	coupled	with	other	products,	services	and	software.	For multiple-element	arrangements	that	include	products	containing	software	essential	to	the	equipment's	functionality,	undelivered	software	elements	that	relate	to	the product's	essential	software,	and	undelivered	non-software	services,	deliverables	are	separated	into	more	than	one	unit	of	accounting	when	(i)	the	delivered	element(s) have	value	to	the	customer	on	a	stand-alone	basis,	and	(ii)	delivery	of	the	undelivered	element(s)	is	probable	and	substantially	in	the	control	of	the	Company.	In	these arrangements,	the	Company	allocates	revenue	to	all	deliverables	based	on	their	relative	selling	prices.	The	Company	uses	the	following	hierarchy	to	determine	the selling	price	to	be	used	for	allocating	revenue	to	deliverables:	(i)	vendor-specific	objective	evidence	of	fair	value	("VSOE"),	(ii)	third-party	evidence	of	selling	price ("TPE"),	and	(iii)	best	estimate	of	selling	price	("ESP").

•VSOE—In	many	instances,	products	are	sold	separately	in	stand-alone	arrangements	as	customers	may	support	the	products	themselves	or	purchase	support	on a	time	and	materials	basis.	Additionally,	advanced	services	such	as	general	consulting,	network	management	or	advisory	projects	are	often	sold	in	stand-alone engagements.	Technical	support	services	are	also	often	sold	separately	through	renewals	of	annual	contracts.	The	Company	determines	VSOE	based	on	its normal	pricing	and	discounting	practices	for	the	specific	product	or	service	when	sold	separately.	In	determining	VSOE,	the	Company	requires	that	a substantial	majority	of	the	selling	prices	for	a	product	or	service	fall	within	a	reasonably	narrow	pricing	range,	generally	evidenced	by	the	pricing	rates	of approximately	80%	of	such	historical	stand-alone	transactions	falling	within	plus	or	minus	15%	of	the	median	rate.	In	addition,	the	Company	considers	the geographies	in	which	the	products	or	services	are	sold,	major	product	and	service	groups,	customer	classification,	and	other	environmental	or	marketing variables	in	determining	VSOE.

•TPE—VSOE	exists	only	when	the	Company	sells	the	deliverable	separately.	When	VSOE	does	not	exist,	the	Company	attempts	to	determine	TPE	based	on competitor	prices	for	similar	deliverables	when	sold	separately.	Generally,	the	Company's	go-to-market	strategy	for	many	of	its	products	differs	from	that	of	its peers	and	its	offerings	contain	a	significant	level	of	customization	and	differentiation	such	that	the	comparable	pricing	of	products	with	similar	functionality sold	by	other	companies	cannot	be	obtained.	Furthermore,	the	Company	is	unable	to	reliably	determine	what	similar	competitor	products'	selling	prices	are	on a	stand-alone	basis.	Therefore,	the	Company	is	typically	not	able	to	determine	TPE.

•ESP—The	objective	of	ESP	is	to	determine	the	price	at	which	the	Company	would	transact	a	sale	if	the	product	or	service	were	sold	on	a	stand-alone	basis. When	both	VSOE	and	TPE	do	not	exist,	the	Company	determines	ESP	by	first	collecting	all	reasonably	available	data	points	including	sales,	cost	and	margin analysis	of	the	product,	and	other	inputs	based	on	its	normal	pricing	practices.	Second,	the	Company	makes	any	reasonably	required	adjustments	to	the	data based	on	market	and	Company-specific	factors.	Third,	the	Company	stratifies	the	data	points,	when	appropriate,	based	on	customer,	magnitude	of	the transaction	and	sales	volume.

The	Company's	arrangements	with	multiple	deliverables	may	also	contain	a	stand-alone	software	deliverable	that	is	subject	to	software	revenue	recognition guidance.	The	revenue	for	these	multiple-element	arrangements	is	allocated	to	the	software	deliverable	and	the	non-software	deliverable(s)	based	on	the	relative	selling prices	of	all	of	the	deliverables	in	the	arrangement	using	the	fair	value	hierarchy	outlined	above.	In	circumstances	where	the	Company	cannot	determine	VSOE	or	TPE of	the	selling	price	for	any	of	the	deliverables	in	the	arrangement,	ESP	is	used	for	the	purpose	of	allocating	the	arrangement	consideration	between	software	and	non software	deliverables.

The	Company	accounts	for	multiple-element	arrangements	that	consist	entirely	of	software	or	software-related	products,	including	the	sale	of	software	upgrades	or software	support	agreements	to	previously	sold	software,	in	accordance	with	software	accounting	guidance.	For	such	arrangements,	revenue	is	allocated	to	the deliverables	based	on	the	relative	fair	value	of	each	element,	and	fair	value	is	determined	using	VSOE.	Where	VSOE	does	not	exist	for	the	undelivered	software element,	revenue	is	deferred	until	either	the	undelivered	element	is	delivered	or	VSOE	is	established,	whichever	occurs	first.	When	VSOE	of	a	delivered	element	has	not been	established,	but	VSOE	exists	for	the	undelivered	elements,	the	Company	uses	the	residual	method	to	recognize	revenue	when	the	fair	value	of	all	undelivered elements	is	determinable.	Under	the	residual

method,	the	fair	value	of	the	undelivered	elements	is	deferred	and	the	remaining	portion	of	the	arrangement	consideration	is	allocated	to	the	delivered	elements	and	is recognized	as	revenue.

Cash	Equivalents:				The	Company	considers	all	highly-liquid	investments	purchased	with	an	original	maturity	of	three	months	or	less	to	be	cash	equivalents.	At both	December	31,	2012	and	December	31,	2011,	restricted	cash	was	$63	million.

Sigma	Fund:				The	Company	and	its	wholly-owned	subsidiaries	invest	a	significant	portion	of	their	U.S.	dollar-denominated	cash	in	a	fund	(the	"Sigma	Fund") that	allows	the	Company	to	efficiently	manage	its	cash	around	the	world.	The	Sigma	Fund	portfolio	is	managed	by	four	independent	investment	management	firms.	The investment	guidelines	of	the	Sigma	Fund	require	that	purchased	investments	must	be	in	high-quality,	investment	grade	(rated	at	least	A/A-1	by	Standard	&	Poor's	or A2/P-1	by	Moody's	Investors	Service),	U.S.	dollar-denominated	fixed	income	obligations,	including	certificates	of	deposit,	commercial	paper,	government	bonds, corporate	bonds	and	asset-	and	mortgage-backed	securities.	Under	the	Sigma	Fund's	investment	policies,	except	for	obligations	of	the	U.S.	government,	agencies	and government-sponsored	enterprises,	no	more	than	5%	of	the	Sigma	Fund	portfolio	is	to	consist	of	securities	of	any	one	issuer.	The	Sigma	Fund's	investment	policies further	require	that	floating	rate	investments	must	have	a	maturity	at	purchase	date	that	does	not	exceed	thirty-six	months	with	an	interest	rate	that	is	reset	at	least annually.	The	average	interest	rate	reset	of	the	investments	held	by	the	funds	must	be	one	hundred	twenty	days	or	less.	The	actual	average	maturity	of	the	portfolio (excluding	cash)	was	less	than	one	month	at	both	December	31,	2012	and	December	31,	2011.

Investments	in	the	Sigma	Fund	are	carried	at	fair	value.	The	Company	primarily	relies	on	valuation	pricing	models	and	broker	quotes	to	determine	the	fair	value	of investments	in	the	Sigma	Fund.		These	pricing	models	utilize	observable	inputs	which	include,	but	are	not	limited	to:	market	quotations,	yields,	maturities,	call	features, and	the	security's	terms	and	conditions.

Investments:				Investments	in	equity	and	debt	securities	classified	as	available-for-sale	are	carried	at	fair	value.	Debt	securities	classified	as	held-to-maturity	are carried	at	amortized	cost.	Equity	securities	that	are	restricted	for	more	than	one	year	or	that	are	not	publicly	traded	are	carried	at	cost.	Certain	investments	are	accounted for	using	the	equity	method	if	the	Company	has	significant	influence	over	the	issuing	entity.

The	Company	assesses	declines	in	the	fair	value	of	investments	to	determine	whether	such	declines	are	other-than-temporary.	This	assessment	is	made	considering all	available	evidence,	including	changes	in	general	market	conditions,	specific	industry	and	individual	company	data,	the	length	of	time	and	the	extent	to	which	the	fair value	has	been	less	than	cost,	the	financial	condition	and	the	near-term	prospects	of	the	entity	issuing	the	security,	and	the	Company's	ability	and	intent	to	hold	the investment	until	recovery.	Other-than-temporary	impairments	of	investments	are	recorded	to	Other	within	Other	income	(expense)	in	the	Company's	consolidated statements	of	operations	in	the	period	in	which	they	become	impaired.

Inventories:				Inventories	are	valued	at	the	lower	of	average	cost	(which	approximates	cost	on	a	first-in,	first-out	basis)	or	market	(net	realizable	value	or replacement	cost).

Property,	Plant	and	Equipment:				Property,	plant	and	equipment	are	stated	at	cost	less	accumulated	depreciation.	Depreciation	is	recorded	using	straight-line, based	on	the	estimated	useful	lives	of	the	assets	(buildings	and	building	equipment,	five	to	forty	years;	machinery	and	equipment,	two	to	ten	years)	and	commences	once the	assets	are	ready	for	their	intended	use.

Goodwill	and	Intangible	Assets:				Goodwill	is	assessed	for	impairment	at	least	annually	at	the	reporting	unit	level.	In	September	2011,	the	FASB	issued guidance	which	provides	an	entity	the	option	to	perform	a	qualitative	assessment	to	determine	whether	it	is	more-likely-than-not	that	the	fair	value	of	a	reporting	unit	is less	than	its	carrying	amount	prior	to	performing	the	two-step	goodwill	impairment	test.	If	this	is	the	case,	the	two-step	goodwill	impairment	test	is	required.	If	it	is more-likely-than-not	that	the	fair	value	of	a	reporting	unit	is	greater	than	its	carrying	amount,	the	two-step	goodwill	impairment	test	is	not	required.	The	Company adopted	this	guidance	as	of	the	fourth	quarter	of	2011.

If	the	two-step	goodwill	impairment	test	is	required,	first,	the	fair	value	of	each	reporting	unit	is	compared	to	its	book	value.	If	the	fair	value	of	the	reporting	unit	is less	than	its	book	value,	the	Company	performs	a	hypothetical	purchase	price	allocation	based	on	the	reporting	unit's	fair	value	to	determine	the	fair	value	of	the reporting	unit's	goodwill.	Fair	value	is	determined	using	a	combination	of	present	value	techniques	and	market	prices	of	comparable	businesses.

Intangible	assets	are	generally	amortized	on	a	straight	line	basis	over	their	respective	estimated	useful	lives	ranging	from	one	to	ten	years.	The	Company	has	no intangible	assets	with	indefinite	useful	lives.

Impairment	of	Long-Lived	Assets:				Long-lived	assets,	which	include	intangible	assets,	held	and	used	by	the	Company,	are	reviewed	for	impairment	whenever events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	assets	may	not	be	recoverable.	The	Company	evaluates	recoverability	of	assets	to	be	held	and used	by	comparing	the	carrying	amount	of	an	asset	(group)	to	future	net	undiscounted	cash	flows	to	be	generated	by	the	asset	(group).	If	an	asset	(group)	is	considered	to be	impaired,	the	impairment	to	be	recognized	is	equal	to	the	amount	by	which	the	carrying	amount	of	the	asset	(group)	exceeds	the	asset's	(group's)	fair	value	calculated using	a	discounted	future	cash	flows	analysis	or	market	comparables.	Assets	held	for	sale,	if	any,	are	reported	at	the	lower	of	the	carrying	amount	or	fair	value	less	cost to	sell.

Income	Taxes:				Deferred	tax	assets	and	liabilities	are	recognized	for	the	future	tax	consequences	attributable	to	differences	between	the	financial	statement carrying	amounts	of	existing	assets	and	liabilities	and	their	respective	tax	bases	and	operating	loss	and	tax	credit	carryforwards.	Deferred	tax	assets	and	liabilities	are measured	using	enacted	tax	rates	expected	to	apply	to	taxable	income	in	the	years	in	which	those	temporary	differences	are	expected	to	be	recovered	or	settled.	The effect	on	deferred	tax	assets	and	liabilities	from	a	change	in	tax	rates	is	recognized	in	the	period	that	includes	the	enactment	date.

Deferred	tax	assets	are	reduced	by	valuation	allowances	if,	based	on	the	consideration	of	all	available	evidence,	it	is	more-likely-than-not	that	some	portion	of	the deferred	tax	asset	will	not	be	realized.	Significant	weight	is	given	to	evidence	that	can	be	objectively	verified.	The	Company	evaluates	deferred	tax	assets	on	a	quarterly basis	to	determine	if	valuation	allowances	are	required	by	considering	available	evidence.	Deferred	tax	assets	are	realized	by	having	sufficient	future	taxable	income	to allow	the	related	tax	benefits	to	reduce	taxes	otherwise	payable.	The	sources	of	taxable	income	that	may	be	available	to	realize	the	benefit	of	deferred	tax	assets	are future	reversals	of	existing	taxable	temporary	differences,	future	taxable	income,	exclusive	of	reversing	temporary	differences	and	carryforwards,	taxable	income	in carry-back	years	and	tax	planning	strategies	that	are	both	prudent	and	feasible.

The	Company	recognizes	the	effect	of	income	tax	positions	only	if	sustaining	those	positions	is	more-likely-than-not.	Changes	in	recognition	or	measurement	are reflected	in	the	period	in	which	a	change	in	judgment	occurs.	The	Company	records	interest	related	to	unrecognized	tax	benefits	in	Interest	expense	and	penalties	in Selling,	general	and	administrative	expenses	in	the	Company's	consolidated	statements	of	operations.

Sales	and	Use	Taxes:	The	Company	records	taxes	imposed	on	revenue-producing	transactions,	including	sales,	use,	value	added	and	excise	taxes,	on	a	net	basis with	such	taxes	excluded	from	revenue.

Long-term	Receivables:				Long-term	receivables	include	trade	receivables	where	contractual	terms	of	the	note	agreement	are	greater	than	one	year.	Long-term receivables	are	considered	impaired	when	management	determines	collection	of	all	amounts	due	according	to	the	contractual	terms	of	the	note	agreement,	including principal	and	interest,	is	no	longer	probable.	Impaired	long-term	receivables	are	valued	based	on	the	present	value	of	expected	future	cash	flows	discounted	at	the receivable's	effective	interest	rate,	or	the	fair	value	of	the	collateral	if	the	receivable	is	collateral	dependent.	Interest	income	and	late	fees	on	impaired	long-term receivables	are	recognized	only	when	payments	are	received.	Previously	impaired	long-term	receivables	are	no	longer	considered	impaired	and	are	reclassified	to performing	when	they	have	performed	under	a	workout	or	restructuring	for	four	consecutive	quarters.

Foreign	Currency:				Certain	of	the	Company's	non-U.S.	operations	use	their	respective	local	currency	as	their	functional	currency.	Those	operations	that	do	not have	the	U.S.	dollar	as	their	functional	currency	translate	assets	and	liabilities	at	current	rates	of	exchange	in	effect	at	the	balance	sheet	date	and	revenues	and	expenses using	rates	that	approximate	those	in	effect	during	the	period.	The	resulting	translation	adjustments	are	included	as	a	component	of	Accumulated	other	comprehensive income	(loss)	in	the	Company's	consolidated	balance	sheets.	For	those	operations	that	have	the	U.S.	dollar	as	their	functional	currency,	transactions	denominated	in	the local	currency	are	measured	in	U.S.	dollars	using	the	current	rates	of	exchange	for	monetary	assets	and	liabilities	and	historical	rates	of	exchange	for	nonmonetary assets.	Gains	and	losses	from	remeasurement	of	monetary	assets	and	liabilities	are	included	in	Other	within	Other	income	(expense)	within	the	Company's	consolidated statements	of	operations.

Derivative	Instruments:				Gains	and	losses	on	hedges	of	existing	assets	or	liabilities	are	marked-to-market	and	the	result	is	included	in	Other	within	Other income	(expense)	within	the	Company's	consolidated	statements	of	operations.	Certain	financial	instruments	are	used	to	hedge	firm	future	commitments	or	forecasted transactions.		Gains	and	losses	pertaining	to	those	instruments	that	qualify	for	hedge	accounting	are	deferred	until	such	time	as	the	underlying	transactions	are recognized	and	subsequently	recognized	in	the	same	line	within	the	consolidated	statements	of	operations	of	the	hedged	item.	Gains	and	losses	pertaining	to	those instruments	that	do	not	qualify	for	hedge	accounting	are	recorded	immediately	in	Other	income	(expense)	within	the	consolidated	statements	of	operations.

Earnings	Per	Share:				The	Company	calculates	its	basic	earnings	per	share	based	on	the	weighted-average	effect	of	all	common	shares	issued	and	outstanding. Net	earnings	attributable	to	Motorola	Solutions,	Inc.	is	divided	by	the	weighted	average	common	shares	outstanding	during	the	period	to	arrive	at	the	basic	earnings	per share.	Diluted	earnings	per	share	is	calculated	by	dividing	net	earnings	attributable	to	Motorola	Solutions,	Inc.	by	the	sum	of	the	weighted	average	number	of	common shares	used	in	the	basic	earnings	per	share	calculation	and	the	weighted	average	number	of	common	shares	that	would	be	issued	assuming	exercise	or	conversion	of	all potentially	dilutive	securities,	excluding	those	securities	that	would	be	anti-dilutive	to	the	earnings	per	share	calculation.	Both	basic	and	diluted	earnings	per	share amounts	are	calculated	for	earnings	from	continuing	operations	and	net	earnings	attributable	to	Motorola	Solutions,	Inc.	for	all	periods	presented.	All	earnings	per	share information	presented	gives	effect	to	the	distribution	of	Motorola	Mobility	and	Reverse	Stock	Split,	which	occurred	on	January	4,	2011.

Share-Based	Compensation	Costs:				The	Company	has	incentive	plans	that	reward	employees	with	stock	options,	stock	appreciation	rights,	restricted	stock	and restricted	stock	units,	as	well	as	an	employee	stock	purchase	plan.	The	amount	of

compensation	cost	for	these	share-based	awards	is	generally	measured	based	on	the	fair	value	of	the	awards,	as	of	the	date	that	the	share-based	awards	are	issued	and adjusted	to	the	estimated	number	of	awards	that	are	expected	to	vest.	The	fair	values	of	stock	options	and	stock	appreciation	rights	are	generally	determined	using	a Black-Scholes	option	pricing	model	which	incorporates	assumptions	about	expected	volatility,	risk	free	rate,	dividend	yield,	and	expected	life.	Compensation	cost	for share-based	awards	is	recognized	on	a	straight-line	basis	over	the	vesting	period.

Retirement	Benefits:				The	Company	records	annual	expenses	relating	to	its	pension	benefit	and	postretirement	plans	based	on	calculations	which	include various	actuarial	assumptions,	including	discount	rates,	assumed	asset	rates	of	return,	compensation	increases,	turnover	rates	and	health	care	cost	trend	rates.	The Company	reviews	its	actuarial	assumptions	on	an	annual	basis	and	makes	modifications	to	the	assumptions	based	on	current	rates	and	trends.	The	effects	of	the	gains, losses,	and	prior	service	costs	and	credits	are	amortized	either	over	the	average	service	life	or	over	the	average	remaining	lifetime	of	the	participant,	depending	on	the number	of	active	employees	in	the	plan.	The	funding	status,	or	projected	benefit	obligation	less	plan	assets,	for	each	plan,	is	reflected	in	the	Company's	consolidated balance	sheets	using	a	December	31	measurement	date.

Advertising	Expense:				Advertising	expenses,	which	are	the	external	costs	of	marketing	the	Company's	products,	are	expensed	as	incurred.	Advertising	expenses were	$95	million,	$98	million	and	$109	million	for	the	years	ended	December	31,	2012,	2011	and	2010,	respectively.

Use	of	Estimates:				The	preparation	of	the	accompanying	consolidated	financial	statements	in	conformity	with	accounting	principles	generally	accepted	in	the U.S.	requires	management	to	make	estimates	and	assumptions	about	future	events.	These	estimates	and	the	underlying	assumptions	affect	the	amounts	of	assets	and liabilities	reported,	disclosures	about	contingent	assets	and	liabilities,	and	reported	amounts	of	revenues	and	expenses.	Such	estimates	include	the	valuation	of	accounts receivable	and	long	term	receivables,	inventories,	Sigma	Fund,	investments,	goodwill,	intangible	and	other	long-lived	assets,	legal	contingencies,	guarantee	obligations, indemnifications,	and	assumptions	used	in	the	calculation	of	income	taxes,	retirement	and	other	post-employment	benefits	and	allowances	for	discounts,	price	protection, product	returns,	and	customer	incentives,	among	others.	These	estimates	and	assumptions	are	based	on	management's	best	estimates	and	judgment.	Management evaluates	its	estimates	and	assumptions	on	an	ongoing	basis	using	historical	experience	and	other	factors,	including	the	current	economic	environment,	which management	believes	to	be	reasonable	under	the	circumstances.	The	Company	adjusts	such	estimates	and	assumptions	when	facts	and	circumstances	dictate.	Illiquid credit	markets,	volatile	equity,	foreign	currency,	energy	markets	and	declines	in	consumer	spending	have	combined	to	increase	the	uncertainty	inherent	in	such estimates	and	assumptions.	As	future	events	and	their	effects	cannot	be	determined	with	precision,	actual	results	could	differ	significantly	from	these	estimates.	Changes in	those	estimates	resulting	from	continuing	changes	in	the	economic	environment	will	be	reflected	in	the	financial	statements	in	future	periods.

