~~Table~~UNITED ofSTATES ~~Contents~~

~~UNITED~~SECURITIES ~~STATES~~AND EXCHANGE COMMISSION

~~SECURITIES~~Washington, ~~AND~~D.C. ~~EXCHANGE~~20549 ~~COMMISSION~~

~~Washington, D.C. 20549~~ Form 10-Q

~~Form 10-Q~~ (Mark One)

~~(Mark~~x ~~One~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

xFor ~~QUARTERLY~~the ~~REPORT~~period ~~PURSUANT~~ended TOMarch 31, ~~SECTION~~2012 ~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~or ~~the period ended October 1, 2011~~

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

¨For ~~TRANSITION~~the ~~REPORT~~transition ~~PURSUANT~~period ~~TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~from to

~~For~~Commission ~~the~~file ~~transition~~number: ~~period from to~~001-34805

~~Commission~~MOTOROLA ~~file~~MOBILITY ~~number:~~HOLDINGS, INC. ~~001-34805~~

~~MOTOROLA MOBILITY~~(Exact ~~HOLDINGS, INC.~~name of registrant as specified in its charter)

(Exact name of registrant as specified in its charter)


DELAWARE (State of Incorporation)		27-2780868 (I.R.S. Employer Identification No.)

600 N. U.S. Highway 45 Libertyville, Illinois 60048 (Address of principal executive offices)		60048 (Zip Code)

DELAWARE (State of Incorporation)		27-2780868 (I.R.S. Employer Identification No.)
600 N. U.S. Highway 45 Libertyville, Illinois 60048 (Address of principal executive offices)		60048 (Zip Code)

Registrant’s telephone number, including area code:

~~Registrant’s~~(847) 523-5000 ~~telephone number, including area code:~~

Indicate by check mark whether the registrant (~~847~~1) ~~523-5000~~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 x No ¨

Indicate by check mark whether the registrant ~~(1)~~ has ~~filed~~submitted ~~all~~electronically ~~reports~~and ~~required~~posted toon beits ~~filed~~corporate byWeb ~~Section 13~~site, orif ~~15(d)~~any, ofevery ~~the~~Interactive Data ~~Securities~~File ~~Exchange~~required ~~Act~~to be submitted and posted pursuant to Rule 405 of ~~1934~~Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports),~~ and ~~(2) has~~post ~~been subject to~~ such ~~filing requirements for the past 90 days~~files). Yes x No ¨

Indicate by check mark whether the registrant ~~has~~is ~~submitted~~a ~~electronically~~large ~~and~~accelerated ~~posted~~filer, onan ~~its~~accelerated ~~corporate Web site~~filer, ifa ~~any~~non-accelerated filer, ~~every~~or ~~Interactive Data~~a ~~File~~smaller ~~required~~reporting tocompany. beSee ~~submitted~~the ~~and~~definitions ~~posted pursuant to Rule 405~~ of ~~Regulation S-T~~“large ~~during~~accelerated ~~the~~filer”, ~~preceding~~“accelerated ~~12 months~~filer” ~~(or~~and ~~for~~“smaller reporting ~~such~~company” ~~shorter~~in ~~period~~Rule 12b-2 ~~that~~of the ~~registrant~~Exchange ~~was~~Act. ~~required~~(Check ~~to submit and post such files~~one).: ~~Yes x No ¨~~

~~Indicate~~Large ~~by check mark whether the registrant is a large~~ accelerated filer, anx ~~accelerated~~Accelerated filer, a¨ ~~non~~Non-accelerated filer, or¨ a(Do ~~smaller~~not ~~reporting~~check ~~company.~~if ~~See~~a ~~the~~smallerreporting ~~definitions~~company) ofSmaller ~~“large accelerated filer”, “accelerated filer” and “smaller~~ reporting company” ~~in Rule 12b-2 of the Exchange Act. (Check one):~~ ¨

~~Large~~Indicate ~~accelerated~~by ~~filer~~check ¨mark ~~Accelerated~~whether ~~filer~~the ¨registrant ~~Non-accelerated~~is ~~filer~~a xshell company (Doas ~~not~~defined ~~check~~in ifRule 12b-2 aof ~~smallerreporting~~the Exchange ~~company~~Act). ~~Smaller~~Yes ¨ No ~~reporting~~x ~~company ¨~~

~~Indicate~~The bynumber ~~check~~of ~~mark~~shares ~~whether~~outstanding of each of the ~~registrant~~issuer’s isclasses aof ~~shell~~common ~~company~~stock (as ~~defined~~of inthe ~~Rule 12b-2~~close of ~~the Exchange~~business ~~Act).~~on ~~Yes~~March ~~¨ No~~31, x2012:

The number of shares outstanding of each of the issuer’s classes of common stock as of the close of business on October 1, 2011:


Class		Number of Shares
Common Stock; $.01 Par Value		303,676,580

Class	Number of Shares
	Page
Common Stock; $.01 Par Value	299,487,006
PART I—FINANCIAL INFORMATION		1
Item 1. Financial Statements
Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2012 and April 2, 2011		1
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2012 and April 2, 2011		2
Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2012 and December 31, 2011		3
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) for the Three Months Ended March 31, 2012		4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2012 and April 2, 2011		5
Notes to Condensed Consolidated Financial Statements (Unaudited)		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3. Quantitative and Qualitative Disclosures About Market Risk		33
Item 4. Controls and Procedures		35
PART II—OTHER INFORMATION		36
Item 1. Legal Proceedings		36
Item 1A. Risk Factors		42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3. Defaults Upon Senior Securities		42
Item 4. Mine Safety Disclosures		42
Item 5. Other Information		42
Item 6. Exhibits		43

~~Table of Contents~~1

	Page
PART I - FINANCIAL INFORMATION		1
Item 1. Financial Statements
Condensed Consolidated Statements of Operations (Unaudited) for the Three Months and Nine Months Ended October 1, 2011 and October 2, 2010		1
Condensed Consolidated Balance Sheets (Unaudited) as of October 1, 2011 and December 31, 2010		2
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited) for the Nine Months Ended October 1, 2011		3
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended October 1, 2011 and October 2, 2010		4
Notes to Condensed Consolidated Financial Statements (Unaudited)		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		40
Item 4. Controls and Procedures		42
PART II - OTHER INFORMATION		44
Item 1. Legal Proceedings		44
Item 1A. Risk Factors		47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		48
Item 3. Defaults Upon Senior Securities		48
Item 4. (Removed and Reserved)		48
Item 5. Other Information		48
Item 6. Exhibits		48

Part I—Financial Information

~~Table~~Motorola ofMobility ~~Contents~~Holdings, Inc. and Subsidiaries

1Condensed Consolidated Statements of Operations

~~Part~~(Unaudited) ~~I—Financial Information~~

Motorola Mobility Holdings, Inc. and Subsidiaries


	Three Months Ended
(In millions, except per share amounts)	March 31, 2012		April 2, 2011
Net revenues		$3,078		$3,032
Costs of sales		2,324		2,277
Gross margin		754		755
Selling, general and administrative expenses		430		417
Research and development expenditures		366		357
Other charges		28		17
Operating loss		(70)		(36)
Other income (expense):
Interest income, net		3		2
Other, net		(2)		(17)
Total other income (expense)		1		(15)
Loss before income taxes		(69)		(51)
Income tax expense		17		30
Net loss		$(86)		$(81)
Loss per common share (Note 2):
Basic		$(0.28)		$(0.27)
Diluted		$(0.28)		$(0.27)
Weighted average common shares outstanding:
Basic		302.4		294.7
Diluted		302.4		294.7

~~Condensed~~See ~~Consolidated~~accompanying ~~Statements~~notes ofto ~~Operations~~condensed consolidated financial statements (unaudited).

~~(Unaudited)~~ 2

	Three Months Ended				Nine Months Ended
(In millions, except per share amounts)	October 1,2011		October 2,2010		October 1,2011		October 2,2010
Net revenues		$3,259		$2,946		$9,628		$8,035
Costs of sales		2,415		2,155		7,165		5,985
Gross margin		844		791		2,463		2,050
Selling, general and administrative expenses		426		385		1,299		1,141
Research and development expenditures		390		373		1,142		1,112
Other charges (income)		33		27		86		(153)
Operating earnings (loss)		(5)		6		(64)		(50)
Other income (expense):
Interest income (expense), net		7		(11)		10		(40)
Gains on sales of investments		2		—		12		—
Other, net		(6)		(2)		(28)		(24)
Total other income (expense)		3		(13)		(6)		(64)
Loss before income taxes		(2)		(7)		(70)		(114)
Income tax expense		30		28		99		55
Net loss		(32)		(35)		(169)		(169)
Less: Loss attributable to non-controlling interests		—		(1)		—		(3)
Net loss attributable to Motorola Mobility Holdings, Inc.		$(32)		$(34)		$(169)		$(166)
Loss per common share (Note 3):
Basic		$(0.11)		$(0.12)		$(0.57)		$(0.56)
Diluted		$(0.11)		N/A		$(0.57)		N/A
Weighted average common shares outstanding:
Basic		297.7		294.3		296.1		294.3
Diluted		297.7		N/A		296.1		N/A

Motorola Mobility Holdings, Inc. and Subsidiaries

~~See~~Condensed ~~accompanying~~Consolidated ~~notes~~Statements toof ~~condensed~~Comprehensive ~~consolidated~~Income ~~financial statements~~ (~~unaudited~~Loss).

~~Table~~(Unaudited) ~~of Contents~~


	Three Months Ended
(In millions)	March 31, 2012		April 2, 2011
Net loss		$(86)		$(81)
Other comprehensive income (loss):
Net unrealized loss on securities (net of tax of $0)		(1)		(3)
Net loss on derivative instruments (net of tax of $1)		(3)		—
Foreign currency translation adjustments		23		2

Total other comprehensive income (loss)		19		(1)

Comprehensive loss		$(67)		$(82)

~~Motorola~~See ~~Mobility~~accompanying ~~Holdings,~~notes ~~Inc.~~to ~~and~~condensed ~~Subsidiaries~~ consolidated financial statements (unaudited).

~~Condensed Consolidated Balance Sheets~~ 3

~~(Unaudited)~~Motorola Mobility Holdings, Inc. and Subsidiaries

(In millions)	October 1,2011		December 31,2010
ASSETS
Cash and cash equivalents		$3,078		$—
Accounts receivable, net		1,774		1,571
Inventories, net		746		843
Deferred income taxes		147		110
Other current assets		605		595
Total current assets		6,350		3,119
Cash deposits		160		—
Property, plant and equipment, net		803		806
Investments		125		137
Deferred income taxes		50		49
Goodwill		1,431		1,396
Other assets		558		697
Total assets		$9,477		$6,204
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		$1,708		$1,731
Accrued liabilities		2,234		2,115
Total current liabilities		3,942		3,846
Other liabilities		587		603
Stockholders’ Equity
Common stock: $.01 par value;		3		—
Authorized shares: 900.0
Issued shares: 300.0
Outstanding shares: 299.5
Additional paid-in capital		5,217		—
Accumulated other comprehensive loss		(103)		(345)
Retained earnings (accumulated deficit)		(169)		—
Owner’s net investment, prior to Separation		—		2,077
Total Motorola Mobility Holdings, Inc. stockholders’ equity		4,948		1,732
Non-controlling interests		—		23
Total stockholders’ equity		4,948		1,755
Total liabilities and stockholders’ equity		$9,477		$6,204

Condensed Consolidated Balance Sheets

~~See accompanying notes to condensed consolidated financial statements~~ (~~unaudited~~Unaudited).


(In millions)	March 31, 2012		December 31, 2011
ASSETS
Cash and cash equivalents		$3,065		$3,451
Cash deposits		267		2
Accounts receivable, net		1,711		1,780
Inventories, net		569		701
Deferred income taxes		92		95
Other current assets		595		583

Total current assets		6,299		6,612

Cash deposits		162		155
Property, plant and equipment, net		801		805
Investments		123		119
Deferred income taxes		93		93
Goodwill		1,434		1,433
Other assets		480		513

Total assets		$9,392		$9,730
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		$1,530		$1,666
Accrued liabilities		2,224		2,408

Total current liabilities		3,754		4,074

Other liabilities		547		568
Stockholders’ Equity
Common stock: $.01 par value;		3		3
Authorized shares: 900.0
Issued shares: 304.3
Outstanding shares: 303.7
Additional paid-in capital		5,522		5,452
Accumulated other comprehensive loss		(99)		(118)
Accumulated deficit		(335)		(249)

Total stockholders’ equity		5,091		5,088

Total liabilities and stockholders’ equity		$9,392		$9,730

3See accompanying notes to condensed consolidated financial statements (unaudited).

~~Motorola Mobility Holdings, Inc. and Subsidiaries~~ 4

~~Condensed~~Motorola ~~Consolidated~~Mobility ~~Statement~~Holdings, ofInc. ~~Stockholders’~~and ~~Equity~~Subsidiaries

~~(Unaudited)~~Condensed Consolidated Statement of Stockholders’ Equity

					Accumulated Other ComprehensiveIncome (Loss)
(In millions)	Shares		CommonStock andAdditionalPaid-inCapital		Fair ValueAdjustmenttoAvailablefor SaleSecurities,Net of Tax		ForeignCurrencyTranslationAdjustments,Net of Tax		RetirementBenefitsAdjustments,Net of Tax		RetainedEarnings(AccumulatedDeficit)		Owner’s NetInvestment,Prior toSeparation		Non-ControllingInterests		ComprehensiveEarnings (Loss)
Balances at December 31, 2010		—		$—		$14		$(349)		$(10)		$—		$2,077		$23
Capital contribution from Former Parent														3,200
Separation-related adjustments						(5)		346		(4)				(300)		(23)
Reclassification of Owner’s Net Investment to Common Stock and Additional Paid-in Capital in connection with Separation		294.3		4,977										(4,977)
Deferred Contribution from Former Parent				75
Net loss												(169)						(169)
Impact of sale of securities, net oftax of $5						(9)												(9)
Foreign currency translation adjustments								(86)										(86)
Issuance of common stock and stock options exercised		5.2		48
Share-based compensation expense				120
Balances at October 1, 2011		299.5		$5,220		$—		$(89)		$(14)		$(169)		$—		$—		$(264)

(Unaudited)

See accompanying notes to condensed consolidated financial statements (unaudited).

Accumulated Other Comprehensive
Income (Loss)

(In millions)

Shares

Common
Stock and
Additional
Paid-in
Capital

Fair Value
Adjustment
to
Available
for Sale
Securities,
Net of Tax

Foreign
Currency
Translation
Adjustments,
Net of Tax

Retirement
Benefits
Adjustments,
Net of Tax

Other
Items,
Net of
Tax

Accumulated
Deficit

Balances at December 31, 2011

301.7

$5,455

$—

$(111)

$(11)

$(249)

Net loss

(86)

Net unrealized loss on securities (net of tax
of $0)

(1)

Net loss on derivative instruments (net of tax of $1)

(3)

Foreign currency translation adjustments

Stock options exercised

2.0

Share-based compensation expense

Balances at March 31, 2012

303.7

$5,525

$(1)

$(88)

$(11)

$(335)

~~Table~~See ofaccompanying ~~Contents~~notes to condensed consolidated financial statements (unaudited).

Motorola Mobility Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	Three Months Ended
(In millions)	~~October~~March 131,~~2011~~2012		~~October~~April 2,~~2010~~2011
Operating
Net loss attributable to Motorola Mobility Holdings, Inc.		$(169)		$(166)
Net loss		$(86)		$(81)
Loss attributable to non-controlling interests		—		(3)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
Net loss		(169)		(169)
Depreciation and amortization		49		54
Adjustments to reconcile net loss to net cash provided by operating activities:
Share-based compensation expense		48		40
Depreciation and amortization		167		169
Non-cash other charges (income)		—		(1)
Share-based compensation expense		120		120
Deferred income taxes		(3)		(11)
Non-cash other charges		17		1
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Gains on sales of investments		(12)		—
Accounts receivable		74		21
Deferred income taxes		(46)		14
Inventories		138		(16)
Changes in assets and liabilities, net of effects of acquisitions:
Other current assets		(8)		22
Accounts receivable, net		(246)		(225)
Accounts payable and accrued liabilities		(327)		1
Inventories		80		(166)
Other assets and liabilities		17		78
Other current assets		—		(7)
Net cash provided by (used for) operating activities		(98)		107
Accounts payable and accrued liabilities		125		686
Other assets and liabilities		96		(42)
Net cash provided by operating activities		132		381
Investing
Acquisitions and investments		(65)		(66)
Acquisitions and investments, net		(20)		(11)
Proceeds from sales of investments and business, net		29		12
Capital expenditures		(33)		(50)
Capital expenditures		(136)		(68)
Cash deposits		(265)		—
Cash deposits		(24)		—
Other, net		(1)		—
Other, net		5		1
Net cash used for investing activities		(319)		(61)
Net cash used for investing activities		(191)		(121)
Financing
Share-based compensation activity		48		—
Issuance of common stock		22		16
Capital contributions from Former Parent		3,107		—
Capital contribution from Former Parent, net of cash deposits of $168		—		3,032
Other, net		14(1)		—15
Net transfers to Former Parent		—		(293)
Net cash provided by financing activities		21		3,063
Net cash provided by (used for) financing activities		3,169		(293)
Effect of exchange rate changes on cash and cash equivalents		10		7
Effect of exchange rate changes on cash and cash equivalents		(32)		33
Net increase (decrease) in cash and cash equivalents		(386)		3,116
Net increase in cash and cash equivalents		3,078		—
Cash and cash equivalents, beginning of period		3,451		—
Cash and cash equivalents, beginning of period		—		—
Cash and cash equivalents, end of period		$3,065		$3,116
Cash and cash equivalents, end of period		$3,078		$—
Cash Flow Information
Cash paid during the period for:
Interest, net		$21		~~N/A~~$1
Income taxes, net of refunds		~~122~~6		~~N/A~~19

See accompanying notes to condensed consolidated financial statements (unaudited).

~~Table of Contents~~6

5Motorola Mobility Holdings, Inc. and Subsidiaries

~~Motorola~~Notes ~~Mobility~~to ~~Holdings,~~Condensed ~~Inc.~~Consolidated ~~and~~Financial ~~Subsidiaries~~ Statements

~~Notes~~(Dollars toin ~~Condensed~~millions, ~~Consolidated~~except ~~Financial~~as ~~Statements~~noted)

(~~Dollars in millions, except as noted~~Unaudited)

~~(Unaudited)~~1. Background and Basis of Presentation

1. Background ~~and Basis of Presentation~~

~~Background~~Motorola Mobility Holdings, Inc. (“Motorola Mobility” or the “Company”) is a provider of innovative technologies, products and services that enable a broad range of mobile and wireline, digital communication, information and entertainment experiences. The Company’s integrated products and platforms deliver rich multimedia content, such as voice, video, messaging and Internet-based applications and services to multiple screens, such as mobile devices, televisions and personal computers (“multi screens”). Our product portfolio primarily includes mobile devices, wireless accessories, set-top boxes, video distribution systems and associated customer premises equipment. We are focused on developing differentiated, innovative products to meet the expanding needs of consumers to communicate, to collaborate and to discover, consume, create and share content at a time and place of their choosing on multiple devices.

On January 4, 2011 (the “Distribution Date”), the separation of Motorola Mobility from ~~Holdings~~Motorola, Inc., (“which effective January 4, 2011 changed its name to Motorola ~~Mobility”~~Solutions, orInc. (hereinafter, the “Former Parent”) (the ~~Company~~“Separation”), was completed. Motorola Mobility is anow ~~provider~~an ofindependent ~~innovative~~public company ~~technologies,~~trading ~~products~~under ~~and~~the ~~services~~symbol ~~that~~“MMI” ~~enable~~on athe ~~broad~~New ~~range~~York ofStock ~~mobile~~Exchange. ~~and wireline~~On January 4, ~~digital communication~~2011, ~~information~~Former ~~and~~Parent ~~entertainment~~stockholders ~~experiences.~~of ~~The~~record ~~Company’s~~as ~~integrated~~of ~~products~~the ~~and~~close ~~platforms~~of ~~deliver~~business ~~rich~~on ~~multimedia content~~December 21, ~~such~~2010 as(the ~~voice,~~“Record ~~video,~~Date”) ~~messaging~~received ~~and~~one (1) share ~~Internet-based~~of ~~applications~~Motorola ~~and~~Mobility ~~services~~common ~~to multiple~~stock ~~screens,~~for ~~such~~each aseight ~~mobile~~(8) shares ~~devices~~of Motorola, ~~televisions~~Inc. ~~and~~common ~~personal~~stock ~~computers~~held as of the Record Date (~~“multi~~the ~~screens~~“Distribution”). Motorola ~~Our~~Mobility ~~product~~did ~~portfolio~~not ~~primarily~~issue ~~includes~~fractional ~~mobile~~shares ~~devices,~~of ~~wireless~~its ~~accessories,~~common ~~set-top~~stock ~~boxes~~in the ~~and~~Distribution. ~~video~~Fractional ~~distribution~~shares ~~systems,~~that ~~and~~Former ~~wireline broadband~~Parent ~~infrastructure~~stockholders ~~products~~would ~~and~~otherwise ~~associated~~have ~~customer~~been ~~premises~~entitled ~~equipment.~~to Wereceive ~~are~~were ~~focused~~aggregated onand ~~developing~~sold ~~differentiated,~~in ~~innovative~~the ~~products~~public tomarket ~~meet~~by the ~~expanding~~distribution ~~needs~~agent ofand ~~consumers~~aggregate tonet ~~communicate,~~cash toproceeds ~~collaborate~~of ~~and~~these tosales ~~discover,~~were ~~consume, create~~distributed ~~and~~ratably ~~share~~to ~~content~~those atstockholders awho ~~time~~would ~~and~~otherwise ~~place~~have ofbeen ~~their~~entitled ~~choosing~~to onreceive ~~multiple~~fractional ~~devices~~shares.

OnAt ~~January 4,~~the ~~2011~~time ~~(the~~of ~~“Distribution~~the ~~Date”)~~Distribution, the ~~separation~~Former ofParent ~~Motorola~~contributed ~~Mobility from Motorola, Inc~~$3.,2 ~~which~~billion ~~effective~~in ~~January 4~~cash, ~~2011~~cash ~~changed~~equivalents ~~its~~and ~~name~~cash deposits to ~~Motorola~~the ~~Solutions,~~Company ~~Inc.~~ (~~hereinafter,~~ the “~~Former~~Distribution ~~Parent”)~~Date ~~(the “Separation~~Contribution”)~~, was completed~~. ~~Motorola~~ ~~Mobility~~The isFormer ~~now~~Parent anagreed ~~independent~~to ~~public~~contribute ~~company~~to ~~trading under~~ the ~~symbol~~Company ~~“MMI”~~an onadditional ~~the~~$300 ~~New~~million ~~York~~in cash ~~Stock~~if ~~Exchange.~~and Onwhen ~~January 4,~~the ~~2011,~~ Former Parent ~~stockholders~~receives ofcash ~~record~~distributions as ofa ~~the~~result ~~close~~ of ~~business on December 21, 2010 (~~the ~~“Record~~reduction ~~Date”)~~in ~~received~~registered ~~one~~capital ~~(1) share~~ of ~~Motorola~~an ~~Mobility~~overseas ~~common~~subsidiary ~~stock for each eight~~ (~~8) shares of Motorola, Inc. common stock held as of~~ the ~~Record Date (the~~ “~~Distribution~~Deferred Contribution”). ~~Motorola Mobility~~ ~~did~~Since ~~not~~Separation, ~~issue~~the ~~fractional~~Company ~~shares~~has ofreceived ~~its~~$297 ~~common~~million ~~stock~~of in the Deferred ~~Distribution.~~Contribution ~~Fractional~~from ~~shares~~the ~~that~~ Former Parent ~~stockholders~~including ~~would~~$72 ~~otherwise~~million ~~have~~received ~~been~~on ~~entitled~~April to24, receive were aggregated and sold in the public market by the distribution agent and aggregate net cash proceeds of these sales were distributed ratably to those stockholders who would otherwise have been entitled to receive fractional shares2012.

AtMerger ~~the~~Agreement ~~time~~with ofGoogle ~~the Distribution, the Former Parent contributed $3~~Inc.~~2 billion in cash, cash equivalents and cash deposits to the Company (the “Distribution Date Contribution”). The Former Parent~~ agreed to contribute to the Company an additional $300 million in cash if and when the Former Parent receives cash distributions as a result of the reduction in registered capital of an overseas subsidiary (the “Deferred Contribution”). On July 22, 2011, the Company received its first Deferred Contribution of $75 million from the Former Parent.

On August 15, 2011, Motorola Mobility Holdings, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Google Inc. (“Google”) and RB98 Inc., a wholly owned subsidiary of Google (“Merger Sub”). The Merger Agreement provides for the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Google. In the Merger, each outstanding share of common stock, par value $0.01 per share, of the Company, other than any dissenting shares, shares held by Google, Merger Sub, the Company or any of their respective subsidiaries and treasury shares, will be cancelled and converted into the right to receive $40 in cash, without interest.

OnThe ~~August 15,~~closing ~~2011, Motorola Mobility Holdings, Inc. entered into an Agreement and Plan~~ of ~~Merger (~~the “Merger ~~Agreement”)~~is ~~with~~subject ~~Google~~to ~~Inc.~~customary ~~(“Google”)~~closing ~~and RB98 Inc.~~conditions, aincluding ~~wholly~~adoption ~~owned subsidiary~~ of ~~Google~~the (“Merger ~~Sub”). The Merger~~ Agreement ~~provides~~by ~~for~~ the ~~merger~~Company’s stockholders ~~of Merger Sub with~~ and ~~into~~regulatory ~~the~~approvals. ~~Company~~On ~~(the “Merger”)~~November 17, ~~with~~2011, ~~the~~Motorola ~~Company~~Mobility ~~surviving~~stockholders approved the ~~Merger~~proposed asmerger awith ~~wholly owned subsidiary of~~ Google. Inat the ~~Merger,~~Company’s ~~each~~Special ~~outstanding~~Meeting ~~share~~ of ~~common~~Stockholders. ~~stock,~~Antitrust ~~par~~clearances ~~value~~have ~~$0.01~~been ~~per~~received ~~share,~~in of the ~~Company~~U.S., European ~~other than any dissenting shares~~Commission, ~~shares held by Google~~Canada, ~~Merger Sub~~Israel, ~~the Company or any of their respective subsidiaries and treasury shares~~Russia, ~~will~~Taiwan ~~be cancelled~~ and ~~converted~~Turkey. ~~into~~Under the ~~right~~merger toagreement, ~~receive~~antitrust ~~$40.00 in cash~~clearances, ~~without~~or ~~interest.~~waiting ~~The~~period ~~closing of the Merger is subject to customary closing conditions~~expirations, ~~including~~are ~~adoption~~also ofrequired ~~the~~in ~~Merger Agreement by the Company’s stockholders and regulatory approvals.~~

Under the Merger Agreement, the Company may not solicit competing proposals or participate in any discussions or negotiations regarding alternative business combination transactions, subject to exceptions that 7

~~Table~~ China. Requisite filings have been submitted to the appropriate regulatory body in China. In March 2012, the Chinese Ministry of ~~Contents~~Commerce extended the second phase of its investigation and the investigation is pending.