# 2.				Discontinued	Operations

On	January	1,	2012,	the	Company	completed	a	series	of	transactions	which	resulted	in	exiting	the	amateur,	marine	and	airband	radio	businesses.		The	operating results	of	the	amateur,	marine	and	airband	radio	businesses,	formerly	included	as	part	of	the	Government	segment,	are	reported	as	discontinued	operations	in	the consolidated	statements	of	operations	for	all	periods	presented.

On	October	28,	2011,	the	Company	completed	the	sale	of	its	wireless	broadband	businesses.	During	the	year	ended	December	31,	2011,	the	Company	recorded	a pre-tax	gain	related	to	the	sale	of	the	wireless	broadband	businesses	of	$40	million,	net	of	closing	costs,	in	its	results	from	discontinued	operations.	The	operating	results of	the	wireless	broadband	businesses,	formerly	included	as	part	of	the	Enterprise	segment,	are	reported	as	discontinued	operations	in	the	statements	of	operations	for	all periods	presented.

On	April	29,	2011,	the	Company	completed	the	sale	of	certain	assets	and	liabilities	of	its	Networks	business	to	Nokia	Siemens	Networks	("NSN").	The	results	of operations	of	the	portions	of	the	Networks	business	sold	are	reported	as	discontinued	operations	for	all	periods	presented.	Based	on	the	terms	and	conditions	of	the Networks	business	divestiture,	the	sale	was	subject	to	a	purchase	price	adjustment	that	was	contingent	upon	the	review	of	final	assets	and	liabilities	transferred	to	NSN and	was	based	on	the	change	in	net	assets	from	the	original	agreed	upon	sale	date.	During	the	year	ended	December	31,	2011,	the	Company	received	approximately	$1.0 billion	of	net	proceeds	and	recorded	a	pre-tax	gain	related	to	the	completion	of	this	sale	of	$434	million,	net	of	closing	costs,	and	an	agreed	upon	purchase	price adjustment	of	$120	million	in	its	results	from	discontinued	operations.

On	January	4,	2011,	the	distribution	of	Motorola	Mobility	was	completed.	The	stockholders	of	record	as	of	the	close	of	business	on	December	21,	2010	received one	(1)	share	of	Motorola	Mobility	common	stock	for	each	eight	(8)	shares	of	the	Company's	common	stock	held	as	of	the	record	date.	Immediately	following	the distribution,	the	Company	changed	its	name	to	Motorola	Solutions,	Inc.	The	distribution	was	structured	to	be	tax-free	to	Motorola	Solutions	and	its	stockholders	for	U.S. tax	purposes	(other	than	with	respect	to	any	cash	received	in	lieu	of	fractional	shares).	The	historical	financial	results	of	Motorola	Mobility	are	reflected	in	the Company's	consolidated	financial	statements	and	footnotes	as	discontinued	operations	for	all	periods	presented.

On	May	27,	2010,	the	Company	completed	the	sale	of	its	Israel-based	wireless	network	operator	business	formerly	included	as	part	of	the	Government	segment. The	Company	received	$170	million	in	net	cash	and	recorded	a	gain	on	sale	of	the	business	of	$20	million	before	income	taxes,	which	is	included	in	Earnings	from discontinued	operations,	net	of	tax,	in	the	Company's	consolidated	statements	of	operations.

The	following	table	displays	summarized	activity	in	the	Company's	consolidated	statements	of	operations	for	discontinued	operations	during	the	years	ended December	31,	2012,	2011	and	2010.

| Years	ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Net\tsales | $— | $1,346 | $15,256 |
| Operating\tearnings | 11 | 201 | 601 |
| Gains\t(loss)\ton\tsales\tof\tinvestments\tand\tbusinesses,\tnet | (7) | 474 | 20 |
| Earnings\tbefore\tincome\ttaxes | 8 | 667 | 600 |
| Income\ttax\texpense | 5 | 256 | 211 |
| Earnings\tfrom\tdiscontinued\toperations,\tnet\tof\ttax | 3 | 411 | 389 |

# 3.				Other	Financial	Data

# Statement	of	Operations	Information

Other	charges	included	in	Operating	earnings	consist	of	the	following:

| Years	ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Other\tcharges\t(income): |  |  |  |
| Intangibles\tamortization | $29 | $200 | $203 |
| Reorganization\tof\tbusinesses | 41 | 52 | 54 |
| Intellectual\tproperty\tsettlements\tand\treserve\tadjustment | — | — | (78) |
| Legal\tand\trelated\tinsurance\tmatters,\tnet | (16) | 88 | (29) |
| Pension\tplan\tadjustments,\tnet | — | (9) | — |
| Long-term\tfinancing\treceivable\treserve | — | 10 | — |
|  | $54 | $341 | $150 |

During	2012,	the	Company	recorded	a	$16	million	gain	in	connection	with	the	settlement	of	a	legal	matter	involving	the	legacy	paging	business.

During	2011,	the	Company	recorded	$88	million	of	net	charges	for	legal	matters.	These	charges	primarily	relate	to	the	Silverman	litigation	and	legal	matters related	to	the	legacy	paging	business.

During	2010,	the	Company	entered	into	a	settlement	agreement	with	another	company	to	resolve	certain	intellectual	property	disputes	between	the	two	companies. As	a	result	of	the	settlement	agreement,	the	Company	received	$65	million	in	cash	and	was	assigned	certain	patent	properties.	As	a	result	of	this	agreement,	the Company	recorded	a	pre-tax	gain	of	$39	million	(and	$55	million	was	recorded	in	discontinued	operations)	during	the	year	ended	December	31,	2010,	related	to	the settlement	of	the	outstanding	litigation	between	the	parties.

# Other	Income	(Expense)

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

| Years	ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Interest\texpense,\tnet: |  |  |  |
| Interest\texpense | $(108) | $(132) | $(217) |
| Interest\tincome | 42 | 58 | 88 |
|  | $(66) | $(74) | $(129) |
| Other: |  |  |  |
| Investment\timpairments | $(8) | $(4) | $(21) |
| Loss\tfrom\tthe\textinguishment\tof\tthe\tCompany's\toutstanding\tlong-term\tdebt | (6) | (81) | (12) |
| Foreign\tcurrency\tgain\t(loss) | (13) | 8 | 12 |
| Gain\ton\tSigma\tFund\tinvestments | — | — | 11 |
| Other | 13 | 8 | 3 |
|  | $(14) | $(69) | $(7) |

# Earnings	Per	Common	Share

Basic	and	diluted	earnings	per	common	share	from	both	continuing	operations	and	net	earnings	attributable	to	Motorola	Solutions,	Inc.,	including	discontinued operations,	is	computed	as	follows:

|  |  | Continuing	Operations |  |  | Motorola	Solutions,	Inc. |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Years\tended\tDecember\t31 | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 |
| Basic\tearnings\tper\tcommon\tshare: |  |  |  |  |  |  |
| Earnings | $878 | $747 | $244 | $881 | $1,158 | $633 |
| Weighted\taverage\tcommon\tshares\noutstanding | 292.1 | 333.8 | 333.3 | 292.1 | 333.8 | 333.3 |
| Per\tshare\tamount | $3.01 | $2.24 | $0.73 | $3.01 | $3.47 | $1.90 |
| Diluted\tearnings\tper\tcommon\nshare: |  |  |  |  |  |  |
| Earnings | $878 | $747 | $244 | $881 | $1,158 | $633 |
| Weighted\taverage\tcommon\tshares\noutstanding | 292.1 | 333.8 | 333.3 | 292.1 | 333.8 | 333.3 |
| Add\teffect\tof\tdilutive\tsecurities:\nShare-based\tawards\tand\tother | 5.3 | 5.9 | 4.8 | 5.3 | 5.9 | 4.8 |
| Diluted\tweighted\taverage\tcommon\nshares\toutstanding | 297.4 | 339.7 | 338.1 | 297.4 | 339.7 | 338.1 |
| Per\tshare\tamount | $2.95 | $2.20 | $0.72 | $2.96 | $3.41 | $1.87 |

In	the	computation	of	diluted	earnings	per	common	share	from	both	continuing	operation	and	on	a	net	earnings	basis	for	the	year	ended	December	31,	2012,	the assumed	exercise	of	5.9	million	stock	options	was	excluded	because	their	inclusion	would	have	been	antidilutive.	For	the	year	ended	December	31,	2011,	the	assumed exercise	of	8.6	million	stock	options	and	vesting	of	0.2	million	restricted	stock	units	were	excluded	because	their	inclusion	would	have	been	antidilutive.	For	the	year ended	December	31,	2010,	the	assumed	exercise	of	14.6	million	stock	options	and	vesting	of	0.7	million	restricted	stock	units	were	excluded	because	their	inclusion would	have	been	antidilutive.

During	2012,	the	Company	paid	an	aggregate	of	$2.4	billion,	including	transaction	costs,	to	repurchase	49.6	million	shares.	The	share	repurchase	program	is discussed	in	further	detail	in	the	"Stockholders'	Equity	Information"	section.

# Balance	Sheet	Information

# Sigma	Fund

Sigma	Fund	consists	of	the	following:

| December	31 | 2012 | 2011 |
| :--- | :--- | :--- |
| Cash | $149 | $264 |
| Securities: |  |  |
| U.S.\tgovernment,\tagency\tand\tgovernment-sponsored\tenterprise\tobligations | 1,984 | 2,944 |
|  | $2,133 | $3,208 |

# Investments

Investments	consist	of	the	following:

|  | Recorded	Value | Recorded	Value | Less |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2012 | Short-term\nInvestments | Investments | Unrealized\nGains | Unrealized\nLosses | Cost\nBasis |
| Available-for-sale\tsecurities: |  |  |  |  |  |
| U.S.\tgovernment,\tagency\tand\tgovernment-sponsored\nenterprise\tobligations | $— | $15 | $— | $— | $15 |
| Corporate\tbonds | 2 | 11 | — | — | 13 |
| Mortgage-backed\tsecurities | — | 2 | — | — | 2 |
| Common\tstock\tand\tequivalents | — | 10 | 3 | — | 7 |
|  | 2 | 38 | 3 | — | 37 |
| Other\tsecurities,\tat\tcost | — | 93 | — | — | 93 |
| Equity\tmethod\tinvestments | — | 13 | — | — | 13 |
|  | $2 | $144 | $3 | $— | $143 |

|  | Recorded	Value | Recorded	Value | Less |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2011 | Short-term\nInvestments | Investments | Unrealized\nGains | Unrealized\nLosses | Cost\nBasis |
| Available-for-sale\tsecurities: |  |  |  |  |  |
| U.S.\tgovernment,\tagency\tand\tgovernment-sponsored\nenterprise\tobligations | $— | $16 | $— | $— | $16 |
| Corporate\tbonds | 2 | 10 | — | — | 12 |
| Mortgage-backed\tsecurities | — | 2 | — | — | 2 |
| Common\tstock\tand\tequivalents | — | 11 | 2 | (1) | 10 |
|  | 2 | 39 | 2 | (1) | 40 |
| Other\tsecurities,\tat\tcost | — | 106 | — | — | 106 |
| Equity\tmethod\tinvestments | — | 21 | — | — | 21 |
|  | $2 | $166 | $2 | $(1) | $167 |

During	the	years	ended	December	31,	2012,	2011	and	2010,	the	Company	recorded	investment	impairment	charges	of	$8	million,	$4	million	and	$21	million, respectively,	representing	other-than-temporary	declines	in	the	value	of	the	Company's	available-for-sale	investment	portfolio.	Investment	impairment	charges	are included	in	Other	within	Other	income	(expense)	in	the	Company's	consolidated	statements	of	operations.

Gains	on	sales	of	investments	and	businesses,	net,	consists	of	the	following:

| Years	Ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Gains\ton\tsales\tof\tinvestments,\tnet | $39 | $17 | $49 |
| Gains\ton\tsales\tof\tbusinesses,\tnet | — | 6 | — |
|  | $39 | $23 | $49 |

During	the	year	ended	December	31,	2010,	the	$49	million	of	net	gains	primarily	relate	to	sales	of	a	number	of	the	Company's	equity	investments,	of	which	$31 million	of	gain	was	attributable	to	a	single	investment.

# Accounts	Receivable,	Net

# Other	Assets

# Stockholders'	Equity	Information

Share	Repurchase	Program:		On	July	28,	2011,	the	Company	announced	that	its	Board	of	Directors	approved	a	share	repurchase	program	that	allowed	the Company	to	purchase	up	to	$2.0	billion	of	its	outstanding	common	stock	through	December	31,	2012.	On	January	30,	2012,	the	Company	announced	that	its	Board	of Directors	authorized	up	to	$1.0	billion	in	additional	funds	for	use	in	the	existing	stock	repurchase	program	through	the	end	of	2012.	On	February	26,	2012,	the	Company purchased	23,739,362	shares	of	its	common	stock	for	approximately	$1.2	billion	from	Carl	C.	Icahn	and	certain	of	his	affiliates.	On	July	25,	2012,	the	Company announced	that	its	Board	of	Directors	authorized	up	to	$2.0	billion	in	additional	funds	for	share	repurchase,	bringing	the	aggregate	amount	of	the	share	repurchase program	to	$5.0	billion,	and	extended	the	entire	share	repurchase	program	indefinitely	with	no	expiration	date.	During	2012,	the	Company	paid	an	aggregate	of	$2.4 billion,	including	transaction	costs,	to	repurchase	49.6	million	shares	at	an	average	price	of	$49.14	per	share.	During	2011,	the	Company	paid	an	aggregate	of	$1.1 billion,	including	transaction	costs	to	repurchase	26.6	million	shares	at	an	average	price	of	$41.77.	As	of	December	31,	2012,	the	Company	has	used	approximately	$3.5 billion	of	the	share	repurchase	authority,	including	transaction	costs,	to	repurchase	shares,	leaving	approximately	$1.5	billion	of	authority	available	for	repurchases.	All repurchased	shares	have	been	retired.	During	the	year	ended	December	31	2010,	the	Company	did	not	repurchase	any	of	its	common	shares.

Payment	of	Dividends:		During	the	year	ended	December	31,	2012,	the	Company	paid	$270	million	in	cash	dividends	to	holders	of	its	common	stock.	During	the year	ended	December	31,	2011,	the	Company	paid	$72	million	in	cash	dividends	to	holders	of	its	common	stock.	During	the	year	ended	December	31,	2010,	the Company	did	not	pay	cash	dividends	to	holders	of	its	common	stock.

During	the	years	ended	December	31,	2011,	and	2010,	the	Company	paid	$8	million	and	$23	million,	respectively,	of	dividends	to	minority	shareholders	in connection	with	subsidiary	common	stock.

Motorola	Mobility	Distribution:		On	January	4,	2011,	the	distribution	of	Motorola	Mobility	from	Motorola	Solutions	was	completed.	On	January	4,	2011,	the stockholders	of	record	as	of	the	close	of	business	on	December	21,	2010	(the	"Record	Date")	received	one	(1)	share	of	Motorola	Mobility	common	stock	for	each	eight (8)	shares	of	the	Company's	common	stock	held	as	of	the	Record	Date.	The	distribution	was	completed	pursuant	to	an	Amended	and	Restated	Master	Separation	and Distribution	Agreement,	effective	as	of	July	31,	2010,	among	the	Company,	Motorola	Mobility	and	Motorola	Mobility,	Inc.

As	a	result	of	the	distribution	on	January	4,	2011,	certain	equity	balances	were	transferred	by	the	Company	to	Motorola

Mobility	including:	(i)	$1	million	in	foreign	currency	translation	adjustments,	(ii)	$9	million	in	fair	value	adjustments	to	available	for	sale	securities,	net	of	tax	of	$5 million,	and	(iii)	$8	million	in	retirement	benefit	adjustments,	net	of	tax	of	$4	million.	The	distribution	of	net	assets	and	these	equity	balances	were	effected	by	way	of	a pro	rata	dividend	to	Motorola	Solutions	stockholders,	which	reduced	Retained	earnings	and	Additional	paid	in	capital	by	$5.3	billion.

Reverse	Stock	Split:		On	January	4,	2011,	immediately	following	the	distribution	of	Motorola	Mobility	common	stock,	the	Company	completed	the	Reverse	Stock Split.	All	consolidated	per	share	information	presented	gives	effect	to	the	distribution	of	Motorola	Mobility	and	the	Reverse	Stock	Split.

# 4.				Debt	and	Credit	Facilities

# Long-Term	Debt

| December	31 | 2012 | 2011 |
| :--- | :--- | :--- |
| 5.375%\tsenior\tnotes\tdue\t2012 | — | 400 |
| 6.0%\tsenior\tnotes\tdue\t2017 | 399 | 399 |
| 3.75%\tsenior\tnotes\tdue\t2022 | 747 | — |
| 6.5%\tdebentures\tdue\t2025 | 118 | 118 |
| 7.5%\tdebentures\tdue\t2025 | 346 | 346 |
| 6.5%\tdebentures\tdue\t2028 | 36 | 36 |
| 6.625%\tsenior\tnotes\tdue\t2037 | 54 | 54 |
| 5.22%\tdebentures\tdue\t2097 | 89 | 89 |
| Other\tlong-term\tdebt | 45 | 50 |
|  | 1,834 | 1,492 |
| Adjustments,\tprimarily\tunamortized\tgains\ton\tinterest\trate\tswap\tterminations | 29 | 43 |
| Less:\tcurrent\tportion | (4) | (405) |
| Long-term\tdebt | $1,859 | $1,130 |

During	the	year	ended	December	31,	2012,	the	Company	issued	an	aggregate	face	principal	amount	of	$750	million	of	3.750%	Senior	Notes	due	May	15,	2022 (the	"2022	Senior	Notes").		The	Company	also	redeemed	$400	million	aggregate	principal	amount	outstanding	of	its	5.375%	Senior	Notes	due	November	2012	for	an aggregate	purchase	price	of	approximately	$408	million.		After	accelerating	the	amortization	of	debt	issuance	costs	and	debt	discounts,	the	Company	recognized	a	loss of	approximately	$6	million	related	to	this	redemption	within	Other	income	(expense)	in	the	consolidated	statements	of	operations.		This	debt	was	repurchased	with	a portion	of	the	proceeds	from	the	issuance	of	the	2022	Senior	Notes.

During	the	year	ended	December	31,	2011,	the	Company	repurchased	$540	million	of	its	outstanding	long-term	debt	for	a	purchase	price	of	$615	million, excluding	approximately	$6	million	of	accrued	interest,	all	of	which	occurred	during	the	three	months	ended	July	2,	2011.	The	$540	million	of	long-term	debt repurchased	included	principal	amounts	of:	(i)	$196	million	of	the	$314	million	then	outstanding	of	the	6.50%	Debentures	due	2025,	(ii)	$174	million	of	the	$210 million	then	outstanding	of	the	6.50%	Debentures	due	2028,	and	(iii)	$170	million	of	the	$225	million	then	outstanding	of	the	6.625%	Senior	Notes	due	2037.	After accelerating	the	amortization	of	debt	issuance	costs	and	debt	discounts,	the	Company	recognized	a	loss	of	approximately	$81	million	related	to	this	debt	tender	in	Other within	Other	income	(expense)	in	the	consolidated	statements	of	operations.

Also,	during	the	year	ended	December	31,	2011,	the	Company	repaid,	at	maturity,	the	entire	$600	million	aggregate	principal	amount	outstanding	of	its	8.0% Notes	due	November	1,	2011.

As	of	December	31,	2012,	the	Company	had	a	$1.5	billion	unsecured	syndicated	revolving	credit	facility	(the	"2011	Motorola	Solutions	Credit	Agreement")	that	is scheduled	to	expire	on	June	30,	2014.	The	2011	Motorola	Solutions	Credit	Agreement	includes	a	provision	pursuant	to	which	the	Company	can	increase	the	aggregate credit	facility	size	up	to	a	maximum	of	$2.0	billion	by	adding	lenders	or	having	existing	lenders	increase	their	commitments.	The	Company	must	comply	with	certain customary	covenants,	including	maintaining	maximum	leverage	and	minimum	interest	coverage	ratios	as	defined	in	the	2011	Motorola	Solutions	Credit	Agreement.	The Company	was	in	compliance	with	its	financial	covenants	as	of	December	31,	2012.	The	Company	has	never	borrowed	under	the	2011	Motorola	Solutions	Credit Agreement.

At	December	31,	2012,	the	commitment	fee	assessed	against	the	daily	average	unused	amount	was	25	basis	points.

# 5.				Risk	Management

# Derivative	Financial	Instruments

The	Company	uses	financial	instruments	to	reduce	its	overall	exposure	to	the	effects	of	currency	fluctuations	on	cash	flows.	The	Company's	policy	prohibits speculation	in	financial	instruments	for	profit	on	exchange	rate	price	fluctuations,	trading	in	currencies	for	which	there	are	no	underlying	exposures,	or	entering	into transactions	for	any	currency	to	intentionally	increase	the	underlying	exposure.	Instruments	that	are	designated	as	part	of	a	hedging	relationship	must	be	effective	at reducing	the	risk	associated	with	the	exposure	being	hedged	and	are	designated	as	part	of	a	hedging	relationship	at	the	inception	of	the	contract.	Accordingly,	changes	in the	market	values	of	hedge	instruments	must	be	highly	correlated	with	changes	in	market	values	of	the	underlying	hedged	items	both	at	the	inception	of	the	hedge	and over	the	life	of	the	hedge	contract.

The	Company's	strategy	related	to	foreign	exchange	exposure	management	is	to	offset	the	gains	or	losses	on	the	financial	instruments	against	losses	or	gains	on the	underlying	operational	cash	flows	or	investments	based	on	the	Company's	assessment	of	risk.	The	Company	enters	into	derivative	contracts	for	some	of	the Company's	non-functional	currency	cash,	receivables,	and	payables,	which	are	primarily	denominated	in	major	currencies	that	can	be	traded	on	open	markets.	The Company	typically	uses	forward	contracts	and	options	to	hedge	these	currency	exposures.	In	addition,	the	Company	enters	into	derivative	contracts	for	some	forecasted transactions,	which	are	designated	as	part	of	a	hedging	relationship	if	it	is	determined	that	the	transaction	qualifies	for	hedge	accounting	under	the	provisions	of	the authoritative	accounting	guidance	for	derivative	instruments	and	hedging	activities.	A	portion	of	the	Company's	exposure	is	from	currencies	that	are	not	traded	in	liquid markets	and	these	are	addressed,	to	the	extent	reasonably	possible,	by	managing	net	asset	positions,	product	pricing	and	component	sourcing.

At	December	31,	2012,	the	Company	had	outstanding	foreign	exchange	contracts	totaling	$523	million,	compared	to	$524	million	outstanding	at	December	31, 2011.	Management	believes	that	these	financial	instruments	should	not	subject	the	Company	to	undue	risk	due	to	foreign	exchange	movements	because	gains	and	losses on	these	contracts	should	generally	offset	losses	and	gains	on	the	underlying	assets,	liabilities	and	transactions,	except	for	the	ineffective	portion	of	the	instruments, which	is	charged	to	Other	within	Other	income	(expense)	in	the	Company's	consolidated	statements	of	operations.

|  | Notional	Amount |  |
| :--- | :--- | :--- |
| Net\tBuy\t(Sell)\tby\tCurrency | December\t31,\t2012 | December\t31,\t2011 |
| British\tPound | $225 | $55 |
| Chinese\tRenminbi | (99) | (283) |
| Norwegian\tKrone | (48) | — |
| Israeli\tShekel | (35) | 8 |
| Japanese\tYen | 32 | 46 |

At	December	31,	2012,	the	maximum	term	of	derivative	instruments	that	hedge	forecasted	transactions	was	seven	months.	The	weighted	average	duration	of	the Company's	derivative	instruments	that	hedge	forecasted	transactions	was	three	months.

At	December	31,	2012,	the	Company	has	$1.9	billion	of	long-term	debt,	including	the	current	portion	of	long-term	debt,	which	is	primarily	priced	at	long-term, fixed	interest	rates.

As	part	of	its	liability	management	program,	one	of	the	Company's	European	subsidiaries	has	outstanding	interest	rate	agreements	("Interest	Agreements")	relating to	Euro-denominated	loans.	The	interest	on	the	Euro-denominated	loans	is	variable.	The	Interest	Agreements	change	the	characteristics	of	interest	rate	payments	from variable	to	maximum	fixed-rate	payments.	The	Interest	Agreements	are	not	accounted	for	as	a	part	of	a	hedging	relationship	and,	accordingly,	the	changes	in	the	fair value	of	the	Interest	Agreements	are	included	in	Other	income	(expense)	in	the	Company's	consolidated	statements	of	operations.	The	weighted	average	fixed	rate payment	on	the	Interest	Agreement	for	the	year	ended	December	31,	2012	was	4.92%.	The	fair	value	of	the	Interest	Agreements	resulted	in	a	liability	position	of	$4 million	at	December	31,	2012,	compared	to	a	liability	position	of	$3	million	at	December	31,	2011.

# Counterparty	Risk

The	use	of	derivative	financial	instruments	exposes	the	Company	to	counterparty	credit	risk	in	the	event	of	nonperformance	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.	At present	time,	all	of	the	counterparties	have	investment	grade	credit	ratings.	The	Company	is	not	exposed	to	material	credit	risk	with	any	single	counterparty.	As	of December	31,	2012,	the	Company	was	exposed	to	an	aggregate	net	credit	risk	of	approximately	$3	million	with	all	counterparties.

The	following	tables	summarize	the	fair	values	and	location	in	the	consolidated	balance	sheets	of	all	derivative	financial	instruments	held	by	the	Company,	at December	31,	2012	and	2011:

| December	31,	2012 | Fair<br>Value | Sheet<br>Location | Fair<br>Value | Sheet<br>Location |
| :--- | :--- | :--- | :--- | :--- |
| Derivatives\tdesignated\tas\thedging\tinstruments: |  |  |  |  |
| Foreign\texchange\tcontracts | $1 | Other\tassets | $— | Other\tliabilities |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments: |  |  |  |  |
| Foreign\texchange\tcontracts | 2 | Other\tassets | 3 | Other\tliabilities |
| Interest\tagreement\tcontracts | — | Other\tassets | 4 | Other\tliabilities |
| Total\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | 2 |  | 7 |  |
| Total\tderivatives | $3 |  | $7 |  |

The	following	table	summarizes	the	effect	of	derivative	instruments	in	the	Company's	consolidated	statements	of	operations,	including	immaterial	amounts	related to	discontinued	operations,	for	the	years	ended	December	31,	2012,	2011,	and	2010:

| Loss	on	Derivative	Instruments | 2012 | 2011 | 2010 | Operations	Location |
| :--- | :--- | :--- | :--- | :--- |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments: |  |  |  |  |
| Interest\trate\tcontracts | $(16) | $(11) | $(16) | Other\tincome\t(expense) |
| Foreign\texchange\tcontracts | (13) | (17) | (33) | Other\tincome\t(expense) |
| Total\tderivatives\tnot\tdesignated\tas\thedging\tinstruments | $(29) | $(28) | $(49) |  |

The	following	table	summarizes	the	gains	and	losses	recognized	in	the	consolidated	financial	statements,	including	immaterial	amounts	related	to	discontinued operations,	for	the	years	ended	December	31,	2012,	2011,	and	2010:

| Foreign	Exchange	Contracts | 2012 | 2011 | 2010 | Location |
| :--- | :--- | :--- | :--- | :--- |
| Derivatives\tin\tcash\tflow\thedging\trelationships: |  |  |  |  |
| Gain\t(loss)\trecognized\tin\tAccumulated\tother\tcomprehensive\tloss |  |  |  | Accumulated\tother |
| (effective\tportion) | $2 | $(1) | $(9) | comprehensive\tloss |
| Gain\t(loss)\treclassified\tfrom\tAccumulated\tother\ncomprehensive\tloss\tinto\tNet\tearnings\t(effective\tportion) | (1) | 2 | (6) | Cost\tof\tsales |
| Gain\trecognized\tin\tNet\tearnings\ton |  |  |  |  |
| derivative\t(ineffective\tportion\tand\tamount\texcluded\tfrom |  |  |  |  |
| effectiveness\ttesting) | — | 1 | 1 | Other\tincome\t(expense) |

# Stockholders'	Equity

Derivative	instruments	activity,	net	of	tax,	included	in	Accumulated	other	comprehensive	income	(loss)	within	the	consolidated	statements	of	stockholders'	equity for	the	years	ended	December	31,	2012,	2011	and	2010	is	as	follows:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Balance\tat\tJanuary\t1 | $(3) | $— | $2 |
| Increase\t(decrease)\tin\tfair\tvalue | 5 | (5) | 3 |
| Reclassifications\tto\tearnings,\tnet\tof\ttax | (1) | 2 | (5) |
| Balance\tat\tDecember\t31 | $1 | $(3) | $— |

Components	of	earnings	from	continuing	operations	before	income	taxes	are	as	follows:

| Years	ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| United\tStates | $851 | $462 | $368 |
| Other\tnations | 364 | 276 | 296 |
|  | $1,215 | $738 | $664 |

Components	of	income	tax	expense	(benefit)	are	as	follows:

| Years	ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| United\tStates | $5 | $2 | $(45) |
| Other\tnations | 89 | 30 | 183 |
| States\t(U.S.) | 1 | 3 | 74 |
| Current\tincome\ttax\texpense | 95 | 35 | 212 |
| United\tStates | 296 | (118) | 373 |
| Other\tnations | (12) | 111 | (54) |
| States\t(U.S.) | (42) | (31) | (128) |
| Deferred\tincome\ttax\texpense\t(benefit) | 242 | (38) | 191 |
| Total\tincome\ttax\texpense\t(benefit) | $337 | $(3) | $403 |

Deferred	tax	charges	that	were	recorded	within	Accumulated	other	comprehensive	loss	in	the	Company's	consolidated	balance	sheets	resulted	from	retirement benefit	adjustments,	currency	translation	adjustments,	net	gains	(losses)	on	derivative	instruments	and	fair	value	adjustments	to	available-for-sale	securities.	The adjustments	were	$(272)	million,	$(259)	million	and	$41	million	for	the	years	ended	December	31,	2012,	2011	and	2010,	respectively.

The	Company	evaluates	its	permanent	reinvestment	assertions	with	respect	to	foreign	earnings	at	each	reporting	period	and,	except	for	certain	earnings	that	the Company	intends	to	reinvest	indefinitely	due	to	the	capital	requirements	of	the	foreign

subsidiaries	or	due	to	local	country	restrictions,	accrues	for	the	U.S.	federal	and	foreign	income	tax	applicable	to	the	earnings.

Undistributed	earnings	that	the	Company	intends	to	reinvest	indefinitely,	and	for	which	no	income	taxes	have	been

provided,	aggregate	to	$1.0	billion,	$1.0	billion	and	$1.3	billion	at	December	31,	2012,	2011	and	2010,	respectively.	The	Company	currently	has	no	plans	to	repatriate the	foreign	earnings	permanently	reinvested	and	therefore,	the	time	and	manner	of	repatriation	is	uncertain.		If	circumstances	change	and	it	becomes	apparent	that	some or	all	of	the	permanently	reinvested	earnings	will	be	remitted	to	the	U.S.	in	the	foreseeable	future,	an	additional	income	tax	charge	may	be	necessary.		On	a	cash	basis, these	repatriations	from	the	Company's	non-U.S.	subsidiaries	could	require	the	payment	of	additional	taxes.	The	portion	of	earnings	not	reinvested	indefinitely	may	be distributed	without	an	additional	income	tax	charge	given	the	U.S.	federal	and	foreign	income	tax	accrued	on	undistributed	earnings	and	the	utilization	of	available foreign	tax	credits.

Differences	between	income	tax	expense	computed	at	the	U.S.	federal	statutory	tax	rate	of	35%	and	income	tax	expense	(benefit)	as	reflected	in	the	consolidated statements	of	operations	are	as	follows:

| Years	ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Income\ttax\texpense\tat\tstatutory\trate | $425 | $258 | $232 |
| Taxes\ton\tnon-U.S.\tearnings | (10) | (23) | (10) |
| State\tincome\ttaxes | (27) | (2) | (35) |
| Valuation\tallowances | (60) | (237) | (18) |
| Tax\ton\tundistributed\tnon-U.S.\tearnings | 30 | 51 | 287 |
| Other\tprovisions | (7) | (17) | (45) |
| Research\tcredits | — | (11) | (6) |
| Tax\tlaw\tchanges | — | — | 18 |
| Section\t199\tdeduction | (14) | (22) | (20) |
|  | $337 | $(3) | $403 |

Gross	deferred	tax	assets	were	$4.7	billion	and	$5.1	billion	at	December	31,	2012	and	2011,	respectively.	Deferred	tax	assets,	net	of	valuation	allowances,	were $4.4	billion	and	$4.7	billion	at	December	31,	2012	and	2011,	respectively.	Gross	deferred	tax	liabilities	were	$1.4	billion	and	$1.7	billion	at	December	31,	2012	and 2011,	respectively.

Significant	components	of	deferred	tax	assets	(liabilities)	are	as	follows:

| December	31 | 2012 | 2011 |
| :--- | :--- | :--- |
| Inventory | $1 | $38 |
| Accrued\tliabilities\tand\tallowances | 134 | 254 |
| Employee\tbenefits | 1,544 | 1,279 |
| Capitalized\titems | 254 | 290 |
| Tax\tbasis\tdifferences\ton\tinvestments | 28 | 44 |
| Depreciation\ttax\tbasis\tdifferences\ton\tfixed\tassets | 19 | 13 |
| Undistributed\tnon-U.S.\tearnings | (150) | (275) |
| Tax\tcarryforwards | 1,155 | 1,438 |
| Business\treorganization | 12 | 13 |
| Warranty\tand\tcustomer\treserves | 45 | 44 |
| Deferred\trevenue\tand\tcosts | 310 | 218 |
| Valuation\tallowances | (308) | (366) |
| Deferred\tcharges | 36 | 39 |
| Other | (63) | (46) |
|  | $3,017 | $2,983 |

At	December	31,	2012	and	2011,	the	Company	had	valuation	allowances	of	$308	million	and	$366	million,	respectively,	against	its	deferred	tax	assets,	including $272	million	and	$336	million,	respectively,	relating	to	deferred	tax	assets	for	non-U.S.	subsidiaries.	The	Company's	valuation	allowances	for	its	non-U.S.	subsidiaries had	a	net	decrease	of	$64	million	during	2012.	The	decrease	in	the	valuation	allowance	relating	to	deferred	tax	assets	of	non-U.S.	subsidiaries	includes	a	$60	million reduction	for	loss	carryforwards	the	Company	now	expects	to	utilize,	decreases	related	to	current	year	activity	and	exchange	rate	variances,	offset	by	an	increase	related to	foreign	subsidiaries	acquired	during	2012.

In	the	first	quarter	of	2011,	the	Company	reassessed	its	valuation	allowance	requirements	taking	into	consideration	the	distribution	of	Motorola	Mobility.	The Company	evaluated	all	available	evidence	in	its	analysis,	including	the	historical	and	projected	pre-tax	profits	generated	by	the	Company's	U.S.	operations.	The Company	also	considered	tax	planning	strategies	that	are	prudent	and	can	be	reasonably	implemented.	During	2011,	the	Company	recorded	$274	million	of	tax	benefits related	to	the	reversal	of	a	significant	portion	of	the	valuation	allowance	established	on	U.S.	deferred	tax	assets.	The	U.S.	valuation	allowance	as	of	December	31,	2012 relates	to	state	tax	carryforwards	and	deferred	tax	assets	of	a	U.S.	subsidiary	the	Company	expects	to	expire	unutilized.	The	Company	believes	that	the	remaining deferred	tax	assets	are	more-likely-than-not	to	be	realizable	based	on	estimates	of	future	taxable	income	and	the	implementation	of	tax	planning	strategies.

# Tax	carryforwards	are	as	follows:

During	2012,	the	Company	reduced	its	prior	year	unrecognized	tax	benefits	by	$24	million	and	increased	its	prior	year	unrecognized	tax	benefits	by	$11	million for	facts	that	indicate	the	extent	to	which	certain	tax	positions	are	more-likely-than-not	of	being	sustained.	The	net	reduction	resulted	in	the	recording	of	an	income	tax benefit	of	$13	million.	Additionally,	the	Company	reduced	its	unrecognized	tax	benefits	by	$24	million	for	settlements	and	agreements	with	tax	authorities,	the	majority of	which	reduced	tax	carryforwards	and	prepaid	tax	assets.

The	IRS	is	currently	examining	the	Company's	2010	and	2011	tax	years.	The	Company	also	has	several	state	and	non-U.S.	audits	pending.	A	summary	of	open	tax years	by	major	jurisdiction	is	presented	below:

Although	the	final	resolution	of	the	Company's	global	tax	disputes	is	uncertain,	based	on	current	information,	in	the	opinion	of	the	Company's	management,	the ultimate	disposition	of	these	matters	will	not	have	a	material	adverse	effect	on	the	Company's	consolidated	financial	position,	liquidity	or	results	of	operations. However,	an	unfavorable	resolution	of	the	Company's	global	tax	disputes	could	have	a	material	adverse	effect	on	the	Company's	consolidated	financial	position, liquidity	or	results	of	operations	in	the	periods	in	which	the	matters	are	ultimately	resolved.

Based	on	the	potential	outcome	of	the	Company's	global	tax	examinations,	the	expiration	of	the	statute	of	limitations	for	specific	jurisdictions,	or	the	continued ability	to	satisfy	tax	incentive	obligations,	it	is	reasonably	possible	that	the	unrecognized	tax	benefits	will	change	within	the	next	twelve	months.	The	associated	net	tax impact	on	the	effective	tax	rate,	exclusive	of	valuation	allowance	changes,	is	estimated	to	be	in	the	range	of	a	$50	million	tax	charge	to	a	$50	million	tax	benefit,	with cash	payments	not	to	exceed	$25	million.

At	December	31,	2012,	the	Company	had	$24	million	and	$31	million	accrued	for	interest	and	penalties,	respectively,	on	unrecognized	tax	benefits.	At December	31,	2011,	the	Company	had	$17	million	and	$32	million	accrued	for	interest	and	penalties,	respectively,	on	unrecognized	tax	benefits.

# Pension	Benefit	Plans

The	Company's	noncontributory	pension	plan	(the	"Regular	Pension	Plan")	covers	U.S.	employees	who	became	eligible	after	one	year	of	service.	The	benefit formula	is	dependent	upon	employee	earnings	and	years	of	service.	Effective	January	1,	2005,	newly-hired	employees	were	not	eligible	to	participate	in	the	Regular Pension	Plan.	The	Company	also	provides	defined	benefit	plans	which	cover	non-U.S.	employees	in	certain	jurisdictions,	principally	the	United	Kingdom,	Germany, and	Japan	(the	"Non-U.S.	plans").	Other	pension	plans	are	not	material	to	the	Company	either	individually	or	in	the	aggregate.

The	Company	has	a	noncontributory	supplemental	retirement	benefit	plan	(the	"Officers'	Plan")	for	its	officers	elected	prior	to	December	31,	1999.	The	Officers' Plan	contains	provisions	for	vesting	and	funding	the	participants'	expected	retirement	benefits	when	the	participants	meet	the	minimum	age	and	years	of	service requirements.	Elected	officers	who	were	not	yet	vested	in	the	Officers'	Plan	as	of	December	31,	1999	had	the	option	to	remain	in	the	Officers'	Plan	or	elect	to	have	their benefit	bought	out	in	restricted	stock	units.	Effective	December	31,	1999,	newly	elected	officers	were	not	eligible	to	participate	in	the	Officers'	Plan.	Effective	June	30, 2005,	salaries	were	frozen	for	this	plan.

The	Company	has	an	additional	noncontributory	supplemental	retirement	benefit	plan,	the	Motorola	Supplemental	Pension	Plan	("MSPP"),	which	provides supplemental	benefits	to	individuals	by	replacing	the	Regular	Pension	Plan	benefits	that	are	lost	by	such	individuals	under	the	retirement	formula	due	to	application	of the	limitations	imposed	by	the	Internal	Revenue	Code.	However,	elected	officers	who	are	covered	under	the	Officers'	Plan	or	who	participated	in	the	restricted	stock buy-out	are	not	eligible	to	participate	in	MSPP.	Effective	January	1,	2007,	eligible	compensation	was	capped	at	the	IRS	limit	plus	$175,000	(the	"Cap")	or,	for	those already	in	excess	of	the	Cap	as	of	January	1,	2007,	the	eligible	compensation	used	to	compute	such	employee's	MSPP	benefit	for	all	future	years	will	be	the	greater	of: (i)	such	employee's	eligible	compensation	as	of	January	1,	2007	(frozen	at	that	amount),	or	(ii)	the	relevant	Cap	for	the	given	year.	Additionally,	effective	January	1, 2009,	the	MSPP	was	closed	to	new	participants	unless	such	participation	was	required	under	a	prior	contractual	entitlement.