6Pursuant to the Merger Agreement, stock options and restricted stock units (“RSUs”) granted by the Company as a substitute for Motorola, Inc. stock options and RSUs granted prior to 2011 will fully vest upon the closing of the transaction and be paid out at $40 for each RSU and $40 minus the exercise price for each stock option, in each case less applicable tax withholdings. Vested stock options and vested RSUs granted under Motorola Mobility’s 2011 Incentive Compensation Plan in 2011 will be paid out at $40 for each RSU and $40 minus the exercise price for each stock option, in each case less applicable tax withholdings. Unvested stock options and unvested restricted stock (“RS”) and RSUs granted under Motorola Mobility’s 2011 Incentive Compensation Plan in 2011 and 2012 will be converted to an award of equivalent value in Google stock options, RS and RSUs, respectively.

~~permit~~Basis ~~the Company’s Board~~ of ~~Directors~~Presentation to take actions required by their fiduciary duties. The Company may terminate the Merger Agreement under certain specified circumstances, including if its Board of Directors determines in good faith that it has received a superior proposal (as defined in the Merger Agreement), and otherwise complies with certain terms of the Merger Agreement. In connection with a termination to accept a superior proposal, Google will be entitled to a fee of $375 million. The $375 million fee is also payable to Google in other limited circumstances involving a competing proposal and termination of the Merger Agreement.

~~Pursuant~~The tocondensed ~~the~~consolidated ~~Merger~~financial ~~Agreement,~~statements ~~stock~~include ~~options~~the ~~and~~accounts ~~restricted~~of ~~stock units (RSUs) granted by~~ the Company ~~under~~and ~~the~~all ~~Legacy~~controlled ~~Incentive Plan as a substitute for Motorola, Inc~~subsidiaries. ~~stock~~All ~~options,~~ intercompany transactions and ~~RSUs~~balances ~~granted~~have ~~prior~~been toeliminated ~~2011,~~in ~~will~~consolidation. ~~fully~~The ~~vest~~condensed ~~upon~~consolidated ~~the~~financial ~~closing~~statements as of ~~the~~March 31, ~~transaction~~2012 and beDecember 31, ~~paid~~2011 ~~out~~and ~~at $40~~ for ~~each RSU, and $40 minus~~ the ~~exercise~~three ~~price~~months ~~for~~ended ~~each stock option~~March 31, in2012 ~~each~~and ~~case less applicable tax withholdings.~~April ~~Vested~~2, ~~stock options and vested RSUs granted under the~~ 2011 ~~Incentive Compensation Plan~~ include, in ~~2011 will be paid out at $40 for each RSU, and $40 minus~~ the ~~exercise~~opinion ~~price~~of ~~for each stock option~~management, inall ~~each~~adjustments ~~case~~(consisting ~~less applicable~~of ~~tax~~normal ~~withholdings. Unvested~~recurring ~~stock~~adjustments ~~options~~ and ~~unvested restricted stock (RS~~reclassifications) ~~and~~necessary ~~RSUs~~to ~~granted~~present ~~under~~fairly the ~~2011~~Company’s ~~Incentive~~consolidated ~~Compensation~~financial ~~Plan~~position, inresults ~~2011 will be converted to an award~~ of ~~equivalent~~operations ~~value~~and incash ~~Google~~flows ~~stock~~for ~~options,~~all ~~RS and RSUs,~~periods ~~respectively~~presented.

~~Basis~~Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2011. The results of ~~Presentation~~operations for the three months ended March 31, 2012 are not necessarily indicative of the operating results to be expected for the full year. Certain amounts in prior period financial statements and related notes have been reclassified to conform to the 2012 presentation.

The ~~condensed~~preparation ~~consolidated~~of financial statements ~~include~~in ~~the~~conformity ~~accounts~~with ofU.S. GAAP ~~the~~requires ~~Company~~management ~~and~~to ~~all~~make ~~controlled~~certain ~~subsidiaries.~~estimates ~~All intercompany transactions~~ and ~~balances~~assumptions ~~have~~that ~~been~~affect ~~eliminated~~the inreported ~~consolidation.~~amounts ~~The condensed~~of ~~consolidated~~assets ~~financial~~and ~~statements~~liabilities asand disclosure of ~~October 1,~~contingent ~~2011~~assets and ~~December 31,~~liabilities ~~2010~~at ~~and for~~ the ~~three~~date ~~months~~of ~~and~~the ~~nine~~financial ~~months~~statements ~~ended October 1, 2011~~ and ~~October 2, 2010 include, in~~ the ~~opinion~~reported ofamounts ~~management, all adjustments (consisting~~ of ~~normal~~revenues ~~recurring adjustments~~ and ~~reclassifications)~~expenses ~~necessary~~during ~~to present fairly~~ the ~~Company’s~~reporting ~~consolidated~~periods. ~~financial~~Actual ~~position,~~ results ofcould ~~operations~~differ ~~and~~from ~~cash~~those ~~flows for all periods presented~~estimates.

~~Certain information and footnote disclosures normally included in financial statements prepared in accordance with U~~2.S. ~~generally~~Other ~~accepted accounting~~Financial principles (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the combined financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2010. The results of operations for the three months and nine months ended October 1, 2011 are not necessarily indicative of the operating results to be expected for the full year. Certain amounts in prior period financial statements and related notes have been reclassified to conform to the 2011 presentation. Data

~~The~~Statement ~~preparation~~ of ~~financial~~Operations ~~statements~~Information in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

~~Prior~~Other toCharges Separation, the historical financial statements were derived from the consolidated financial statements and accounting records of the Former Parent principally representing the Mobile Devices and Home business segments, using the historical results of operations and historical basis of assets and liabilities of the Company’s businesses. The historical financial statements also include allocations of certain Former Parent general corporate expenses. Management believes the assumptions and methodologies underlying the allocation of general corporate expenses to the historical results of operations were reasonable. However, such expenses may not be indicative of the actual level of expenses that would have been incurred by the Company if it had operated as an independent, publicly traded company or of the costs expected to be incurred in the future. As such, the results of operations prior to Separation, included herein, may not necessarily reflect the Company’s results of operations, financial position or cash flows in the future or what its results of operations, financial position or cash flows would have been had the Company been an independent, publicly traded company during the historical periods presented. Because a direct ownership relationship did not exist among all the various worldwide entities comprising the Company, the Former Parent’s net investment in the Company is presented as Owner’s net investment, rather than stockholders’ equity, in the combined balance sheets for periods prior to the

~~Table~~Other charges included in Operating loss consist of the ~~Contents~~following:


Three Months Ended	March 31, 2012		April 2, 2011
Other charges:
Merger-related transaction costs		$17		$—
Intangible asset amortization		11		16
Intangible asset impairment		—		4
Reorganization of businesses		—		(3)

		$ 28		$ 17

Separation. Transactions between the Mobile Devices and Home business segments and other Former Parent businesses have been identified in the historical financial statements as transactions between related parties for periods prior to the Separation. 8

~~The~~In ~~following~~August ~~table~~2011, ~~presents~~the Company retained investment banking firms to, among other things, advise us in connection with a potential transaction such as the ~~expense~~merger and to evaluate whether the consideration to be received by the holders of our common stock pursuant to the Merger agreement was fair, from a financial point of view, to such holders. In the first quarter of 2012, the Company has incurred non-refundable fees of approximately $1 million, which have been recorded as a component of Other charges (income) ~~allocations~~in the Company’s condensed consolidated statements of operations for the ~~reflected~~three months ended March 31, 2012. At the effective time of the Merger, the Company will incur additional aggregate fees of approximately $39 million to the investment banking firms. Additionally, the Company incurred $16 million in legal fees and other incremental costs in the first quarter of 2012 relating to the Merger, which has also been recorded as a component of Other charges (income) in the Company’s condensed consolidated statements of operations: for the three months ended March 31, 2012.

October 2, 2010	ThreeMonthsEnded		NineMonthsEnded
Leveraged services expenses		$ 102		$ 369
Employee benefits and incentives		119		327
Basic research		—		5
Interest expense (income), net		12		38
		$ 233		$ 739

Other Income (Expense)

~~The~~Interest ~~Company~~income ~~and~~(expense), ~~the~~net, ~~Former~~and ~~Parent considered these leveraged services expenses~~Other, ~~employee benefits and incentives~~net, ~~basic~~both ~~research~~included ~~and~~in ~~interest~~Other ~~expense~~income (~~income~~expense), ~~allocations~~consist ~~to be a reasonable reflection~~ of the ~~services~~following: ~~provided to the Company by the Former Parent. For the three months and nine months ended October 1, 2011, there are no allocations from the Former Parent in the statement of operations.~~

The Former Parent used a worldwide centralized approach to cash management and the financing of its operations with all related activity between the Company and the Former Parent reflected as equity transactions in Owner’s net investment in the Company’s historical balance sheets for periods prior to Separation. Types of intercompany transactions between the Company and the Former Parent prior to Separation included: (i) cash receipts from the Company’s businesses, which were transferred to the Former Parent on a regular basis, (ii) cash injections from the Former Parent used to fund operations, capital expenditures, or acquisitions, (iii) charges (benefits) for income taxes, and (iv) allocations of the Former Parent’s corporate expenses, as discussed above.


Three Months Ended	March 31, 2012		April 2, 2011
Interest income (expense), net:
Interest income		$5		$4
Interest expense		(2)		(2)

		$3		$2

Other, net:
Foreign currency costs		$(1)		$(12)
Investment impairments		(3)		—
Other		2		(5)

		$(2)		$(17)

~~Prior~~Loss toPer ~~Separation,~~Common ~~the~~Share historical financial statements included a manufacturing joint venture that primarily benefited the Company. Activity in the joint venture for the benefit of the Company began to wind down prior to Separation. Upon Separation, the Company did not retain any ownership in the joint venture and the Company is no longer receiving any manufactured goods from the joint venture. As such, after Separation, the joint venture is no longer included in the consolidated financial statements of the Company. In addition, because the historical financial statements were derived from the Former Parent’s accounting records, included in the Separation-related adjustments are adjustments to foreign currency translation adjustments, net of tax, in Accumulated other comprehensive loss, to reflect the appropriate opening balances related to the Company’s legal entities at Separation.

For purposes of the Company’s historical financial statements, income tax expense and deferred income tax balances were recorded as if the Company filed tax returns on a separate return basis (“hypothetical carve-out basis”) from the Former Parent. The ~~Company’s~~computation historical income tax balances reflected tax losses and tax credits generated by the Company while divisions within the Former Parent’s legal entities which were available for use by the Former Parent’s other businesses. Additionally, as part of ~~the~~basic ~~Separation, the Former Parent entered into taxable transactions when separating the Company’s non-U.S. assets~~ and ~~liabilities~~diluted ~~into~~loss ~~separate~~per ~~non-U.S.~~common ~~subsidiaries~~share ofis ~~the Company. As a result of these taxable transactions and the use of certain tax losses and credits by the Former Parent, the Company’s income tax balances,~~ as ~~presented~~follows: on the hypothetical carve-out basis, at December 31, 2010 were adjusted after the Separation to reflect the Company’s post-Separation income tax positions, including unrecognized tax benefits, tax loss and credit carry forwards, other deferred tax assets and valuation allowances. The adjustment resulted in a decrease in the hypothetical carve-out income tax balances with an offsetting $32 million increase in Stockholders’ Equity.


Three Months Ended	March 31, 2012		April 2, 2011
Basic loss per common share:
Net loss		$(86)		$(81)
Weighted average common shares outstanding		302.4		294.7

Per share amount		$(0.28)		$(0.27)

Diluted loss per common share:
Net loss		$(86)		$(81)
Weighted average common shares outstanding		302.4		294.7
Add effect of dilutive securities:
Share-based awards and other		—		—

Diluted weighted average common shares outstanding		302.4		294.7

Per share amount		$(0.28)		$(0.27)

~~Brazil~~For ~~Functional~~the ~~Currency~~three months ended March 31, 2012 and April 2, 2011, the Company was in a net loss position and, accordingly, the assumed exercise of 2.5 million stock options and the assumed vesting of 4.0 million restricted stock units for the three months ended March 31, 2012 and the assumed exercise of 1.3 million stock options and the assumed vesting of 2.7 million restricted stock units for the three months ended April 2, 2011, were excluded from diluted weighted average shares outstanding because their inclusion would have been antidilutive.

~~Effective~~Balance ~~July 3,~~Sheet ~~2011,~~Information based on cumulatively significant changes in economic facts and circumstances, the Company determined that for purposes of financial statement translation the local Brazilian currency should be the functional currency of the Company’s wholly owned Brazilian subsidiary, Motorola Industrial Ltda. Prior to July 3, 2011, the functional currency was the U.S. dollar. As a result of this change, there was an immaterial adjustment to the previously reported values of non-monetary assets offset by an adjustment to the Foreign currency translation adjustment, a component of accumulated other comprehensive loss in Stockholders’ equity in the condensed consolidated balance sheets. As a result of this change in the functional currency, for financial periods beginning on or after July 3, 2011, changes in the Brazilian exchange rates will result in gains or losses, which will be recorded in Other, net in the condensed consolidated statements of operations related to the revaluation of U.S. dollar denominated monetary assets and liabilities, such as cash and cash equivalents and accounts payable held by our Brazilian subsidiary.

~~Recently~~Cash and ~~Issued~~Cash ~~Accounting~~Equivalents ~~Pronouncements~~and Cash Deposits

InThe ~~May~~Company’s ~~2011,~~cash ~~the~~and ~~FASB~~cash ~~issued~~equivalents ~~authoritative~~(which ~~guidance~~are ~~that~~highly-liquid investments ~~changes~~with ~~the~~an ~~wording~~original ~~used~~maturity ~~to describe many~~ of ~~the~~three ~~requirements~~months ~~for~~or ~~measuring~~less) ~~fair value~~were ~~and for disclosing information about fair value measurements to ensure consistency between U~~$3.S.1 ~~GAAP~~billion ~~and~~at ~~IFRS~~March 31, 2012. ~~The~~In ~~guidance~~addition, ~~also expands~~ the ~~disclosures~~Company ~~for~~had ~~fair~~$429 ~~value~~million ~~measurements~~of ~~that~~cash ~~are~~deposits, ~~estimated~~primarily ~~using~~related ~~significant unobservable (Level 3) inputs. This new guidance is~~ to bevarious ~~applied~~legal ~~prospectively~~disputes, ~~during~~at ~~interim and annual periods beginning after December~~March 1531, ~~2011~~2012. ~~The~~At March 31, ~~Company~~2012, ~~anticipates~~$267 ~~that~~million ~~the adoption~~ of this ~~standard~~amount ~~will~~was ~~not~~current ~~materially~~and ~~expand~~$162 ~~its consolidated~~million ~~financial~~of ~~statement~~this ~~footnote~~amount ~~disclosures~~was ~~or change the way it measures fair value~~non-current.

InAccounts ~~June 2011, the FASB~~Receivable issued authoritative guidance which amends current comprehensive income guidance. This guidance eliminates the option to present the components of comprehensive income as part of the statement of stockholders’ equity. Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. This guidance will be effective for the Company during the interim and annual periods beginning after December 15, 2011. The adoption of this guidance will not have an impact on the Company’s consolidated statements of operations, balance sheets or cash flows as it only requires a change in the format of the current presentation.

InAccounts ~~September 2011~~receivable, the FASB issued new accounting guidance intended to simplify goodwill impairment testing. The Company will be allowed to perform a qualitative assessment on goodwill impairment to determine whether a quantitative assessment is necessary. This guidance is effective for goodwill impairment tests performed in interim and annual periods for fiscal years beginning after December 15net, ~~2011~~consists ~~with early~~of ~~adoption permitted. The Company expects to early adopt this guidance in~~ the ~~fourth~~following: quarter effective October 2, 2011 for its fiscal 2011 annual impairment test. The Company does not expect the adoption of this guidance will have a material impact on our results of operations or financial position.

2. Relationship with the Former Parent


	March 31, 2012		December 31, 2011
Accounts receivable		$1,730		$1,803
Less allowance for doubtful accounts		(19)		(23)

		$1,711		$1,780

InInventories connection with the Separation, the Company entered into a series of agreements with the Former Parent which are intended to govern the relationship between the Company and the Former Parent going forward. These agreements include a Master Separation and Distribution Agreement, intellectual property agreements, a trademark license agreement, a tax sharing agreement and an employee matters agreement. The Company also entered into other related agreements with the Former Parent including transition services agreements. During the three months and nine months ended October 1, 2011, the net expense to the Company related to these agreements was not material. See Note 10, “Commitments and Contingencies”, regarding indemnifications to and from the Former Parent.

~~Table~~Inventories, net, consists of ~~Contents~~the following:


	March 31, 2012		December 31, 2011
Finished goods		$387		$474
Work-in-process and production materials		401		455

		788		929
Less inventory reserves		(219)		(228)

		$569		$701

3. Other ~~Financial~~Current ~~Data~~Assets

~~Statement~~Other current assets consists of ~~Operations~~the ~~Information~~following:

Other Charges (Income)


	March 31, 2012		December 31, 2011
Contractor receivables		$234		$264
Tax refunds receivable		141		101
Deferred costs		97		97
Royalty license arrangements		55		47
Other		68		74

		$595		$583

~~Other charges (income) included in Operating earnings (loss) consist of the following:~~ 10

	Three Months Ended				Nine Months Ended
	October 1, 2011		October 2, 2010		October 1, 2011		October 2, 2010
Merger-related transaction costs		$18		$—		$18		$—
Legal claim provision		—		—		20		—
Intangible asset amortization		15		14		47		41
Intangible asset impairment		—		—		4		—
Reorganization of businesses		—		13		(3)		34
Legal settlement		—		—		—		(228)
		$33		$27		$86		$(153)

Property, Plant and Equipment

~~In August 2011~~Property, ~~the~~plant ~~Company retained investment banking firms to, among other things, advise us in connection with a potential transaction such as the merger~~ and ~~to evaluate whether the consideration to be received by the holders of our common stock pursuant to the Merger agreement was fair~~equipment, ~~from a financial point of view~~net, toconsists ~~such holders. To date, the Company has incurred non-refundable fees~~ of ~~approximately $9 million, which have been recorded as a component of Other charges (income) in~~ the ~~Company’s~~following: condensed consolidated statements of operations for the three and nine months ended October 1, 2011. At the effective time of the Merger, the Company will incur additional aggregate fees of approximately $42 million to the investment banking firms. Additionally, the Company incurred $9 million in legal fees and other incremental costs in the third quarter of 2011 relating to the Merger, which has also been recorded as a component of Other Charges (income) in the Company’s condensed consolidated statements of operations for the three and nine months ended October 1, 2011.

In June 2010, the Company announced that it had entered into a settlement and license agreement with another company, which resolved all outstanding litigation between the two companies. The agreement includes provisions for an upfront payment of $175 million from the other company to the Company, future royalties to be paid by the other company to the Company for the license of certain intellectual property, and the transfer of certain patents between the companies. As a result of this agreement and the valuation of the patents exchanged, the Company recorded a pre-tax gain of $228 million during the nine months ended October 2, 2010, related to the settlement of the outstanding litigation between the parties.


	March 31, 2012		December 31, 2011
Land		$43		$43
Buildings		719		696
Machinery and equipment		1,671		1,685

		2,433		2,424
Less accumulated depreciation		(1,632)		(1,619)

		$801		$805

~~Table~~Depreciation ofexpense ~~Contents~~for the three months ended March 31, 2012 and April 2, 2011 was $38 million for each period.

10Investments

~~Other~~Investments ~~Income~~consists ~~(Expense)~~of the following:

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


			Less				Cost Basis
March 31, 2012	Recorded Value		Unrealized Gains		Unrealized Losses		Cost Basis
Available-for-sale securities:
Common stock and equivalents		$4		$—		$(1)		$5
Other securities, at cost		90		—		—		90
Equity method investments		29		—		—		29

		$123		$—		$(1)		$124

			Less
December 31, 2011	Recorded Value		Unrealized Gains		Unrealized Losses		Cost Basis
Available-for-sale securities:
Common stock and equivalents		$—		$—		$—		$—
Other securities, at cost		90		—		—		90
Equity method investments		29		—		—		29

		$119		$—		$—		$119

	Three Months Ended				Nine Months Ended
	October 1,2011		October 2, 2010		October 1,2011		October 2,2010
Interest income (expense), net:
Interest income		$8		$12		$18		$24
Interest expense		(1)		(23)		(8)		(64)
		$7		$(11)		$10		$(40)
Other, net:
Foreign currency costs		$(8)		$(6)		$(30)		$(25)
Investment impairments		—		—		—		(7)
Other		2		4		2		8
		$(6)		$(2)		$(28)		$(24)

During the three months ended March 31, 2012, the Company recorded investment impairment charges of $3 million, representing other-than-temporary declines in the value of the Company’s investment portfolio, primarily related to other securities recorded at cost. During the three months ended April 2, 2011 the investment impairment charges recorded by the Company were de minimis. Investment impairment charges are included in Other within Other income (expense) in the Company’s condensed consolidated statements of operations.

~~Loss Per Common Share~~ 11

~~The~~Other ~~computation~~Assets ~~of basic and diluted loss per common share attributable to Motorola Mobility Holdings, Inc. common stockholders is as follows:~~

	Amounts attributable to Motorola MobilityHoldings, Inc.common stockholders
	Three Months Ended				Nine Months Ended
	October 1,2011		October 2,2010		October 1,2011		October 2,2010
Basic loss per common share:
Net loss		$(32)		$(34)		$(169)		$(166)
Weighted average common shares outstanding		297.7		294.3		296.1		294.3
Per share amount		$(0.11)		$(0.12)		$(0.57)		$(0.56)
Diluted loss per common share:
Net loss		$(32)		N/A		$(169)		N/A
Weighted average common shares outstanding		297.7		N/A		296.1		N/A
Add effect of dilutive securities:
Share-based awards and other		—		N/A		—		N/A
Diluted weighted average common shares outstanding		297.7		N/A		296.1		N/A
Per share amount		$(0.11)		N/A		$(0.57)		N/A

Other assets consists of the following:

For the three months and nine months ended October 1, 2011, the Company was in a net loss position and, accordingly, the assumed exercise of 1.4 million and 1.2 million stock options, respectively, and the assumed vesting of 1.9 million and 2.0 million restricted stock units, respectively, were excluded from diluted weighted average shares outstanding because their inclusion would have been anti-dilutive.


	March 31, 2012		December 31, 2011
Royalty license arrangements		$202		$210
Intangible assets, net of accumulated amortization of $684 and $673		137		147
Deferred costs		94		111
Value-added tax refunds receivable		8		6
Other		39		39

		$480		$513

~~The~~Accrued ~~computation~~Liabilities of basic loss per common share for all periods through December 31, 2010, is calculated using the number of shares of Motorola Mobility common stock outstanding on January 4, 2011, following the Distribution. No measure of diluted loss per common share is presented since there were no actual shares outstanding prior to Separation.

~~Table~~Accrued liabilities consists of ~~Contents~~the following:


	March 31, 2012		December 31, 2011
Customer reserves		$338		$382
Deferred revenue		315		307
Warranty reserves		289		277
Royalty license arrangements		249		269
Contractor payables		194		217
Compensation		168		302
Tax liabilities		102		106
Other		569		548

		$2,224		$2,408

~~Balance~~Other ~~Sheet~~Liabilities ~~Information~~

~~Cash~~Other ~~and~~liabilities ~~Cash~~consists ~~Equivalents~~of ~~and~~the ~~Cash~~following: ~~Deposits~~

The Company’s cash and cash equivalents (which are highly-liquid investments with an original maturity of three months or less) were $3.1 billion at October 1, 2011. In addition, the Company had $181 million of cash deposits, primarily related to various legal disputes, at October 1, 2011. At October 1, 2011, $21 million of this amount was current and included in Other current assets in the Company’s condensed consolidated balance sheet (all of which was held in the U.S.) and $160 million of this amount was non-current (including $155 million held outside the U.S.). Prior to Separation, the Company participated in the Former Parent’s cash management program. As a result, the Company has recorded no cash, cash equivalents or cash deposits on its balance sheet prior to Separation.


	March 31, 2012		December 31, 2011
Deferred revenue		$144		$162
Defined benefit pension plans		98		95
Facility financing obligation		97		97
Deferred income taxes		64		70
Other		144		144

		$547		$568

~~Accounts~~3. ~~Receivable~~Risk Management

~~Accounts~~Derivative ~~receivable,~~Financial ~~net,~~Instruments ~~consists of the following:~~

	October 1,2011		December 31, 2010
Accounts receivable		$1,801		$1,620
Less allowance for doubtful accounts		(27)		(49)
		$1,774		$1,571

Foreign Currency Risk

~~Inventories~~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

~~Inventories, net, consists of the following:~~ 12

	October 1,2011		December 31,2010
Work-in-process and production materials		$465		$724
Finished goods		504		508
		969		1,232
Less inventory reserves		(223)		(389)
		$746		$843

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.

~~Other~~The ~~Current~~Company’s ~~Assets~~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 operating business units’ assessment of risk. The Company enters into derivative contracts for some of the Company’s non-functional currency 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 firm commitments and 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.

~~Other~~As ~~current~~of March 31, 2012 and December 31, 2011, the Company had outstanding foreign exchange contracts with notional values totaling $564 million and $546 million, respectively. 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, ~~consists~~liabilities and transactions, except for the ineffective portion of the ~~following:~~instruments, which are charged to Other within Other income (expense) in the Company’s condensed consolidated statements of operations.

	October 1,2011		December 31,2010
Contractor receivables		$246		$239
Deferred costs		109		163
Tax refunds receivable		108		103
Royalty license arrangements		50		44
Cash deposits		21		—
Other		71		46
		$605		$595

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


	Notional Amount
Net Buy (Sell) by Currency	March 31, 2012		December 31, 2011
Euro		$(343)		$(154)
British Pound		(27)		(10)
Chinese Yuan		31		191
Brazilian Real		41		37
Canadian Dollar		46		47

12Counterparty Risk

~~Property~~The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of nonperformance by counterparties. However, ~~Plant~~the ~~and~~risk ~~Equipment~~is limited to the fair value of the instruments when the derivative is in an asset position. At the present time, all of the counterparties have investment grade credit ratings. The Company is not exposed to material credit risk with any single counterparty.