In	February	2007,	the	Company	amended	the	Regular	Pension	Plan	and	the	MSPP,	modifying	the	definition	of	average	earnings.	For	the	years	ended	prior	to December	31,	2007,	benefits	were	calculated	using	the	rolling	average	of	the	highest	annual	earnings	in	any	five	years	within	the	previous	ten	calendar	year	period. Beginning	in	January	2008,	the	benefit	calculation	was	based	on	the	set	of	the	five	highest	years	of	earnings	within	the	ten	calendar	years	prior	to	December	31,	2007,

averaged	with	earnings	from	each	year	after	2007.	In	addition,	effective	January	2008,	the	Company	amended	the	Regular	Pension	Plan,	modifying	the	vesting	period from	five	years	to	three	years.

In	December	2008,	the	Company	amended	the	Regular	Pension	Plan,	the	Officers'	Plan	and	the	MSPP.	Effective	March	1,	2009:	(i)	no	participant	shall	accrue any	benefit	or	additional	benefit	on	and	after	March	1,	2009,	and	(ii)	no	compensation	increases	earned	by	a	participant	on	and	after	March	1,	2009	shall	be	used	to compute	any	accrued	benefit.

Beginning	in	2012,	for	disclosure	purposes,	the	Company	has	changed	its	presentation	to	include	the	Regular	Pension	Plan,	the	Officers'	Plan	and	the	MSPP	as "U.S.	plans."

The	net	periodic	pension	cost	for	U.S.	and	Non-U.S.	plans	was	as	follows:

# U.S.	plans

The	status	of	the	Company's	plans	are	as	follows:

|  | 2012 |  | 2011 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | U.S | Non\nU.S. | U.S. | Non\nU.S. |
| Change\tin\tbenefit\tobligation: |  |  |  |  |
| Benefit\tobligation\tat\tJanuary\t1 | $6,986 | $1,588 | $6,173 | $1,423 |
| Service\tcost | — | 10 | — | 17 |
| Interest\tcost | 349 | 75 | 344 | 72 |
| Plan\tamendments | — | — | — | 20 |
| Settlement/curtailment | — | — | — | (19) |
| Actuarial\tloss | 1,277 | 103 | 714 | 123 |
| Foreign\texchange\tvaluation\tadjustment | — | 48 | — | (10) |
| Employee\tcontributions | — | 2 | — | — |
| Tax\tpayments | — | — | (5) | — |
| Benefit\tpayments | (324) | (39) | (240) | (38) |
| Benefit\tobligation\tat\tDecember\t31 | 8,288 | 1,787 | 6,986 | 1,588 |
| Change\tin\tplan\tassets: |  |  |  |  |
| Fair\tvalue\tat\tJanuary\t1 | 4,747 | 1,219 | 4,320 | 1,214 |
| Return\ton\tplan\tassets | 660 | 111 | 178 | 23 |
| Company\tcontributions | 340 | 31 | 489 | 38 |
| Settlements/curtailments | — | — | — | (19) |
| Employee\tcontributions | — | 2 | — | — |
| Foreign\texchange\tvaluation\tadjustment | — | 38 | — | 1 |
| Benefit\tpayments\tfrom\tplan\tassets | (321) | (39) | (240) | (38) |
| Fair\tvalue\tat\tDecember\t31 | 5,426 | 1,362 | 4,747 | 1,219 |
| Funded\tstatus\tof\tthe\tplan | (2,862) | (425) | (2,238) | (369) |
| Unrecognized\tnet\tloss | 4,313 | 520 | 3,536 | 462 |
| Unrecognized\tprior\tservice\tcost | — | (51) | — | (55) |
| Prepaid\tpension\tcost | $1,451 | $44 | $1,298 | $38 |
| Components\tof\tprepaid\t(accrued)\tpension\tcost: |  |  |  |  |
| Non-current\tbenefit\tliability | $(2,862) | $(425) | $(2,238) | $(369) |
| Deferred\tincome\ttaxes | 1,592 | 41 | 1,295 | 26 |
| Accumulated\tother\tcomprehensive\tincome | 2,721 | 428 | 2,241 | 381 |
| Prepaid\tpension\tcost | $1,451 | $44 | $1,298 | $38 |

It	is	estimated	that	the	net	periodic	cost	for	2013	will	include	amortization	of	the	unrecognized	net	loss	and	prior	service	costs	for	the	U.S.	and	Non-U.S.	plans, currently	included	in	Accumulated	other	comprehensive	loss,	of	$131	million,	and	$8	million,	respectively.	For	2013,	it	was	determined	that	the	majority	of	the Company's	plan	participants	in	its	Regular	and	United	Kingdom	pension	plans	are	no	longer	actively	employed	by	the	Company	due	to	significant	employee	exits	as	a result	of	the	Company's	recent	divestitures.		Under	relevant	accounting	rules,	when	almost	all	of	the	plan	participants	are	considered	inactive,	the	amortization	period	for unrecognized	losses	changes	from	the	average	remaining	service	period	to	the	average	remaining	lifetime	of	the	participant.

The	Company	has	utilized	a	five-year,	market-related	asset	value	method	of	recognizing	asset-related	gains	and	losses.		Unrecognized	gains	and	losses	have	been amortized	over	periods	ranging	from	three	to	thirteen	years.	For	2013,	depending	on	the	plan,	the	Company	will	amortize	gains	and	losses	over	periods	ranging	from five	to	28	years.	Prior	service	costs	are	being	amortized	over	periods	ranging	from	ten	to	twelve	years.		Benefits	under	all	pension	plans	are	valued	based	on	the projected	unit	credit	cost	method.

In	April	2011,	the	Company	recognized	a	curtailment	gain	in	its	United	Kingdom	defined	benefit	plan,	and	a	settlement	loss	in	its	Japanese	defined	benefit	plan, due	to	the	sale	of	certain	assets	of	the	Networks	business.	As	a	result,	the	Company	recorded	a	net	gain	to	its	consolidated	statement	of	operations	of	$9	million.

Certain	actuarial	assumptions	such	as	the	discount	rate	and	the	long-term	rate	of	return	on	plan	assets	have	a	significant	effect	on	the	amounts	reported	for	net periodic	cost	and	benefit	obligation.	The	assumed	discount	rates	reflect	the	prevailing	market	rates	of	a	universe	of	high-quality,	non-callable,	corporate	bonds	currently available	that,	if	the	obligation	were	settled	at	the	measurement	date,	would	provide	the	necessary	future	cash	flows	to	pay	the	benefit	obligation	when	due.	The	long- term	rates	of	return	on	plan	assets	represents	an	estimate	of	long-term	returns	on	an	investment	portfolio	consisting	of	a	mixture	of	equities,	fixed	income,	cash	and other	investments	similar	to	the	actual	investment	mix.	In	determining	the	long-term	return	on	plan	assets,	the	Company	considers	long-term	rates	of	return	on	the	asset classes	(both	historical	and	forecasted)	in	which	the	Company	expects	the	plan	funds	to	be	invested.

Weighted	average	actuarial	assumptions	used	to	determine	costs	for	the	plans	were	as	follows:

The	Company	has	adopted	a	pension	investment	policy	designed	to	meet	or	exceed	the	expected	rate	of	return	on	plan	assets	assumption.	To	achieve	this,	the pension	plans	retain	professional	investment	managers	that	invest	plan	assets	in	equity,	fixed	income	securities,	and	cash.	In	addition,	some	plans	invest	in	insurance contracts.	The	Company's	measurement	date	of	its	plan	assets	and	obligations	is	December	31.	The	Company	has	the	following	target	mixes	for	these	asset	classes	for all	plans,	which	are	readjusted	periodically,	when	an	asset	class	weighting	deviates	from	the	target	mix,	with	the	goal	of	achieving	the	required	return	at	a	reasonable risk	level:

| Asset	Category | 2012 |  | 2011 |  |
| :--- | :--- | :--- | :--- | :--- |
| Equity\tsecurities |  | 64% |  | 63% |
| Fixed\tincome\tsecurities |  | 35% |  | 35% |
| Cash\tand\tother\tinvestments |  | 1% |  | 2% |
| The\tweighted-average\tpension\tplan\tasset\tallocation\tby\tasset\tcategories: |  |  |  |  |
|  |  | Actual\tMix |  |  |
| December\t31 | 2012 |  | 2011 |  |
| Equity\tsecurities |  | 64% |  | 60% |
| Fixed\tincome\tsecurities |  | 34% |  | 35% |
| Cash\tand\tother\tinvestments |  | 2% |  | 5% |

Within	the	equity	securities	asset	class,	the	investment	policy	provides	for	investments	in	a	broad	range	of	publicly-traded	securities	including	both	domestic	and foreign	stocks.	Within	the	fixed	income	securities	asset	class,	the	investment	policy	provides	for	investments	in	a	broad	range	of	publicly-traded	debt	securities	including U.S.	Treasury	issues,	corporate	debt	securities,	mortgage	and	asset-backed	securities,	as	well	as	foreign	debt	securities.	In	the	cash	and	other	investments	asset	class, investments	may	be	in	cash,	cash	equivalents	or	insurance	contracts.

The	Company	contributed	$340	million	to	its	U.S.	pension	plans	during	2012,	compared	to	$489	million	contributed	in	2011.	In	January	2011,	the	Pension	Benefit Guaranty	Corporation	("PBGC")	announced	an	agreement	with	the	Company	under	which	it	would	contribute	$100	million	above	and	beyond	its	legal	requirement	to its	U.S.	pension	plans	over	the	next	five	years.	The	Company	and	the	PBGC	entered	into	the	agreement	as	the	Company	was	in	the	process	of	separating	Motorola Mobility	and	pursuing	the	sale	of	certain	assets	of	the	Networks	business.	The	Company	made	a	$250	million	pension	contribution	to	its	U.S.	pension	plans	over	the amounts	required	in	the	fourth	quarter	2011,	of	which	$100	million	fulfilled	the	PBGC	financial	obligation.	As	a	result,	the	Company	has	no	further	financial	obligations under	this	agreement	with	the	PBGC.

The	Company	currently	expects	to	make	cash	contributions	of	approximately	$300	million	to	its	U.S.	pension	plans	and	approximately	$30	million	to	its	non-U.S. pension	plans	in	2013.

The	following	benefit	payments	are	expected	to	be	paid:

| Year | U.S. | Non<br>U.S. |
| :--- | :--- | :--- |
| 2013 | $276 | $39 |
| 2014 | 284 | 40 |
| 2015 | 297 | 41 |
| 2016 | 313 | 42 |
| 2017 | 333 | 43 |
| 2018-2022 | 2,008 | 233 |

# Postretirement	Health	Care	Benefits	Plan

Certain	health	care	benefits	are	available	to	eligible	domestic	employees	meeting	certain	age	and	service	requirements	upon	termination	of	employment	(the "Postretirement	Health	Care	Benefits	Plan").	For	eligible	employees	hired	prior	to	January	1,	2002,	the	Company	offsets	a	portion	of	the	postretirement	medical	costs	to the	retired	participant.	As	of	January	1,	2005,	the	Postretirement	Health	Care	Benefits	Plan	was	closed	to	new	participants.	The	benefit	obligation	and	plan	assets	for	the Postretirement	Health	Care	Benefits	Plan	have	been	measured	as	of	December	31,	2012.

The	assumptions	used	were	as	follows:

It	is	estimated	that	the	2013	net	periodic	expense	for	the	Postretirement	Health	Care	Benefits	Plan	will	include	amortization	of	a	net	credit	of	$28	million, comprised	of	the	unrecognized	prior	service	gain	and	unrecognized	actuarial	loss,	currently	included	in	Accumulated	other	comprehensive	loss.

The	funded	status	of	the	plan	is	as	follows:

During	the	first	quarter	of	2010,	the	Patient	Protection	and	Affordable	Care	Act	and	the	Health	Care	and	Education	Reconciliation	Act	of	2010	were	signed	into law,	which	eliminated	the	favorable	income	tax	treatment	of	Medicare	Part	D	Subsidy	receipts	effective	for	tax	years	starting	in	2013.	As	a	result	of	the	tax	law	change, the	Company	recorded	an	$18	million	non-cash	tax	charge	in	2010	to	reduce	its	deferred	tax	asset	associated	with	Medicare	Part	D	subsidies	estimated	to	be	received after	2012.

The	Company	has	adopted	an	investment	policy	for	plan	assets	designed	to	meet	or	exceed	the	expected	rate	of	return	on	plan	assets	assumption.	To	achieve	this, the	plan	retains	professional	investment	managers	that	invest	plan	assets	in	equity	and	fixed	income	securities	and	cash.	The	Company	uses	long-term	historical	actual return	experience	with	consideration	of	the	expected	investment	mix	of	the	plans'	assets,	as	well	as	future	estimates	of	long-term	investment	returns,	to	develop	its expected	rate	of	return	assumption	used	in	calculating	the	net	periodic	cost	and	the	net	retirement	healthcare	expense.	The	Company	has	the	following	target	mixes	for these	asset	classes,	which	are	readjusted	periodically,	when	an	asset	class	weighting	deviates	from	the	target	mix,	with	the	goal	of	achieving	the	required	return	at	a reasonable	risk	level:

|  | Target	Mix |  |
| :--- | :--- | :--- |
| Asset\tCategory | 2012 | 2011 |
| Equity\tsecurities | 65% | 65% |
| Fixed\tincome\tsecurities | 34% | 34% |
| Cash\tand\tother\tinvestments | 1% | 1% |

# The	weighted-average	asset	allocation	for	plan	assets	by	asset	categories:

|  | Actual	Mix |  |
| :--- | :--- | :--- |
| December\t31 | 2012 | 2011 |
| Equity\tsecurities | 64% | 59% |
| Fixed\tincome\tsecurities | 32% | 36% |
| Cash\tand\tother\tinvestments | 4% | 5% |

Within	the	equity	securities	asset	class,	the	investment	policy	provides	for	investments	in	a	broad	range	of	publicly-traded	securities	including	both	domestic	and foreign	stocks.	Within	the	fixed	income	securities	asset	class,	the	investment	policy	provides	for	investments	in	a	broad	range	of	publicly-traded	debt	securities	including U.S.	Treasury	issues,	corporate	debt	securities,	mortgages	and	asset-backed	issues,	as	well	as	foreign	debt	securities.	In	the	cash	asset	class,	investments	may	be	in	cash and	cash	equivalents.

The	Company	expects	to	make	no	cash	contributions	to	the	Postretirement	Health	Care	Benefits	Plan	in	2013.	The	following	benefit	payments	are	expected	to	be paid:

The	health	care	cost	trend	rate	used	to	determine	the	December	31,	2012	accumulated	postretirement	benefit	obligation	is	8.50%	for	2013,	then	grading	down	to	a rate	of	5%	in	2020.		The	health	care	cost	trend	rate	used	to	determine	the	December	31,	2011	accumulated	postretirement	benefit	obligation	was	7.25%	for	2012, remaining	flat	at	7.25%	through	2015,	then	grading	down	to	a	rate	of	5%	in	2019.

Changing	the	health	care	trend	rate	by	one	percentage	point	would	change	the	accumulated	postretirement	benefit	obligation	and	the	net	Postretirement	Health Care	Benefits	Plan	expenses	as	follows:

The	Company	maintains	a	lifetime	cap	on	postretirement	health	care	costs,	which	reduces	the	liability	duration	of	the	plan.	A	result	of	this	lower	duration	is	a decreased	sensitivity	to	a	change	in	the	discount	rate	trend	assumption	with	respect	to	the	liability	and	related	expense.

The	Company	has	no	significant	Postretirement	Health	Care	Benefit	Plans	outside	the	United	States.

# Other	Benefit	Plans

The	Company	maintains	a	number	of	endorsement	split-dollar	life	insurance	policies	that	were	taken	out	on	now-retired	officers	under	a	plan	that	was	frozen	prior to	December	31,	2004.	The	Company	had	purchased	the	life	insurance	policies	to	insure	the	lives	of	employees	and	then	entered	into	a	separate	agreement	with	the employees	that	split	the	policy	benefits	between	the	Company	and	the	employee.	Motorola	Solutions	owns	the	policies,	controls	all	rights	of	ownership,	and	may terminate	the	insurance	policies.	To	effect	the	split-dollar	arrangement,	Motorola	Solutions	endorsed	a	portion	of	the	death	benefits	to	the	employee	and	upon	the	death of	the	employee,	the	employee's	beneficiary	typically	receives	the	designated	portion	of	the	death	benefits	directly	from	the	insurance	company	and	the	Company receives	the	remainder	of	the	death	benefits.	It	is	currently	expected	that	minimal	cash	payments	will	be	required	to	fund	these	policies.

The	net	periodic	pension	cost	for	these	split-dollar	life	insurance	arrangements	was	$5	million	for	the	years	ended	December	31,	2012,	2011,	and	2010.	The Company	has	recorded	a	liability	representing	the	actuarial	present	value	of	the	future	death	benefits	as	of	the	employees'	expected	retirement	date	of	$58	million	and $56	million	as	of	December	31,	2012	and	December	31,	2011,	respectively.

# Defined	Contribution	Plan

The	Company	and	certain	subsidiaries	have	various	defined	contribution	plans,	in	which	all	eligible	employees	may	participate.	In	the	U.S.,	the	401(k)	plan	is	a contributory	plan.	Matching	contributions	are	based	upon	the	amount	of	the	employees'	contributions.	After	temporarily	suspending	all	matching	contributions, effective	July	1,	2010,	the	Company	reinstated	matching	contributions	and	provides	a	dollar	for	dollar	(100%)	match	on	the	first	4%	of	employee	contributions.	The maximum	matching	contribution	for	2010	was	pro-rated	to	account	for	the	number	of	months	remaining	after	the	reinstatement.	The	Company's	expenses	for	material defined	contribution	plans	for	the	years	ended	December	31,	2012,	2011	and	2010	were	$42	million,	$48	million	and	$23	million,	respectively.

Beginning	January	1,	2012,	the	Company	may	make	an	additional	discretionary	401(k)	plan	matching	contribution	to	eligible	employees.	For	the	year	ended December	31,	2012,	the	Company	made	no	discretionary	matching	contributions.

# 8.				Share-Based	Compensation	Plans	and	Other	Incentive	Plans

# Stock	Options,	Stock	Appreciation	Rights	and	Employee	Stock	Purchase	Plan

The	Company	grants	options	to	acquire	shares	of	common	stock	to	certain	employees	and	to	existing	option	holders	of	acquired	companies	in	connection	with	the merging	of	option	plans	following	an	acquisition.	Each	option	granted	and	stock	appreciation	right	has	an	exercise	price	of	no	less	than	100%	of	the	fair	market	value	of the	common	stock	on	the	date	of	the	grant.	The	awards	have	a	contractual	life	of	five	to	ten	years	and	vest	over	two	to	four	years.	Stock	options	and	stock	appreciation rights	assumed	or	replaced	with	comparable	stock	options	or	stock	appreciation	rights	in	conjunction	with	a	change	in	control	of	the	Company	only	become	exercisable if	the	holder	is	also	involuntarily	terminated	(for	a	reason	other	than	cause)	or	quits	for	good	reason	within	24	months	of	a	change	in	control.

The	employee	stock	purchase	plan	allows	eligible	participants	to	purchase	shares	of	the	Company's	common	stock	through	payroll	deductions	of	up	to	20%	of eligible	compensation	on	an	after-tax	basis.	Plan	participants	cannot	purchase	more	than	$25,000	of	stock	in	any	calendar	year.	The	price	an	employee	pays	per	share	is 85%	of	the	lower	of	the	fair	market	value	of	the	Company's	stock	on	the	close	of	the	first	trading	day	or	last	trading	day	of	the	purchase	period.	The	plan	has	two purchase	periods,	the	first	one	from	October	1	through	March	31	and	the	second	one	from	April	1	through	September	30.	For	the	years	ended	December	31,	2012,	2011 and	2010,	employees	purchased	1.4	million,	2.2	million	and	2.7	million	shares,	respectively,	at	purchase	prices	of	$34.52	and	$42.96,	$30.56	and	$35.61,	and	$41.79	and $42.00,	respectively.

The	Company	calculates	the	value	of	each	employee	stock	option,	estimated	on	the	date	of	grant,	using	the	Black-Scholes	option	pricing	model.	The	weighted- average	estimated	fair	value	of	employee	stock	options	granted	during	2012,	2011	and	2010	was	$9.60,	$13.25	and	$21.43,	respectively,	using	the	following	weighted- average	assumptions:

|  | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Expected\tvolatility | 24.0% | 28.8% | 41.7% |
| Risk-free\tinterest\trate | 0.8% | 2.1% | 2.1% |
| Dividend\tyield | 2.2% | 0.0% | 0.0% |
| Expected\tlife\t(years) | 6.1 | 6.0 | 6.1 |

The	Company	uses	the	implied	volatility	for	traded	options	on	the	Company's	stock	as	the	expected	volatility	assumption	required	in	the	Black-Scholes	model. The	selection	of	the	implied	volatility	approach	was	based	upon	the	availability	of	actively	traded	options	on	the	Company's	stock	and	the	Company's	assessment	that implied	volatility	is	more	representative	of	future	stock	price	trends	than	historical	volatility.

The	risk-free	interest	rate	assumption	is	based	upon	the	average	daily	closing	rates	during	the	year	for	U.S.	Treasury	notes	that	have	a	life	which	approximates	the expected	life	of	the	option.	The	dividend	yield	assumption	is	based	on	the	Company's	future	expectation	of	dividend	payouts.	The	expected	life	of	employee	stock options	represents	the	average	of	the	contractual	term	of	the	options	and	the	weighted-average	vesting	period	for	all	option	tranches.

The	Company	has	applied	forfeiture	rates,	estimated	based	on	historical	data,	of	13%-50%	to	the	option	fair	values	calculated	by	the	Black-Scholes	option	pricing model.	These	estimated	forfeiture	rates	are	applied	to	grants	based	on	their	remaining	vesting	term	and	may	be	revised	in	subsequent	periods	if	actual	forfeitures	differ from	these	estimates.

Stock	option	activity	was	as	follows	(in	thousands,	except	exercise	price	and	employee	data):

|  |  | 2012 |  | 2011 |  | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Years\tended\tDecember\t31 | Shares\nSubject\tto\nOptions | Wtd.\tAvg.\nExercise\nPrice | Shares\nSubject\tto\nOptions | Wtd.\tAvg.\nExercise\nPrice | Shares\nSubject\tto\nOptions | Wtd.\tAvg.\nExercise\nPrice |
| Options\toutstanding\tat\tJanuary\t1 | 15,729 | $63 | 19,614 | $81 | 23,061 | $84 |
| Options\tgranted | 1,286 | 51 | 3,155 | 39 | 1,630 | 50 |
| Options\texercised | (2,831) | 29 | (4,475) | 27 | (1,559) | 42 |
| Adjustments\tto\toptions\toutstanding\tto\nreflect\tMotorola\tMobility\tdistribution | — | — | 7,756 | 39 | — | — |
| Options\tterminated,\tcancelled\tor\texpired | (1,052) | 60 | (10,321) | 59 | (3,518) | 104 |
| Options\toutstanding\tat\tDecember\t31 | 13,132 | 70 | 15,729 | 63 | 19,614 | 81 |
| Options\texercisable\tat\tDecember\t31 | 9,242 | 81 | 11,184 | 74 | 12,429 | 99 |
| Approx.\tnumber\tof\temployees\tgranted\noptions | 115 |  | 270 |  | 529 |  |

At	December	31,	2012,	the	Company	had	$30	million	of	total	unrecognized	compensation	expense,	net	of	estimated	forfeitures,	related	to	stock	option	plans	and the	employee	stock	purchase	plan	that	will	be	recognized	over	the	weighted	average	period	of	approximately	two	years.	Cash	received	from	stock	option	exercises	and the	employee	stock	purchase	plan	was	$133	million,	$192	million	and	$179	million	for	the	years	ended	December	31,	2012,	2011	and	2010,	respectively.	The	total intrinsic	value	of	options	exercised	during	the	years	ended	December	31,	2012,	2011	and	2010	was	$59	million,	$73	million	and	$17	million,	respectively.	The	aggregate intrinsic	value	for	options	outstanding	and	exercisable	as	of	December	31,	2012	was	$170	million	and	$118	million,	respectively,	based	on	a	December	31,	2012	stock price	of	$55.68	per	share.

The	following	table	summarizes	information	about	stock	options	outstanding	and	exercisable	at	December	31,	2012	(in	thousands,	except	exercise	price	and

# years):

|  |  | Options	Outstanding |  | Options<br>Exercisable | Options<br>Exercisable |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Exercise\tprice\trange | No.\tof\noptions | Wtd.\tavg.\nExercise\nPrice | Wtd.\tavg.\ncontractual\nlife\t(in\tyrs.) | No.\tof\noptions | Wtd.\tavg.\nExercise\nPrice |
| Under\t$30 | 3,099 | $26 | 7 | 2,617 | $26 |
| $30-$40 | 3,728 | 38 | 7 | 2,064 | 37 |
| $41-$50 | 620 | 45 | 8 | 246 | 44 |
| $51-$60 | 1,377 | 52 | 9 | 7 | 54 |
| $61-$70 | 836 | 67 | 2 | 836 | 67 |
| $71-$80 | 255 | 74 | 4 | 255 | 74 |
| $81\tand\tover | 3,217 | 161 | 2 | 3,217 | 161 |
|  | 13,132 |  |  | 9,242 |  |

As	of	December	31,	2012,	the	weighted	average	contractual	life	for	options	outstanding	and	exercisable	was	five	and	four	years,	respectively.

# Restricted	Stock	and	Restricted	Stock	Units

Restricted	stock	("RS")	and	restricted	stock	unit	("RSU")	grants	consist	of	shares	or	the	rights	to	shares	of	the	Company's	common	stock	which	are	awarded	to employees	and	non-employee	directors.	The	grants	are	restricted	such	that	they	are	subject	to	substantial	risk	of	forfeiture	and	to	restrictions	on	their	sale	or	other transfer	by	the	employee.	Shares	of	RS	and	RSUs	assumed	or	replaced	with	comparable	shares	of	RS	or	RSUs	in	conjunction	with	a	change	in	control	will	only	have	the restrictions	lapse	if	the	holder	is	also	involuntarily	terminated	(for	a	reason	other	than	cause)	or	quits	for	good	reason	within	24	months	of	a	change	in	control.

Restricted	stock	and	restricted	stock	unit	activity	was	as	follows	(in	thousands,	except	fair	value	and	employee	data):

|  |  | 2012 |  | 2011 |  | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Years\tended\tDecember\t31 | RS\tand\tRSU | Wtd.\tAvg.\nGrant\nDate\tFair\nValue | RS\tand\tRSU | Wtd\tAvg.\nGrant\nDate\tFair\nValue | RS\tand\tRSU | Wtd\tAvg.\nGrant\nDate\tFair\nValue |
| RS\tand\tRSU\toutstanding\tat\tJanuary\t1 | 8,990 | $40 | 9,559 | $51 | 8,061 | $55 |
| Granted | 1,657 | 49 | 5,150 | 44 | 4,772 | 49 |
| Adjustments\tto\tRSUs\toutstanding\tto\nreflect\tMotorola\tMobility\tdistribution | — | — | 3,638 | 20 | — | — |
| Vested | (3,845) | 41 | (3,230) | 31 | (2,407) | 58 |
| Terminated\tor\tcanceled | (503) | 33 | (6,127) | 44 | (867) | 56 |
| RS\tand\tRSU\toutstanding\tat\nDecember\t31 | 6,299 | 41 | 8,990 | 40 | 9,559 | 51 |
| Approx.\tnumber\tof\temployees\tgranted\nRSUs | 2,355 |  | 12,351 |  | 29,973 |  |

At	December	31,	2012,	the	Company	had	unrecognized	compensation	expense	related	to	RS	and	RSUs	of	$144	million,	net	of	estimated	forfeitures,	expected	to	be recognized	over	the	weighted	average	period	of	approximately	two	years.	The	total	fair	value	of	RS	and	RSU	shares	vested	during	the	years	ended	December	31,	2012, 2011	and	2010	was	$144	million,	$146	million	and	$114	million,	respectively.	The	aggregate	fair	value	of	outstanding	RSUs	as	of	December	31,	2012	was	$351	million. Pursuant	to	the	completion	of	the	distribution	of	Motorola	Mobility	on	January	4,	2011,	approximately	3.8	million	unvested	RSUs	held	by	the	employees	of	Motorola Mobility	were	cancelled.	Upon	the	completed	divestiture	of	certain	assets	of	the	Networks	business	on	April	29,	2011,	approximately	1.4	million	unvested	RSUs	were cancelled.

# Total	Share-Based	Compensation	Expense

Compensation	expense	for	the	Company's	employee	stock	options,	stock	appreciation	rights,	employee	stock	purchase	plans,	RS	and	RSUs	was	as	follows:

| Years	ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Share-based\tcompensation\texpense\tincluded\tin: |  |  |  |
| Costs\tof\tsales | $25 | $20 | $19 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 112 | 112 | 82 |
| Research\tand\tdevelopment\texpenditures | 47 | 36 | 43 |
| Share-based\tcompensation\texpense\tincluded\tin\tOperating\tearnings | 184 | 168 | 144 |
| Tax\tbenefit | 62 | 51 | 43 |
| Share-based\tcompensation\texpense,\tnet\tof\ttax | $122 | $117 | $101 |
| Decrease\tin\tbasic\tearnings\tper\tshare | $(0.42) | $(0.34) | $(0.30) |
| Decrease\tin\tdiluted\tearnings\tper\tshare | $(0.41) | $(0.34) | $(0.30) |
| Share-based\tcompensation\texpense\tin\tdiscontinued\toperations | $— | $13 | $164 |

At	December	31,	2012	and	2011,	22.2	million	shares	and	23.7	million	shares,	respectively,	were	available	for	future	share-based	award	grants	under	the	current share-based	compensation	plan,	covering	all	equity	awards	to	employees	and	non-employee	directors.

# Motorola	Solutions	Incentive	Plans

The	Company's	incentive	plans	provide	eligible	employees	with	an	annual	payment,	calculated	as	a	percentage	of	an	employee's	eligible	earnings,	in	the	year	after the	close	of	the	current	calendar	year	if	specified	business	goals	and	individual	performance	targets	are	met.	The	expense	for	awards	under	this	incentive	plan	for	the years	ended	December	31,	2012,	2011	and	2010	was	$201	million,	$203	million	and	$201	million,	respectively.

# Long-Range	Incentive	Plan

The	Long-Range	Incentive	Plan	("LRIP")	rewards	participating	elected	officers	for	the	Company's	achievement	of	specified	business	goals	during	the	period, based	on	two	performance	objectives	measured	over	three-year	cycles.	The	expense	for	LRIP	(net	of	the	reversals	of	previously	recognized	reserves)	for	the	years	ended December	31,	2012,	2011	and	2010	was	$12	million,	$3	million	and	$11	million,	respectively.

# 9.				Fair	Value	Measurements

The	Company	holds	certain	fixed	income	securities,	equity	securities	and	derivatives,	which	are	recognized	and	disclosed	at	fair	value	in	the	financial	statements	on a	recurring	basis.	Fair	value	is	defined	as	the	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an	orderly	transaction	between	market participants	as	of	the	measurement	date.	Fair	value	is	measured	using	the	fair	value	hierarchy	and	related	valuation	methodologies	as	defined	in	the	authoritative literature.	This	guidance	specifies	a	hierarchy	of	valuation	techniques	based	on	whether	the	inputs	to	each	measurement	are	observable	or	unobservable.	Observable inputs	reflect	market	data	obtained	from	independent	sources,	while	unobservable	inputs	reflect	the	Company's	assumptions	about	current	market	conditions.	The prescribed	fair	value	hierarchy	and	related	valuation	methodologies	are	as	follows:

Level	1-Quoted	prices	for	identical	instruments	in	active	markets.

Level	2-Quoted	prices	for	similar	instruments	in	active	markets,	quoted	prices	for	identical	or	similar	instruments	in	markets	that	are	not	active	and	model-derived valuations,	in	which	all	significant	inputs	are	observable	in	active	markets.

Level	3-Valuations	derived	from	valuation	techniques,	in	which	one	or	more	significant	inputs	are	unobservable.

The	fair	values	of	the	Company's	financial	assets	and	liabilities	by	level	in	the	fair	value	hierarchy	as	of	December	31,	2012	and	2011	were	as	follows:

| December	31,	2012 | Level	1 | Level	2 | Total |
| :--- | :--- | :--- | :--- |
| Assets: |  |  |  |
| Sigma\tFund\tsecurities: |  |  |  |
| U.S.\tgovernment,\tagency\tand\tgovernment-sponsored\tenterprise\tobligations | $— | $1,984 | $1,984 |
| Foreign\texchange\tderivative\tcontracts | — | 3 | 3 |
| Available-for-sale\tsecurities: |  |  |  |
| U.S.\tgovernment,\tagency\tand\tgovernment-sponsored\tenterprise\tobligations | — | 15 | 15 |
| Corporate\tbonds | — | 11 | 11 |
| Mortgage-backed\tsecurities | — | 2 | 2 |
| Common\tstock\tand\tequivalents | 3 | 7 | 10 |
| Liabilities: |  |  |  |
| Foreign\texchange\tderivative\tcontracts | $— | $3 | $3 |
| Interest\tagreement\tderivative\tcontracts | — | 4 | 4 |

| December	31,	2011 | Level	1 | Level	2 | Total |
| :--- | :--- | :--- | :--- |
| Assets: |  |  |  |
| Sigma\tFund\tsecurities: |  |  |  |
| U.S.\tgovernment,\tagency\tand\tgovernment-sponsored\tenterprise\tobligations | $— | $2,944 | $2,944 |
| Foreign\texchange\tderivative\tcontracts | — | 1 | 1 |
| Available-for-sale\tsecurities: |  |  |  |
| U.S.\tgovernment,\tagency\tand\tgovernment-sponsored\tenterprise\tobligations | — | 16 | 16 |
| Corporate\tbonds | — | 10 | 10 |
| Mortgage-backed\tsecurities | — | 2 | 2 |
| Common\tstock\tand\tequivalents | 3 | 8 | 11 |
| Liabilities: |  |  |  |
| Foreign\texchange\tderivative\tcontracts | $— | $5 | $5 |
| Interest\tagreement\tderivative\tcontracts | — | 3 | 3 |

      The	following	table	summarizes	the	changes	in	fair	value	of	the	Company's	Level	3	assets	for	2011:

There	were	no	significant	transfers	between	Level	1	and	Level	2	during	2012	or	2011.

# Pension	and	Postretirement	Health	Care	Benefits	Plan	Assets

The	fair	values	of	the	various	pension	and	postretirement	health	care	benefits	plans'	assets	by	level	in	the	fair	value	hierarchy	as	of	December	31,	2012	and	2011 were	as	follows:

| December	31,	2012 | Level	1 | Level	2 | Total |
| :--- | :--- | :--- | :--- |
| Common\tstock\tand\tequivalents | $1,592 | $3 | $1,595 |
| Commingled\tequity\tfunds | — | 1,965 | 1,965 |
| Preferred\tstock | 9 | — | 9 |
| U.S.\tgovernment\tand\tagency\tobligations | — | 317 | 317 |
| Other\tgovernment\tbonds | — | 49 | 49 |
| Corporate\tbonds | — | 327 | 327 |
| Mortgage-backed\tbonds | — | 14 | 14 |
| Commingled\tbond\tfunds | — | 1,082 | 1,082 |
| Commingled\tshort-term\tinvestment\tfunds | — | 58 | 58 |
| Total\tinvestment\tsecurities | $1,601 | $3,815 | $5,416 |
| Accrued\tincome\treceivable |  |  | 10 |
| Fair\tvalue\tplan\tassets |  |  | $5,426 |

The	table	above	includes	securities	on	loan	as	part	of	a	securities	lending	arrangement	of	$117	million	of	common	stock	and	equivalents,	$260	million	of	U.S. government	and	agency	obligations,	and	$17	million	of	corporate	bonds.	All	securities	on	loan	are	fully	cash	collateralized.

| December	31,	2011 | Level	1 | Level	2 | Total |
| :--- | :--- | :--- | :--- |
| Common\tstock\tand\tequivalents | $1,128 | $3 | $1,131 |
| Commingled\tequity\tfunds | — | 1,705 | 1,705 |
| Preferred\tstock | 9 | — | 9 |
| U.S.\tgovernment\tand\tagency\tobligations | — | 261 | 261 |
| Other\tgovernment\tbonds | — | 40 | 40 |
| Corporate\tbonds | — | 322 | 322 |
| Mortgage-backed\tbonds | — | 18 | 18 |
| Commingled\tbond\tfunds | — | 1,018 | 1,018 |
| Commingled\tshort-term\tinvestment\tfunds | — | 232 | 232 |
| Total\tinvestment\tsecurities | $1,137 | $3,599 | $4,736 |
| Accrued\tincome\treceivable |  |  | 11 |
| Fair\tvalue\tplan\tassets |  |  | $4,747 |

The	table	above	includes	securities	on	loan	as	part	of	a	securities	lending	arrangement	of	$173	million	of	common	stock	and	equivalents,	$182	million	of	U.S. government	and	agency	obligations,	and	$39	million	of	corporate	bonds.	All	securities	on	loan	are	fully	cash	collateralized.

# Non-U.S.	Plans

| December	31,	2012 | Level	1 | Level	2 | Total |
| :--- | :--- | :--- | :--- |
| Common\tstock\tand\tequivalents | $346 | $— | $346 |
| Commingled\tequity\tfunds | — | 434 | 434 |
| Corporate\tbonds | — | 18 | 18 |
| Government\tand\tagency\tobligations | — | 233 | 233 |
| Commingled\tbond\tfunds | — | 257 | 257 |
| Commingled\tshort-term\tinvestment\tfunds | — | 7 | 7 |
| Total\tinvestment\tsecurities | $346 | $949 | $1,295 |
| Cash |  |  | 8 |
| Insurance\tcontracts* |  |  | 59 |
| Fair\tvalue\tplan\tassets |  |  | $1,362 |

*	Comprised	of	annuity	contracts	issued	by	life	insurance	companies	for	one	of	the	Company's	non-U.S.	pension	plans

The	table	above	includes	securities	on	loan	as	part	of	a	securities	lending	arrangement	of	$29	million	of	common	stock	and	equivalents,	$2	million	of	U.S.

government	and	agency	obligations,	and	$27	million	of	corporate	bonds.	All	securities	on	loan	are	fully	cash	collateralized.

| December	31,	2011 | Level	1 | Level	2 | Total |
| :--- | :--- | :--- | :--- |
| Common\tstock\tand\tequivalents | $312 | $— | $312 |
| Commingled\tequity\tfunds | — | 375 | 375 |
| Corporate\tbonds | — | 206 | 206 |
| Government\tand\tagency\tobligations | — | 10 | 10 |
| Commingled\tbond\tfunds | — | 248 | 248 |
| Commingled\tshort-term\tinvestment\tfunds | — | 2 | 2 |
| Total\tinvestment\tsecurities | $312 | $841 | $1,153 |
| Cash |  |  | 7 |
| Accrued\tincome\treceivable |  |  | 3 |
| Insurance\tcontracts* |  |  | 56 |
| Fair\tvalue\tplan\tassets |  |  | $1,219 |

| December	31,	2012 | Level	1 | Level	2 | Total |
| :--- | :--- | :--- | :--- |
| Common\tstock\tand\tequivalents | $44 | $— | $44 |
| Commingled\tequity\tfunds | — | 56 | 56 |
| U.S.\tgovernment\tand\tagency\tobligations | — | 9 | 9 |
| Corporate\tbonds | — | 9 | 9 |
| Mortgage-backed\tbonds | — | 1 | 1 |
| Commingled\tbond\tfunds | — | 30 | 30 |
| Commingled\tshort-term\tinvestment\tfunds | — | 6 | 6 |
| Fair\tvalue\tplan\tassets | $44 | $111 | $155 |

The	table	above	includes	securities	on	loan	as	part	of	a	securities	lending	arrangement	of	$4	million	of	common	stock	and	equivalents	and	$7	million	of	U.S. government	and	agency	obligations.	All	securities	on	loan	are	fully	cash	collateralized.

| December	31,	2011 | Level	1 | Level	2 | Total |
| :--- | :--- | :--- | :--- |
| Common\tstock\tand\tequivalents | $38 | $— | $38 |
| Commingled\tequity\tfunds | — | 54 | 54 |
| U.S.\tgovernment\tand\tagency\tobligations | — | 10 | 10 |
| Corporate\tbonds | — | 11 | 11 |
| Mortgage-backed\tbonds | — | 1 | 1 |
| Commingled\tbond\tfunds | — | 34 | 34 |
| Commingled\tshort-term\tinvestment\tfunds | — | 7 | 7 |
| Fair\tvalue\tplan\tassets | $38 | $117 | $155 |

# Valuation	Methodologies

Level	1-	Quoted	market	prices	in	active	markets	are	available	for	investments	in	common	and	preferred	stock	and	common	stock	equivalents.	As	such,	these investments	are	classified	within	Level	1.

Level	2-	The	securities	classified	as	Level	2	are	comprised	primarily	of	corporate,	government,	agency	and	government sponsored	enterprise	fixed	income	securities.	These	securities	are	priced	using	pricing	services,	bid/offer,	and	last	trade.	Prices may	also	be	obtained	from	brokers,	counterparties,	fund	administrators,	online	securities	data	services,	or	investment	managers. Fixed	income	securities,	including	short-term	instruments,	may	be	priced	using	pricing	models	comprised	of	observable	inputs which	include,	but	are	not	limited	to,	market	quotations,	yields,	maturities,	call	features,	and	the	security's	terms	and	conditions.