~~Property,~~The ~~plant~~following ~~and~~table ~~equipment,~~summarizes ~~net,~~the ~~consists~~effect of ~~the~~derivative ~~following~~instruments in our condensed consolidated statements of operations:

	October 1,2011		December 31,2010
Three Months Ended March 31, 2012	Loss on DerivativeInstruments		Statement of Operations Location
Land		$44		$44
Derivatives designated as hedging instruments:
Building		695		716
Foreign exchange contracts—Fair value hedges		$—		Foreign currency income (expense)
Machinery and equipment		1,717		1,665
Derivatives not designated as hedging instruments:
		2,456		2,425
Foreign exchange contracts		(4)		Other income (expense)
Less accumulated depreciation		(1,653)		(1,619)
Total derivatives not designated as hedging instruments		$(4)
		$803		$806

Depreciation expense for the three months ended October 1, 2011 and October 2, 2010 was $42 million and $44 million, respectively. Depreciation expense for the nine months ended October 1, 2011 and October 2, 2010 was $120 million and $128 million, respectively. 13

Investments


Three Months Ended April 2, 2011	Loss on Derivative Instruments		Statement of Operations Location
Derivatives designated as hedging instruments:
Foreign exchange contracts – Fair value hedges		$—		Foreign currency income (expense)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		(25)		Other income (expense)

Total derivatives not designated as hedging instruments		$(25)

~~Investments~~Fair ~~consists~~Value of ~~the~~Financial ~~following:~~Instruments

			Less				CostBasis
October 1, 2011	RecordedValue		Unrealized Gains		Unrealized Losses
Available-for-sale securities:
Common stock and equivalents		$—		$—		$—		$—
Other securities, at cost		93		—		—		93
Equity method investments		32		—		—		32
		$125		$—		$—		$125

The Company’s financial instruments include cash equivalents, accounts receivable, accounts payable, accrued liabilities, derivative financial instruments and other financing commitments. The Company’s available-for-sale investment portfolios and derivative financial instruments are recorded in the Company’s condensed consolidated balance sheets at fair value. All other financial instruments are carried at cost, which is not materially different than the instruments’ fair values.

			Less				CostBasis
December 31, 2010	RecordedValue		Unrealized Gains		Unrealized Losses
Available-for-sale securities:
Common stock and equivalents		$21		$14		$—		$7
Other securities, at cost		89		—		—		89
Equity method investments		27		—		—		27
		$137		$14		$—		$123

4.	Income Taxes

~~During~~Income ~~the~~Tax ~~nine~~Expense ~~months ended October 1, 2011, the Company disposed of Available-for-sale common stock and equivalents and Other securities, at cost resulting in a gain on sale of investments of $12 million.~~

~~During~~For the three months ~~and nine months~~ ended ~~October~~March 131, ~~2011,~~2012 and ~~the three months ended October~~April 2, ~~2010~~2011, ~~investment impairment charges recorded by~~ the Company ~~were de minimis. During the nine months ended October 2, 2010, the Company~~ recorded ~~investment~~income ~~impairment~~tax ~~charges~~expense of $7 17 million ~~representing~~and ~~other-than-temporary~~$30 ~~declines~~million, inrespectively, ~~the~~comprised ~~value~~ of ~~the~~taxes ~~Company’s~~on ~~investment~~foreign ~~portfolio,~~earnings ~~primarily~~and foreign ~~related~~withholding totaxes ~~other~~on ~~securities~~royalty ~~recorded~~and atother ~~cost~~income. The ~~Investment~~Company ~~impairment~~has ~~charges~~not ~~are included~~recorded ina ~~Other~~tax ~~within~~benefit ~~Other~~on ~~income~~its ~~(expense)~~U.S. inlosses ~~the~~due ~~Company’s~~to ~~condensed~~its ~~consolidated~~recent ~~statements~~history of ~~operations~~cumulative U.S. losses.

~~Table~~Deferred ofIncome ~~Contents~~Taxes

13As of March 31, 2012 and December 31, 2011, the Company’s net deferred tax assets, exclusive of valuation allowances, were $2.6 billion. As of March 31, 2012 and December 31, 2011, the valuation allowance against the net deferred tax assets was $2.5 billion.

~~Other~~Included ~~Assets~~in the net deferred tax assets of $2.6 billion as of March 31, 2012 are: (i) approximately $900 million of deferred tax assets related to capitalized R&D costs that may be amortized for tax purposes through 2019; (ii) approximately $900 million of deferred tax assets related to U.S. and foreign tax loss and credit carry forwards; and (iii) approximately $800 million of deferred taxes related to other temporary differences.

~~Other~~Unrecognized ~~assets~~Tax ~~consists of the following:~~ Benefits

	October 1,2011		December 31,2010
Royalty license arrangements		$220		$228
Intangible assets, net of accumulated amortization of $661 and $614		160		205
Deferred costs		128		180
Value-added tax refunds receivable		11		48
Other		39		36
		$558		$697

The Company had unrecognized tax benefits of $16 million and $23 million, at March 31, 2012 and December 31, 2011, respectively. During the three months ended March 31, 2012, the Company reduced its unrecognized tax benefits by $7 million primarily for facts that indicate the extent to which certain tax positions are more-likely-than-not of being sustained. The reduction resulted in the recording of no net income tax benefit due to offsetting valuation allowances.

~~Accrued~~5. ~~Liabilities~~Share-Based Compensation Plans

~~Accrued~~Upon ~~liabilities~~Separation, ~~consists~~all outstanding Former Parent stock options, stock appreciation rights and restricted stock units for the Company’s employees were replaced with awards in the Company using a formula designed to preserve the intrinsic value and fair value of the ~~following:~~award immediately prior to Separation. There was no incremental compensation expense to the Company related to the replacement of the Former Parent share-based compensation awards. Any unrecognized compensation expense related to the replaced awards will be recognized by the Company over the remaining vesting period of the awards.

	October 1,2011		December 31,2010
Customer reserves		$364		$256
Deferred revenue		310		325
Warranty reserves		253		206
Compensation		249		246
Royalty license arrangements		246		211
Contractor payables		183		179
Tax liabilities		100		140
Other		529		552
		$2,234		$2,115


14

~~Other~~Stock ~~Liabilities~~Options

~~Other~~During ~~liabilities~~the ~~consists~~three months ended March 31, 2012, the Company did not grant any stock options. As of March 31, 2012, the ~~following:~~Company had 18.6 million stock options and stock appreciation rights outstanding.

	October 1,2011		December 31,2010
Deferred revenue		$178		$224
Facility financing obligation		97		96
Defined benefit pension plans		95		93
Deferred income taxes		77		79
Other		140		111
		$587		$603

Restricted Stock and Restricted Stock Units

4During the three months ended March 31, 2012, the Company granted 6.1 million ~~Risk~~RS ~~Management~~and RSUs with a weighted-average fair market value of $38.88 per RS and RSU. As of March 31, 2012, the Company had 14.2 million RS and RSUs outstanding.

~~Derivative~~Compensation ~~Financial~~expense ~~Instruments~~related to the Company’s employee stock option, stock appreciation rights, employee stock purchase, restricted stock and restricted stock unit plans was as follows:

Foreign Currency Risk


Three Months Ended	March 31, 2012		April 2, 2011
Share-based compensation expense included in:
Costs of sales		$5		$4
Selling, general and administrative expenses		25		21
Research and development expenditures		18		15

Share-based compensation expense included in Operating loss		48		40
Tax benefit		—		—

Share-based compensation expense, net of tax		$48		$40

~~The Company uses financial instruments to reduce its overall exposure to the effects of currency fluctuations on cash flows~~6. ~~The~~Fair ~~Company’s~~Value ~~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~~ Measurements

~~Table~~The Company had no non-financial assets or liabilities that are required to be measured at fair value on a recurring basis as of ~~Contents~~March 31, 2012.

14Applicable accounting standards specify 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:

~~into~~Level ~~transactions~~1—Quoted prices 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~~identical ~~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~~active ~~values of the underlying hedged items both at the inception of the hedge and over the life of the hedge contract~~markets.

~~The~~Level ~~Company’s strategy~~2—Quoted ~~related~~prices tofor ~~foreign~~similar ~~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 operating business units’ assessment of risk. The Company enters into derivative contracts for some of the Company’s non-functional currency receivables and payables, which are primarily denominated in ~~major~~active ~~currencies that can be traded on open~~ markets~~. The Company typically uses forward contracts and options to hedge these currency exposures. In addition~~, ~~the~~quoted ~~Company~~prices ~~enters into derivative contracts~~ for ~~some firm commitments and some forecasted transactions, which are designated as part of a hedging~~ ~~relationship~~identical ifor itsimilar ~~is determined that the transaction qualifies for hedge accounting under the provisions of the authoritative accounting guidance for derivative~~ instruments ~~and~~in ~~hedging~~markets ~~activities. A portion of the Company’s exposure is from currencies~~ that are not ~~traded~~active ~~in liquid markets~~ and ~~these~~model-derived ~~are addressed~~valuations, toin ~~the~~which ~~extent~~all ~~reasonably~~significant ~~possible,~~inputs byare ~~managing~~observable ~~net~~in ~~asset~~active ~~positions, product pricing and component sourcing~~markets.

AsLevel of3—Valuations ~~October 1,~~derived ~~2011~~from ~~and~~valuation ~~December 31~~techniques, ~~2010,~~in ~~the~~which ~~Company~~one ~~had~~or ~~outstanding~~more ~~foreign~~significant ~~exchange~~inputs contracts with notional values totaling $265 million and $608 million, respectively. 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 are ~~charged to Other within Other income (expense) in the Company’s condensed consolidated statements of operations~~unobservable.

The ~~following~~fair ~~table~~values ~~shows~~of the ~~five~~Company’s ~~largest~~financial ~~net~~assets ~~notional~~and ~~amounts~~liabilities ofby ~~the~~level ~~positions~~in tothe ~~buy~~fair orvalue ~~sell foreign~~hierarchy ~~currency~~ as of ~~October~~March 131, ~~2011~~2012 ~~and~~were ~~the corresponding positions~~ as ~~of December 31, 2010~~follows:

	Notional Amount
March 31, 2012	Level 1		Level 2		Level 3		Total
Net Buy (Sell) by Currency	October 1,2011		December 31,2010
Assets:
Canadian Dollar		$25		$35
Cash equivalents
Indian Rupee		(25)		(43)
Money market funds		$2,345		$—		$—		$2,345
Chinese Yuan		(29)		14
Time deposits and bank drafts		—		423		—		423
Euro		(66)		(54)
Common stock and equivalents		4		—		—		4
Japanese Yen		(67)		(5)
Foreign exchange derivative contracts		—		1		—		1

~~Counterparty Risk~~ 15

~~The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of nonperformance by counterparties~~7. ~~However,~~Sales ~~the risk is limited to the fair value~~ of the instruments when the derivative is in an asset position. At the present time, all of the counterparties have investment grade credit ratings. As of October 1, 2011 the Company was exposed to an aggregate credit risk of approximately $14 million with all counterparties. Receivables

~~Fair~~For ~~Value~~the three months ended March 31, 2012 and April 2, 2011, total accounts receivable sold by the Company were $3 million and $31 million, respectively. As of ~~Financial~~March 31, ~~Instruments~~2012 and December 31, 2011, there were no accounts receivable outstanding for which the Company retained servicing obligations.

~~The Company’s financial instruments include accounts receivable, accounts payable, accrued liabilities, derivative financial instruments and other financing commitments~~8. ~~The~~Credit Company’s available-for-sale investment portfolios and derivative financial instruments are recorded in the Company’s condensed consolidated balance sheets at fair value. All other financial instruments are carried at cost, which is not materially different than the instruments’ fair values. Facilities

~~Table~~On January 4, 2011, the Company entered into a $500 million unsecured three-year credit agreement (the “Credit Agreement”) with a syndicate of ~~Contents~~lenders. The Credit Agreement provides for a revolving credit facility and a letter of credit facility, is guaranteed by certain of the Company’s subsidiaries, and contains restrictive covenants. The Company may use any borrowings under the Credit Agreement for general corporate purposes. No obligations are outstanding under the Credit Agreement as of March 31, 2012.

159. Commitments and Contingencies

5.Legal ~~Income Taxes~~

~~Basis~~The Company is involved in various lawsuits, claims and investigations arising in the normal course of ~~Presentation~~business and relating to the Company’s business. The Company is currently engaged in significant patent litigation with Microsoft Corporation (“Microsoft”) and Apple Inc. (“Apple”) in many different forums within and outside the U.S., including in the U.S. International Trade Commission (“ITC”). The Company expects final ITC determinations on the Microsoft patent infringement matter against the Company in May 2012 with a sixty-day presidential review period subject to any applicable bonding requirements. An ultimate loss for the Company in an ITC action could result in a prohibition on importing infringing products or products incorporating infringing components into the U.S. The Company’s manufacturing is conducted outside the U.S. and the Company imports all of its products into the U.S. An ultimate loss in the ITC also could necessitate workarounds to shift to non-infringing products or limit certain features of our products, increasing costs. Such patent litigation also could result in increased costs for the Company associated with damages, development of non-infringing products, and licenses under the subject intellectual property.

~~For~~In ~~purposes~~the opinion of management, the ultimate disposition of these various matters is not expected to have a material adverse effect on the Company’s ~~historical~~consolidated financial ~~statements pre-Separation~~position, ~~income~~liquidity ~~tax~~or ~~expense~~results ~~and~~of ~~deferred~~operations. ~~income~~However, ~~tax~~an ~~balances~~unfavorable ~~were~~resolution ~~recorded~~could ashave a ifmaterial adverse effect on the Company’s ~~had~~consolidated ~~filed~~financial ~~tax~~position, ~~returns~~liquidity onor aresults ~~separate return~~of ~~basis~~operations ~~(“hypothetical~~in ~~carve-out~~the ~~basis”)~~periods ~~from~~in which the ~~Former~~matters ~~Parent~~are ultimately resolved. ~~Post-Separation,~~ ~~income~~If ~~tax~~the ~~expense~~Company is prohibited from importing infringing products into the U.S. and ~~deferred~~the ~~income~~scope ~~tax~~of ~~balances~~the ~~are~~prohibition ~~recorded~~impacts ina ~~accordance~~meaningful ~~with~~portion of the Company’s ~~stand-alone~~products, ~~income~~disposition ~~tax~~of ~~positions.~~such an ITC matter could have a material impact on the Company’s consolidated financial position, liquidity or results of operations.

~~Income~~ Tax ~~Expense~~and Regulatory Proceedings in Brazil

~~For~~In connection with the ~~three~~Company’s ~~months~~operations ~~ended~~in ~~October 1~~Brazil, ~~2011~~Brazilian ~~and~~tax ~~October 2,~~authorities ~~2010,~~have ~~the~~proposed ~~Company~~assessments ~~recorded~~against ~~net~~the ~~income~~Company’s ~~tax~~Brazilian ~~expense~~subsidiary ofrelating ~~$30~~to ~~million~~various ~~and~~technology ~~$28 million~~transfer taxes, ~~respectively~~duties, ~~primarily~~value ~~comprised~~added of taxes ~~on foreign earnings~~ and ~~foreign~~certain ~~withholding~~other taxes onrelated ~~royalty~~to ~~and~~the ~~other~~subsidiary’s ~~income.~~operations for calendar years 1997 through

For the nine months ended October 1, 2011 and October 2, 2010, the Company recorded net income tax expense of $99 million and $55 million, respectively, primarily comprised of taxes on foreign earnings and foreign withholding taxes on royalty and other income. 16

~~The~~ 2010. As of March 31, 2012, these assessments collectively represent reasonably possible loss contingencies under the applicable accounting standards of up to approximately $449 million, based on the exchange rate in effect at March 31, 2012, including interest and penalties. However, the Company is vigorously disputing these matters, believes it has ~~not~~valid ~~recorded~~defenses athat ~~tax~~are ~~benefit~~supported onby ~~its~~the Ulaw, and believes that this amount is not a meaningful indicator of liability.S. ~~losses~~These ~~due~~matters toare ~~its~~progressing ~~recent~~through ~~history~~the multiple levels of ~~cumulative~~administrative Uand judicial review available in Brazil.S. ~~losses~~Due to the complexities and uncertainty surrounding the administrative and judicial process in Brazil and the nature of the claims asserted, the Company does not expect a final resolution of these matters for several years.

~~Deferred~~The ~~Income~~Company ~~Taxes~~routinely assesses the probability of ultimately incurring a loss in each of these matters and records the Company’s best estimate of the ultimate loss in situations where the Company assesses the likelihood of an ultimate loss as probable. Based on the Company’s assessment of these matters, the Company has recorded accruals on only a small portion of the total exposure. It is, however very difficult to predict the outcome of legal disputes and controversies, including litigation, in Brazil and our ultimate loss may be significantly greater than our current assessments and related accruals.

As of ~~October~~March 131, ~~2011~~2012, the Company’s ~~net~~had ~~deferred~~approximately ~~tax~~$157 ~~assets,~~million ~~exclusive~~ of ~~valuation~~cash ~~allowances~~deposits, ~~were~~including ~~$2.5~~accrued ~~billion~~interest, ~~compared~~for tothese ~~$2.9 billion as of December 31~~matters, ~~2010. As~~which ~~of October 1,~~are ~~2011,~~included ~~the~~in ~~valuation~~non-current ~~allowance~~Cash ~~against~~deposits in the ~~net~~Company’s condensed ~~deferred~~consolidated ~~tax~~balance ~~assets~~sheet ~~was $2.4 billion,~~ as ~~compared to $2.8 billion as~~ of ~~December~~March 31, ~~2010~~2012.

~~Included~~Indemnifications in the net deferred tax assets of $2.5 billion as of October 1, 2011 are: (i) approximately $1.0 billion of deferred tax assets related to capitalized R&D costs that may be amortized for tax purposes through 2019; (ii) approximately $800 million of deferred tax assets related to U.S. and foreign tax loss and credit carry forwards; and (iii) approximately $700 million of deferred taxes related to other temporary differences.

~~Unrecognized~~The ~~Tax~~Company ~~Benefits~~may provide indemnifications for losses associated with indemnification and/or warranty provisions contained in certain commercial and intellectual property agreements. Historically, the Company has not made significant payments under these indemnifications. However, there is an increasing risk in relation to intellectual property indemnities given the current legal climate. In particular, two customers of the Company have made indemnification demands of the Company related to patent infringement claims by TiVo, Inc. against our products.

~~The~~Furthermore, ~~Company~~pursuant ~~had~~to ~~unrecognized~~the ~~tax~~Master ~~benefits~~Separation ofand ~~$21~~Distribution ~~million~~Agreement and ~~$101~~certain ~~million~~other asagreements ofwith ~~October 1~~the Former Parent, ~~2011~~Motorola Mobility ~~and~~agreed ~~December 31,~~to ~~2010,~~indemnify ~~respectively.~~the ~~The~~Former ~~decrease~~Parent infor ~~unrecognized~~certain ~~tax~~liabilities, ~~benefits~~and isthe ~~primarily attributable~~Former Parent agreed to aindemnify ~~$76~~Motorola ~~million~~Mobility ~~decrease~~for ~~relating~~certain toliabilities, ~~post-Separation~~in ~~adjustments~~each case for uncapped amounts.

6Generally, 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. ~~Share~~Further, the Company’s obligations under these agreements for indemnification are generally limited in terms of duration and are for amounts not in excess of the contract value, except with respect to certain intellectual property infringement claims. In some instances, the Company may have recourse against third-~~Based~~parties ~~Compensation~~for ~~Plans~~certain payments made by the Company.

Upon Separation, all outstanding Former Parent stock options, stock appreciation rights and restricted stock units (“RSU”) for the Company’s employees were replaced with awards in the Company using a formula designed to preserve the intrinsic value and fair value of the award immediately prior to Separation10. ~~There~~Segment was no incremental compensation expense to the Company related to the replacement of the Former Parent share-based compensation awards. Any unrecognized compensation expense related to the replaced awards will be recognized by the Company over the remaining vesting period of the awards. During the nine months ended October 1, 2011, the Company began to grant share based compensation to employees and non-employee directors under the Company’s incentive plans. Information

~~Stock~~The ~~Options~~Company reports financial results for the following business segments:

~~During~~• ~~the~~The ~~nine~~Mobile ~~months~~Devices ~~ended~~segment ~~October 1~~designs, ~~2011~~manufactures, ~~the~~sells ~~Company~~and ~~granted~~services ~~9.7 million~~wireless ~~stock~~mobile ~~options.~~devices, ~~The~~including ~~weighted-average~~smartphones ~~estimated~~and ~~fair value~~media ~~of employee stock options granted during the nine months ended October 1~~tablets, ~~2011~~with ~~was~~integrated ~~$11.70.~~software Asand ofaccessory ~~October 1~~products, ~~2011, the Company had 21.4 million stock options~~ and ~~stock~~licenses ~~appreciation~~intellectual ~~rights outstanding~~property.

~~Table~~• ofThe ~~Contents~~Home segment designs, manufactures, sells, installs and services set-top boxes for digital video, Internet Protocol (“IP”) video, satellite and terrestrial broadcast networks, end-to-end digital video and Internet Protocol Television (“IPTV”) distribution systems, broadband access network infrastructure platforms, and associated data and voice customer premises equipment and associated software solutions to cable television (“TV”) and telecommunication service providers.

1617

~~Restricted~~Summarized ~~Stock~~below are the Company’s net revenues and ~~Restricted~~operating ~~Stock~~earnings ~~Units~~(loss) by segment for the three months ended March 31, 2012 and April 2, 2011:

During the nine months ended October 1, 2011, the Company granted 4.5 million restricted stock (“RS”) and RSUs with a weighted-average fair market value of $29.15 per RS and RSU. As of October 1, 2011, the Company had 8.6 million RS and RSUs outstanding.

Net Revenues

Operating
Earnings
(Loss)

Three Months Ended

March 31,
2012

April 2,
2011

March 31,
2012

April 2,
2011

Mobile Devices

$2,194

$2,128

$(121)

$(89)

Home

884

904

$3,078

$3,032

Merger-related transaction costs

(17)

—

Operating loss

(70)

(36)

Total other income (expense)

(15)

Loss before income taxes

$(69)

$(51)

~~Employee~~11. ~~Stock~~Reorganization ~~Purchase~~of ~~Plan~~ Businesses

~~During~~The ~~the~~Company ~~three~~maintains ~~months~~a ~~ended July 2,~~formal ~~2011,~~Involuntary ~~employees~~Severance ~~began~~Plan to(the ~~participate~~“Severance inPlan”), which permits the Company’s to ~~new~~offer ~~employee~~eligible ~~stock~~employees ~~purchase~~severance ~~plan.~~benefits ~~The~~based ~~employee~~on ~~stock~~years ~~purchase~~of ~~plan~~service ~~allows~~and ~~eligible~~employment ~~participants~~grade tolevel ~~purchase~~in ~~shares~~the ofevent ~~the~~that ~~Company’s~~employment ~~common~~is ~~stock~~involuntarily ~~through~~terminated ~~payroll~~as ~~deductions~~ a result of upa reduction-in-force or restructuring. Prior to ~~10%~~Separation, ofthe ~~eligible~~Company participated ~~compensation~~in onthe anFormer ~~after-tax~~Parent’s ~~basis.~~Severance Plan. ~~participants~~The ~~cannot~~Company ~~purchase~~recognizes ~~more~~termination ~~than~~benefits ~~$25,000~~based ofon ~~stock~~formulas inper ~~any~~the ~~calendar~~Severance ~~year.~~Plan ~~The~~at ~~price~~the anpoint ~~employee~~in ~~pays~~time ~~per~~that ~~share~~future settlement is ~~85%~~probable ofand ~~the~~can ~~lower~~be ofreasonably ~~the~~estimated ~~fair~~based ~~market~~on ~~value~~estimates prepared ofat the ~~Company’s stock~~time ona ~~the~~restructuring ~~close~~plan ofis ~~the~~approved ~~first~~by ~~trading~~management. ~~day~~Exit orcosts ~~last~~consist ~~trading~~of ~~day~~future ofminimum ~~the~~lease ~~purchase~~payments ~~period.~~on ~~The~~vacated ~~plan~~facilities ~~has~~and ~~two~~other ~~purchase~~contractual ~~periods~~terminations. At each reporting date, the ~~first~~Company ~~one~~evaluates ~~from~~its ~~May 1~~accruals ~~through~~for employee ~~October 31~~separation and ~~the~~exit ~~second~~costs ~~one~~to ~~from~~ensure ~~November 1~~the ~~through~~accruals ~~April 30.~~are ~~During the~~still ~~three~~appropriate. ~~months~~In ~~ended~~certain ~~October 1~~circumstances, ~~2011,~~accruals ~~there~~are ~~was~~ no ~~purchase~~longer needed because of ~~the~~efficiencies ~~Company’s~~in ~~stock~~carrying ~~under~~out the ~~plan~~plans asor ~~the~~because ~~initial~~employees ~~offering~~previously ~~period~~identified ~~had~~for separation resigned from the Company and did not ~~yet~~receive ~~closed.~~severance ~~During~~or ~~the~~were ~~three~~redeployed ~~months~~due ~~ended~~to ~~October 1,~~circumstances ~~2011,~~not foreseen when the ~~Company~~original ~~announced~~plans ~~that~~were ~~the period~~initiated. ~~ending~~In ~~October 31~~these cases, ~~2011~~the ~~would~~Company bereverses accruals through the ~~final~~condensed ~~period~~consolidated ~~that~~statements ~~employees~~of operations ~~would~~where bethe ~~able~~original tocharges ~~purchase~~were ~~common~~recorded ~~stock~~when ofit ~~the~~is ~~Company~~determined ~~under~~they ~~the~~are ~~plan~~no longer needed.

~~Compensation~~2012 ~~expense~~Activity related to the Company’s employee stock options, stock appreciation rights, restricted stock, restricted stock units and employee stock purchase plan was as follows (prior to Separation, compensation expense included the Company’s employees, as well as allocated compensation expense from the Former Parent’s corporate functions):

	Three Months Ended				Nine Months Ended
	October 1,2011		October 2,2010		October 1,2011		October 2,2010
Share-based compensation expense included in:
Costs of sales		$3		$5		$11		$12
Selling, general and administrative expenses		19		22		68		68
Research and development expenditures		12		15		41		40
Share-based compensation expense included in Operating earnings (loss)		34		42		120		120
Tax benefit		—		—		—		—
Share-based compensation expense, net of tax		$34		$42		$120		$120

During the three months ended March 31, 2012, the Company recorded no additional charges related to restructuring actions under Other charges in the Company’s condensed consolidated statements of operations, and de minimis reversals of reorganization of business charges for accruals no longer needed.

7.The ~~Fair~~following ~~Value~~table ~~Measurements~~displays a rollforward of the reorganization of businesses accruals established for exit costs and employee separation costs from January 1, 2012 to March 31, 2012:

The Company had no non-financial assets or liabilities that are required to be measured at fair value on a recurring basis as of October 1, 2011.


	Accruals at January 1, 2012		Additional Charges		Adjustments		Amount Used		Accruals at March 31, 2012
Exit costs		$5		$—		$—		$(1)		$4
Employee separation costs		21		—		—		(14)		7

		$26		$—		$—		$(15)		$11

~~Applicable~~Adjustments ~~accounting~~include ~~standards~~foreign ~~specify~~currency atranslation ~~hierarchy of valuation techniques based on whether the inputs to each measurement are observable or unobservable~~adjustments. 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.~~ 18

~~Level~~Exit ~~2—Quoted~~Costs 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.

~~Table~~At January 1, 2012, the Company had an accrual of ~~Contents~~$5 million for exit costs attributable to lease terminations. The $1 million used reflects cash payments. The remaining accrual of $4 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheet at March 31, 2012, represents future cash payments, primarily for lease termination obligations that are expected to be paid over a number of years.

17Employee Separation Costs

~~Level~~At ~~3—Valuations~~January 1, ~~derived~~2012, ~~from~~the ~~valuation~~Company ~~techniques~~had an accrual of $21 million for employee separation costs, inrepresenting the severance costs for approximately 700 employees. During the three months ended March 31, 2012, approximately 300 employees, of which ~~one~~100 orwere ~~more~~direct employees and 200 were indirect employees, were separated from the Company. The $14 million used reflects cash payments to these separated employees. The remaining ~~significant~~accrual ~~inputs~~of $7 million, relating to employee separation costs that are ~~unobservable~~expected to be paid in 2012, is included in Accrued liabilities in the Company’s condensed consolidated balance sheet at March 31, 2012.

~~The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of October 1,~~ 2011 ~~were~~Activity ~~as follows:~~

October 1, 2011	Level 1		Level 2		Level 3		Total
Assets:
Foreign exchange derivative contracts		$—		$15		$—		$15
Liabilities:
Foreign exchange derivative contracts		$—		$3		$—		$3

During the three months ended April 2, 2011, the Company recorded $6 million of reversals of reorganization of business charges for accruals no longer needed, including $3 million of Separation-related adjustments for employees that remained with the Former Parent and $3 million under Other charges in the Company’s condensed consolidated statements of operations.

8.The ~~Sales~~following table displays the net charges (reversals of ~~Receivables~~accruals) incurred by business segment:

Prior to Separation, the Former Parent sold accounts receivable generated from its business units to third-parties in transactions that qualified as “true-sales.” Until Separation, the Company’s businesses participated in this activity by transferring certain of their accounts receivable balances to the Former Parent. The Company also has agreements under which the Company sells its accounts receivable directly to a third party in transactions that qualify as “true-sales.”


Three Months Ended	April 2, 2011
Mobile Devices		$(3)
Home		—

		$(3)

~~Total~~The ~~sales~~following oftable ~~accounts~~displays ~~receivable~~a ~~were~~rollforward ~~$43 million~~of ~~and $57 million during~~ the ~~three~~reorganization ~~months~~of ~~ended~~businesses ~~October 1,~~accruals ~~2011~~established ~~and~~for exit ~~October 2,~~costs ~~2010, respectively,~~ and ~~$140 million~~employee ~~and $173 million~~separation ~~for~~costs ~~the~~from ~~nine months ended October~~January 1, 2011 ~~and~~to ~~October~~April 2, ~~2010, respectively. As of October 1,~~ 2011,: ~~there were no accounts receivable outstanding under these programs for which the Company retained servicing obligations, compared to $43 million at December 31, 2010.~~

9. Credit Facilities


	Accruals at January 1, 2011		Additional Charges		Adjustments		Amount Used		Accruals at April 2, 2011
Exit costs		$12		$—		$—		$(1)		$11
Employee separation costs		32		—		(6)		(18)		8

		$44		$—		$(6)		$(19)		$19

OnAdjustments ~~January 4,~~include ~~2011,~~foreign ~~the~~currency ~~Company~~translation ~~entered into a $500 million unsecured three-year credit agreement (the “Credit Agreement”) with a syndicate of lenders~~adjustments. The Credit Agreement provides for a revolving credit facility and a letter of credit facility, is guaranteed by certain of the Company’s subsidiaries, and contains restrictive covenants. The Company may use any borrowings under the Credit Agreement for general corporate purposes. No obligations are outstanding under the Credit Agreement as of October 1, 2011.

~~10.~~Exit ~~Commitments~~Costs ~~and Contingencies~~

~~Legal~~At January 1, 2011, the Company had an accrual of $12 million for exit costs attributable to lease terminations. The $1 million used reflects cash payments. The remaining accrual of $11 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheet at April 2, 2011, represents future cash payments, primarily for lease termination obligations that are expected to be paid over a number of years.

The Company is involved in various lawsuits, claims and investigations arising in the normal course of business and relating to the Company’s business. In the opinion of management, the ultimate disposition of these matters is not expected to 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. 19

~~Tax~~Employee ~~and~~Separation ~~Regulatory~~Costs ~~Proceedings in Brazil~~

InAt ~~connection~~January 1, ~~with~~2011, the Company’s ~~operations~~had inan ~~Brazil,~~accrual ~~Brazilian~~of ~~tax~~$32 million ~~authorities~~for ~~have~~employee ~~proposed~~separation ~~assessments~~costs, ~~against~~representing the ~~Company’s~~severance ~~Brazilian~~costs ~~subsidiary~~for ~~relating~~approximately to1,100 ~~various~~employees. ~~technology~~The ~~transfer~~adjustments of ~~taxes~~$6 million reflect reversals of accruals no longer needed. During the three months ended April 2, ~~duties~~2011, ~~value~~approximately ~~added~~500 ~~taxes~~employees, ~~certain~~of ~~other~~which ~~taxes~~100 were direct employees and ~~labor~~400 ~~related~~were ~~matters~~indirect ~~related~~employees, towere separated from the ~~subsidiary’s~~Company. ~~operations~~The $18 million ~~for~~used ~~calendar~~reflects ~~years~~cash ~~1997~~payments ~~through~~to ~~2010~~these separated employees. AsThe remaining accrual of ~~October~~$8 1,million ~~2011,~~is ~~these~~included ~~assessments~~in ~~collectively~~Accrued ~~represent~~liabilities ~~reasonably possible~~in the Company’s condensed consolidated balance sheet at April 2, 2011.

~~Table~~12. ofIntangible ~~Contents~~Assets and Goodwill

18Intangible Assets

~~loss~~Amortized ~~contingencies~~intangible ~~under~~assets ~~the~~were ~~applicable~~comprised ~~accounting standards~~ of ~~up to approximately $466 million, based on~~ the ~~exchange~~following: rate in effect at October 1, 2011, including interest and penalties. However, the Company is vigorously disputing these matters, believes it has valid defenses that are supported by the law, and believes that this amount is not a meaningful indicator of liability. These matters are progressing through the multiple levels of administrative and judicial review available in Brazil. Due to the complexities and uncertainty surrounding the administrative and judicial process in Brazil and the nature of the claims asserted, the Company does not expect a final resolution of these matters for several years.

The Company routinely assesses the probability of ultimately incurring a loss in each of these matters and records the Company’s best estimate of the ultimate loss in situations where the Company assesses the likelihood of an ultimate loss as probable. Based on the Company’s assessment of these matters, the Company has recorded accruals on only a small portion of the total exposure. It is, however, very difficult to predict the outcome of legal disputes and controversies, including litigation, in Brazil and our ultimate loss may be significantly greater than our current assessments and related accruals.


	*March 31, 2012*				December 31, 2011
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Completed technology		$516		$466		$515		$459
Licensed technology		106		106		106		106
Patents		97		26		97		24
Customer-related		64		48		64		46
Other intangibles		38		38		38		38

		$821		$684		$820		$673

AsAmortization ofexpense ~~October 1,~~on ~~2011~~intangible assets, ~~the~~which ~~Company~~is ~~had~~included ~~approximately~~within Other charges, was $~~150~~11 million and $16 million offor ~~cash deposits~~the three months ended March 31, ~~including~~2012 ~~accrued~~and ~~interest~~April 2, ~~for~~2011, ~~these~~respectively. ~~matters~~As of March 31, ~~which~~2012, ~~are~~annual ~~included~~amortization inexpense ~~Cash~~is ~~deposits~~estimated to be $42 million in ~~the~~2012, ~~Company’s~~$36 million ~~condensed~~in ~~consolidated~~2013, ~~balance~~$16 million in ~~sheet~~2014, as$12 million ofin ~~October~~2015 and $9 1,million ~~2011~~in 2016.

~~Indemnifications~~Amortized intangible assets, excluding goodwill, by business segment were as follows:

The Company may provide indemnifications for losses associated with indemnification and/or warranty provisions contained in certain commercial and intellectual property agreements. Historically, the Company has not made significant payments under these indemnifications. However, there is an increasing risk in relation to intellectual property indemnities given the current legal climate. In particular, two customers of the Company have made indemnification demands of the Company related to patent infringement claims by TiVo, Inc. against our products.

March 31, 2012

December 31, 2011

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

Mobile Devices

$149

$67

$148

$64

Home

672

617

672

609

$821

$684

$820

$673

Furthermore, pursuant to the Master Separation and Distribution Agreement and certain other agreements with the Former Parent, the Company agreed to indemnify the Former Parent for certain liabilities, and the Former Parent agreed to indemnify the Company for certain liabilities, in each case for uncapped amounts. 20

~~Generally,~~Goodwill 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. Further, the Company’s obligations under these agreements for indemnification are generally limited in terms of duration and are for amounts not in excess of the contract value, except with respect to certain intellectual property infringement claims. In some instances, the Company may have recourse against third-parties for certain payments made by the Company.

~~11.~~The ~~Segment~~following ~~Information~~table displays a rollforward of the carrying amount of goodwill by reportable segment from January 1, 2012 to March 31, 2012:

The Company reports financial results for the following business segments:


	Mobile Devices		Home		Total
Balances as of January 1, 2012:
Aggregate goodwill acquired		$142		$1,419		$1,561
Accumulated impairment losses		(55)		(73)		(128)
Goodwill, net of impairment losses		87		1,346		1,433
Goodwill acquired		—		—		—
Impairment losses		—		—		—
Adjustments		1		—		1
Balances as of March 31, 2012:
Aggregate goodwill acquired		143		1,419		1,562
Accumulated impairment losses		(55)		(73)		(128)
Goodwill, net of impairment losses		$88		$1,346		$1,434

• The Mobile Devices segment designs, manufactures, sells and services wireless mobile devices, including smartphones and media tablets, with integrated software and accessory products, and licenses intellectual property.21

•MANAGEMENT’S ~~The~~DISCUSSION ~~Home~~AND ~~segment~~ANALYSIS designs, manufactures, sells, installs and services set-top boxes for digital video, Internet Protocol (“IP”) video, satellite and terrestrial broadcast networks, end-to-end digital video and Internet Protocol Television (“IPTV”) distribution systems, broadband access network infrastructure platforms, and associated data and voice customer premises equipment and associated software solutions to cable television (“TV”) and telecommunication service providers.

~~Table~~OF ofFINANCIAL ~~Contents~~CONDITION AND RESULTS OF OPERATIONS

19Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Summarized~~This ~~below~~commentary ~~are~~should ~~the~~be ~~Company’s~~read in ~~net~~conjunction ~~revenues~~with ~~and~~Motorola ~~operating~~Mobility ~~earnings~~Holdings, Inc.’s (~~loss~~the “Company’s”) ~~by segment~~condensed consolidated financial statements for the three months ~~and~~ended ~~nine~~March 31, ~~months~~2012 ~~ended~~and ~~October~~April 12, 2011, as well as the Company’s consolidated financial statements and ~~October~~related notes thereto and management’s discussion and analysis of financial condition and results of operations in the Company’s Annual Report on Form 2,10-K ~~2010:~~for the year ended December 31, 2011.

	Net Revenues				OperatingEarnings(Loss)
Three Months Ended	October 1,2011		October 2,2010		October 1,2011		October 2,2010
Mobile Devices		$2,434		$2,034		$(41)		$(43)
Home		825		912		54		49
		$3,259		$2,946
Merger-related transaction costs						(18)		—
Operating earnings (loss)						(5)		6
Total other income (expense)						3		(13)
Loss before income taxes						$(2)		$(7)

Introduction

	Net Revenues				OperatingEarnings(Loss)
Nine Months Ended	October 1,2011		October 2,2010		October 1,2011		October 2,2010
Mobile Devices		$6,992		$5,399		$(215)		$(148)
Home		2,636		2,636		169		98
		$9,628		$8,035
Merger-related transaction costs						(18)		—
Operating loss						(64)		(50)
Total other expense						(6)		(64)
Loss before income taxes						$(70)		$(114)

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is a supplement to the accompanying condensed consolidated financial statements and provides additional information on Motorola Mobility’s business, recent developments, financial condition, liquidity and capital resources, cash flows and results of operations. MD&A is organized as follows:

12• Separation from Motorola, Inc.—This ~~Reorganization~~section provides a general discussion of ~~Businesses~~our separation from Motorola, Inc., which changed its name to Motorola Solutions, Inc. (hereinafter, our “Former Parent”) effective January 4, 2011.

~~The~~• ~~Company~~Merger ~~maintains~~Agreement awith ~~formal~~Google 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 restructuringInc.—This ~~Prior~~section toprovides Separation, the Company participated in the Former Parent’s Severance Plan. 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~~general ~~plan~~discussion ~~is approved by management. Exit costs consist~~ of ~~future~~our ~~minimum~~proposed ~~lease~~Merger ~~payments~~with onGoogle ~~vacated facilities and other contractual terminations~~Inc. 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 initiated. In these cases, the Company reverses accruals through the condensed consolidated statements of operations where the original charges were recorded when it is determined they are no longer needed.

~~Table~~• Executive Overview—This section provides a general description of ~~Contents~~our business, as well as recent developments we believe are important in understanding our results of operations and financial condition or in understanding anticipated future trends.

20• Looking Forward—This section provides a discussion of management’s general outlook about market demand, competition and product development.

~~2011~~• ~~Activity~~Results of Operations—This section provides an analysis of our results of operations for the three months ended March 31, 2012 and April 2, 2011.

~~During~~• ~~the~~Liquidity ~~three~~and ~~months~~Capital ~~ended~~Resources—This ~~October 1,~~section ~~2011,~~provides ~~the~~a ~~Company~~discussion ~~recorded~~of noour ~~additional~~current ~~charges~~financial ~~related~~condition toand ~~restructuring~~an ~~actions~~analysis ~~under~~of ~~Other~~our ~~charges~~cash inflows for the ~~Company’s~~three ~~condensed~~months ~~consolidated~~ended ~~statements of~~March ~~operations~~31, 2012 and deApril ~~minimis~~2, ~~reversals of reorganization of business charges for accruals no longer needed~~2011.

~~During~~• ~~the nine~~Significant ~~months~~Accounting ~~ended~~Policies—This ~~October 1,~~section ~~2011,~~identifies ~~the~~and ~~Company~~summarizes ~~recorded~~those ~~$6 million~~accounting ofpolicies ~~net~~that ~~reversals~~significantly ofimpact ~~reorganization~~our ofreported ~~business~~results ~~charges, including $3 million~~ of ~~Separation-related~~operations ~~adjustments~~and ~~for~~financial ~~employees~~condition ~~that remained with the Former Parent~~ and ~~$4 million~~ ofrequire ~~reversals~~significant ~~for~~judgment ~~accruals~~or noestimates ~~longer~~on ~~needed,~~the ~~partially~~part ~~offset by $1 million~~ of ~~additional~~management ~~charges related to restructuring actions under Other charges~~ in ~~the~~their ~~Company’s condensed consolidated statements of operations~~application.

OnSeparation ~~October~~from 24Motorola, 2011, Company management approved a workforce reduction action under which the Company will record a net pre-tax charge to earnings during the quarter ended December 31, 2011, of approximately $31 million, comprised of $27 million of severance costs related to approximately 800 employees impacted by the action and approximately $4 million of facility exit costsInc. Both of the Company’s business segments (the Mobile Devices business and the Home business), as well as various corporate functions, are impacted by the action and the action affects employees globally. Under the Company’s employee severance plan, policies or applicable law, severance payments to employees affected by this action will be made substantially over the next 12 months.

~~The~~On ~~following~~January 4, ~~table~~2011 ~~displays~~(the “Distribution Date”), Motorola Mobility Holdings, Inc. became an independent, publicly traded company as a result of our Former Parent’s distribution of its shares of Motorola Mobility to our Former Parent’s stockholders. On the Distribution ~~net~~Date, ~~charges~~Former Parent stockholders of record as of the close of business on December 21, 2010 (~~reversals~~the “Record Date”) received one share of ~~accruals~~Motorola Mobility common stock for every eight shares of Motorola, Inc. common stock held as of the Record Date (the “Distribution”). ~~incurred~~Motorola byMobility is comprised of Motorola, Inc.’s former Mobile Devices and Home businesses. Our Former Parent’s Board of Directors approved the distribution of its shares of Motorola Mobility Holdings, Inc. on November 30, 2010. Motorola Mobility Holdings, Inc. was incorporated on May 28, 2010 and is the parent of Motorola Mobility, Inc., our main U.S. wholly owned operating subsidiary through which we conduct substantially all of the business ~~segment:~~activities discussed in this Form 10-Q. Our Registration Statement on Form 10 was declared effective by the U.S. Securities and Exchange Commission on December 1, 2010. Our common stock began trading “regular-way” under the ticker symbol “MMI” on the New York Stock Exchange on January 4, 2011.

October 1, 2011	Three MonthsEnded		Nine MonthsEnded
Mobile Devices		$—		$(3)
Home		—		—
		$—		$(3)


22

~~The~~Merger ~~following~~Agreement ~~table~~with ~~displays~~Google aInc. ~~rollforward of the reorganization of businesses accruals established for exit costs and employee separation costs from January 1, 2011 to October 1, 2011:~~

	Accruals atJanuary 1,2011		AdditionalCharges		Adjustments		AmountUsed		Accruals atOctober 1,2011
Exit costs		$12		$—		$—		$(3)		$9
Employee separation costs		32		1		(7)		(25)		1
		$44		$1		$(7)		$(28)		$10

~~Adjustments~~The ~~include~~closing ~~foreign~~of ~~currency~~the ~~translation~~Merger ~~adjustments~~is subject to customary closing conditions, including adoption of the Merger Agreement by the Company’s stockholders and regulatory approvals. On November 17, 2011, Motorola Mobility stockholders approved the proposed merger with Google at the Company’s Special Meeting of Stockholders. Antitrust clearances have been received in the U.S., European Commission, Canada, Israel, Russia, Taiwan and Turkey. Under the merger agreement, antitrust clearances, or waiting period expirations, are also required in China. Requisite filings have been submitted to the appropriate regulatory body in China. In March 2012, the Chinese Ministry of Commerce extended the second phase of its investigation and the investigation is pending. The Company currently expects the transaction to close during the first half of 2012.

~~Exit~~Pursuant ~~Costs~~to the Merger Agreement, stock options and restricted stock units (“RSUs”) granted by the Company as a substitute for Motorola, Inc. stock options and RSUs granted prior to 2011 will fully vest upon the closing of the transaction and be paid out at $40 for each RSU and $40 minus the exercise price for each stock option, in each case less applicable tax withholdings. Vested stock options and vested RSUs granted under Motorola Mobility’s 2011 Incentive Compensation Plan in 2011 will be paid out at $40 for each RSU and $40 minus the exercise price for each stock option, in each case less applicable tax withholdings. Unvested stock options and unvested restricted stock (“RS”) and RSUs granted under Motorola Mobility’s 2011 Incentive Compensation Plan in 2011 and 2012 will be converted to an award of equivalent value in Google stock options, RS and RSUs, respectively.

AtExecutive ~~January 1,~~Overview 2011, the Company had an accrual of $12 million for exit costs attributable to lease terminations. The $3 million used reflects cash payments. The remaining accrual of $9 million, which is included in Accrued liabilities in the Company’s condensed consolidated balance sheet at October 1, 2011, represents future cash payments, primarily for lease termination obligations that are expected to be paid over a number of years.

~~Employee~~The ~~Separation Costs~~ Company

AtMotorola ~~January 1,~~Mobility ~~2011~~Holdings, ~~the~~Inc. ~~Company~~is ~~had~~a ~~an accrual~~provider of ~~$32 million~~innovative ~~for~~technologies, ~~employee~~products ~~separation~~and ~~costs,~~services ~~representing~~that ~~the~~enable ~~severance~~a ~~costs~~range ~~for~~of mobile ~~approximately~~and 1wireline digital communication,~~100~~ ~~employees~~information and entertainment experiences. The ~~adjustments~~Company’s ofintegrated ~~$7 million~~products ~~reflect~~and ~~reversals~~platforms ofdeliver ~~accruals~~rich nomultimedia ~~longer~~content, ~~needed~~such ~~and~~as ~~the~~voice, ~~additional~~video, ~~charges~~messaging ofand $1Internet-based ~~million relate~~applications and services to ~~restructuring~~multiple ~~actions~~screens, ~~taken~~such byas ~~the~~mobile ~~Company.~~devices, ~~During~~including ~~the~~smartphones ~~nine~~and ~~months~~media ~~ended October 1~~tablets, ~~2011,~~televisions ~~approximately~~and ~~700~~personal ~~employees,~~computers. ofOur ~~which~~product ~~200~~portfolio ~~were~~primarily ~~direct~~includes ~~employees~~mobile ~~and~~devices, ~~500~~wireless ~~were~~accessories, ~~indirect~~set-top ~~employees~~boxes, ~~were~~video ~~separated~~distribution ~~from~~systems ~~the~~and associated ~~Company~~customer premises equipment. ~~The $25 million~~We ~~used~~are ~~reflects~~focused ~~cash~~on ~~payments~~developing todifferentiated, ~~these~~innovative ~~separated~~products ~~employees.~~to ~~The~~meet ~~remaining~~the ~~accrual~~expanding needs of ~~$1 million~~consumers isto ~~included~~communicate, into ~~Accrued~~collaborate ~~liabilities~~and into ~~the~~discover, ~~Company’s~~consume, ~~condensed~~create ~~consolidated~~and ~~balance~~share ~~sheet~~content at ~~October 1,~~a ~~2011~~time and place of their choosing on multiple devices.

~~Table~~We operate our business in two segments. The Mobile Devices segment is focused on mobile wireless devices and related products and services. This segment’s net revenues were $2.2 billion in the first quarter of ~~Contents~~2012 and $2.1 billion in the first quarter of 2011, representing 71% and 70%, respectively, of Motorola Mobility’s consolidated net revenues. The Home segment is focused on technologies and devices that provide video entertainment services to consumers by enabling subscribers to access a variety of interactive digital television services. This segment’s net revenues were $884 million in the first quarter of 2012 and $904 million in the first quarter of 2011, representing 29% and 30%, respectively, of Motorola Mobility’s consolidated net revenues.

21Motorola Mobility’s Financial Results for the First Quarter of 2012

~~2010~~• ~~Activity~~Net Revenues of $3.1 Billion: Our net revenues were $3.1 billion in the first quarter of 2012, up 2% compared to net revenues of $3.0 billion in the first quarter of 2011. Net revenues increased 3% in the Mobile Devices segment and decreased 2% in the Home segment.

During the three months ended October 2, 2010, the Company recorded net reorganization of business charges of $18 million, including $5 million of charges in Costs of sales and $13 million of charges under Other charges in the Company’s condensed consolidated statements of operations. Included in the aggregate $18 million are charges of $25 million for employee separation costs, partially offset by $7 million of reversals for accruals no longer needed. 23

~~During~~• ~~the~~Operating ~~nine~~Loss ~~months ended October 2, 2010, the Company recorded net reorganization~~ of ~~business charges of~~ $~~45 million,~~70 ~~including~~Million: ~~$11~~We ~~million~~incurred ofan ~~charges~~operating inloss ~~Costs~~ of ~~sales and~~ $34 70 million ~~of charges under Other charges~~ in the ~~Company’s~~first ~~condensed~~quarter ~~consolidated statements~~ of ~~operations.~~2012, ~~Included~~compared into ~~the aggregate~~an ~~$45 million~~operating ~~are~~loss ~~charges~~ of $61 36 million ~~for~~in ~~employee~~the ~~separation~~first ~~costs,~~quarter ~~partially offset by $16 million~~ of ~~reversals for accruals no longer needed~~2011.

~~The~~• ~~following~~Net ~~table~~Loss ~~displays~~of $86 Million: We incurred a net loss of $86 million in the first quarter of 2012, compared to a net ~~charges~~loss ~~incurred~~of by$81 ~~business~~million ~~segment:~~in the first quarter of 2011.

October 2, 2010	Three MonthsEnded		Nine MonthsEnded
Mobile Devices		$13		$30
Home		5		15
		$18		$45

•

Cash used for Operating Activities of $98 Million: We used $98 million of net cash from operating activities in the first quarter of 2012, compared to generating $107 million of net cash from operating activities in the first quarter of 2011.

~~The~~Financial results ~~following~~for ~~table~~our ~~displays~~two abusiness ~~rollforward~~segments offor the ~~reorganization~~quarter ofended ~~businesses accruals established for exit costs and employee separation costs from January~~March 131, ~~2010~~2012 ~~to October 2, 2010:~~

	Accruals atJanuary 1,2010		AdditionalCharges		Adjustments		AmountUsed		Accruals atOctober 2,2010
Exit costs		$39		$—		$(3)		$(17)		$19
Employee separation costs		33		61		(16)		(47)		31
		$72		$61		$(19)		$(64)		$50

•

In Our Mobile Devices Business: Net revenues were $2.2 billion in the first quarter of 2012, an increase of 3% compared to net revenues of $2.1 billion in the first quarter of 2011. The increase in net revenues was primarily driven by an 11% increase in average selling price (“ASP”), partially offset by a 3% decrease in handset unit shipments. We shipped 8.9 million mobile devices in the first quarter of 2012, a 4% decrease compared to shipments of 9.3 million mobile devices in the first quarter of 2011, and a 15% decrease sequentially compared to shipments of 10.5 million mobile devices in the fourth quarter of 2011. We shipped 5.1 million Android-based smartphones in the first quarter of 2012, a 24% increase compared to shipments of 4.1 million in the first quarter of 2011, and a 5% decrease sequentially compared to shipments of 5.4 million in the fourth quarter of 2011. On a geographic basis, net revenues increased in the Europe, Middle East and Africa region (“EMEA”) and Latin America, partially offset by decreased net revenues in Asia and North America.

~~Adjustments~~The ~~include~~segment ~~foreign~~incurred ~~currency~~an ~~translation~~operating ~~adjustments~~loss of $121 million in the first quarter of 2012, compared to an operating loss of $89 million in the first quarter of 2011. The increase in the operating loss was primarily due to (i) higher selling, general and administrative (“SG&A”) expenses to support the growth in smartphone volumes and (ii) a decrease in gross margin, partially offset by a 3% increase in net revenues.