In	determining	the	fair	value	of	the	Company's	foreign	currency	derivatives,	the	Company	uses	forward	contract	and	option	valuation	models	employing	market observable	inputs,	such	as	spot	currency	rates,	time	value	and	option	volatilities.	Since	the	Company	primarily	uses	observable	inputs	in	its	valuation	of	its	derivative assets	and	liabilities,	they	are	classified	as	Level	2	assets.

Level	3-	Securities	that	do	not	have	actively	traded	quotes	as	of	the	financial	statement	date.	Determining	the	fair	value	of	these	securities	requires	the	use	of unobservable	inputs,	such	as	indicative	quotes	from	dealers,	extrapolated	data,	proprietary	models	and	qualitative	input	from	investment	advisors.	The	Company	had	no Level	3	assets	at	December	31,	2012	and	2011.

At	December	31,	2012,	the	Company	has	$422	million	of	investments	in	money	market	mutual	funds	classified	as	Cash	and	cash	equivalents	in	its	consolidated balance	sheet.	The	money	market	funds	have	quoted	market	prices	that	are	generally	equivalent	to	par.

Using	quoted	market	prices	and	market	interest	rates,	the	Company	determined	that	the	fair	value	of	long-term

debt	at	December	31,	2012	was	$2.1	billion	(Level	2),	compared	to	a	face	value	of	$1.9	billion.	Since	considerable	judgment

is	required	in	interpreting	market	information,	the	fair	value	of	the	long-term	debt	is	not	necessarily	indicative	of	the	amount	which	could	be	realized	in	a	current	market exchange.

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

# 10.				Long-term	Customer	Financing	and	Sales	of	Receivables

# Long-term	Customer	Financing

Long-term	receivables	consist	of	trade	receivables	with	payment	terms	greater	than	twelve	months,	long-term	loans	and	lease	receivables	under	sales-type	leases.

Long-term	receivables	consist	of	the	following:

| December	31 | 2012 | 2011 |
| :--- | :--- | :--- |
| Long-term\treceivables | $101 | $177 |
| Less\tallowance\tfor\tlosses | — | (10) |
|  | 101 | 167 |
| Less\tcurrent\tportion | (41) | (130) |
| Non-current\tlong-term\treceivables,\tnet | $60 | $37 |

The	current	portion	of	long-term	receivables	is	included	in	Accounts	receivable	and	the	non-current	portion	of	long-term	receivables	is	included	in	Other	assets	in the	Company's	consolidated	balance	sheets.	Interest	income	recognized	on	long-term	receivables	for	the	years	ended	December	31,	2012,	2011	and	2010	was	$7	million, $15	million	and	$14	million,	respectively.

Certain	purchasers	of	the	Company's	infrastructure	equipment	may	request	that	the	Company	provide	long-term	financing	(defined	as	financing	with	a	term	of greater	than	one	year)	in	connection	with	the	sale	of	equipment.	These	requests	may	include	all	or	a	portion	of	the	purchase	price	of	the	equipment.	The	Company's obligation	to	provide	long-term	financing	may	be	conditioned	on	the	issuance	of	a	letter	of	credit	in	favor	of	the	Company	by	a	reputable	bank	to	support	the	purchaser's credit	or	a	pre-existing	commitment	from	a	reputable	bank	to	purchase	the	long-term	receivables	from	the	Company.	The	Company	had	outstanding	commitments	to provide	long-term	financing	to	third-parties	totaling	$84	million	at	December	31,	2012,	compared	to	$138	million	at	December	31,	2011.

As	of	December	31,	2012,	$60	million	of	net	long-term	receivables	are	classified	as	non-current.	The	remainder	of	the	long-term	receivables	are	current	and included	in	Accounts	receivable,	net.

From	time	to	time,	the	Company	sells	accounts	receivable	and	long-term	receivables	on	a	non-recourse	basis	to	third-parties	under	one-time	arrangements	while others	are	sold	to	third-parties	under	committed	facilities.	The	Company	may	or	may	not	retain	the	obligation	to	service	the	sold	accounts	receivable	and	long-term receivables.

The	Company	had	no	sales	facilities	and	no	significant	committed	facilities	for	the	sale	of	long-term	receivables	at	December	31,	2012	or	at	December	31,	2011.

| Years	ended	December	31 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- |
| Cumulative\tannual\tproceeds\treceived\tfrom\tone-time\tsales: |  |  |  |
| Accounts\treceivable\tsales\tproceeds | $12 | $8 | $30 |
| Long-term\treceivables\tsales\tproceeds | 178 | 224 | 67 |
| Total\tproceeds\tfrom\tone-time\tsales | 190 | 232 | 97 |
| Cumulative\tannual\tproceeds\treceived\tfrom\tsales\tunder\tcommitted\tfacilities | — | — | 70 |
| Total\tproceeds\tfrom\treceivables\tsales | $190 | $232 | $167 |

# Credit	Quality	of	Customer	Financing	Receivables	and	Allowance	for	Credit	Losses

An	aging	analysis	of	financing	receivables	at	December	31,	2012	and	December	31,	2011	is	as	follows:

| December	31,	2012 | Total<br>Long-term<br>Receivable | Current	Billed<br>Due | Past	Due<br>Under	90	Days | Past	Due<br>Over	90	Days |
| :--- | :--- | :--- | :--- | :--- |
| Municipal\tleases\tsecured\ttax\texempt | $23 | $— | $— | $— |
| Commercial\tloans\tand\tleases\tsecured | $78 | $1 | $2 | $4 |
| Total\tgross\tlong-term\treceivables,\tincluding\tcurrent\nportion | $101 | $1 | $2 | $4 |

# Total

| December	31,	2011 | Long-term<br>Receivable | Current	Billed<br>Due | Past	Due<br>Under	90	Days | Past	Due<br>Over	90	Days |
| :--- | :--- | :--- | :--- | :--- |
| Municipal\tleases\tsecured\ttax\texempt | $14 | $— | $— | $— |
| Commercial\tloans\tand\tleases\tsecured | $61 | $1 | $2 | $— |
| Commercial\tloans\tunsecured | $102 | $— | $— | $— |
| Total\tgross\tlong-term\treceivables,\tincluding\tcurrent\nportion | $177 | $1 | $2 | $— |

The	Company	uses	an	internally	developed	credit	risk	rating	system	for	establishing	customer	credit	limits.	This	system	is	aligned	and	comparable	to	the	rating systems	utilized	by	independent	rating	agencies.

The	Company's	policy	for	valuing	the	allowance	for	credit	losses	is	to	review	for	collectability	on	an	individual	receivable	basis.	All	customer	financing receivables	are	reviewed	for	collectability.	For	those	receivables	where	collection	risk	is	probable,	the	Company	calculates	the	value	of	impairment	based	on	the	net present	value	of	expected	future	cash	flows	from	the	customer.

The	Company	did	have	financing	receivables	past	due	over	90	days	as	of	December	31,	2012	in	relation	to	a	single	loan.	The	Company	is	no	longer	accruing interest	on	this	loan	as	of	December	31,	2011.	A	$10	million	reserve	was	established	for	this	loan	due	to	collectability	issues	at	December	31,	2011,	all	of	which	is classified	as	current	as	of	December	31,	2012.

# 11.				Commitments	and	Contingencies

# Legal

The	Company	is	a	defendant	in	various	suits,	claims	and	investigations	that	arise	in	the	normal	course	of	business.	In	the	opinion	of	management,	based	on	the current	facts	and	circumstances,	the	ultimate	disposition	of	these	matters	will	not	have	a	material	adverse	effect	on	the	Company's	consolidated	financial	position, liquidity	or	results	of	operations.

Leases:				The	Company	leases	certain	office,	factory	and	warehouse	space,	land,	and	information	technology	and	other	equipment	under	principally	non- cancelable	operating	leases.	Rental	expense,	net	of	sublease	income,	for	the	years	ended	December	31,	2012,	2011	and	2010	was	$65	million,	$92	million,	and	$123 million,	respectively.	At	December	31,	2012,	future	minimum	lease	obligations,	net	of	minimum	sublease	rentals,	for	the	next	five	years	and	beyond	are	as	follows: 2013—$69	million;	2014—$54	million;	2015—$36	million;	2016—$28	million;	2017—$20	million	and	beyond—$149	million.

Indemnifications:				The	Company	is	a	party	to	a	variety	of	agreements	pursuant	to	which	it	is	obligated	to	indemnify	the	other	party	with	respect	to	certain matters.	In	indemnification	cases,	payment	by	the	Company	is	conditioned	on	the	other	party	making	a	claim	pursuant	to	the	procedures	specified	in	the	particular contract,	which	procedures	typically	allow	the	Company	to	challenge	the	other	party's	claims.	In	some	instances,	the	Company	may	have	recourse	against	third-parties for	certain	payments	made	by	the	Company.

Some	of	these	obligations	arise	as	a	result	of	divestitures	of	the	Company's	assets	or	businesses	and	require	the	Company	to	indemnify	the	other	party	against losses	arising	from	breaches	of	representations	and	warranties	and	covenants	and,	in	some	cases,	the	settlement	of	pending	obligations.	The	Company's	obligations	under divestiture	agreements	for	indemnification	based	on	breaches	of	representations	and	warranties	are	generally	limited	in	terms	of	duration,	and	for	amounts	for	breaches of	such	representation	and	warranties	in	connection	with	prior	divestitures	not	in	excess	of	a	percentage	of	the	contract	value.	The	total	amount	of	potential	claims	is approximately	$14	million,	of	which	the	Company	had	no	accruals	at	December	31,	2012.

In	addition,	the	Company	may	provide	indemnifications	for	losses	that	result	from	the	breach	of	general	warranties	contained	in	certain	commercial	and intellectual	property	agreements.	Historically,	the	Company	has	not	made	significant

payments	under	these	agreements.	However,	there	is	an	increasing	risk	in	relation	to	patent	indemnities	given	the	current	legal	climate.

In	addition,	pursuant	to	the	Master	Separation	and	Distribution	Agreement	and	certain	other	agreements	with	Motorola	Mobility,	Motorola	Mobility	agreed	to indemnify	the	Company	for	certain	liabilities,	and	the	Company	agreed	to	indemnify	Motorola	Mobility	for	certain	liabilities,	in	each	case	for	uncapped	amounts.

Intellectual	Property	Matters:				During	2010,	the	Company	entered	into	a	settlement	agreement	with	another	company	to	resolve	certain	intellectual	property disputes	between	the	two	companies.	As	a	result	of	the	settlement	agreement,	the	Company	received	$65	million	in	cash	and	was	assigned	certain	patent	assets.	As	a result	of	this	agreement,	the	Company	recorded	a	pre-tax	gain	of	$39	million	(and	$55	million	was	allocated	to	discontinued	operations)	during	the	year	ended December	31,	2010,	related	to	the	settlement	of	the	outstanding	litigation	between	the	parties.

# 12.				Information	by	Segment	and	Geographic	Region

We	report	financial	results	for	two	segments,	based	on	products	and	services	provided:

Government:	The	Government	segment	includes	sales	of	public	safety	communication	systems,	commercial	two-way	radio	systems	and	devices,	and	software. Service	revenues	included	in	the	Government	segment	are	primarily	those	associated	with	the	design,	installation,	maintenance	and	optimization	of	equipment for	public	safety	networks.

Enterprise:	The	Enterprise	segment	includes	sales	of	rugged	and	enterprise	grade	mobile	computers	and	tablets,	laser/imaging/RFID	based	data	capture products,	wireless	local	area	network	("WLAN")	and	integrated	digital	enhanced	networks	("iDEN")	and	software.	Service	revenues	included	in	the	Enterprise segment	are	primarily	maintenance	contracts	associated	with	the	above	products.

|  |  | Net	Sales |  |  | Operating	Earnings	(Loss) |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Years\tended\tDecember\t31 | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 |
| Government | $5,989 | $5,358 | $5,049 | $965 | $616 | $534 |
| Enterprise | 2,709 | 2,845 | 2,568 | 291 | 242 | 217 |
|  | 8,698 | 8,203 | 7,617 |  |  |  |
| Operating\tearnings |  |  |  | 1,256 | 858 | 751 |
| Total\tother\texpense |  |  |  | (41) | (120) | (87) |
| Earnings\tfrom\tcontinuing\toperations\nbefore\tincome\ttaxes |  |  |  | $1,215 | $738 | $664 |

|  |  | Assets |  |  | Capital<br>Expenditures |  |  | Depreciation<br>Expense |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Years\tended\tDecember\t31 | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 |
| Government | $3,095 | $2,892 | $3,424 | $132 | $159 | $172 | $143 | $128 | $110 |
| Enterprise | 2,552 | 2,264 | 2,724 | 55 | 27 | 20 | 36 | 37 | 40 |
|  | 5,647 | 5,156 | 6,148 | 187 | 186 | 192 | 179 | 165 | 150 |
| Other | 7,032 | 8,773 | 11,649 |  |  |  |  |  |  |
|  | 12,679 | 13,929 | 17,797 |  |  |  |  |  |  |
| Discontinued\toperations | — | — | 7,780 |  |  |  |  |  |  |
|  | $12,679 | $13,929 | $25,577 |  |  |  |  |  |  |

Assets	in	Other	include	primarily	cash	and	cash	equivalents,	Sigma	Fund,	deferred	income	taxes,	short-term	investments,	property,	plant	and	equipment,	investments,	and	the	administrative headquarters	of	the	Company.

# Geographic	area	information

|  |  | Net	Sales |  |  | Assets |  |  | Property,	Plant,	and<br>Equipment,	net |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Years\tended\tDecember\t31 | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 | 2012 | 2011 | 2010 |
| United\tStates | $4,807 | $4,417 | $4,161 | $8,743 | $8,888 | $10,501 | $505 | $504 | $484 |
| China | 344 | 322 | 307 | 570 | 860 | 1,823 | 13 | 14 | 9 |
| United\tKingdom | 263 | 270 | 257 | 1,393 | 584 | 850 | 19 | 21 | 23 |
| Israel | 119 | 127 | 112 | 823 | 1,128 | 1,366 | 22 | 26 | 40 |
| Malaysia | 92 | 91 | 50 | 448 | 331 | 369 | 54 | 44 | 42 |
| Japan | 88 | 97 | 99 | 127 | 553 | 724 | 5 | 60 | 61 |
| Denmark | 44 | 46 | 46 | 90 | 93 | 101 | 52 | 62 | 72 |
| Other,\tnet\tof\teliminations | 2,941 | 2,966 | 2,734 | 485 | 1,492 | 2,063 | 169 | 165 | 191 |
|  | $8,698 | $8,203 | $7,617 | $12,679 | $13,929 | $17,797 | $839 | $896 | $922 |

Net	sales	are	attributed	to	countries	based	on	the	shipping	location	of	the	ultimate	destination	with	the	exception	of	sales	to	the	U.S.	federal	government.	Sales	to	the	U.S.	federal	government	are included	within	the	United	States	regardless	of	shipping	location.	For	2010	and	2011	certain	sales	have	been	reclassified	between	countries	to	conform	to	the	current	year's	presentation,	which primarily	includes;	(i)	sales	from	the	United	Kingdom	to	"Other,	net	of	eliminations"	and	(ii)	sales	from	Israel	to	"Other,	net	of	eliminations."

The	Company	maintains	a	formal	Involuntary	Severance	Plan	(the	"Severance	Plan"),	which	permits	the	Company	to	offer	eligible	employees	severance	benefits based	on	years	of	service	and	employment	grade	level	in	the	event	that	employment	is	involuntarily	terminated	as	a	result	of	a	reduction-in-force	or	restructuring.	The Company	recognizes	termination	benefits	based	on	formulas	per	the	Severance	Plan	at	the	point	in	time	that	future	settlement	is	probable	and	can	be	reasonably estimated	based	on	estimates	prepared	at	the	time	a	restructuring	plan	is	approved	by	management.	Exit	costs	consist	of	future	minimum	lease	payments	on	vacated facilities	and	other	contractual	terminations.	At	each	reporting	date,	the	Company	evaluates	its	accruals	for	employee	separation	and	exit	costs	to	ensure	the	accruals	are still	appropriate.	In	certain	circumstances,	accruals	are	no	longer	needed	because	of	efficiencies	in	carrying	out	the	plans	or	because	employees	previously	identified	for separation	resigned	from	the	Company	and	did	not	receive	severance,	or	were	redeployed	due	to	circumstances	not	foreseen	when	the	original	plans	were	approved.	In these	cases,	the	Company	reverses	accruals	through	the	consolidated	statements	of	operations	where	the	original	charges	were	recorded	when	it	is	determined	they	are no	longer	needed.

During	2012,	the	Company	continued	to	implement	various	productivity	improvement	plans	aimed	at	achieving	long-term,	sustainable	profitability	by	driving efficiencies	and	reducing	operating	costs.	Both	of	the	Company's	segments	were	impacted	by	these	plans.	The	employees	affected	were	located	in	all	geographic regions.

During	2012,	the	Company	recorded	net	reorganization	of	business	charges	of	$50	million,	including	$9	million	of	charges	in	Costs	of	sales	and	$41	million	of charges	under	Other	charges	in	the	Company's	consolidated	statements	of	operations.	Included	in	the	aggregate	$50	million	are	charges	of	$54	million	for	employee separation	costs,	and	$7	million	for	building	impairment,	partially	offset	by	$11	million	of	reversals	for	accruals	no	longer	needed.

The	following	table	displays	the	net	charges	incurred	by	segment:

The	following	table	displays	a	rollforward	of	the	reorganization	of	businesses	accruals	established	for	exit	costs	and	employee	separation	costs	from	January	1, 2012	to	December	31,	2012:

|  | Accruals	at	January	1,<br>2012 | Additional<br>Charges | Adjustments | Amount<br>Used | Accruals	at	December	31,<br>2012 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Exit\tcosts | $14 | $— | $1 | $(11) | $4 |
| Employee\tseparation\tcosts | 30 | 54 | (9) | (44) | 31 |
|  | $44 | $54 | $(8) | $(55) | $35 |

# Exit	Costs

At	January	1,	2012,	the	Company	had	an	accrual	of	$14	million	for	exit	costs	attributable	to	lease	terminations.	There	were	no	additional	charges	in	2012.	The	net adjustments	of	$1	million	reflect	$2	million	of	reversals	of	accruals	no	longer	needed,	offset	by	$3	million	of	other	adjustments.	The	$11	million	used	in	2012	reflects cash	payments.	The	remaining	accrual	of	$4	million,	which	is	included	in	Accrued	liabilities	in	the	Company's	consolidated	balance	sheets	at	December	31,	2012, primarily	represents	future	cash	payments	for	lease	termination	obligations	that	are	expected	to	be	paid	over	a	number	of	years.

# Employee	Separation	Costs

At	January	1,	2012,	the	Company	had	an	accrual	of	$30	million	for	employee	separation	costs,	representing	the	severance	costs	for:	(i)	severed	employees	who began	receiving	payments	in	2011,	and	(ii)	approximately	700	employees	who	began	receiving	payments	in	2012.	The	2012	additional	charges	of	$54	million	represent severance	costs	for	approximately	an	additional	1,000	employees,	of	which	300	were	direct	employees	and	700	were	indirect	employees.	The	adjustments	of	$9	million reflect	reversals	of	accruals	no	longer	needed.

During	2012,	approximately	1,000	employees,	of	which	700	were	indirect	employees	and	300	were	direct	employees,	were	separated	from	the	Company.	The	$44 million	used	in	2012	reflects	cash	payments	to	separated	employees.	The	remaining	accrual	of	$31	million,	which	is	included	in	Accrued	liabilities	in	the	Company's consolidated	balance	sheet	at	December	31,	2012,	is	expected	to	be	paid,	generally,	within	one	year	to:	(i)	severed	employees	who	have	already	begun	to	receive payments,	and	(ii)	approximately	700	employees	to	be	separated	in	2013.

During	2011,	the	Company	recorded	net	reorganization	of	business	charges	of	$58	million,	including	$6	million	of	charges	in	Costs	of	sales	and	$52	million	of charges	under	Other	charges	in	the	Company's	consolidated	statements	of	operations.	Included	in	the	aggregate	$58	million	are	charges	of	$41	million	for	employee separation	costs	and	$19	million	for	exit	costs,	partially	offset	by	$2	million	of	reversals	for	accruals	no	longer	needed.

| 2011 | Accruals	at<br>January	1 | Additional<br>Charges | Adjustments | Amount<br>Used | Accruals	at<br>December	31 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Exit\tcosts | $17 | $19 | $1 | $(23) | $14 |
| Employee\tseparation\tcosts | 50 | 41 | (3) | (58) | 30 |
|  | $67 | $60 | $(2) | $(81) | $44 |

At	January	1,	2011,	the	Company	had	an	accrual	of	$17	million	for	exit	costs	attributable	to	lease	terminations.	The	additional	2011	charges	of	$19	million	are primarily	related	to	the	exit	of	leased	facilities	and	contractual	termination	costs.	The	$23	million	used	in	2011	reflects	cash	payments.	The	remaining	accrual	of	$14 million,	which	was	included	in	Accrued	liabilities	in	the	Company's	consolidated	balance	sheet	at	December	31,	2011,	represents	future	cash	payments,	primarily	for lease	termination	obligations.