~~Exit~~• ~~Costs~~In Our Home Business: Net revenues were $884 million in the first quarter of 2012, a decrease of 2% compared to net revenues of $904 million in the first quarter of 2011. The decrease in net revenues in the Home segment was primarily driven by a 4% decrease in net revenues of set-top boxes, reflecting a 10% decrease in shipments of set-top boxes, partially offset by a higher ASP due to a favorable product mix. Net revenues of video and access infrastructure equipment declined slightly. On a geographic basis, net revenues decreased in North America, Latin America and Asia, partially offset by increased net revenues in EMEA.

AtThe ~~January 1,~~segment ~~2010, the Company~~ had anoperating ~~accrual~~earnings of $3968 million ~~for~~in ~~exit~~the ~~costs~~first ~~attributable~~quarter toof ~~lease~~2012, compared ~~terminations.~~to ~~There~~operating ~~were~~earnings noof ~~material~~$53 million ~~additional~~in ~~charges~~the ~~related~~first toquarter ~~exit~~of ~~costs~~2011. The ~~adjustments~~increase ofin ~~$3 million~~operating ~~reflect:~~earnings was primarily due to (i) $2an ~~million~~increase ofin ~~reversals~~gross ofmargin ~~accruals~~primarily nodriven ~~longer~~by ~~needed,~~operational efficiencies and a favorable product mix and (ii) $1a ~~million~~decrease ofin ~~foreign~~SG&A ~~currency~~expenditures, ~~translation~~primarily ~~adjustments.~~due ~~The~~to ~~$17 million~~a ~~used~~non-recurring ~~reflects~~charge ~~cash~~to ~~payments.~~settle ~~The~~a ~~remaining~~legal ~~accrual~~matter ofduring ~~$19 million~~the ~~was~~first ~~included~~quarter inof ~~Accrued~~2011, ~~liabilities~~partially inoffset ~~the~~by ~~Company’s~~higher ~~condensed~~research ~~combined~~and ~~balance~~development ~~sheet at~~(“R&D”) ~~October 2, 2010~~expenditures.

~~Employee~~Looking ~~Separation~~Forward ~~Costs~~

AtIn August ~~January 1~~2011, ~~2010,~~Motorola ~~the~~Mobility ~~Company~~and ~~had~~Google anentered ~~accrual~~into ofthe ~~$33 million~~Merger ~~for~~Agreement ~~employee~~pursuant ~~separation~~to ~~costs,~~which ~~representing~~Google ~~the~~will ~~severance~~acquire ~~costs~~the ~~for approximately 400 employees~~Company. The ~~additional~~Merger ~~charges~~is ~~of $61 million~~subject ~~represent~~to ~~severance~~various ~~costs~~closing ~~for~~conditions, ~~approximately~~including anantitrust ~~additional~~clearances ~~1,500 employees,~~in ofvarious ~~which~~jurisdictions ~~500~~and ~~were~~other conditions ~~direct~~described ~~employees~~in ~~and~~the ~~1,000~~Company’s ~~were~~definitive ~~indirect~~proxy ~~employees.~~statement ~~The~~on ~~adjustments~~Schedule of14A ~~$16 million~~filed ~~reflect:~~with ~~(i) $13~~the ~~million~~Securities ofand ~~reversals~~Exchange ~~of accruals~~Commission noon ~~longer~~October 14, ~~needed~~2011. ~~and~~We ~~(ii) $3~~currently ~~million~~expect ofthe ~~foreign~~Merger ~~currency~~to ~~translation~~be ~~adjustments.~~completed ~~During~~during the ~~nine~~first ~~months~~half ~~ended~~of ~~October 2,~~2012 ~~2010,~~following antitrust ~~approximately~~regulatory ~~900 employees,~~approval offrom ~~which~~China. ~~300~~In ~~were~~all ~~direct~~other ~~employees~~jurisdictions ~~and~~with ~~600~~pre-closing ~~were~~requirements, ~~indirect~~the ~~employees, were~~transaction ~~separated~~has ~~from~~been ~~the~~investigated ~~Company~~and cleared without conditions. ~~The~~It ~~$47 million~~is ~~used~~possible ~~reflects~~that ~~cash~~the ~~payments~~failure to ~~these~~timely ~~separated~~meet ~~employees.~~the ~~The~~closing ~~remaining~~conditions ~~accrual~~or other factors outside of ~~$31 million~~our ~~was~~control ~~included~~could inrequire ~~Accrued~~us ~~liabilities~~to incomplete the ~~Company’s~~Merger ~~combined~~at ~~balance~~a ~~sheet~~later ~~at October 2,~~time ~~2010~~or prevent us from completing the Merger altogether.

~~Table of Contents~~24

22We expect continued growth, as well as convergence, of industries like wireless, media, computing and the Internet. This is expected to create continued consumer demand for new mobile devices, applications and services. We believe we are well positioned to deliver innovative experiences, both in the home and on the go, and across multiple types of devices, to address these opportunities.

13In our Mobile Devices business, we expect continued annual growth in total industry demand over the next several years, particularly in the smartphone and media tablet segments of the market. ~~Intangible~~We ~~Assets~~expect the overall global mobile device market to remain intensely competitive, particularly in smartphones and ~~Goodwill~~media tablets. The largest competitors in the industry, particularly Apple, are expected to continue to be very successful in the marketplace. We also expect certain competitors to significantly expand their smartphone portfolios in 2012 in the markets in which we compete, including several China-based manufacturers. Our strategy is focused on developing and marketing a competitive mobile device portfolio and strengthening our position in priority markets. Our product portfolio priorities include the following: (i) providing a more focused portfolio of mobile devices distributed through carriers, distributors and retailers globally, (ii) software applications, services and accessories for consumers, including cloud based, interactive experiences and a portfolio of accessories that enhance user experiences, and (iii) enterprise-ready devices for business as well as personal use. The balance of our portfolio, including feature phones, iDEN devices, and voice-centric devices will be more limited given the declining opportunity for profitable growth in these segments of the handset industry. Mobile Devices’ market priorities continue to be primarily North America, China and Latin America, followed by Western Europe and other strategic markets. With the growth in industry demand for mobile devices, and by providing compelling consumer experiences and leveraging our brand, we expect to continue to improve the financial performance in our Mobile Devices business.

~~Intangible~~In ~~Assets~~our Home business, we expect industry conditions in 2012 to be comparable to 2011, including overall demand levels, competitiveness and pricing pressures. We will leverage our market leadership position and intellectual property to enhance our device portfolio, including advanced high definition and DVR set-top boxes and voice and data gateways. We are focusing our development efforts on innovation that enables our customers to provide converged media experiences through next generation whole-home IP video gateways and multi-screen service enablement. Increasing adoption of IP connected devices, such as smartphones, tablets, PCs and TVs, is enabling new services and increasing broadband demand. These trends are leading service providers to invest in IP networks driving the need for video and broadband infrastructure equipment to optimize their network, increase bandwidth and provide new services. We are focused on balancing our investment in growth market segments, management of our cost structure in the mature market segments and the profitability of the business.

~~Amortized~~The ~~intangible~~Company ~~assets~~has ~~were~~an ~~comprised~~industry leading patent portfolio encompassing many wireless, video, and other innovative technologies. We are involved in significant patent litigation with industry competitors and other relevant patent holders. Several of these matters could be resolved during 2012. The outcome of these disputes could have a significant impact on our business and such matters are discussed in “Part II. Item 1. Legal Proceedings” of the ~~following:~~Company’s Form 10-Q and “Part I. Item 3. Legal Proceedings” of the Company’s 2011 Form 10-K.

	October 1, 2011				December 31, 2010
	GrossCarryingAmount		AccumulatedAmortization		GrossCarryingAmount		AccumulatedAmortization
Completed technology		$510		$451		$507		$418
Licensed technology		106		106		105		105
Patents		97		22		97		16
Customer-related		64		44		62		37
In-process research and development		6		—		10		—
Other intangibles		38		38		38		38
		$821		$661		$819		$614

We conduct our business in highly competitive markets, facing both new and established competitors. The markets for many of our products are characterized by rapidly changing technologies, frequent new product introductions, changing consumer trends, short product life cycles, consumer loyalty and evolving industry standards. Market disruptions caused by new technologies, the entry of new competitors, consolidations among our customers and competitors, changes in regulatory requirements, changes in economic conditions, supply interruptions or other factors, can introduce volatility into our businesses. Meeting all of these challenges requires consistent operational planning and execution and investment in technology, resulting in innovative products that meet the needs of our customers around the world. As we execute on meeting these objectives, we remain focused on taking the necessary action to design and deliver differentiated and innovative products, services and experiences that simplify, connect, and enrich people’s lives.

Amortization expense on intangible assets, which is included within Other charges, was $15 million and $14 million for the three months ended October 1, 2011 and October 2, 2010, respectively. Amortization expense on intangible assets, which is included within Other charges, was $47 million and $41 million for the nine months ended October 1, 2011 and October 2, 2010, respectively. As of October 1, 2011, annual amortization expense is estimated to be $59 million in 2011, $42 million in 2012, $33 million in 2013, $18 million in 2014 and $12 million in 2015. 25

~~During~~Results ~~the three months ended April 2, 2011, the Company recorded an impairment~~ of $4Operations ~~million related to the abandonment of previously acquired in-process research and development.~~

Amortized intangible assets, excluding goodwill, by business segment were as follows:


	Three Months Ended
(Dollars in millions)	March 31, 2012		% of Revenue		April 2, 2011		% of Revenue
Net revenues		$3,078				$3,032
Costs of sales		2,324		75.5%		2,277		75.1%

Gross margin		754		24.5%		755		24.9%

Selling, general and administrative expenses		430		14.0%		417		13.8%
Research and development expenditures		366		11.9%		357		11.8%
Other charges		28		0.9%		17		0.5%

Operating loss		(70)		(2.3)%		(36)		(1.2)%

Other income (expense):
Interest income (expense), net		3		0.1%		2		0.0%
Other, net		(2)		—%		(17)		(0.5)%

Total other income (expense)		1		0.1%		(15)		(0.5)%

Loss before income taxes		(69)		(2.2)%		(51)		(1.7)%
Income tax expense		17		0.6%		30		1.0%

Net loss		$(86)		(2.8)%		$(81)		(2.7)%

	October 1, 2011				December 31, 2010
	GrossCarryingAmount		AccumulatedAmortization		GrossCarryingAmount		AccumulatedAmortization
Mobile Devices		$149		$61		$153		$53
Home		672		600		666		561
		$821		$661		$819		$614

Three months ended March 31, 2012 compared to three months ended April 2, 2011

~~Goodwill~~Net Revenues

~~The~~Net revenues ~~following~~were ~~table~~$3.1 billion ~~displays~~in athe ~~rollforward~~first quarter of 2012, up 2% compared to net revenues of $3.0 billion in the ~~carrying~~first ~~amount~~quarter of ~~goodwill~~2011. byThe ~~reportable~~increase ~~segment~~in ~~from~~net ~~January~~revenues reflects 1a $66 million, ~~2011~~or to3%, ~~October~~increase in net revenues in the Mobile Devices segment, partially offset by a $20 1million, ~~2011:~~or 2%, decrease in net revenues in the Home segment. The 3% increase in net revenues in the Mobile Devices segment was primarily driven by an 11% increase in ASP, partially offset by a 3% decrease in unit shipments. The 2% decrease in net revenues in the Home segment was primarily driven by a 4% decrease in net revenues of set-top boxes, reflecting a 10% decrease in shipments of set-top boxes, partially offset by a higher ASP due to favorable product mix. Net revenues of video and access infrastructure equipment declined slightly.

	MobileDevices		Home		Total
Balances as of January 1, 2011:
Aggregate goodwill acquired		$133		$1,391		$1,524
Accumulated impairment losses		(55)		(73)		(128)
Goodwill, net of impairment losses		78		1,318		1,396
Goodwill acquired		9		25		34
Adjustments		1		—		1
Balances as of October 1, 2011:
Aggregate goodwill acquired		143		1,416		1,559
Accumulated impairment losses		(55)		(73)		(128)
Goodwill, net of impairment losses		$88		$1,343		$1,431

Gross Margin

~~Table~~Gross margin was $754 million, or 24.5% of ~~Contents~~net revenues, in the first quarter of 2012, compared to $755 million, or 24.9% of net revenues, in the first quarter of 2011. The decrease in gross margin as a percentage of net sales in the first quarter of 2012 compared to the first quarter of 2011 reflects a decrease in gross margin percentage in the Mobile Devices segment, partially offset by an increase in the Home segment. The Company’s overall gross margin as a percentage of net revenues can be impacted by the proportion of overall net revenues generated by its various businesses.

23Selling, General and Administrative Expenses

~~MANAGEMENT’S~~SG&A ~~DISCUSSION~~expenses ~~AND~~increased ~~ANALYSIS~~3% to $430 million, or 14.0% of net revenues, in the first quarter of 2012, compared to $417 million, or 13.8% of net revenues, in the first quarter of 2011. The increase in SG&A expenses reflects higher SG&A expenses in the Mobile Devices segment, partially offset by lower SG&A expenses in the Home segment, primarily due to the absence in the first quarter of 2012 of a comparable non-recurring charge to settle a legal matter. The increase in the Mobile Devices segment was to support the growth in smartphone volumes. SG&A expenses as a percentage of net revenues increased in the Mobile Devices segment and decreased in the Home segment.

~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ 26

~~Item 2.~~Research ~~Management’s Discussion~~ and ~~Analysis~~Development ofExpenditures ~~Financial Condition and Results of Operations~~

~~This~~R&D ~~commentary~~expenditures ~~should~~increased be3% ~~read~~to in$366 million, ~~conjunction~~or ~~with~~11.9% ~~Motorola~~of ~~Mobility~~net ~~Holdings~~revenues, ~~Inc.’s~~ (in the ~~“Company’s”)~~first ~~condensed~~quarter of 2012, compared to ~~consolidated~~$357 million, ~~financial~~or ~~statements~~11.8% ~~for~~of ~~the~~net ~~three~~revenues, ~~and~~in ~~nine~~the ~~months~~first ~~ended~~quarter ~~October 1,~~of 2011. ~~and~~The ~~October 2,~~increase ~~2010,~~in asR&D ~~well~~expenditures asreflects higher R&D expenditures in the ~~Company’s~~Home ~~combined~~segment, ~~financial~~partially ~~statements~~offset ~~and~~by ~~related~~a ~~notes~~slight ~~thereto~~decrease ~~and~~in ~~management’s~~R&D ~~discussion~~in ~~and~~the ~~analysis~~Mobile Devices segment. ofR&D ~~financial~~expenses ~~condition~~as ~~and~~a ~~results~~percentage of ~~operations~~net revenues increased in the Home segment and decreased in the Mobile Devices segment. The Company’s ~~Annual~~participates ~~Report~~in onvery ~~Form 10-K~~competitive ~~for~~industries ~~the~~with ~~year~~constant ~~ended~~changes ~~December 31~~in technology and, ~~2010~~accordingly, the Company continues to believe that a strong commitment to R&D is required to drive long-term growth.

~~Introduction~~Other Charges

~~Management’s~~The ~~discussion~~Company ~~and~~recorded ~~analysis~~net charges of ~~financial condition~~$28 million ~~and~~in ~~results~~Other ofcharges ~~operations~~in ~~(“MD&A”)~~the isfirst aquarter ~~supplement~~of 2012, compared to net charges of $17 million in the ~~accompanying~~first ~~condensed~~quarter ~~consolidated~~of ~~financial~~2011. ~~statements~~The ~~and~~charges ~~provides~~in ~~additional~~the ~~information~~first onquarter ~~Motorola~~of ~~Mobility’s~~2012 ~~business,~~were ~~recent~~primarily ~~developments,~~comprised ~~financial condition,~~of ~~liquidity~~$17 ~~and~~million ~~capital~~of ~~resources,~~charges ~~cash~~related ~~flows~~to the proposed Merger with Google and ~~results~~$11 million of ~~operations~~charges relating to the amortization of intangibles. ~~MD&A~~The ischarges ~~organized~~in asthe ~~follows:~~first quarter of 2011 were primarily comprised of $16 million of charges relating to the amortization of intangibles.

•Interest ~~Separation~~Income ~~from Motorola, Inc.—This section provides a general discussion of our separation from Motorola, Inc., which changed its name to Motorola Solutions, Inc.~~ (~~hereinafter, our “Former Parent”~~Expense) ~~effective January 4~~, ~~2011.~~Net

•Net ~~Merger~~interest ~~Agreement~~income ~~with~~was ~~Google~~$3 ~~Inc~~million in the first quarter of 2012, compared to net interest income of $2 million in the first quarter of 2011.~~—This~~ ~~section~~Net ~~provides~~interest aincome ~~general~~in ~~discussion~~the first quarter of ~~our~~2012 ~~proposed~~includes ~~Merger~~interest ~~with~~income ~~Google~~of ~~Inc~~$5 million, partially offset by interest expense of $2 million. Net interest income in the first quarter of 2011 includes interest income of $4 million, partially offset by interest expense of $2 million.

~~• Executive Overview—This section provides a general description of our business~~Other, asNet ~~well as recent developments we believe are important in understanding our results of operations and financial condition or in understanding anticipated future trends.~~

•Net ~~Looking~~expense ~~Forward—This~~classified ~~section~~as ~~provides~~Other, aas ~~discussion~~presented ofin ~~management’s~~Other ~~general~~income (expense), ~~outlook~~was ~~about~~$2 million ~~market~~in ~~demand~~the first quarter of 2012, ~~competition~~compared ~~and~~to ~~product~~$17 million ~~development~~in the first quarter of 2011. The net expense in the first quarter of 2012 was primarily comprised of $3 million of investment impairment costs. The net expense in the first quarter of 2011 was primarily comprised of $12 million of foreign currency costs.

•Income ~~Results~~Tax ~~of Operations—This section provides an analysis of our results of operations for the three and nine months ended October 1, 2011 and October 2, 2010.~~Expense

•The ~~Liquidity~~Company ~~and~~recorded ~~Capital~~income ~~Resources—This~~tax ~~section~~expense ~~provides~~of a$17 ~~discussion~~million in the first quarter of ~~our~~2012 ~~current~~as ~~financial~~compared ~~condition~~to ~~and~~$30 million anin ~~analysis~~the first quarter of ~~our~~2011. The ~~cash~~expense ~~flows~~ for both the ~~nine~~first ~~months~~quarters ~~ended~~of ~~October~~2012 1,and 2011 was comprised of taxes on foreign earnings and ~~October~~foreign 2,withholding ~~2010~~taxes on royalty and other income. The Company has not recorded a tax benefit on its U.S. losses due to its recent history of cumulative U.S. losses.

•The ~~Significant~~Company’s ~~Accounting~~tax ~~Policies—This~~provision ~~section~~may ~~identifies~~change ~~and~~from ~~summarizes~~period ~~those~~to ~~accounting~~period based ~~policies~~on ~~that~~non-recurring ~~significantly~~events, ~~impact~~such ~~our~~as ~~reported~~the ~~results~~settlement of ~~operations~~tax ~~and~~audits, ~~financial~~changes ~~condition~~in valuation allowances and ~~require~~the tax impact of significant ~~judgment~~unusual or ~~estimates~~extraordinary onitems. The Company’s tax provision will also change due to the ~~part~~level of ~~management~~pre-tax income inor ~~their~~loss ~~application~~and its geographic mix.

~~Separation~~Net ~~from~~Loss ~~Motorola, Inc.~~

OnThe ~~January 4,~~Company ~~2011~~incurred ~~(the “Distribution~~a ~~Date”),~~loss ~~Motorola~~before ~~Mobility~~income ~~Holdings,~~taxes ~~Inc. became an independent, publicly traded company as a result~~ of ~~our~~$69 million ~~Former~~in ~~Parent’s~~the ~~distribution~~first ofquarter ~~its shares~~ of ~~Motorola Mobility to our Former Parent’s stockholders. On the Distribution Date~~2012, ~~Former~~compared ~~Parent~~with ~~stockholders~~a ofloss ~~record~~before asincome oftaxes ~~the close~~ of ~~business on December~~$51 ~~21,~~million ~~2010~~in (the ~~“Record~~first ~~Date”)~~quarter ~~received one share~~ of ~~Motorola Mobility common stock for every eight shares of Motorola, Inc~~2011. ~~common~~After ~~stock~~taxes, ~~held as of~~ the ~~Record~~Company ~~Date~~incurred ~~(the~~a ~~“Distribution”).~~net ~~Motorola~~loss ~~Mobility is comprised~~ of ~~Motorola,~~$86 million ~~Inc.’s~~in ~~former Mobile Devices and Home businesses. Our Former Parent’s Board of Directors approved~~ the ~~distribution~~first ofquarter ~~its shares~~ of ~~Motorola~~ ~~Mobility Holdings~~2012, ~~Inc.~~compared onto ~~November 30,~~a ~~2010.~~net ~~Motorola~~loss ~~Mobility~~of ~~Holdings, Inc. was incorporated on May~~$81 ~~28,~~million ~~2010~~in ~~and is~~ the ~~parent~~first ofquarter ~~Motorola Mobility, Inc., our main U.S. wholly owned operating subsidiary through which we conduct substantially all~~ of the business activities discussed in this Form 10-Q. Our Registration Statement on Form 10 was declared effective by the U.S. Securities and Exchange Commission on December 1, 2010. Our common stock began trading “regular-way” under the ticker symbol “MMI” on the New York Stock Exchange on January 4, 2011.

~~Table~~The increase in the loss before income taxes in the first quarter of ~~Contents~~2012 compared to the first quarter of 2011 was primarily attributable to a $11 million increase in Other charges and a $13 million increase in SG&A expenses, partially offset by a $15 million decrease in Other, as presented in Other income (expense).

2427

~~The~~Segment ~~Motorola~~Results Mobility businesses discussed herein represent the historical operating results and financial condition of Motorola Mobility. For operating results prior to the separation, any references to “we,” “us,” “Motorola Mobility Holdings, Inc.,” “Motorola Mobility” or the “Company” in this MD&A refer to the Mobile Devices and Home businesses as they operated as a part of our Former Parent prior to the Distribution.

~~Merger~~The ~~Agreement~~following commentary should be read in conjunction with ~~Google~~the ~~Inc~~financial results of each operating business segment as detailed in Note 10, “Segment Information,” to the Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2012. Net revenues and operating results for the Company’s two operating business segments for the three months ended March 31, 2012 and April 2, 2011 are presented below.

OnMobile ~~August 15,~~Devices ~~2011,~~Segment Motorola Mobility Holdings, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Google Inc. (“Google”) and RB98 Inc., a wholly owned subsidiary of Google (“Merger Sub”). The Merger Agreement provides for the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Google. In the Merger, each outstanding share of common stock, par value $0.01 per share, of the Company, other than any dissenting shares, shares held by Google, Merger Sub, the Company or any of their respective subsidiaries and treasury shares, will be cancelled and converted into the right to receive $40.00 in cash, without interest. The closing of the Merger is subject to customary closing conditions, including adoption of the Merger Agreement by the Company’s stockholders and regulatory approvals.

~~Under~~The ~~the~~Mobile ~~Merger~~Devices ~~Agreement~~segment designs, ~~the~~manufactures, ~~Company~~sells ~~may~~and ~~not~~services ~~solicit~~wireless ~~competing~~mobile ~~proposals~~devices, orincluding ~~participate~~smartphones inand ~~any discussions or~~media ~~negotiations regarding alternative business combination transactions~~tablets, ~~subject~~with tointegrated ~~exceptions~~software ~~that~~and ~~permit~~accessory ~~the~~products, ~~Company’s~~and ~~Board~~licenses ofintellectual ~~Directors to take actions required by their fiduciary duties~~property. ~~The~~For ~~Company may terminate~~ the ~~Merger~~first ~~Agreement~~quarter ~~under certain~~of ~~specified circumstances~~2012, ~~including if its Board of Directors determines in good faith that it has received a superior proposal (as defined in~~ the ~~Merger~~segment’s ~~Agreement),~~net ~~and~~revenues ~~otherwise~~represented ~~complies~~71% ~~with certain terms~~ of the ~~Merger~~Company’s ~~Agreement.~~consolidated ~~In connection~~net ~~with a termination to accept a superior proposal~~revenues, ~~Google~~compared ~~will be entitled~~ to a70% ~~fee~~for ofthe first ~~$375~~quarter ~~million. The $375 million fee is also payable to Google in other limited circumstances involving a competing proposal and termination~~ of ~~the Merger Agreement~~2011.

Pursuant to the Merger Agreement, stock options and restricted stock units (RSUs) granted by the Company under the Legacy Incentive Plan as a substitute for Motorola, Inc. stock options, and RSUs granted prior to 2011, will fully vest upon the closing of the transaction and be paid out at $40 for each RSU, and $40 minus the exercise price for each stock option, in each case less applicable tax withholdings. Vested stock options and vested RSUs granted under the 2011 Incentive Compensation Plan in 2011 will be paid out at $40 for each RSU, and $40 minus the exercise price for each stock option, in each case less applicable tax withholdings. Unvested stock options and unvested restricted stock (RS) and RSUs granted under the 2011 Incentive Compensation Plan in 2011 will be converted to an award of equivalent value in Google stock options, RS and RSUs, respectively. The Merger Agreement and related materials can be found in the Company’s SEC filings at www.sec.gov.

Three Months Ended

(Dollars in millions)

March 31,
2012

April 2,
2011

% Change

Segment net revenues

$2,194

$2,128

3 %

Operating loss

(121)

(89)

36%

~~Table~~Three ofmonths ~~Contents~~ended March 31, 2012 compared to three months ended April 2, 2011

25In the first quarter of 2012, the segment’s net revenues were $2.2 billion, an increase of 3% compared to net revenues of $2.1 billion in the first quarter of 2011. The increase in net revenues was primarily driven by an 11% increase in average selling price, partially offset by a 3% decrease in unit shipments. On a geographic basis, net revenues increased in the Europe, Middle East and Africa region and Latin America, partially offset by decreased net revenues in Asia and North America.

~~Executive~~The ~~Overview~~segment incurred an operating loss of $121 million in the first quarter of 2012, compared to an operating loss of $89 million in the first quarter of 2011. The increase in the operating loss was primarily due to (i) higher selling, general and administrative expenses to support the growth in smartphone volumes and (ii) a decrease in gross margin, partially offset by a 3% increase in net revenues. As a percentage of net revenues in the first quarter of 2012 as compared to the first quarter of 2011, gross margin and R&D expenditures decreased and SG&A expenses increased.

The ~~Company~~segment’s industry typically experiences short life cycles for new products. Therefore, it is vital to the segment’s success that new, compelling products are continually introduced. Accordingly, a strong commitment to R&D is required and, even amidst challenging global economic conditions, the segment expects to continue to make the appropriate investments to develop a differentiated product portfolio and fuel long-term growth.

~~Motorola~~Handset ~~Mobility~~unit ~~Holdings,~~shipments ~~Inc.~~in isthe afirst ~~provider~~quarter of ~~innovative~~2012 were ~~technologies~~8.8 million units, ~~products~~a ~~and~~3% ~~services~~decrease ~~that~~compared ~~enable~~to ashipments ~~range~~ of ~~mobile~~9.0 million ~~and~~units ~~wireline~~in ~~digital~~the ~~communication,~~first ~~information~~quarter ~~and~~of ~~entertainment~~2011 ~~experiences.~~and ~~The~~a ~~Company’s~~14% ~~integrated~~decrease ~~products~~sequentially ~~and~~compared ~~platforms~~to ~~deliver~~shipments ~~rich~~of ~~multimedia~~10.3 million ~~content,~~units ~~such~~in asthe ~~voice, video,~~fourth ~~messaging~~quarter ~~and~~of ~~Internet-based~~2011. ~~applications~~Smartphone ~~and~~shipments in ~~services~~the tofirst ~~multiple~~quarter ~~screens,~~of ~~such~~2012 aswere ~~mobile devices~~5.1 million, ~~including~~a ~~smartphones~~24% ~~and~~increase ~~media~~compared ~~tablets,~~to ~~televisions~~shipments ~~and~~of ~~personal computers~~4.1 million ~~Our~~smartphones ~~product~~in ~~portfolio~~the ~~primarily~~first ~~includes~~quarter ~~mobile~~of ~~devices,~~2011 ~~wireless accessories, set-top boxes~~ and ~~video~~a ~~distribution~~5% ~~systems,~~decrease ~~and~~sequentially ~~wireline~~compared ~~broadband~~to ~~infrastructure~~shipments ~~products~~of ~~and associated customer premises equipment~~5.4 million Wesmartphones ~~are~~in ~~focused on developing differentiated, innovative products to meet~~ the ~~expanding~~fourth quarter ~~needs~~ of ~~consumers~~ to2011. ~~communicate,~~In toaddition ~~collaborate and~~ to ~~discover~~handsets, ~~consume,~~we ~~create~~also ~~and~~shipped ~~share~~over ~~content~~100 thousand atmedia atablet ~~time~~units ~~and~~in ~~place~~the offirst ~~their~~quarter ~~choosing~~of ~~on multiple devices~~2012.

WeIn ~~operate~~the ~~our~~first ~~business~~quarter inof ~~two~~2012, ~~segments. The Mobile Devices~~ segment isASP ~~focused~~increased onapproximately ~~mobile~~11% ~~wireless~~compared ~~devices~~to ~~and related products and services. This segment’s net revenues were $2.4 billion in~~ the ~~third~~ first quarter of 2011 and ~~$2.0~~increased ~~billion~~approximately in3% compared to the ~~third~~fourth quarter of ~~2010, representing 75% and 69%, respectively, of Motorola Mobility’s consolidated net revenues~~2011. The ~~Home~~increase ~~segment~~in isASP ~~focused~~in the onfirst ~~technologies~~quarter toof ~~provide~~2012 ~~video~~as ~~entertainment~~compared ~~services~~ to ~~consumers~~ bythe ~~enabling~~fourth ~~subscribers~~quarter ~~to access a variety~~ of ~~interactive~~2011 ~~digital~~was ~~television~~driven ~~services.~~by ~~This~~favorable ~~segment’s~~product ~~net~~mix ~~revenues were $825 million~~ in the ~~third~~first quarter of ~~2011~~2012. ~~and~~ASP ~~$912~~is ~~million~~impacted inby ~~the~~numerous ~~third~~factors, ~~quarter~~including ofproduct ~~2010~~mix, ~~representing~~market ~~25%~~conditions and ~~31%,~~ ~~respectively~~competitive product offerings, and ofASP ~~Motorola~~trends ~~Mobility’s~~often ~~consolidated~~vary ~~net~~over ~~revenues~~time.

~~Motorola Mobility’s Financial Results for the quarter ended October 1, 2011~~ 28

• Net Revenues: Our net revenues were $3.3 billion in the third quarter of 2011, up 11% compared to net revenues of $2.9 billion in the third quarter of 2010. Net revenues increased 20% in the Mobile Devices segment and decreased 10% in the Home ~~segment.~~Segment

•The ~~Operating~~Home ~~Earnings~~segment designs, manufactures, sells, installs and services set-top boxes for digital video, Internet protocol (~~Loss~~“IP”): Wevideo, ~~incurred~~satellite anand ~~operating~~terrestrial ~~loss~~broadcast ofnetworks, end-to-end $5digital ~~million~~video inand Internet protocol television (“IPTV”) distribution systems, broadband access network infrastructure platforms, and associated data and voice customer premises equipment and associated software solutions to cable TV and telecommunication service providers. For the ~~third~~first quarter of ~~2011~~2012, ~~compared~~the tosegment’s ~~operating~~net ~~earnings~~revenues represented 29% of $6the ~~million~~Company’s inconsolidated net revenues, compared to 30% for the ~~third~~first quarter of ~~2010~~2011.

• Net Loss: We incurred a net loss of $32 million in the third quarter of 2011, compared to net loss of $34 million in the third quarter of 2010.

Three Months Ended

(Dollars in millions)

March 31,
2012

April 2,
2011

%
Change

Segment net revenues

$884

$904

(2)%

Operating earnings

28%

•Three ~~Operating Cash Flows: We generated $132 million of net cash from operating activities in the first nine~~ months ofended ~~2011~~March 31, 2012 compared to ~~generating~~three ~~$381~~months ~~million~~ended ofApril 2, ~~net~~2011 ~~cash from operating activities in the first nine months of 2010.~~

~~Financial~~In ~~results~~the ~~for our~~first ~~two~~quarter ~~business~~of ~~segments~~2012, ~~for~~ the ~~quarter~~segment’s ~~ended~~net ~~October~~revenues were $884 1million, a decrease of 2% compared to net revenues of $904 million in the first quarter of 2011. The 2% decrease in net revenues was primarily driven by a 4% decrease in net revenues of set-top boxes, reflecting a 10% decrease in shipments of set-top boxes, partially offset by a higher ASP due to a favorable product mix. Net revenues of video and access infrastructure equipment declined slightly.

•Revenues Infrom ~~Our~~high definition ~~Mobile~~(“HD”) ~~Devices~~and ~~Business:~~standard ~~Net~~definition revenues were $2.4 billion in the third quarter of 2011, an increase of 20% compared to net revenues of $2.0 billion in the third quarter of 2010. The increase in net revenues was primarily driven by a 28% increase in unit shipments, partially offset by a 6% decrease in average selling price (“~~ASP~~SD”). Weset-top ~~shipped~~boxes ~~11.6~~decreased ~~million~~primarily ~~mobile~~due ~~devices~~to inlower ~~the~~shipments ~~third quarter of 2011, a 28% increase compared~~ to ~~shipments~~large oftelecommunication ~~9.1~~and ~~million~~cable ~~mobile~~operators ~~devices~~ in ~~third~~North ~~quarter~~America ofas ~~2010, and~~ a 5%result ~~increase sequentially compared to shipments~~ of ~~11.0~~lower ~~million mobile devices in the second quarter of 2011~~demand. WeThe ~~shipped~~decrease ~~4.8 million Android-based smartphones~~ in ~~the~~unit ~~third quarter of 2011, a 27% increase compared to~~ shipments of ~~3.8~~HD ~~million~~and inSD ~~the~~set-top ~~third~~boxes ~~quarter~~was ofpartially ~~2010,~~offset ~~and~~by aan ~~10%~~ increase ~~sequentially compared to shipments of 4.4 million~~ in ~~the~~high ~~second~~definition ~~quarter~~/ ofdigital ~~2011.~~video Onrecorder ~~a geographic basis, net revenues increased substantially in Latin America, the Europe, Middle East and Africa region~~ (“~~EMEA~~HD/DVR”) ~~and~~set-top ~~Asia,~~boxes ~~and~~due ~~decreased~~to inhigher ~~North~~demand ~~America~~for DVR capabilities.

~~The~~On ~~segment~~a ~~incurred~~geographic anbasis, ~~operating~~net ~~loss~~revenues ofdecreased ~~$41 million~~ in ~~the~~North ~~third quarter of 2011~~America, ~~compared~~Latin toAmerica ~~an operating~~and ~~loss~~Asia, ofpartially ~~$43 million~~offset inby ~~the~~increased ~~third~~net ~~quarter~~revenues ~~of 2010~~in EMEA. ~~The~~Net ~~decrease~~revenues in ~~operating~~North ~~loss~~America ~~was~~continued ~~primarily~~to ~~due~~comprise toa ansignificant ~~increase~~portion inof ~~gross~~the ~~margin~~segment’s business, ~~driven~~accounting byfor aapproximately 2074% ~~increase~~of inthe segment’s net revenues, ~~largely~~in ~~offset~~the byfirst anquarter ~~increase~~of 2012, compared to approximately 77% in ~~SG&A~~the first ~~expenses~~quarter of 2011.

~~Table~~The segment had operating earnings of ~~Contents~~$68 million in the first quarter of 2012, compared to operating earnings of $53 million in the first quarter of 2011. The increase in operating earnings was primarily due to (i) an increase in gross margin primarily driven by operational efficiencies and a favorable product mix and (ii) a decrease in SG&A expenditures, primarily due to a non-recurring charge to settle a legal matter during the first quarter of 2011, partially offset by higher R&D expenditures. As a percentage of net revenues in the first quarter of 2012 as compared to the first quarter of 2011, gross margin and R&D expenditures increased and SG&A expenditures decreased.

26Reorganization of Businesses

•During Inthe ~~Our~~three ~~Home~~months ~~Business:~~ended ~~Net~~March 31, ~~revenues~~2012, ~~were $825 million in~~ the ~~third~~Company ~~quarter~~recorded ofno ~~2011,~~additional acharges ~~decrease~~related ~~of 10% compared~~ to restructuring ~~net~~actions ~~revenues~~under ofOther ~~$912~~charges ~~million~~ in the ~~third~~Company’s ~~quarter~~condensed ofconsolidated ~~2010.~~statements ~~The decrease in net revenues in the Home segment was primarily driven by an 11% decrease in net revenues from sales~~ of ~~set-top boxes~~operations, ~~reflecting~~and ade 3%minimis ~~decrease~~reversals ~~in shipments~~ of ~~set-top~~reorganization ~~boxes as well as a lower ASP. Net revenues from sales~~ of ~~video~~business ~~and~~charges ~~access~~for ~~infrastructure~~accruals ~~equipment~~no ~~declined~~longer ~~12%~~needed. ~~On a geographic basis, net revenues decreased in Asia and North America, partially offset by increased net revenues in EMEA. Net revenues in Latin America remained unchanged.~~

~~The~~During ~~segment~~the ~~had~~three ~~operating~~months ~~earnings~~ended ~~of $54~~April ~~million~~2, ~~in the third quarter of~~ 2011, ~~compared~~the toCompany ~~operating~~recorded ~~earnings of~~ $49 6 million inof ~~the~~reversals ~~third~~of ~~quarter~~reorganization of ~~2010.~~business ~~The~~charges ~~increase~~for accruals inno ~~operating~~longer ~~earnings was primarily due to (i) an increase in gross margin~~needed, ~~driven~~including by$3 ~~operational~~million ~~efficiencies,~~of ~~product~~separation-related ~~cost recoveries~~adjustments asfor ~~well~~employees asthat aremained ~~favorable~~with ~~product~~our ~~mix~~Former ~~shift,~~Parent ~~(ii)~~and $3 amillion ~~slight~~under ~~decrease~~Other charges in ~~SG&A~~the ~~expenses,~~Company’s ~~partially~~condensed ~~offset~~consolidated bystatements anof ~~increase in research and development (“R&D”) expenditures~~operations.

~~Looking~~The ~~Forward~~following table displays the net charges (reversals of accruals) incurred by business segment:

In August 2011, Motorola Mobility and Google Inc. entered into the Merger Agreement pursuant to which Google will acquire the Company. We currently expect the Merger to be completed by the end of 2011 or early 2012. However, the Merger is subject to various closing conditions, including antitrust clearances in various jurisdictions and other conditions described in the Company’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on October 14, 2011. It is possible that the failure to timely meet those closing conditions or other factors outside of our control could require us to complete the Merger at a later time or prevent us from completing the Merger altogether.


*Three Months Ended*	March 31, 2012		April 2, 2011
Mobile Devices		$—		$(3)
Home		—		—

		$—		$(3)

In our Mobile Devices business, while we expect the overall global mobile device market to remain intensely competitive, we expect annual growth in total industry demand over the next several years, particularly in smartphones and media tablets. Our strategy is focused on developing and marketing a comprehensive smartphone portfolio and strengthening our position in priority markets. Our smartphone priorities and areas of differentiation include the following areas: (i) providing a broad based portfolio of devices at multiple price points and distributed through carriers, distributors and retailers globally, (ii) expanding our portfolio to include 4G LTE devices, (iii) software applications and services for consumers, including cloud based social networking, media and content related experiences, (iv) Webtop, a proprietary software application, and related accessories that enable enhanced and more interactive computer-like user experiences, and (v) enterprise-ready devices that address the security and device management needs required for business use. Our mid- to high-tier feature phone portfolio will be limited given declining global demand in this segment of the handset industry. We will continue to develop and market our iDEN portfolio of devices, although we expect overall annual iDEN unit demand to continue to gradually decline. For lower-priced, voice-centric mobile devices, our portfolio will also be limited as we deliver devices to meet certain market needs. To address a growth opportunity, we are developing a portfolio of media tablets, wireless devices which enable enhanced access to the mobile Internet, content consumption, and enterprise experiences for consumers and business users. We shipped our first LTE-upgradable media tablet, the Motorola XOOM, beginning in the first quarter of 2011. We expect significant annual growth in total industry demand for media tablets over the next several years and for this market to be intensely competitive. Mobile Devices’ market priorities continue to be primarily North America, China and Latin America, followed by Western Europe and other strategic markets. With the growth in demand for smartphones and media tablets, and by accelerating our speed to market, providing rich consumer experiences and strengthening our brand, we expect to continue to improve the financial performance in our Mobile Devices business. 29

InCash ~~our~~payments ~~Home~~for ~~business, industry~~exit ~~demand~~costs ~~levels~~and inemployee ~~2011~~separations ~~have~~in ~~been~~connection ~~comparable~~with tothese reorganization ~~2010.~~plans Wewere ~~expect~~$15 amillion ~~return~~during tothe ~~industry~~three ~~growth~~months ~~when~~ended ~~market conditions improve~~March 31, ~~particularly~~2012 inand ~~the~~$19 ~~U.S.,~~million ~~which~~during ~~may~~the ~~drive~~three ~~increased~~months ~~consumer~~ended ~~demand~~April 2, ~~for~~2011. ~~high~~The ~~definition~~$11 TVmillion ~~set-top~~reorganization ~~boxes,~~of ~~whole-home IP-based~~businesses ~~network~~accrual ~~solutions,~~at ~~3D-TV~~March 31, ~~advanced~~2012 ~~interactive~~includes (i) $7 ~~services~~million ~~and~~relating ~~converged~~to ~~experiences.~~employee Inseparation ~~addition,~~costs ~~consumer~~that ~~demand~~are ~~for video services is~~ expected to ~~drive~~be ~~the~~paid ~~need~~in ~~for~~2012 ~~infrastructure~~and ~~equipment~~(ii) $4 tomillion ~~optimize~~relating ~~networks~~to ~~and~~lease ~~storage,~~termination ~~increase bandwidth~~obligations ~~and~~that ~~provide~~are ~~new~~expected ~~services~~to ~~across~~be ~~multiple~~paid ~~screens,~~over ~~including~~a ~~smartphones,~~number ~~media~~of ~~tablets and TV’s~~years. ~~We will continue~~

~~Table~~Liquidity ofand ~~Contents~~Capital Resources

27As highlighted in the condensed consolidated statements of cash flows, the Company’s liquidity and available capital resources are impacted by four key components: (i) cash and cash equivalents, (ii) operating activities, (iii) investing activities, and (iv) financing activities.

toCash ~~leverage our market leadership position in set-top boxes~~ and ~~video~~Cash ~~delivery~~Equivalents ~~systems~~ and ~~in intellectual property to develop innovative solutions for new and emerging market opportunities. As~~Cash weDeposits ~~address these opportunities, we will continue to manage our overall cost structure, focus on the profitability of our core business, and position ourselves for profitable growth.~~

~~Other~~The ~~opportunities~~Company’s wecash ~~plan~~and tocash ~~focus~~equivalents on(which ~~include~~are ~~those~~highly-liquid ~~resulting~~investments ~~from~~with ~~the~~an ~~convergence~~original maturity of ~~industries~~three ~~like~~months ~~wireless~~or less) were $3.1 billion at March 31, ~~media~~2012. At March 31, ~~computing~~2012, ~~and~~$2.1 billion of this amount was held in the ~~Internet~~ U.S. ~~These~~and ~~industries~~$1.0 ~~are~~billion ~~increasingly~~was ~~interacting~~held ~~with~~by ~~each~~the Company or its subsidiaries in other, ~~which~~countries. weOur ~~expect~~intent ~~will~~is ~~create~~to indefinitely ~~demand~~reinvest ~~for~~a ~~new~~portion ~~consumer~~of ~~devices,~~our ~~applications~~earnings from foreign operations. The Company has sufficient U.S. cash and ~~services~~cash equivalents to fund its U.S. Weoperations, ~~believe~~without wethe ~~will~~need befor ~~well~~funds ~~positioned~~from foreign operations. In the event funds from foreign operations are needed to ~~deliver~~fund ~~innovative~~operations ~~experiences~~or other strategic initiatives in the U.S., ~~both~~the Company may incur foreign withholding tax costs in order to distribute the ~~home~~ earnings and oncash back to the ~~go,~~U.S. ~~across~~The ~~multiple~~Company ~~types~~would not incur a U.S. tax liability as a result of ~~devices~~the todistribution ~~address~~given ~~this~~its ~~emerging~~available ~~opportunity~~U.S. tax attributes.

~~The~~At ~~Company~~March 31, ~~has~~2012, anCash ~~industry~~deposits ~~leading~~were ~~patent portfolio encompassing many wireless~~$429 million, ~~video,~~primarily ~~and~~related ~~other~~to ~~innovative~~various ~~technologies.~~legal ~~We are involved in significant patent litigation with industry competitors and other relevant patent holders~~disputes. ~~Several~~At ofMarch 31, ~~these matters could be resolved during the remainder of 2011 or the first half of~~ 2012., ~~The~~$267 ~~outcome~~million of ~~these~~this ~~disputes~~amount ~~could~~was ~~have~~current ~~a significant impact on our business~~ and ~~such~~$162 ~~matters~~million ~~are discussed in “Part II. Item 1. Legal Proceedings”~~ of ~~the~~this ~~Company’s~~amount ~~Forms~~was 10non-~~Q and “Part I~~current. ~~Item 3. Legal Proceedings” of the Company’s Form 10-K.~~

WeDeferred ~~conduct~~Contribution ~~our~~from ~~business~~Former inParent highly competitive markets, facing both new and established competitors. The markets for many of our products are characterized by rapidly changing technologies, frequent new product introductions, changing consumer trends, short product life cycles and evolving industry standards. Market disruptions caused by new technologies, the entry of new competitors, consolidations among our customers and competitors, changes in regulatory requirements, or other factors, can introduce volatility into our businesses. We face challenging, but relatively stable, global economic conditions in our largest markets. Meeting all of these challenges requires consistent operational planning and execution and investment in technology, resulting in innovative products that meet the needs of our customers around the world. As we execute on meeting these objectives, we remain focused on taking the necessary action to design and deliver differentiated and innovative products, services and experiences that simplify, connect, and enrich people’s lives.

~~Table~~Our Former Parent agreed to contribute to us an additional $300 million in cash if and when the Former Parent receives cash distributions as a result of ~~Contents~~the reduction in registered capital of an overseas subsidiary (the “Deferred Contribution”). Since Separation, the Company has received $297 million of the Deferred Contribution from the Former Parent including $72 million received on April 24, 2012.

28Operating Activities

~~Results~~The net cash used for operating activities in the first quarter of ~~Operations~~2012 was $98 million, compared to $107 million of cash generated from operating activities in the first quarter of 2011. The primary contributor to the net cash usage in the first quarter of 2012 was a $327 million decrease in accounts payable and accrued liabilities, partially offset by a $138 million decrease in net inventories and a $74 million decrease in net accounts receivable. The primary contributors to the net cash generation in the first quarter of 2011 were: (i) a $78 million net decrease in other assets and liabilities, (ii) a $22 million decrease in other current assets, and (iii) a $21 million decrease in net accounts receivable, partially offset by a $16 million increase in net inventories.

	Three Months Ended								Nine Months Ended
(Dollars in millions, except per shareamounts)	October 1,2011		% ofSales		October 2,2010		% ofSales		October 1,2011		% ofSales		October 2,2010		% ofSales
Net revenues		$3,259				$2,946				$9,628				$8,035
Costs of sales		2,415		74.1%		2,155		73.2%		7,165		74.4%		5,985		74.5%
Gross margin		844		25.9%		791		26.8%		2,463		25.6%		2,050		25.5%
Selling, general and administrative expenses		426		13.0%		385		13.1%		1,299		13.5%		1,141		14.2%
Research and development expenditures		390		12.0%		373		12.6%		1,142		11.8%		1,112		13.8%
Other charges (income)		33		1.1%		27		0.9%		86		0.9%		(153)		(1.9)%
Operating earnings (loss)		(5)		(0.2)%		6		0.2%		(64)		(0.6)%		(50)		(0.6)%
Other income (expense):
Interest income (expense), net		7		0.2%		(11)		(0.4)%		10		0.1%		(40)		(0.5)%
Gains on sales of investments		2		0.1%		—		—%		12		0.1%		—		—%
Other, net		(6)		(0.2)%		(2)		(0.0)%		(28)		(0.3)%		(24)		(0.3)%
Total other income (expense)		3		0.1%		(13)		(0.4)%		(6)		(0.1)%		(64)		(0.8)%
Loss before income taxes		(2)		(0.1)%		(7)		(0.2)%		(70)		(0.7)%		(114)		(1.4)%
Income tax expense		30		0.9%		28		1.0%		99		1.1%		55		0.7%
Net loss		(32)		(1.0)%		(35)		(1.2)%		(169)		(1.8)%		(169)		(2.1)%
Less: Loss attributable to non-controlling interests		—		—%		(1)		(0.0)%		—		—%		(3)		(0.0)%
Net loss attributable to Motorola Mobility Holdings, Inc.		$(32)		(1.0)%		$(34)		(1.2)%		$(169)		(1.8)%		$(166)		(2.1)%

Accounts Receivable: The Company’s net accounts receivable were $1.7 billion at March 31, 2012, compared to $1.8 billion at December 31, 2011. Compared to December 31, 2011, net accounts receivable at March 31, 2012 were lower in the Home segment and slightly higher in the Mobile Devices segment. The Company’s businesses sell their products in a variety of markets throughout the world and payment terms can vary by market type and geographic location. Accordingly, the Company’s levels of net accounts receivable can be impacted by the timing and level of sales that are made by its various businesses and by the geographic locations in which those sales are made.

~~Three months ended October 1, 2011 compared to three months ended October 2, 2010~~ 30

~~Net~~As ~~Revenues~~further described below under “Sales of Receivables,” from time to time, the Company elects to sell accounts receivable to third-parties. The Company’s levels of net accounts receivable can be impacted by the timing and amount of such sales, which can vary by period and can be impacted by numerous factors.

~~Net revenues~~Inventories: ~~were~~The ~~$3.3 billion~~Company’s innet ~~the~~inventories ~~third~~were ~~quarter~~$569 million ofat ~~2011~~March 31, up2012, ~~11%~~ compared to ~~net revenues of~~ $~~2.9~~701 ~~billion~~million inat ~~the~~December 31, ~~third quarter of 2010~~2011. The ~~increase~~decrease in ~~net~~the ~~revenues~~Company’s ~~reflects: (i) a $400 million, or 20%, increase in~~ net ~~revenues~~inventories ~~in the~~was ~~Mobile~~reflective ~~Devices~~of ~~segment, and (ii)~~ a ~~$87 million, or 10%,~~ decrease in net ~~revenues~~inventory in the ~~Home segment. The 20% increase in net revenues in the~~ Mobile Devices segment. ~~was~~Inventory ~~primarily~~management ~~driven~~continues byto abe ~~28%~~an ~~increase~~area inof ~~unit~~focus ~~shipments,~~as ~~partially~~the Company ~~offset~~balances bythe aneed 6%to ~~decrease~~maintain instrategic ~~average~~inventory ~~selling~~levels ~~price~~to ~~(“ASP”).~~ensure ~~The~~delivery ~~10%~~to ~~decrease~~its incustomers ~~net~~against ~~revenues in~~ the ~~Home~~risk ~~business was primarily driven by an 11% decrease in net revenues from sales~~ of ~~set-top~~inventory ~~boxes,~~excess ~~reflecting~~and aobsolescence 3%due ~~decrease~~to inrapidly ~~shipments of~~changing ~~set-top~~technology ~~boxes~~and ascustomer ~~well as a lower ASP~~demand.

~~Gross~~Accounts ~~Margin~~Payable: The Company’s accounts payable were $1.5 billion at March 31, 2012, compared to $1.7 billion at December 31, 2011. Accounts payable decreased in both segments. The Company buys products in a variety of markets throughout the world and payment terms can vary by market type and geographic location. Accordingly, the Company’s levels of accounts payable can be impacted by the timing and level of purchases made by its various businesses and by the geographic locations in which those purchases are made.

~~Gross~~Reorganization ~~margin was $844 million, or 25.9%~~ of ~~net~~Businesses: ~~revenues,~~The inCompany ~~the~~has ~~third~~implemented ~~quarter~~reorganization of ~~2011,~~businesses ~~compared to $791 million, or 26~~plans.8% ofCash ~~net~~payments ~~revenues,~~for inexit ~~the~~costs ~~third~~and ~~quarter~~employee ofseparations ~~2010. The increase~~ in ~~gross~~connection ~~margin reflects~~with ~~higher~~a ~~gross~~number ~~margin~~of inthese ~~both~~plans ~~segments. The increase in gross margin in the Mobile Devices segment was primarily driven by~~were $15 ~~the~~million ~~20% increase~~ in ~~net revenues. The increase in gross margin in~~ the ~~Home~~first ~~segment~~quarter ~~was~~of ~~primarily due to operational efficiencies~~2012, ~~product cost recoveries and a favorable product mix shift. The decrease in gross margin~~ as acompared ~~percentage~~to of$19 million ~~net revenues~~ in the ~~third~~first quarter of 2011. ~~compared~~Of to the ~~third~~$11 million ~~quarter~~reorganization of ~~2010~~businesses ~~reflects~~accrual aat ~~decrease~~March 31, in2012, ~~gross margin~~$7 million ~~percentage~~relates into ~~the~~employee ~~Mobile~~separation ~~Devices~~costs and ~~segment~~is ~~partially~~expected ~~offset~~to bybe anpaid ~~increase~~over ~~in gross margin percentage in~~ the ~~Home~~remainder ~~segment~~of 2012. The ~~Company’s~~remaining ~~overall~~$4 million ~~gross~~in ~~margin~~accruals asrelate ato ~~percentage~~lease oftermination ~~net~~obligations ~~revenues~~that ~~can~~are expected to be ~~impacted~~paid byover ~~the~~a ~~proportion~~number of ~~overall net revenues generated by its two businesses~~years.