At	January	1,	2011,	the	Company	had	an	accrual	of	$50	million	for	employee	separation	costs,	representing	the	severance	costs	for	approximately	1,000 employees.	The	additional	2011	charges	of	$41	million	represent	severance	costs	for	approximately	an	additional	900	employees,	of	which	300	are	direct	employees	and 600	are	indirect	employees.	The	adjustments	of	$3	million	reflect	accruals	no	longer	required.

During	2011,	approximately	1,300	employees,	of	which	800	were	direct	employees	and	500	were	indirect	employees,	were	separated	from	the	Company.	The	$58 million	used	in	2011	reflects	cash	payments	to	these	separated	employees.	The	remaining	accrual	of	$30	million	was	included	in	Accrued	liabilities	in	the	Company's consolidated	balance	sheet	at	December	31,	2011.

During	2010,	the	Company	continued	to	implement	various	productivity	improvement	plans	aimed	at	achieving	long-term,	sustainable	profitability	by	driving efficiencies	and	reducing	operating	costs.	Both	of	the	Company's	segments	were	impacted	by	these	plans.	The	employees	affected	were	located	in	all	geographic regions.

The	Company	recorded	net	reorganization	of	business	charges	of	$73	million,	including	$19	million	of	charges	in	Costs	of	sales	and	$54	million	of	charges	under Other	charges	in	the	Company's	consolidated	statements	of	operations.	Included	in	the	aggregate	$73	million	are	charges	of	$73	million	for	employee	separation	costs and	$16	million	for	exit	costs,	partially	offset	by	$16	million	of	reversals	for	accruals	no	longer	needed.

The	following	table	displays	a	rollforward	of	the	reorganization	of	businesses	accruals	established	for	exit	costs	and	employee	separation	costs	from	January	1, 2010	to	December	31,	2010:

| 2010 | Accruals	at<br>January	1 | Additional<br>Charges | Adjustments | Amount<br>Used | Accruals	at<br>December	31 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Exit\tcosts | $16 | $16 | $(3) | $(12) | $17 |
| Employee\tseparation\tcosts | 31 | 73 | (13) | (41) | 50 |
|  | $47 | $89 | $(16) | $(53) | $67 |

At	January	1,	2010,	the	Company	had	an	accrual	of	$16	million	for	exit	costs	attributable	to	lease	terminations.	The	2010	additional	charges	of	$16	million	were primarily	related	to	the	exit	of	leased	facilities	and	contractual	termination	costs.	The	adjustments	of	$3	million	reflect	reversals	of	accruals	no	longer	needed.	The	$12 million	used	in	2010	reflected	cash	payments.	The	remaining	accrual	of	$17	million,	which	was	included	in	Accrued	liabilities	in	the	Company's	consolidated	balance sheets	at	December	31,	2010,	represented	future	cash	payments,	primarily	for	lease	termination	obligations.

At	January	1,	2010,	the	Company	had	an	accrual	of	$31	million	for	employee	separation	costs,	representing	the	severance	costs	for	approximately	1,400 employees.	The	additional	2010	charges	of	$73	million	were	severance	costs	for	approximately	an	additional	1,600	employees,	of	which	800	were	direct	employees	and 800	were	indirect	employees.	The	adjustments	of	$13	million	reflect	accruals	no	longer	required.

During	2010,	approximately	1,000	employees,	of	which	700	were	direct	employees	and	300	were	indirect	employees,	were	separated	from	the	Company.	The	$41 million	used	in	2010	reflected	cash	payments	to	these	separated	employees.	The	remaining	accrual	of	$50	million	was	included	in	Accrued	liabilities	in	the	Company's consolidated	balance	sheet	at	December	31,	2010.

# 14.						Intangible	Assets	and	Goodwill

The	Company	accounts	for	acquisitions	using	purchase	accounting	with	the	results	of	operations	for	each	acquiree	included	in	the	Company's	consolidated financial	statements	for	the	period	subsequent	to	the	date	of	acquisition.	The	pro	forma	effects	of	the	acquisitions	completed	in	2012,	2011,	and	2010	were	not	significant individually	or	in	the	aggregate.	The	Company	did	not	have	any	significant	acquisitions	during	the	years	ended	December	31,	2012,	2011	and	2010.

# Intangible	Assets

Amortized	intangible	assets	were	comprised	of	the	following:

| December	31, | Gross<br>Carrying<br>Amount | Accumulated<br>Amortization | Gross<br>Carrying<br>Amount | Accumulated<br>Amortization |
| :--- | :--- | :--- | :--- | :--- |
| Intangible\tassets: |  |  |  |  |
| Completed\ttechnology | $657 | $632 | $635 | $627 |
| Patents | 276 | 276 | 276 | 276 |
| Customer-related | 201 | 125 | 137 | 103 |
| Licensed\ttechnology | 23 | 19 | 23 | 18 |
| Other\tintangibles | 94 | 90 | 91 | 90 |
|  | $1,251 | $1,142 | $1,162 | $1,114 |

Amortization	expense	on	intangible	assets,	which	is	included	within	Other	charges	in	the	consolidated	statements	of	operations,	was	$29	million,	$200	million	and $203	million	for	the	years	ended	December	31,	2012,	2011	and	2010,	respectively.	The	reduction	in	intangible	amortization	in	2012	is	due	to	certain	intangible	assets that	have	fully	amortized.	As	of	December	31,	2012,	future	amortization	expense	is	estimated	to	be	$25	million	in	2013,	$23	million	in	2014,	$18	million	in	2015,	$18 million	in	2016	and	$15	million	in	2017.

Amortized	intangible	assets,	excluding	goodwill,	by	segment	are	as	follows:

| December	31, | Gross<br>Carrying<br>Amount | Accumulated<br>Amortization | Gross<br>Carrying<br>Amount | Accumulated<br>Amortization |
| :--- | :--- | :--- | :--- | :--- |
| Government | $53 | $48 | $53 | $48 |
| Enterprise | 1,198 | 1,094 | 1,109 | 1,066 |
|  | $1,251 | $1,142 | $1,162 | $1,114 |

# Goodwill

The	following	table	displays	a	rollforward	of	the	carrying	amount	of	goodwill	by	segment	from	January	1,	2010	to	December	31,	2012:

|  | Government | Enterprise | Total<br>Company |
| :--- | :--- | :--- | :--- |
| Balances\tas\tof\tJanuary\t1,\t2010: |  |  |  |
| Aggregate\tgoodwill\tacquired | $350 | $2,643 | $2,993 |
| Accumulated\timpairment\tlosses | — | (1,564) | (1,564) |
| Goodwill,\tnet\tof\timpairment\tlosses | 350 | 1,079 | 1,429 |
| Balance\tas\tof\tDecember\t31,\t2010: |  |  |  |
| Aggregate\tgoodwill\tacquired | 350 | 2,643 | 2,993 |
| Accumulated\timpairment\tlosses | — | (1,564) | (1,564) |
| Goodwill,\tnet\tof\timpairment\tlosses | 350 | 1,079 | 1,429 |
| Goodwill\tacquired | — | 20 | 20 |
| Goodwill\tdivested | — | (21) | (21) |
| Balance\tas\tof\tDecember\t31,\t2011: |  |  |  |
| Aggregate\tgoodwill\tacquired/divested | 350 | 2,642 | 2,992 |
| Accumulated\timpairment\tlosses | — | (1,564) | (1,564) |
| Goodwill,\tnet\tof\timpairment\tlosses | 350 | 1,078 | 1,428 |
| Goodwill\tacquired | — | 83 | 83 |
| Goodwill\tdivested | (1) | — | (1) |
| Balance\tas\tof\tDecember\t31,\t2012: |  |  |  |
| Aggregate\tgoodwill\tacquired/divested | 349 | 2,725 | 3,074 |
| Accumulated\timpairment\tlosses | — | (1,564) | (1,564) |
| Goodwill,\tnet\tof\timpairment\tlosses | $349 | $1,161 | $1,510 |

The	Company	conducts	its	annual	assessment	of	goodwill	for	impairment	in	the	fourth	quarter	of	each	year.	The	goodwill	impairment	assessment	is	performed	at the	reporting	unit	level.	A	reporting	unit	is	an	operating	segment	or	one	level	below	an	operating	segment.	The	Company	has	determined	that	the	Government	segment and	Enterprise	segment	each	meet	the	definition	of	a	reporting	unit.

The	Company	performed	a	qualitative	assessment	to	determine	whether	it	was	more-likely-than-not	that	the	fair	value	of	each	reporting	unit	was	less	than	its carrying	amount	for	fiscal	year	2012	and	fiscal	year	2011.	In	performing	this	qualitative	assessment	the	Company	assessed	relevant	events	and	circumstances	including macroeconomic	conditions,	industry	and	market	conditions,	cost	factors,	overall	financial	performance,	changes	in	share	price,	and	entity-specific	events.	In	addition,	the Company	considered	the	fair	value	derived	for	each	reporting	unit	in	conjunction	with	the	2010	goodwill	impairment	test.	The	Company	compared	this	prior	fair	value against	the	current	carrying	value	of	each	reporting	unit	noting	fair	value	significantly	exceeded	carrying	value	for	both	reporting	units.	The	Company	performed	a sensitivity	analysis	on	the	fair	value	determined	for	each	reporting	unit	in	conjunction	with	the	2010	goodwill	impairment	test	for	changes	in	significant	assumptions including	the	weighted	average	cost	of	capital	used	in	the	income	approach	and	changes	in	expected	cash	flows.	For	fiscal	2012,	these	changes	in	assumptions	and estimated	cash	flows	resulted	in	an	increase	in	fair	value	for	the	Government	reporting	unit	and	a	slight	decrease	in	fair	value	for	the	Enterprise	reporting	unit.	In	spite	of this	small	decrease	in	estimated	fair	value	of	the	Enterprise	reporting	unit,	the	reporting	unit's	fair	value	significantly	exceeds	its	carrying	value.	For	fiscal	year	2011, these	changes	in	assumptions	and	estimated	cash	flows	resulted	in	an	increase	in	fair	value	for	each	reporting	unit	from	the	2010	fair	values.	As	such,	the	Company concluded	it	is	more-likely-than-not	that	the	fair	value	of	each	reporting	unit	exceeds	its	carrying	value.	Therefore,	the	two-step	goodwill	impairment	test	was	not required	for	fiscal	2012	or	fiscal	2011.

The	goodwill	impairment	test	for	fiscal	2010	was	performed	using	the	two	step	goodwill	impairment	analysis.	In	step	one,	the	fair	value	of	each	reporting	unit	is compared	to	its	book	value.	Management	must	apply	judgment	in	determining	the	estimated	fair	value	of	these	reporting	units.	Fair	value	is	determined	using	a combination	of	present	value	techniques	and	quoted	market	prices	of	comparable	businesses.	If	the	fair	value	of	the	reporting	unit	exceeds	its	book	value,	goodwill	is	not deemed	to	be	impaired	for	that	reporting	unit,	and	no	further	testing	would	be	necessary.	If	the	fair	value	of	the	reporting	unit	is	less	than	its	book	value,	the	Company performs	step	two.	Step	two	uses	the	calculated	fair	value	of	the	reporting	unit	to

perform	a	hypothetical	purchase	price	allocation	to	the	fair	value	of	the	assets	and	liabilities	of	the	reporting	unit.	The	difference	between	the	fair	value	of	the	reporting unit	calculated	in	Step	One	and	the	fair	value	of	the	underlying	assets	and	liabilities	of	the	reporting	unit	is	the	implied	fair	value	of	the	reporting	unit's	goodwill.	A charge	is	recorded	in	the	financial	statements	if	the	carrying	value	of	the	reporting	unit's	goodwill	is	greater	than	its	implied	fair	value.

The	Company	weighted	the	valuation	of	its	reporting	units	at	75%	based	on	the	income	approach	and	25%	based	on	the	market-based	approach	consistent	with prior	periods.	The	Company	believes	that	this	weighting	is	appropriate	because	it	is	often	difficult	to	find	other	appropriate	market	participants	that	are	similar	to	its reporting	units,	and	it	is	the	Company's	view	that	future	discounted	cash	flows	are	more	reflective	of	the	value	of	the	reporting	units.

Based	on	the	results	of	the	2010	annual	assessment	of	the	recoverability	of	goodwill,	the	fair	values	of	both	reporting	units	exceeded	their	book	values,	indicating that	there	was	no	impairment	of	goodwill.

# 15.				Valuation	and	Qualifying	Accounts

The	following	table	presents	the	valuation	and	qualifying	account	activity	for	the	years	ended	December	31,	2012,	2011	and	2010:

|  | Balance	at<br>January	1 | Charged	to<br>Earnings | Used | Adjustments* | Balance	at<br>December	31 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| 2012 |  |  |  |  |  |
| Allowance\tfor\tDoubtful\tAccounts** | $45 | $8 | $(4) | $2 | $51 |
| Allowance\tfor\tLosses\ton\tLong-term\nReceivables** | 10 | — | — | (10) | — |
| Inventory\tReserves | 170 | 67 | (73) | (1) | 163 |
| Customer\tReserves | 125 | 456 | (416) | (21) | 144 |
| 2011 |  |  |  |  |  |
| Allowance\tfor\tDoubtful\tAccounts | 49 | 7 | (4) | (7) | 45 |
| Allowance\tfor\tLosses\ton\tLong-term\nReceivables | 1 | 10 | (1) | — | 10 |
| Inventory\tReserves | 157 | 37 | (30) | 6 | 170 |
| Customer\tReserves | 117 | 580 | (565) | (7) | 125 |
| 2010 |  |  |  |  |  |
| Allowance\tfor\tDoubtful\tAccounts | 16 | 41 | (2) | (6) | 49 |
| Allowance\tfor\tLosses\ton\tLong-term\nReceivables | 7 | — | (6) | — | 1 |
| Inventory\tReserves | 140 | 67 | (34) | (16) | 157 |
| Customer\tReserves | 97 | 427 | (374) | (33) | 117 |

**	During	2012,	the	adjustment	of	$10	million	within	Allowance	for	Losses	on	Long-term	Receivables	relates	to	a	reclass	from	non-current	to	current.

# 16.				Quarterly	and	Other	Financial	Data	(unaudited)

|  |  | 2012 |  |  |  | 2011 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 1st | 2nd | 3rd | 4th | 1st | 2nd | 3rd | 4th |
| Operating\tResults |  |  |  |  |  |  |  |  |
| Net\tsales | $1,956 | $2,148 | $2,153 | $2,441 | $1,834 | $1,984 | $2,085 | $2,300 |
| Costs\tof\tsales | 983 | 1,088 | 1,066 | 1,212 | 910 | 977 | 1,030 | 1,140 |
| Gross\tmargin | 973 | 1,060 | 1,087 | 1,229 | 924 | 1,007 | 1,055 | 1,160 |
| Selling,\tgeneral\tand\nadministrative\texpenses | 472 | 496 | 485 | 510 | 461 | 482 | 471 | 498 |
| Research\tand\tdevelopment\nexpenditures | 254 | 269 | 262 | 290 | 239 | 260 | 270 | 266 |
| Other\tcharges | 15 | 17 | 16 | 6 | 55 | 106 | 60 | 120 |
| Operating\tearnings | 232 | 278 | 324 | 423 | 169 | 159 | 254 | 276 |
| Earnings\tfrom\tcontinuing\noperations* | 159 | 177 | 206 | 336 | 367 | 50 | 153 | 177 |
| Net\tearnings* | 157 | 182 | 206 | 336 | 497 | 349 | 128 | 184 |
| Per\tShare\tData\t(in\tdollars) |  |  |  |  |  |  |  |  |
| Continuing\tOperations: |  |  |  |  |  |  |  |  |
| Basic\tearnings\tper\tcommon\nshare | $0.51 | $0.61 | $0.73 | $1.20 | $1.09 | $0.15 | $0.46 | $0.55 |
| Diluted\tearnings\tper\tcommon\nshare | 0.50 | 0.60 | 0.72 | 1.18 | 1.07 | 0.14 | 0.45 | 0.54 |
| Net\tEarnings: |  |  |  |  |  |  |  |  |
| Basic\tearnings\tper\tcommon\nshare | 0.50 | 0.63 | 0.73 | 1.20 | 1.47 | 1.02 | 0.38 | 0.57 |
| Diluted\tearnings\tper\tcommon\nshare | 0.49 | 0.61 | 0.72 | 1.18 | 1.44 | 1.00 | 0.38 | 0.56 |
| Dividends\tdeclared | 0.22 | 0.22 | 0.26 | 0.26 | — | — | 0.22 | 0.22 |
| Dividends\tpaid | 0.22 | 0.22 | 0.22 | 0.26 | — | — | — | 0.22 |
| Stock\tprices |  |  |  |  |  |  |  |  |
| High | 51.76 | 51.46 | 51.79 | 55.68 | 44.69 | 47.87 | 46.37 | 47.41 |
| Low | 44.94 | 46.73 | 45.18 | 49.77 | 37.04 | 43.42 | 38.71 | 40.62 |

# Item	9:	Changes	in	and	Disagreements	with	Accountants	on	Accounting	and	Financial	Disclosure

# Item	9A:	Controls	and	Procedures

# Evaluation	of	Disclosure	Controls	and	Procedures.

Under	the	supervision	and	with	the	participation	of	our	senior	management,	including	our	chief	executive	officer	and	chief	financial	officer,	we	conducted	an evaluation	of	the	effectiveness	of	the	design	and	operation	of	our	disclosure	controls	and	procedures,	as	defined	in	Rules	13a-15(e)	and	15d-15(e)	under	the	Securities Exchange	Act	of	1934,	as	amended	(the	"Exchange	Act"),	as	of	the	end	of	the	period	covered	by	this	annual	report	(the	"Evaluation	Date").	Based	on	this	evaluation,	our chief	executive	officer	and	chief	financial	officer	concluded	as	of	the	Evaluation	Date	that	our	disclosure	controls	and	procedures	were	effective	such	that	the information	relating	to	Motorola	Solutions,	including	our	consolidated	subsidiaries,	required	to	be	disclosed	in	our	Securities	and	Exchange	Commission	("SEC") reports	(i)	is	recorded,	processed,	summarized	and	reported	within	the	time	periods	specified	in	SEC	rules	and	forms,	and	(ii)	is	accumulated	and	communicated	to Motorola	Solutions'	management,	including	our	chief	executive	officer	and	chief	financial	officer,	as	appropriate	to	allow	timely	decisions	regarding	required	disclosure.

# Management's	Report	on	Internal	Control	Over	Financial	Reporting.

Motorola	Solutions'	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	as	such	term	is	defined	in Rule	13a-15(f)	of	the	Exchange	Act.	Under	the	supervision	and	with	the	participation	of	our	senior	management,	including	our	chief	executive	officer	and	chief	financial officer,	we	assessed	the	effectiveness	of	our	internal	control	over	financial	reporting	as	of	December	31,	2012,	using	the	criteria	set	forth	in	Internal	Control—Integrated Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	Based	on	this	assessment,	management	has	concluded	that our	internal	control	over	financial	reporting	is	effective	as	of	December	31,	2012.	The	Company's	independent	registered	public	accounting	firm,	KPMG	LLP,	has issued	a	report	on	the	Company's	internal	control	over	financial	reporting.	The	report	on	the	audit	of	internal	control	over	financial	reporting	appears	in	this	Form	10-K.

# Changes	in	Internal	Control	Over	Financial	Reporting.

There	have	been	no	changes	in	our	internal	control	over	financial	reporting	that	occurred	during	the	year	ended	December	31,	2012	that	have	materially	affected, or	are	reasonably	likely	to	materially	affect,	our	internal	control	over	financial	reporting.

We	are	in	the	process	of	a	multi-year	phased	upgrade	and	consolidation	of	our	enterprise	resource	planning	("ERP")	systems	into	a	single	global	platform	across our	business.		The	first	phase	was	successfully	implemented	during	the	third	quarter	of	2012	with	no	significant	changes	to	our	internal	controls	over	financial	reporting.

Continuing	to	implement	the	remaining	phased	approaches	of	our	ERP	system	on	a	widespread	basis	involves	significant	changes	in	business	processes	and extensive	organizational	training.		A	phased	approach	reduces	the	risks	associated	with	making	these	changes.		We	believe	we	are	taking	the	necessary	steps	to	monitor and	maintain	appropriate	internal	controls	during	these	transition	periods.			Such	steps	include	deploying	resources	to	mitigate	internal	control	risks	and	performing additional	verifications	and	testing	to	ensure	data	integrity.		In	connection	with	the	continued	implementation	of	our	global	ERP	system,	we	expect	there	will	be	certain redesigns	of	our	business	processes	throughout	the	implementation,	some	of	which	may	be	related	to	internal	control	over	financial	reporting	and	disclosure	controls	and procedures.