~~Table~~Investing ofActivities ~~Contents~~

29Net cash used for investing activities was $319 million in the first quarter of 2012, compared to net cash used of $61 million in the first quarter of 2011. The $258 million increase in net cash used for investing activities was primarily due to a $265 million increase in cash deposits.

~~Selling~~Acquisitions and Investments: The Company used $20 million of net cash for acquisitions and new investment activities in the first quarter of 2012, ~~General~~compared to net cash used of $11 million in the first quarter of 2011. The cash used in the first quarter of 2012 and ~~Administrative~~2011 ~~Expenses~~was primarily for small strategic investments across the Company.

~~SG&A~~Capital ~~expenses~~Expenditures: ~~increased~~Capital ~~11%~~expenditures towere $~~426~~33 million, ~~or 13.0% of net revenues,~~ in the ~~third~~first quarter of ~~2011~~2012, compared to $~~385~~50 million, ~~or 13.1% of net revenues,~~ in the ~~third~~first quarter of ~~2010~~2011. The ~~increase~~Company’s inemphasis ~~SG&A expenses reflects higher SG&A expenses~~ in ~~the~~making ~~Mobile~~capital ~~Devices~~expenditures ~~segment,~~is ~~partially offset by a slight decrease in SG&A expenses in the Home segment. The increase in the Mobile Devices segment was~~ to ~~support~~focus ~~the~~on ~~growth~~strategic ininvestments ~~smartphone~~driven ~~volumes.~~by ~~SG&A~~customer ~~expenses~~demand, asnew adesign ~~percentage~~capability ~~of net revenues increased in the Home segment~~ and ~~decreased~~process inimprovements, ~~the~~including ~~Mobile~~IT ~~Devices segment~~systems.

~~Research~~Cash ~~and~~deposits: ~~Development~~The ~~Expenditures~~Company made cash deposits of $265 million in the first three months of 2012, compared to no cash deposits being made in the first three months of 2011. The cash deposits made in the first three months of 2012 were primarily to enforce court injunctions related to ongoing legal matters outside of the U.S.

~~R&D~~Investments: ~~expenditures~~The ~~increased~~Company 4%views toits ~~$390 million,~~investments oras ~~12.0%~~an additional source of ~~net~~liquidity. ~~revenues,~~The inmajority ~~the~~of ~~third~~these ~~quarter~~securities ofare available-for-sale ~~2011,~~and ~~compared~~cost-method toinvestments ~~$373 million,~~in ortechnology 12companies.6% The fair market values of ~~net~~these ~~revenues,~~securities inare ~~the~~subject ~~third~~to ~~quarter~~substantial ofprice ~~2010~~volatility. ~~The increase~~In inaddition, ~~R&D~~the ~~expenditures~~realizable ~~reflects~~values ~~higher~~of ~~R&D~~these ~~expenditures~~securities inare ~~both~~subject ~~segments~~to market and other conditions. ~~R&D~~At ~~expenditures~~March as31, a2012, ~~percentage~~the ofCompany’s ~~net~~available-for-sale ~~revenues~~equity ~~increased~~securities inportfolio ~~the~~had ~~Home~~an ~~segment~~approximate ~~and~~fair ~~decreased~~market invalue ~~the~~of ~~Mobile~~$4 million, ~~Devices~~comprised ~~segment.~~of ~~The~~a ~~Company~~cost ~~participates~~basis inof ~~very competitive~~$5 million ~~industries~~and ~~with~~a ~~constant~~net ~~changes~~unrealized inloss ~~technology~~of ~~and~~$1 million. At December 31, ~~accordingly~~2011, the Company ~~continues~~did tonot ~~believe~~have ~~that~~an aavailable-for-sale ~~strong~~equity ~~commitment~~securities toportfolio. ~~R&D~~The isCompany’s ~~required~~available-for-sale toinvestments ~~drive~~are ~~long-term~~included ~~growth.~~in Investments in the Company’s condensed consolidated balance sheets.

~~Other~~Financing ~~Charges~~Activities ~~(Income)~~

~~The~~Net ~~Company~~cash ~~recorded~~provided ~~other~~by ~~charges~~financing of activities was $3321 million in the ~~third~~first quarter of ~~2011~~2012, compared to ~~net charges of~~ $~~27 million~~3.1 inbillion ~~the third quarter~~ of ~~2010.~~net ~~The~~cash ~~charges~~provided in the ~~third~~first quarter of 2011. ~~were~~Cash ~~comprised~~provided ofby ~~$18 million of charges related to the proposed Merger with Google and~~financing ~~$15 million~~activities ~~of charges relating to the amortization of intangibles. The other charges~~ in the ~~third~~first ~~quarter~~three ofmonths ~~2010 included $14 million~~ of ~~charges~~2012 ~~relating~~was toprimarily ~~the~~comprised ~~amortization~~ of ~~intangibles and~~ $13 22 million of ~~net~~cash ~~reorganization of~~from ~~business~~stock ~~charges.~~options ~~The~~being ~~net reorganization of business charges are discussed in further detail in the section entitled “Reorganization of Businesses” included elsewhere within this document~~exercised. Cash

~~Interest Income (Expense), Net~~ 31

~~Net~~ provided ~~interest~~by ~~income~~financing ~~was~~activities ~~$7 million~~ in the ~~third~~first ~~quarter~~three months of 2011, ~~compared~~was toprimarily ~~net~~comprised ~~interest expense~~ of $~~11 million~~3.0 inbillion ~~the third quarter~~ of ~~2010.~~cash ~~Net~~and ~~interest~~cash ~~income~~equivalents inreceived ~~the~~from ~~third~~our ~~quarter~~Former ofParent ~~2011 includes~~at ~~interest~~the ~~income~~time of ~~$8 million, partially offset by interest expense of $1 million~~the Distribution. ~~Net~~The ~~interest~~contribution ~~expense~~from inour ~~the~~Former ~~third~~Parent ~~quarter~~also ~~of 2010~~ included ~~interest~~$168 ~~expense~~million of ~~$23 million~~cash deposits, ~~partially~~primarily ~~offset~~related byto ~~interest~~various ~~income~~legal ~~of $12 million. Prior to separation~~disputes, ~~our~~which ~~interest~~are ~~income~~included ~~and~~in ~~expense~~Cash ~~primarily~~deposits ~~represents~~in ~~amounts~~the ~~allocated~~Company’s ~~from~~condensed ~~our~~consolidated ~~Former~~balance ~~Parent~~sheets.

~~Gains~~Credit onFacilities ~~Sales of Investments~~

~~Gains~~On onJanuary 4, ~~sales~~2011, ofthe ~~investments~~Company ~~were~~entered into a $2 500 million inunsecured three-year credit agreement (the ~~third~~“Credit ~~quarter~~Agreement”) with a syndicate of ~~2011~~lenders. WeThe ~~did~~Credit ~~not~~Agreement ~~have~~provides ~~gains~~for ona revolving ~~sales~~credit facility and a letter of ~~investments~~credit infacility, ~~the~~is ~~third~~guaranteed ~~quarter~~by certain of ~~2010~~the Company’s subsidiaries, and contains restrictive covenants. InThe Company may use any borrowings under the ~~third~~Credit ~~quarter~~Agreement for general corporate purposes. No obligations are outstanding under the Credit Agreement on the date hereof. Our ability to obtain standby letters of ~~2011~~credit, ~~the~~performance ~~net~~bonds, ~~gain~~surety ~~was~~bonds (collectively referred to as “Letters of Credit”), credit facilities, and foreign exchange lines primarily ~~comprised~~depends upon our capitalization, working capital, past performance, management expertise and reputation, and certain external factors, including the condition of ~~gains~~the ~~related~~capital tomarkets, ~~sales~~the overall capacity of ~~securities~~Letters of ~~recorded~~Credit atand ~~cost~~foreign exchange markets. Financial institutions providing these instruments consider such factors in addition to their underwriting/credit standards, which may change from time to time.

~~Other,~~Sales ~~Net~~of Receivables

~~Net~~For ~~expense~~the ~~classified~~three asmonths ~~Other,~~ended ~~net~~March 31, as2012 ~~presented~~and inApril 2, ~~Other~~2011, ~~income~~total ~~(expense),~~accounts ~~was~~receivable ~~$6 million~~sold inby the ~~third~~Company ~~quarter~~were of$3 ~~2011,~~million ~~compared to~~and $2 31 million, ~~in the third quarter of 2010~~respectively. ~~The~~As ~~net expense in the third quarter~~ of ~~2011~~March 31, ~~was~~2012 ~~primarily comprised of $8~~and December ~~million~~31, of2011, ~~foreign~~there ~~currency~~were ~~costs.~~no ~~The~~accounts ~~net~~receivable ~~expense~~outstanding infor which the ~~third~~Company ~~quarter~~retained ofservicing ~~2010 was primarily comprised of $6 million of foreign currency costs~~obligations.

~~Income~~Other Contingencies ~~Tax Expense~~

~~The~~Potential ~~Company~~Contractual ~~recorded~~Damage ~~income~~Claims ~~tax~~in ~~expense~~Excess of ~~$30~~Underlying ~~million~~Contract Value: In incertain ~~the~~circumstances, ~~third~~our ~~quarter~~businesses ofmay ~~2011~~enter asinto ~~compared~~contracts towith ~~$28 million~~customers inpursuant to which the ~~third~~damages ~~quarter~~that ofcould ~~2010. The~~be ~~expense~~claimed by the other party for ~~both~~failed ~~the~~performance ~~third~~might ~~quarters~~exceed ofthe ~~2011~~revenue ~~and~~Motorola ~~2010~~Mobility ~~was~~receives ~~comprised~~from the contract. Contracts with these types of ~~taxes~~uncapped ondamage ~~foreign~~provisions ~~earnings~~are ~~and~~fairly ~~foreign~~rare, ~~withholding~~but ~~taxes~~individual oncontracts ~~royalty~~could ~~and~~still ~~other~~represent ~~income~~meaningful risk. ~~The~~ ~~Company~~There ~~has~~is ~~not~~a ~~recorded~~possibility that a ~~tax~~damage ~~benefit~~claim onby ~~its~~a ~~U.S.~~counterparty ~~losses~~to ~~due~~one of these contracts could result in expenses to ~~its~~Motorola ~~recent~~Mobility ~~history~~that are far in excess of ~~cumulative~~the ~~U.S.~~revenue ~~losses~~received from the counterparty in connection with the contract.

~~Table~~Indemnification Provisions: Motorola Mobility may provide indemnifications for losses associated with indemnification and/or warranty provisions contained in certain commercial and intellectual property agreements. Historically, Motorola Mobility has not made significant payments under these indemnifications. However, there is an increasing risk in relation to intellectual property indemnities given the current legal climate. In particular, two customers of ~~Contents~~the Company have made indemnification demands of the Company related to patent infringement claims by TiVo, Inc. against our products.

30Generally, in indemnification cases, payment by Motorola Mobility is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow Motorola Mobility to challenge the other party’s claims. Further, Motorola Mobility’s obligations under these agreements for indemnification are generally limited in terms of duration, typically not more than 24 months, and for amounts not in excess of the contract value, except with respect to certain intellectual property infringement claims. In some instances, Motorola Mobility may have recourse against third-parties for certain payments made by Motorola Mobility.

~~The~~Furthermore, ~~Company’s~~pursuant ~~tax provision may change from period~~ to ~~period~~the ~~based~~Master ~~on non-recurring~~Separation ~~events,~~and ~~such~~Distribution asAgreement ~~the~~and ~~settlement~~certain ofother ~~tax~~agreements ~~audits,~~with ~~changes~~our inFormer ~~valuation~~Parent, ~~allowances~~Motorola ~~and~~Mobility ~~the~~agreed ~~tax~~to ~~impact~~indemnify ofour ~~significant~~Former ~~unusual~~Parent orfor ~~extraordinary~~certain ~~items. The~~liabilities, ~~Company’s~~and ~~tax~~our ~~provision~~Former ~~will~~Parent ~~also~~agreed ~~change due~~ to ~~the~~indemnify ~~level~~Motorola ofMobility ~~pre-tax~~for ~~income~~certain orliabilities, ~~loss~~in each ~~and~~case ~~its geographic~~for ~~mix~~uncapped amounts.

~~Net~~Legal ~~Loss~~Matters: The Company is involved in various lawsuits, claims and investigations arising in the normal course of business and relating to our business. The Company is currently engaged in significant patent

The Company incurred a loss before income taxes of $2 million in the third quarter of 2011, compared with a loss before income taxes of $7 million in the third quarter of 2010. After taxes, and excluding Loss attributable to non-controlling interests, the Company incurred a net loss of $32 ~~million in the third quarter of 2011, compared to net loss of $34 million in the third quarter of 2010.~~

~~Nine~~ litigation ~~months~~with ~~ended~~Microsoft ~~October 1~~and Apple in many different forums within and outside the U.S., ~~2011~~including ~~compared~~in the U.S. International Trade Commission (“ITC”). We expect final ITC determinations on the Microsoft patent infringement matter against the Company in May 2012 with a sixty-day presidential review period subject to ~~nine~~any ~~months~~applicable ~~ended~~bonding ~~October~~requirements. An ultimate loss for the Company in an ITC action could result in a prohibition on importing infringing 2products or products incorporating infringing components into the U.S. The Company’s manufacturing is conducted outside the U.S. and we import all of our products into the U.S. An ultimate loss in the ITC also could necessitate workarounds to shift to non-infringing products or limit certain features of our products, ~~2010~~increasing costs. Such patent litigation also could result in increased costs for the Company associated with damages, development of non-infringing products, and licenses under the subject intellectual property.

~~Net~~In ~~Revenues~~the opinion of management, the ultimate disposition of these various matters is not expected to have a material adverse effect on Motorola Mobility’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. If the Company is prohibited from importing infringing products into the U.S. and the scope of the prohibition impacts a meaningful portion of the Company’s products, disposition of such an ITC matter could have a material impact on Motorola Mobility’s consolidated financial position, liquidity or results of operations. See “Part II. Item 1. Legal Proceedings” for more details.

~~Net revenues~~Tax ~~were~~and ~~$9.6 billion~~Regulatory Proceedings in ~~the~~Brazil: The ~~first~~Company ~~nine~~had ~~months~~approximately $157 million of ~~2011~~cash deposits, upincluding ~~20%~~accrued ~~compared~~interest, related to ~~net~~various ~~revenues~~legal ofdisputes ~~$8.0 billion~~in Brazil, which are included in non-current Cash deposits in the ~~first~~Company’s ~~nine~~condensed ~~months~~consolidated balance sheet as of ~~2010~~March 31, 2012. ~~The~~This amount may increase inbefore ~~net~~the ~~revenues~~end ~~reflects~~ of the year because a ~~$1.6 billion,~~trade orcompliance ~~30%,~~matter ~~increase~~is pending in ~~net revenues~~the inintermediate administrative level and may be resolved at that level before the ~~Mobile~~end ~~Devices~~of ~~segment~~the year. ~~The~~If ~~30%~~we ~~increase~~receive inan ~~net~~adverse ~~revenues~~ruling inand are forced to continue to dispute the ~~Mobile~~matter ~~Devices~~in ~~segment~~Brazil’s ~~was~~judicial ~~primarily~~system, ~~driven~~we bywould abe 5%required ~~increase~~to deposit approximately $331 million, based on the exchange rate in ~~ASP~~effect ~~and~~at byMarch a31, ~~23%~~2012, ~~increase~~of additional collateral with the Brazil judicial system, which could be in ~~unit~~the ~~shipments~~form of cash, bank or insurance bonds or pledged assets.

~~Gross~~Significant ~~Margin~~Accounting Policies

~~Gross~~Management’s ~~margin~~Discussion ~~was~~and ~~$2.5 billion,~~Analysis ~~or 25.6%~~ of ~~net~~Financial ~~revenues, in~~Condition ~~the~~and ~~first~~Results ~~nine months~~ of ~~2011,~~Operations ~~compared~~discusses tothe ~~$2.1~~Company’s ~~billion,~~condensed orconsolidated ~~25.5%~~financial ~~of net revenues~~statements, inwhich ~~the~~have ~~first~~been ~~nine~~prepared ~~months~~in ofaccordance with ~~2010~~U.S. ~~The~~generally ~~increase~~accepted inaccounting ~~gross margin reflects higher gross margin in both segments~~principles. The ~~increase~~preparation inof ~~gross~~these ~~margin~~financial instatements ~~the~~requires ~~Mobile~~management ~~Devices segment~~to ~~was~~make ~~primarily~~estimates ~~driven by (i) the 30% increase in net revenues~~ and ~~(ii) a~~assumptions ~~favorable~~that ~~product~~affect ~~mix,~~the ~~specifically~~reported ~~due~~amounts ~~to increased volume~~ of ~~smartphone~~assets ~~devices.~~and ~~The~~liabilities ~~increase~~and ~~in gross margin in~~ the ~~Home~~disclosure ~~segment~~of ~~was primarily due to a~~contingent ~~favorable~~assets ~~product mix shift, operational efficiencies~~ and ~~product~~liabilities ~~cost~~at ~~recoveries. The slight increase in gross margin as a percentage of net revenues in~~ the ~~first~~date ~~nine months~~ of ~~2011 compared to~~ the ~~first~~financial ~~nine months of 2010 reflects an increase in gross margin percentage in the Home segment~~statements, ~~almost~~as ~~entirely~~well ~~offset~~as by the ~~decrease~~reported inamounts ~~gross margin in the Mobile Devices segment. The Company’s overall gross margin as a percentage~~ of ~~net~~ revenues ~~can~~and beexpenses ~~impacted~~during by the ~~proportion~~reporting ~~of overall net revenues generated by its two businesses~~period.

~~Selling~~Management bases its estimates and judgments on historical experience, ~~General~~current economic and ~~Administrative~~industry ~~Expenses~~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:

~~SG&A~~— ~~expenses~~Revenue ~~increased 14% to $1.3 billion, or 13.5% of net revenues, in the first nine months of 2011, compared to $1.1~~recognition billion, or 14.2% of net revenues, in the first nine months of 2010. The increase in SG&A expenses reflects higher SG&A expenses in the Mobile Devices segment. The increase in the Mobile Devices segment was to support the growth in smartphone volumes. SG&A expenses as a percentage of net revenues decreased in both segments.

~~Research~~— ~~and~~Warranty ~~Development~~reserves ~~Expenditures~~

~~R&D~~— ~~expenditures~~Inventory ~~increased~~valuation 3% to $1.1 billion, or 11.8% of net revenues, in the first nine months of 2011, compared to $1.1 billion, or 13.8% of net revenues, in the first nine months of 2010. The increase in R&D expenditures reflects slightly higher R&D expenditures in both segments. R&D expenditures as a percentage of net revenues increased in the Home segment and decreased in the Mobile Devices segment. The Company participates in very competitive industries with constant changes in technology and, accordingly, the Company continues to believe that a strong commitment to R&D is required to drive long-term growth.

~~Table~~— ofIncome ~~Contents~~taxes

31— Restructuring activities

~~Other~~— ~~Charges~~Valuation ~~(Income)~~and recoverability of goodwill

~~The~~— ~~Company~~Valuation recorded other charges of $86 million in the first nine months of 2011, compared to other income of $153 million in the first nine months of 2010. The charges in the first nine months of 2011 were primarily comprised of $47 million of charges relating to the amortization of intangibles, $20 million of charges related to a legal claim provision and ~~$18 million of charges related to the proposed Merger with Google. The~~ ~~other~~recoverability ~~income in the first nine months~~ of ~~2010~~long-lived ~~included~~assets a $228 million gain related to a legal settlement, partially offset by: (i) $41 million of charges relating to the amortization of intangibles and (ii) $34 million of net reorganization of business charges.

~~Interest Income (Expense), Net~~ 33

~~Net interest income was $10 million in the first nine months of 2011, compared to net interest expense of $40~~Item ~~million in the first nine months of 2010~~3. ~~Net~~Quantitative interest income in the first nine months of 2011 includes interest income of $18 million, partially offset by interest expense of $8 million. Net interest expense in the first nine months of 2010 included interest expense of $64 million, partially offset by interest income of $24 million. Prior to separation, our interest income and ~~expense~~Qualitative ~~primarily~~Disclosures ~~represents~~About ~~amounts~~Market ~~allocated from our Former Parent.~~ Risk

~~Gains~~Derivative onFinancial ~~Sales~~Instruments ~~of Investments~~

~~Gains~~Foreign onCurrency ~~sales~~Risk of investments were $12 million in the first nine months of 2011. We did not have gains on sales of investments in the first nine months of 2010. In the first nine months of 2011, the net gain was primarily comprised of gains related to sales of certain of the Company’s available-for-sale securities.

~~Other~~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, ~~Net~~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.

~~Net~~The ~~expense~~Company’s ~~classified~~strategy asrelated ~~Other,~~to ~~net,~~foreign asexchange exposure ~~presented~~management inis ~~Other~~to ~~income~~offset ~~(expense),~~the ~~was~~gains ~~$28 million~~or inlosses on the ~~first~~financial ~~nine months~~instruments ofagainst ~~2011,~~losses ~~compared~~or togains ~~$24~~on ~~million~~the inunderlying operational cash flows or investments based on the ~~first~~operating ~~nine~~business ~~months~~units’ assessment of ~~2010~~risk. The ~~net~~Company ~~expense~~enters ininto derivative contracts for some of the ~~first~~Company’s ~~nine~~non-functional ~~months~~currency ofreceivables ~~2011~~and ~~was~~payables, which are primarily ~~comprised~~denominated ofin ~~$30 million~~major ofcurrencies ~~foreign~~that ~~currency~~can ~~costs~~be traded on open markets. The ~~net~~Company ~~expense~~typically inuses forward contracts and options to hedge these currency exposures. In addition, the ~~first~~Company ~~nine~~enters ~~months~~into derivative contracts for some firm commitments and some forecasted transactions, which are designated as part of ~~2010~~a ~~was~~hedging relationship if it is determined that the transaction ~~primarily~~qualifies ~~comprised~~for hedge accounting under the provisions of ~~$25 million~~the authoritative accounting guidance for derivative instruments and hedging activities. A portion of ~~foreign~~the ~~currency~~Company’s ~~costs~~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.

~~Income~~As ~~Tax~~of ~~Expense~~March 31, 2012 and December 31, 2011, the Company had outstanding foreign exchange contracts with notional values totaling $564 million and $546 million, respectively. 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 are charged to Other within Other income (expense) in the Company’s condensed consolidated statements of operations.

The ~~Company~~following ~~recorded~~table ~~income~~shows ~~tax~~the ~~expense~~five oflargest ~~$99~~net ~~million~~notional inamounts ~~the first nine months~~ of ~~2011~~the aspositions ~~compared~~ to ~~$55 million~~buy inor ~~the~~sell ~~first nine~~foreign ~~months~~currency as of ~~2010.~~March ~~The~~31, ~~expense~~2012 ~~for~~and ~~both~~ the ~~first~~corresponding ~~nine~~positions ~~months~~as of ~~2011 and 2010 was comprised of taxes on foreign earnings and foreign withholding taxes on royalty and other income.~~December ~~The~~31, ~~Company~~2011: ~~has not recorded a tax benefit on its U.S. losses due to its recent history of cumulative U.S. losses.~~

The Company’s tax provision may change from period to period based on non-recurring events, such as the settlement of tax audits, changes in valuation allowances and the tax impact of significant unusual or extraordinary items. The Company’s tax provision will also change due to the level of pre-tax income or loss and its geographic mix.


	Notional Amount
Net Buy (Sell) by Currency	March 31, 2012		December 31, 2011
Euro		$(343)		$(154)
British Pound		(27)		(10)
Chinese Yuan		31		191
Brazilian Real		41		37
Canadian Dollar		46		47

~~Net~~Interest ~~Loss~~Rate Risk

~~The~~At ~~Company incurred a loss before income taxes of $70~~March ~~million in the first nine months of 2011~~31, ~~compared~~2012 ~~with~~and ~~a loss before income taxes of $114~~December ~~million in the first nine months of 2010. After taxes~~31, ~~and excluding Loss attributable to non-controlling interests~~2011, the Company ~~incurred~~did anot ~~net~~have ~~loss~~any ofinterest ~~$169 million~~rate inagreements ~~the first nine months of 2011, compared to a net loss of $166 million~~ in ~~the first nine months of 2010~~place.

~~The~~Counterparty ~~improvement~~Risk in the loss before income taxes in the first nine months of 2011 compared to the first nine months of 2010 was primarily attributable to a $413 million increase in gross margin, primarily due to an increase in revenues. The increase in gross margin was partially offset by (i) a $239 million change in Other charges (income), primarily due to the absence in 2011 of a comparable $228 million gain related to a legal settlement in 2010, and (ii) a $158 million increase in SG&A expenses.

~~Table~~The use of ~~Contents~~derivative financial instruments exposes the Company to counterparty credit risk in the event of nonperformance by counterparties. However, the risk is limited to the fair value of the instruments when the

3234

~~Segment~~ derivative ~~Results~~is in an asset position. At the present time, all of the counterparties have investment grade credit ratings. The Company is not exposed to material credit risk with any single counterparty.

~~The~~Fair ~~following~~Value ~~commentary should be read in conjunction with the financial results~~ of ~~each~~Financial ~~operating~~Instruments business segment as detailed in Note 11, “Segment Information,” to the Company’s condensed consolidated financial statements as of and for the three months and nine months ended October 1, 2011. Net revenues and operating results for the Company’s two operating business segments for the three months and nine months ended October 1, 2011 and October 2, 2010, are presented below.

~~Mobile~~The ~~Devices~~Company’s ~~Segment~~financial instruments include cash equivalents, short-term investments, accounts receivable, accounts payable, accrued liabilities, derivative financial instruments and other financing commitments. The Company’s available-for-sale investment portfolios and derivative financial instruments are recorded in the Company’s condensed consolidated balance sheets at fair value. All other financial instruments are carried at cost, which is not materially different than the instruments’ fair values.

~~The~~Forward-Looking ~~Mobile~~Statements Devices segment designs, manufactures, sells and services wireless mobile devices, including smartphones and media tablets, with integrated software and accessory products, and licenses intellectual property. For the third quarter of 2011, the segment’s net revenues represented 75% of the Company’s consolidated net revenues, compared to 69% for the third quarter of 2010. For the first nine months of 2011, the segment’s net revenues represented 73% of the Company’s consolidated net revenues, compared to 67% for the first nine months of 2010.