We	have	audited	Motorola	Solutions,	Inc.'s	internal	control	over	financial	reporting	as	of	December	31,	2012,	based	on	criteria	established	in	Internal	Control	- Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	Motorola	Solutions,	Inc.'s	management	is responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting, included	in	the	accompanying	Management's	Report	on	Internal	Control	Over	Financial	Reporting	in	Item	9A:	Controls	and	Procedures.

Our	responsibility	is	to	express	an	opinion	on	Motorola	Solutions	Inc.'s	internal	control	over	financial	reporting	based	on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our audit	included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing	and	evaluating	the design	and	operating	effectiveness	of	internal	control	based	on	the	assessed	risk.	Our	audit	also	included	performing	such	other	procedures	as	we	considered	necessary	in the	circumstances.	We	believe	that	our	audit	provides	a	reasonable	basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	and	directors	of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.

In	our	opinion,	Motorola	Solutions,	Inc.	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2012,	based	on criteria	established	in	Internal	Control	-	Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	balance	sheets	of Motorola	Solutions,	Inc.	and	Subsidiaries	as	of	December	31,	2012	and	2011,	and	the	related	consolidated	statements	of	operations,	comprehensive	income, stockholders'	equity,	and	cash	flows	for	each	of	the	years	in	the	three-year	period	ended	December	31,	2012,	and	our	report	dated	February	12,	2013	expressed	an unqualified	opinion	on	those	consolidated	financial	statements.

# Item	9B:	Other	Information

# PART	III

# Item	10.	Directors,	Executive	Officers	and	Corporate	Governance

The	response	to	this	Item	required	by	Item	401	of	Regulation	S-K,	with	respect	to	directors,	incorporates	by	reference	the	information	under	the	caption "Nominees"	of	Motorola	Solutions'	Proxy	Statement	for	the	2013	Annual	Meeting	of	Stockholders	(the	"Proxy	Statement")	and,	with	respect	to	executive	officers,	is contained	in	Part	I	hereof	under	the	caption	"Executive	Officers	of	the	Registrant"	and,	with	respect	to	the	audit	committee,	incorporates	by	reference	the	information under	the	caption	"Board	of	Director	Matters	-	What	Are	the	Committees	of	the	Board?"	and	"Audit	Committee	Matters	-	Report	of	Audit	Committee"	of	the	Proxy Statement.

The	response	to	this	Item	required	by	Item	405	of	Regulation	S-K	incorporates	by	reference	the	information	under	the	caption	"Other	Matters—Section	16(a) Beneficial	Ownership	Reporting	Compliance"	of	the	Proxy	Statement.

The	response	to	this	Item	also	incorporates	by	reference	the	information	under	the	caption	"Communications—How	Can	I	Recommend	a	Director	Candidate	to the	Governance	and	Nominating	Committee?"	of	the	Proxy	Statement.

Motorola	Solutions	has	adopted	a	code	of	ethics,	the	Motorola	Solutions	Code	of	Business	Conduct	(the	"Code"),	that	applies	to	all	employees,	including	the Company's	principal	executive	officer,	principal	financial	officer	and	controller	(principal	accounting	officer).	The	Code	is	posted	on	Motorola	Solutions'	Internet website,	www.motorolasolutions.com/investor,	and	is	available	free	of	charge,	upon	request	to	Investor	Relations,	Motorola	Solutions,	Inc.,	Corporate	Offices,	1303 East	Algonquin	Road,	Schaumburg,	Illinois	60196,	E-mail:	investors@motorolasolutions.com.	Any	amendment	to,	or	waiver	from,	the	Code	applicable	to	executive officers	will	be	posted	on	our	Internet	website	within	four	business	days	following	the	date	of	the	amendment	or	waiver.	Motorola	Solutions'	Code	of	Business	Conduct applies	to	all	of	the	Company's	employees	worldwide,	without	exception,	and	describes	employee	responsibilities	to	the	various	stakeholders	involved	in	our	business. The	Code	goes	beyond	the	legal	minimums	by	implementing	the	values	we	share	as	employees	of	Motorola	Solutions—our	key	beliefs—uncompromising	integrity	and constant	respect	for	people.	The	Code	places	special	responsibility	on	managers	and	prohibits	retaliation	for	reporting	issues.

# Item	11:	Executive	Compensation

The	response	to	this	Item	incorporates	by	reference	the	information	under	the	captions	"Board	of	Director	Matters	-	How	Are	the	Directors	Compensated?," "Compensation	Discussion	and	Analysis,"	"Compensation	and	Leadership	Committee	Report,"	"Compensation	and	Leadership	Committee	Interlocks	and	Insider Participation,"	and	under	"Named	Executive	Officer	Compensation,"	the	following	subsections:	"2012	Summary	Compensation	Table,"	"Grants	of	Plan-Based	Awards in	2012,"	"Outstanding	Equity	Awards	at	2012	Fiscal	Year-End,"	"Option	Exercises	and	Stock	Vested	in	2012,"	"Nonqualified	Deferred	Compensation	in	2012," "Retirement	Plans,"	"Pension	Benefits	in	2012,"	"Employment	Contracts,"	and	"Termination	of	Employment	and	Change	in	Control	Arrangements,"	of	the	Proxy Statement.

# Item	12:	Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters

The	response	to	this	Item	incorporates	by	reference	the	information	under	the	captions	"Equity	Compensation	Plan	Information"	and	"Ownership	of	Securities"	of the	Proxy	Statement.

# Item	13:	Certain	Relationships	and	Related	Transactions,	and	Director	Independence

The	response	to	this	Item	incorporates	by	reference	the	relevant	information	under	the	caption	"Board	of	Directors	Matters	-	Related	Person	Transaction	Policy and	Procedures"	and	"Corporate	Governance	Matters	-	Which	Directors	Are	Independent"	of	the	Proxy	Statement.

# Item	14:	Principal	Accounting	Fees	and	Services

The	response	to	this	Item	incorporates	by	reference	the	information	under	the	caption	"Audit	Committee	Matters	-	Independent	Registered	Public	Accounting Firm	Fees"	and	"Audit	Committee	Matters	-	Audit	Committee	Pre-Approval	Policies"	of	the	Proxy	Statement.

# PART	IV

# Item	15:	Exhibits,	Financial	Statement	Schedules

(a) 1.	Financial	Statements

See	Part	II,	Item	8	hereof.

2. Financial	Statement	Schedule	and	Independent	Auditors'

Report

All	schedules	omitted	are	inapplicable	or	the	information	required	is	shown	in	the	consolidated	financial	statements	or	notes	thereto.

3. Exhibits

Exhibits	required	to	be	attached	by	Item	601	of	Regulation	S-K	are	listed	in	the	Exhibit	Index	attached	hereto,	which	is	incorporated	herein	by	this reference.	Exhibit	numbers	10.10	through	10.70,	listed	in	the	attached	Exhibit	Index,	are	management	contracts	or	compensatory	plans	or	arrangements required	to	be	filed	as	exhibits	to	this	form	by	Item	15(b)	hereof.

(b) Exhibits:

# CONSENT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# The	Board	of	Directors

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	Motorola	Solutions,	Inc.	has	duly	caused	this	report	to	be signed	on	its	behalf	by	the	undersigned,	thereunto	duly	authorized.

/S/		GREGORY	Q.	BROWN

Gregory	Q.	Brown

Chairman	and	Chief	Executive	Officer

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	Motorola Solutions,	Inc.	and	in	the	capacities	and	on	the	dates	indicated.

# EXHIBIT	INDEX

2.1	(a) Master	Acquisition	Agreement	dated	as	of	July	16,	2010,	by	and	between	Motorola	Solutions,	Inc.	(formerly	Motorola,	Inc.)	and	Nokia	Siemens Networks	B.V	(incorporated	by	reference	to	Exhibit	2.1	to	Motorola	Solutions'	Current	Report	on	Form	8-K	filed	on	July	19,	2010	(File	No.	1- 7221)).

2.1	(b) Amendment	No.	1	dated	as	of	April	12,	2011	to	the	Master	Acquisition	Agreement	dated	as	of	July	16,	2010,	by	and	between	Motorola	Solutions, Inc.	(formerly	Motorola,	Inc.)	and	Nokia	Siemens	Networks	B.V	(incorporated	by	reference	to	Exhibit	2.1(b)	to	Motorola	Solutions'	Quarterly Report	on	Form	10-Q	for	the	fiscal	quarter	ended	April	2,	2011	(File	No.	1-7221)).

3.1	(a) Restated	Certificate	of	Incorporation	of	Motorola,	Inc.,	as	amended	through	May	5,	2009	(incorporated	by	reference	to	Exhibit	3(i)(b)	to	Motorola, Inc.'s	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	July	4,	2009	(File	No.	1-7221)).

3.1	(b) Certificate	of	Amendment	to	the	Restated	Certificate	of	Incorporation	of	Motorola,	Inc.,	effective	January	4,	2011,	as	filed	with	the	Secretary	of State	of	the	State	of	Delaware	(incorporated	by	reference	to	Exhibit	3.1	to	Motorola	Solutions'	Current	Report	on	Form	8-K	filed	on	January	10, 2011	(File	No.	1-7221)).

3.1	(c) Certificate	of	Ownership	and	Merger	merging	Motorola	Name	Change	Corporation	into	Motorola,	Inc.,	effective	January	4,	2011,	as	filed	with	the Secretary	of	State	of	the	State	of	Delaware	(incorporated	by	reference	to	Exhibit	3.2	to	Motorola	Solutions'	Current	Report	on	Form	8-K	filed	on January	10,	2011	(File	No.	1-7221)).

3.2 Motorola	Solutions,	Inc.	Amended	and	Restated	Bylaws	as	of	January	17,	2013	(incorporated	by	reference	to	Exhibit	3.1	to	Motorola,	Inc.'s Current	Report	on	Form	8-K	filed	on	January	17,	2013	(File	No.	1-7221)).

4.1	(a) Senior	Indenture,	dated	as	of	May	1,	1995,	between	The	Bank	of	New	York	Mellon	Trust	Company,	N.A.	(as	successor	Trustee	to	JPMorgan Chase	Bank	(as	successor	in	interest	to	Bank	One	Trust	Company)	and	BNY	Midwest	Trust	Company	(as	successor	in	interest	to	Harris	Trust	and Savings	Bank)	and	Motorola,	Inc.	(incorporated	by	reference	to	Exhibit	4(d)	of	the	Registrant's	Registration	Statement	on	Form	S-3	dated September	25,	1995	(Registration	No.	33-62911)).

4.1	(b) Instrument	of	Resignation,	Appointment	and	Acceptance,	dated	as	of	January	22,	2001,	among	Motorola,	Inc.,	Bank	One	Trust	Company,	N.A. and	BNY	Midwest	Trust	Company	(as	successor	in	interest	to	Harris	Trust	and	Savings	Bank)	(incorporated	by	reference	to	Exhibit	4.2(b)	to Motorola,	Inc.'s	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	31,	2000	(File	No.	1-7221)).

Certain	instruments	defining	the	rights	of	holders	of	long-term	debt	of	Motorola,	Inc.	and	of	all	its	subsidiaries	for	which	consolidated	or unconsolidated	financial	statements	are	required	to	be	filed	are	being	omitted	pursuant	to	paragraph(4)(iii)(A)	of	Item	601	of	Regulation	S-K. Motorola	Solutions	agrees	to	furnish	a	copy	of	any	such	instrument	to	the	Commission	upon	request.

10.1 Amended	and	Restated	Master	Separation	and	Distribution	Agreement	among	Motorola	Mobility	Holdings,	Inc.	(f/k/a	Motorola	SpinCo	Holdings Corporation),	Motorola	Mobility,	Inc.	and	Motorola,	Inc.	effective	as	of	July	31,	2010	(incorporated	by	reference	to	Exhibit	2.1	to	Amendment No.	1	to	the	Form	10	Registration	Statement	filed	on	August	31,	2010	by	Motorola	Mobility	Holdings,	Inc.	(formerly	Motorola	SpinCo	Holdings Corporation)	(File	No.	1-34805)).

10.2 Amended	and	Restated	Intellectual	Property	License	Agreement	between	Motorola	Mobility,	Inc.	and	Motorola,	Inc.	effective	as	of	July	31,	2010 (incorporated	by	reference	to	Exhibit	10.2	to	Amendment	No.	1	to	the	Form	10	Registration	Statement	filed	on	August	31,	2010	by	Motorola Mobility	Holdings,	Inc.	(formerly	Motorola	SpinCo	Holdings	Corporation	(File	No.	1-34805)).

10.4 Tax	Sharing	Agreement	among	Motorola	Mobility	Holdings,	Inc.	(f/k/a	Motorola	SpinCo	Holdings	Corporation),	Motorola	Mobility,	Inc.	and Motorola,	Inc.	effective	as	of	July	31,	2010	(incorporated	by	reference	to	Exhibit	10.4	to	Amendment	No.	1	to	the	Form	10	Registration	Statement filed	on	August	31,	2010	by	Motorola	Mobility	Holdings,	Inc.	(formerly	Motorola	SpinCo	Holdings	Corporation)	(File	No.	1-34805)).

10.5 Amended	and	Restated	Employee	Matters	Agreement	among	Motorola	Mobility	Holdings,	Inc.	(f/k/a	Motorola	SpinCo	Holdings	Corporation), Motorola	Mobility,	Inc.	and	Motorola,	Inc.	effective	as	of	July	31,	2010	(incorporated	by	reference	to	Exhibit	10.7	to	Amendment	No.	2	to	the Form	10	Registration	Statement	filed	on	October	8,	2010	by	Motorola	Mobility	Holdings,	Inc.	(formerly	Motorola	SpinCo	Holdings	Corporation (File	No.	1-34805)).

10.6 Stock	Purchase	Agreement,	dated	as	of	February	26,	2012,	by	and	between	Motorola	Solutions,	Inc.	and	Carl	C.	Icahn	and	certain	of	his	affiliates (incorporated	by	reference	to	Exhibit	10.1	to	Motorola	Solutions'	Current	Report	on	Form	8-K	filed	on	February	27,	2012	(File	No.	1-7221)).

10.7 Motorola	Solutions	Omnibus	Incentive	Plan	of	2006,	as	amended	and	restated	November	8,	2011	(incorporated	by	reference	to	Exhibit	10.10	to Motorola	Solutions'	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	31,	2011	(File	No.	1-34805)).

10.8 Form	of	Motorola	Solutions	Inc.	Award	Document-Terms	and	Conditions	Related	to	Employee	Nonqualified	Stock	Options	relating	to	the Motorola	Solutions	Omnibus	Incentive	Plan	of	2006	for	grants	on	or	after	January	4,	2011	(incorporated	by	reference	to	Exhibit	10.11	to	Motorola Solutions'	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	31,	2010	(	File	No.	1-34805)).

10.9 Form	of	Motorola,	Inc.	Award	Document-Terms	and	Conditions	Related	to	Employee	Nonqualified	Stock	Options	relating	to	the	Motorola Solutions	Omnibus	Incentive	Plan	of	2006	for	grants	from	August	1,	2009	to	January	3,	2011	(incorporated	by	reference	to	Exhibit	10.1	to Motorola	Inc.'s	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	July	4,	2009	(File	No.	1-7221)).

10.10 Form	of	Motorola,	Inc.	Award	Document-Terms	and	Conditions	Related	to	Employee	Nonqualified	Stock	Options	relating	to	the	Motorola Solutions	Omnibus	Incentive	Plan	of	2006	for	grants	from	May	6,	2008	to	August	1,	2009	(incorporated	by	reference	to	Exhibit	10.54	to	Motorola Inc.'s	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	March	29,	2008	(File	No.	1-7221)).

10.21 Motorola	Solutions,	Inc.	Amended	Award	Document-Terms	and	Conditions	Related	to	Employee	Nonqualified	Stock	Options	and	Addendum	A Motorola	Solutions,	Inc.	Award	Document-Terms	and	Conditions	Related	to	Employee	Stock	Appreciation	Rights,	relating	to	the	Motorola Solutions	Omnibus	Incentive	Plan	of	2006	for	a	grant	on	February	22,	2011	to	Gregory	Q.	Brown.	(incorporated	by	reference	to	Motorola Solutions'	Quarterly	Report	on	Form	10-Q	for	the	fiscal	quarter	ended	April	2,	2011	(File	No.	1-27221)).

10.22 Form	of	Motorola	Solutions	Award	Document-Terms	and	Conditions	Related	to	Employee	Nonqualified	Stock	Options	for	Gregory	Q.	Brown, relating	to	the	Motorola	Solutions	Omnibus	Incentive	Plan	of	2006	for	grant	on	February	1,	2011	pursuant	to	the	terms	of	the	Employment Agreement	dated	August	27,	2008,	as	amended,	by	and	between	Motorola,	Inc.	and	Gregory	Q.	Brown	(incorporated	by	reference	to	Exhibit	10.24 to	Motorola	Solutions'	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	31,	2010	(	File	No.	1-34805)).

10.23 Form	of	Motorola	Solutions	Award	Document-Terms	and	Conditions	Related	to	Employee	Nonqualified	Stock	Options	for	Gregory	Q.	Brown, relating	to	the	Motorola	Solutions	Omnibus	Incentive	Plan	of	2006	for	grants	on	or	after	January	4,	2011	(incorporated	by	reference	to	Exhibit 10.25	to	Motorola	Solutions'	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	31,	2010	(	File	No.	1-34805)).

10.35 Form	of	Motorola	Solutions	Deferred	Stock	Units	Agreement	between	Motorola	Solutions,	Inc.	and	its	non-employee	directors,	relating	to	the deferred	stock	units	issued	in	lieu	of	cash	compensation	to	directors	under	the	Motorola	Solutions	Omnibus	Incentive	Plan	of	2006,	for acquisitions	on	or	after	January	4,	2011	(incorporated	by	reference	to	Exhibit	10.37	to	Motorola	Solutions'	Annual	Report	on Form	10-K	for	the	fiscal	year	ended	December	31,	2010	(File	No.	1-34805)).

10.36 Form	of	Deferred	Stock	Units	Agreement	between	Motorola,	Inc.	and	its	non-employee	directors,	relating	to	the	deferred	stock	units	issued	in	lieu of	cash	compensation	to	directors	under	the	Motorola	Omnibus	Incentive	Plan	of	2006	or	any	successor	plan,	for	acquisitions	from	February	11, 2007	to	January	3,	2011	(incorporated	by	reference	to	Exhibit	10.8	to	Motorola,	Inc.'s	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended December	31,	2006	(File	No.	1-27221)).

10.37 Form	of	Motorola	Solutions	Deferred	Stock	Units	Award	between	Motorola	Solutions,	Inc.	and	its	non-employee	directors	under	the	Motorola Solutions	Omnibus	Incentive	Plan	of	2006	or	any	successor	plan	for	grants	on	or	after	January	1,	2012	(incorporated	by	reference	to	Exhibit	10.40 to	Motorola	Solutions'	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	31,	2011	(File	No.	1-34805)).

10.54 2011-2013	Performance	Measures	under	the	Motorola	Solutions	Long	Range	Incentive	Plan	(LRIP)	(incorporated	by	reference	to	Exhibit	10.3	to Motorola	Solutions'	Current	Report	on	Form	8-K	Report	filed	on	March	17,	2011	(File	No.	1-7221)).

**101.CAL XBRL	Taxonomy	Extension	Calculation	Linkbase	Document

**101.DEF XBRL	Taxonomy	Extension	Definition	Linkbase	Document

**101.LAB XBRL	Taxonomy	Extension	Label	Linkbase	Document

**101.PRE XBRL	Taxonomy	Extension	Presentation	Linkbase	Document

* Filed herewith

** XBRL	(Extensible	Business	Reporting	Language)	information	is	furnished	and	not	filed	or	a	part	of	a	registration	statement	or	prospectus	for	purposes	of	Sections 11	or	12	of	the	Securities	Act	of	1933,	is	deemed	not	filed	for	purposes	of	Section	18	of	the	Securities	Exchange	Act	of	1934,	and	otherwise	is	not	subject	to liability	under	these	sections.



Question: what was the average expected volatility of the weighted-average estimated fair value of employee stock options from 2010 to 2012
Calculation:    expected_volatility_2012 = 24.0
 expected_volatility_2011 = 28.8
 expected_volatility_2010 = 41.7
 risk_free_rate_2012 = 0.8
 risk_free_rate_2011 = 2.1
 risk_free_rate_2010 = 2.1
 dividend_yield_2012 = 2.2
 dividend_yield_2011 = 0.0
 dividend_yield_2010 = 0.0
 expected_life_2012 = 6.1
 expected_life_2011 = 6.0
 expected_life_2010 = 6.1
 answer = (expected_volatility_2012 + expected_volatility_2011 + expected_volatility_2010) / 3 
Answer: 31.5%