	Three Months Ended						Nine Months Ended				% Change
	October 1,2011		October 2,2010		% Change		October 1,2011		October 2,2010
Segment net revenues		$2,434		$2,034		20%		$6,992		$5,399		30%
Operating loss		(41)		(43)		(5)%		(215)		(148)		45%

Except for historical matters, the matters discussed in this Form 10-Q are forward-looking statements within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes”, “expects”, “intends”, “anticipates”, “estimates” and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this Form 10-Q. Forward-looking statements include, but are not limited to, for example: (1) the ability of the Company and Google Inc. to consummate the proposed transaction and the satisfaction of the conditions precedent to the consummation of the proposed transaction, including the ability to secure regulatory and other approvals at all or in a timely manner; (2) our business strategies, plans and objectives, including the anticipated impact of such strategies, plans and objectives; (3) our future operating and financial performance; (4) our future investment strategies; (5) future levels of revenues, operating margins, income from operations, net income, earnings per share and other financial information; (6) expectations regarding the Company’s ability to finance its operations and its ability to obtain, and the cost of, letters of credit, credit facilities and foreign exchange lines; (7) future hedging activities; (8) anticipated levels of demand for our products and services; (9) expectations regarding our research and development activities and intellectual property, including expectations regarding the competitiveness of the patent portfolio; (10) expectations regarding patent litigation, including trends and the impact and timing of a potentially negative result for the Company; (11) the success or timing of completion of ongoing or anticipated capital or maintenance projects; (12) expectations regarding opportunities for growth; (13) expectations regarding availability of materials and components, energy supplies and labor; (14) the resolution, potential effects and timing of judicial or other proceedings on our business, financial condition, results of operations, cash flows and liquidity; (15) the potential effect of the financial markets on our business, financial condition, results of operations, cash flows and liquidity; (16) the anticipated effects of actions of third-parties such as competitors, counterparties, or federal, foreign, state or local regulatory authorities, or plaintiffs in litigation; and (17) statements that describe the proposed Merger transaction with Google, including its financial impact, and other statements of management’s beliefs, intentions or goals. Motorola Mobility undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise, except as required by law.

~~Three~~Some ~~months~~of ~~ended~~the ~~October 1,~~risk factors that affect the Company’s business and financial results are discussed in “Item 1A: Risk Factors” on pages 14 through 34 of our 2011 ~~compared~~Annual Report on Form 10-K. We wish to ~~three~~caution ~~months~~the ~~ended~~reader ~~October 2~~that the risk factors discussed in each of these documents and those described in our other Securities and Exchange Commission filings, ~~2010~~could cause our actual results to differ materially from those stated in the forward-looking statements.

In the third quarter of 2011, the segment’s net revenues were $2.4 billion, an increase of 20% compared to net revenues of $2.0 billion in the third quarter of 2010. The increase in net revenues was primarily driven by a 28% increase in unit shipments, partially offset by a 6% decrease in average selling price (“ASP”). On a geographic basis, net revenues increased substantially in Latin America, the Europe, Middle East and Africa region (“EMEA”) and Asia, and decreased in North America. 35

~~The segment incurred an operating loss of $41~~Item ~~million in the third quarter of 2011, compared to operating loss of $43 million in the third quarter of 2010~~4. ~~The~~Controls ~~decrease in operating loss was primarily due to an increase in gross margin, driven by a 20% increase in net revenues, partially offset by an increase in SG&A expenses~~ and ~~research~~Procedures and development (“R&D”) expenditures. As a percentage of net revenues in the third quarter of 2011 as compared to the third quarter of 2010, gross margin, SG&A expenses and research and development (“R&D”) expenditures decreased.

~~The~~(a) ~~segment’s~~Evaluation ~~industry~~of ~~typically~~disclosure ~~experiences~~controls ~~short~~and ~~life~~procedures. Under ~~cycles~~the ~~for~~supervision ~~new~~and ~~products.~~with ~~Therefore~~the participation of our senior management, itincluding isour ~~vital~~chief toexecutive officer and chief financial officer, we conducted an evaluation of the ~~segment’s~~effectiveness ~~success~~of ~~that~~the ~~new~~design and operation of our disclosure controls and procedures, ~~compelling~~as ~~products~~defined ~~are~~in ~~continually~~Rules 13a-15(e) ~~introduced.~~and ~~Accordingly,~~15d-15(e) aunder ~~strong~~the ~~commitment~~Securities toExchange ~~R&D~~Act isof ~~required~~1934, ~~and~~as amended (the “Exchange Act”), ~~even~~as ~~amidst~~of ~~challenging~~the ~~global~~end ~~economic~~of ~~conditions~~the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the ~~segment~~Evaluation ~~expects~~Date that our disclosure controls and procedures were effective such that the information relating to ~~continue~~Motorola Mobility, including our consolidated subsidiaries, required to ~~make~~be disclosed in our Securities and Exchange Commission (“SEC”) reports, is (i) recorded, processed, summarized and reported within the ~~appropriate~~time ~~investments~~periods tospecified ~~develop~~in aSEC ~~differentiated~~rules ~~product~~and ~~portfolio~~forms, and ~~fuel~~(ii) accumulated ~~long-term~~and communicated to Motorola Mobility’s ~~growth~~management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

~~Handset~~(b) ~~unit~~Changes ~~shipments~~ in ~~the~~internal ~~third~~control ~~quarter~~over offinancial ~~2011 were 11~~reporting.~~5 million~~ There ~~units,~~have abeen ~~27%~~no ~~increase~~changes ~~compared to shipments of 9.1 million units~~ in ~~the~~our ~~third~~internal ~~quarter~~control ofover ~~2010~~financial ~~and~~reporting athat 9%occurred ~~increase~~during ~~sequentially compared to shipments of 10.6 million units in~~ the ~~second~~ quarter ~~of 2011. Smartphone shipments in the third quarter of 2011 were 4.8~~ended March ~~million~~31, a 27% increase compared to shipments of 3.8 million smartphones in the third quarter of 2010 and a 10% increase sequentially compared to shipments of 4.4 million smartphones in the second quarter of 2011. In addition to handsets2012, wethat ~~also~~have ~~shipped approximately~~materially ~~100 thousand~~affected ~~media~~or ~~tablet~~are ~~units~~reasonably inlikely ~~the third quarter of 2011, an 81% decrease sequentially compared~~ to ~~shipments~~materially ofaffect ~~440 thousand~~our ~~units~~internal incontrol ~~the~~over ~~second~~financial ~~quarter of 2011~~reporting.

InThe ~~the~~Company ~~third~~has ~~quarter~~an ofongoing ~~2011,~~initiative ~~segment~~to ~~ASP~~upgrade ~~decreased~~its ~~approximately~~enterprise 6%resource ~~compared~~planning to(ERP) ~~the~~system. ~~third~~The ~~quarter~~upgrade, ofwhich began during 2010, ~~and~~will ~~decreased~~be ~~approximately~~implemented 5%in stages over multiple years. Management believes ~~compared~~that necessary procedures are in place to ~~the~~maintain ~~second~~effective ~~quarter~~internal ofcontrol ~~2011~~over financial reporting during the upgrade process. The ~~decrease~~procedures ininclude ~~ASP~~pre-implementation inplanning, ~~the~~design ~~third~~and ~~quarter~~testing, ofas ~~2011~~well as ~~compared~~extensive toplanned post-implementation ~~the~~monitoring ~~third~~and ~~quarter~~testing of ~~2010~~the ~~was~~effectiveness ~~driven~~of byinternal ~~regional~~control ~~product~~over ~~mix.~~financial ~~ASP~~reporting isin ~~impacted~~the byupgraded ~~numerous~~ERP ~~factors~~environment. To date, ~~including~~the ~~product~~Company ~~mix,~~has ~~market~~not ~~conditions~~identified ~~and competitive~~any ~~product~~significant ~~offerings,~~internal ~~and~~control ~~ASP~~issues ~~trends~~in ~~often~~connection ~~vary~~with ~~over~~the implementation ~~time~~or operation of the ERP system upgrade.

~~Table of Contents~~36

33Part II—Other Information

~~Nine months ended October~~Item 1,. ~~2011~~Legal ~~compared~~Proceedings ~~to nine months ended October 2, 2010~~

InPatent ~~the~~Related ~~first~~Cases nine months of 2011, the segment’s net revenues were $7.0 billion, an increase of 30% compared to net revenues of $5.4 billion in the first nine months of 2010. The 30% increase in net revenues was primarily driven by a 5% increase in ASP and by a 23% increase in unit shipments. On a geographic basis, net revenues increased substantially in the Europe, Middle East and Africa region (“EMEA”), Asia and Latin America, and decreased in North America.

~~The segment~~Microsoft ~~incurred~~Corporation ~~an operating loss of $215 million in the first nine months of 2011, compared to an operating loss of $148 million in the first nine months of 2010~~v. ~~The increase in the operating loss was primarily due to the absence in 2011 of a comparable $228 million gain related to a legal settlement in 2010~~Motorola, ~~partially offset by an increase in gross margin~~Inc. ~~The increase in gross margin in the Mobile Devices segment was primarily driven by (i) the 30% increase in net~~ revenues and (ii) a favorable product mix, specifically due to increased volume of smartphone devices. Also contributing to the increase in operating loss were higher SG&A expenses to support the growth in smartphone volumes. As a percentage of net revenues in the first nine months of 2011 as compared to the first nine months of 2010, gross margin, SG&A expenses and R&D expenditures decreased.

~~Handset~~On ~~unit~~October 1, ~~shipments~~2010, Microsoft Corporation (“Microsoft”) filed complaints against Motorola, Inc. in the International ~~first~~Trade ~~nine~~Commission ~~months~~(“ITC”) ofand ~~2011~~the ~~were~~United ~~31.2 million~~States ~~units,~~District aCourt ~~20%~~for ~~increase~~the ~~compared~~Western toDistrict ~~shipments~~ of ~~26.0 million~~Washington ~~units~~(“District inCourt”) ~~the~~alleging ~~first~~patent ~~nine~~infringement ~~months~~based ofon ~~2010~~products manufactured and sold by Motorola, Inc. ~~Smartphone~~The ~~shipments~~ITC inmatter ~~the~~is ~~first~~entitled ~~nine~~In ~~months~~the Matter of ~~2011~~Mobile ~~were~~Devices, 13Associated Software, and Components Thereof (Inv.3 No. ~~million~~337-TA-744). On October 6, a2010 ~~52%~~and ~~increase~~October 12, ~~compared~~2010, Microsoft amended the District Court and ITC complaints, respectively, to ~~shipments~~add ofMotorola 8Mobility, Inc.~~8 million~~ ~~smartphones~~as ina ~~the~~defendant. ~~first~~The complaints, as amended, allege infringement of claims in nine ~~months~~patents based on Motorola, Inc.’s and Motorola Mobility, Inc.’s manufacture and sale of ~~2010~~Android-based mobile phones. InThe ~~addition~~ITC tocomplaint ~~handsets~~seeks exclusion and cease and desist orders. If granted, wethe ~~also~~Company ~~shipped~~may ~~nearly~~be ~~800 thousand~~prohibited ~~media~~from ~~tablet~~importing ~~units~~into in the ~~first~~U.S. ~~nine~~products ~~months~~that infringe one or more of ~~2011~~Microsoft’s patents. The District Court complaint seeks unspecified monetary damages and injunctive relief.

InOn November 5, 2010, the ~~first~~ITC ~~nine~~instituted ~~months~~the ofinvestigation. ~~2011,~~Microsoft subsequently ~~segment~~dropped ~~ASP~~its ~~increased~~patent ~~approximately~~infringement 5%claims ~~compared~~with respect to ~~the~~two ~~first nine~~patents ~~months~~in ofthe ~~2010~~ITC investigation. ~~The~~On ~~increase~~December 20, in2011, ~~ASP~~the inAdministrative Law Judge found that the ~~first~~Company ~~nine~~infringed ~~months~~one or more claims of ~~2011~~one asasserted ~~compared~~Microsoft topatent. The ~~the~~Administrative ~~first~~Law ~~nine~~Judge ~~months~~did ofnot ~~2010~~find ~~was~~a ~~driven~~violation byfor ~~increased~~six ~~shipments~~other ofMicrosoft ~~smartphones~~patents. Microsoft and the ~~launch~~Company ~~and~~have ~~shipment~~filed petitions to review the findings of ~~media~~the ~~tablets~~Administrative inLaw Judge. On March 2, 2012, the ~~first~~ITC ~~nine~~gave ~~months~~notice ofthat ~~2011.~~it will ~~ASP~~review isthe ~~impacted~~administrative bylaw ~~numerous~~judge’s ~~factors,~~initial ~~including~~determination ~~product~~on ~~mix,~~validity ~~market~~for ~~conditions~~one ~~and~~remaining ~~competitive~~Microsoft ~~product~~patent. ~~offerings,~~We ~~and~~expect ~~ASP~~the ~~trends~~ITC ~~often~~will ~~vary~~issue ~~over~~a ~~time~~final determination by May 18, 2012.

~~Home~~On ~~Segment~~November 9, 2010, Microsoft filed a complaint in the United States District Court for the Western District of Washington against Motorola, Inc. and Motorola Mobility, Inc. (the “Motorola Defendants”) alleging that the Motorola Defendants breached a contractual obligation to license certain patents related to 802.11 wireless networking technology and H.264 video coding technology on reasonable and non-discriminatory terms and conditions. The complaint seeks unspecified monetary damages and injunctive relief including a declaration that the Motorola Defendants have not offered royalties to Microsoft under reasonable rates with reasonable terms and conditions that are demonstrably free of any unfair discrimination. On February 23, 2011, Microsoft amended the complaint to add General Instrument Corporation (our indirect wholly owned subsidiary) as a defendant. On April 12, 2012, Microsoft obtained a temporary restraining order against the Motorola Mobility defendants that could impact enforcement of any injunctions that may issue against Microsoft products based on H.264 standards essential patents currently pending in Germany.

~~The~~In ~~Home~~November ~~segment designs~~2010, ~~manufactures,~~Motorola ~~sells~~Mobility, ~~installs~~ Inc. and ~~services set-top~~General ~~boxes~~Instrument ~~for~~Corporation ~~digital~~(our indirect ~~video,~~wholly ~~Internet~~owned ~~protocol (“IP”~~subsidiary) ~~video,~~filed ~~satellite~~complaints ~~and~~alleging ~~terrestrial~~patent ~~broadcast~~infringement ~~networks,~~against ~~end-to-end~~Microsoft ~~digital~~in ~~video~~the ITC and ~~Internet~~in ~~protocol~~the ~~television~~U.S. ~~(“IPTV”)~~District ~~distribution~~Courts ~~systems~~for the Southern District of Florida, ~~broadband~~ ~~access~~Motorola ~~network~~Mobility, ~~infrastructure~~Inc. ~~platforms~~v. Microsoft Corporation, and ~~associated~~the Western ~~data~~District ~~and~~of ~~voice~~Wisconsin, ~~customer~~Motorola ~~premises~~Mobility, ~~equipment~~Inc. and ~~associated~~General ~~software~~Instrument ~~solutions~~Corporation tov. ~~cable~~Microsoft TVCorporation and ~~telecommunication~~Motorola ~~service~~Mobility, ~~providers~~Inc. ~~For~~and ~~the~~General ~~third~~Instrument ~~quarter~~Corporation v. Microsoft Corporation. The ITC matter is entitled In the Matter of ~~2011~~Certain Gaming and Entertainment Consoles, Related Software, and Components Thereof (Inv. No. 337-TA-752). Among the ~~segment’s~~complaints, ~~net revenues~~Motorola ~~represented~~Mobility, ~~25%~~Inc. and General Instrument Corporation are asserting infringement of ~~the~~claims ~~Company~~in seventeen patents by Microsoft’s ~~consolidated~~PC ~~net~~and ~~revenues~~Server software, ~~compared~~Windows tomobile ~~31%~~software ~~for~~and ~~the~~Xbox ~~third~~products. ~~quarter~~The ofITC ~~2010~~complaint seeks exclusion and cease and desist orders. ~~For~~On December 23, 2010, the ~~first~~ITC ~~nine~~instituted ~~months~~the investigation. ofThe District Court complaints seek monetary damages and injunctive relief. In December 2010 and February 2011, ~~the~~Motorola ~~segment’s~~Mobility, ~~net~~Inc. ~~revenues~~subsequently ~~represented~~asserted ~~27%~~claims of four additional patents in the ~~Company’s~~Western ~~consolidated~~District ~~net~~of Wisconsin, ~~revenues~~Motorola Mobility, ~~compared~~Inc. tov. ~~33%~~Microsoft ~~for~~Corporation. On April 23, 2012, the ~~first~~administrative ~~nine~~law ~~months~~judge found violations for four out of ~~2010~~five Motorola Mobility and General Instrument Corporation patents. The final determination is currently scheduled for August 23, 2012.

	Three Months Ended						Nine Months Ended
	October 1,2011		October 2,2010		% Change		October 1,2011		October 2,2010		% Change
Segment net revenues		$825		$912		(10)%		$2,636		$2,636		—%
Operating earnings		54		49		10%		169		98		72%


			37

~~Three~~Between ~~months~~December 23, ~~ended~~2010 ~~October~~and January 125, 2011, ~~compared~~Microsoft tofiled ~~three~~counterclaims against ~~months~~Motorola ~~ended~~Mobility, ~~October 2~~Inc. in these actions, ~~2010~~alleging infringement of a total of fourteen additional Microsoft patents. Three of the complaints filed by Motorola Mobility, Inc. and General Instrument Corporation in the Western District of Wisconsin and the Southern District of Florida have been transferred to the U.S. District Court for the Western District of Washington.

InOn ~~the~~June 24, ~~third~~2011, ~~quarter~~Motorola ~~of 2011~~Mobility, ~~the~~Inc. ~~segment’s~~filed ~~net~~counterclaims ~~revenues~~against ~~were~~Microsoft ~~$825 million,~~in athe ~~decrease~~ITC ofproceeding ~~10%~~which ~~compared~~we subsequently removed to ~~net~~the ~~revenues~~Northern District of ~~$912 million~~ California, and instituted a new action in the ~~third~~Northern ~~quarter~~District of ~~2010~~California, Motorola Mobility, Inc. ~~The~~v. ~~10%~~Microsoft ~~decrease~~Corporation, inalleging ~~net~~that ~~revenues~~Microsoft ~~was~~Corporation ~~primarily~~breached ~~driven~~commitments ~~by an~~to ~~11%~~license ~~decrease~~certain inpatents. ~~net~~The ~~revenues~~counterclaims ~~from~~include ~~sales~~breach of ~~set-top boxes~~contract, ~~reflecting~~promissory aestoppel, violation 3%of ~~decrease~~Section 2 inof ~~shipments~~the ofSherman ~~set-top~~Act ~~boxes~~and asunfair ~~well~~competition. asThe acounterclaims ~~lower~~have ~~ASP. Net~~been ~~revenues~~transferred ~~from~~to ~~sales~~the ofU.S. ~~video~~District ~~and~~Court ~~access~~for ~~infrastructure~~the ~~equipment~~Western ~~declined~~District byof ~~12%~~Washington.

~~Table~~In ofJuly ~~Contents~~2011, Motorola Mobility, Inc. and General Instrument Corporation filed patent infringement complaints in Mannheim, Germany alleging that Microsoft Deutschland GmbH infringes three patents owned by Motorola Mobility, Inc. and General Instrument Corporation.

34Later in 2011, Microsoft filed patent infringement complaints in Munich, Germany and Mannheim, Germany alleging that Motorola Mobility Germany GmbH infringed utility patents owned by Microsoft. On December 20, 2011, Microsoft applied for an ex parte injunction in Munich, Germany against Motorola RAZR sold in Germany alleging infringement of one patent. The court denied the request but set a hearing for April 4, 2012. After the hearing, the court denied Microsoft’s request for a preliminary injunction.

~~Revenues~~Motorola from high definition (“HD”) set-top boxes decreased primarily due to lower shipments to large telecommunication and cable operators in North America as a result of lower demand. On a geographic basisMobility, ~~net revenues decreased in Asia and North America, partially offset by increased net revenues in EMEA~~Inc. ~~Net revenues in Latin America remained relatively consistent~~v. ~~Net~~Apple ~~revenues in North America continued to comprise a significant portion of the segment’s business, accounting for approximately 73% of the segment’s net revenues in the third quarter of 2011,~~Inc. ~~compared~~ ~~to approximately 76% in the third quarter of 2010.~~

~~The~~On ~~segment~~October 6, ~~had~~2010, ~~operating~~Motorola ~~earnings~~Mobility, ofInc. ~~$54 million~~filed ina ~~the~~complaint alleging patent infringement against ~~third~~Apple ~~quarter~~Inc. with the ITC. The matter is entitled In the Matter of ~~2011~~Certain Wireless Communication Devices, ~~compared~~Portable toMusic ~~operating~~and ~~earnings~~Data ofProcessing ~~$49 million~~Devices, inComputers ~~the~~and ~~third~~Components ~~quarter~~Thereof of(Inv. ~~2010~~No. 337-TA-745). The ~~increase~~complaint inalleges ~~operating~~that ~~earnings~~Apple Inc. ~~was~~directly ~~primarily~~infringes, ~~due~~contributorily infringes and/or induces others to ~~(i) an~~infringe ~~increase~~claims of six patents by importing and selling in ~~gross~~the ~~margin,~~United ~~driven~~States byafter ~~operational~~importation ~~efficiencies~~certain wireless communication devices, ~~product~~portable ~~cost recoveries~~music and adata ~~favorable~~processing devices, ~~product~~computers, ~~mix~~and ~~shift~~components ~~(ii) a~~thereof ~~slight~~without ~~decrease~~the inauthorization ~~SG&A~~of ~~expenses~~Motorola Mobility, ~~partially~~Inc. ~~offset~~The bycomplaint seeks the issuance of an ~~increase~~exclusion inorder ~~research~~barring ~~and~~from ~~development~~entry ~~(“R&D”)~~into ~~expenditures.~~the AsUnited States certain products and a ~~percentage~~cease ofand ~~net~~desist ~~revenues~~order prohibiting inApple from importing, marketing and distributing certain products and other related activities. On November 8, 2010, the ~~third~~ITC ~~quarter~~instituted ~~of 2011~~the asinvestigation. ~~compared~~Motorola Mobility subsequently dropped its patent claims with respect to two patents in the ~~third~~ITC ~~quarter~~investigation. ofOn ~~2010~~April 24, ~~gross margin~~2012, ~~R&D~~the ~~expenditures~~administrative ~~and~~law ~~SG&A~~judge ~~expenses~~found ~~increased~~violations for one out of four remaining Motorola Mobility patents in his initial determination. We expect the ITC will issue a final determination by August 24, 2012.

~~Nine~~On ~~months~~October 6, ~~ended~~2010, Motorola Mobility, Inc. also filed two complaints for patent infringement ~~October~~against Apple Inc., Motorola Mobility, Inc. v. Apple Inc., in the United States District Court for the Northern District of Illinois (the “Illinois Complaints”). Motorola Mobility, Inc. filed another complaint for patent infringement against Apple, Motorola Mobility, Inc. v. Apple Inc., in the United States District Court for the Southern District of Florida (the “Florida Complaint”). The complaints allege that Apple directly and/or indirectly infringes eighteen Motorola Mobility patents by making, using, offering for sale and selling in the United States certain products and services. On November 19, ~~2011~~2010, ~~compared~~Motorola toMobility, ~~nine~~Inc. ~~months~~voluntarily ~~ended~~dismissed the Illinois Complaints, which were being asserted as counterclaims in the actions brought by Apple on October 229, 2010 in the United States District Court for the Western District of Wisconsin, as described below. On November 18, 2010, Apple counterclaimed in the Southern District of Florida, alleging infringement of six Apple patents by Motorola Mobility, Inc.’s manufacture and sale of mobile devices, set-top boxes and digital video recorders. Apple later dropped its assertions on two patents.

InOn ~~the~~October 8, ~~first~~2010, ~~nine~~Motorola ~~months of 2011~~Mobility, ~~the segment’s~~Inc. ~~net~~filed ~~revenues~~a ~~were~~complaint ~~$2.6 billion,~~for ~~which~~declaratory isrelief ~~consistent~~against ~~with~~Apple ~~the~~Inc. ~~net~~and ~~revenues~~NeXT Software, ~~of $2~~Inc.~~6 billion~~ in ~~the~~Motorola ~~first~~Mobility, ~~nine~~Inc. ~~months~~v. ofApple ~~2010~~Inc. ~~Net~~and ~~revenues~~NeXT ~~from~~Software, ~~sales of set-top boxes increased by 3%~~Inc., ~~reflecting an 11% increase~~ in ~~shipments~~the ~~of set-top~~United ~~boxes~~States ~~partially~~District ~~offset~~Court byfor athe ~~lower~~District ~~ASP. Net revenues~~ of ~~video~~Delaware. ~~and~~The ~~access~~complaint ~~infrastructure~~seeks ~~equipment~~a ~~declined~~judgment bydeclaring ~~8%.~~that Motorola Mobility,

Revenues from high definition (“HD”) set-top boxes increased primarily due to higher shipments to large telecommunication and cable operators in North America as a result of higher demand. On a geographic basis, net revenues increased in Latin America and North America, fully offset by the decline in net revenues in EMEA and Asia. Net revenues in North America continued to comprise a significant portion of the segment’s business, accounting for approximately 74% of the segment’s net revenues in the first nine months of 2011, compared to approximately 73% in the first nine months of 2010. 38

~~The~~ Inc. ~~segment~~has ~~had~~not ~~operating~~infringed, ~~earnings~~induced ~~of $169 million in~~ the ~~first~~infringement ~~nine months~~ of ~~2011~~, ~~compared~~or contributed to ~~operating~~the ~~earnings~~infringement of ~~$98 million~~ inany ~~the~~valid, ~~first~~enforceable ~~nine~~claim ~~months~~ of ~~2010.~~twelve ~~The~~patents ~~increase~~owned inby ~~operating~~Apple ~~earnings~~and ~~was~~NeXT ~~primarily~~Software, ~~due~~Inc. toOn December 2, ~~an increase in gross margin~~2010, ~~driven~~Apple byasserted athese ~~favorable~~twelve ~~product~~patents ~~mix~~against ~~shift~~Motorola, ~~operational~~Inc. ~~efficiencies~~ and ~~product~~Motorola ~~cost~~Mobility, ~~recoveries~~Inc. ~~The increase~~ in ~~gross~~ ~~margin~~the ~~was~~Western ~~partially~~District ~~offset~~of byWisconsin, anseeking ~~increase~~to intransfer ~~R&D~~the ~~expenditures.~~Delaware Asaction ato ~~percentage~~Wisconsin. ofThe ~~net~~patent ~~revenues~~assertions ~~in the first nine months~~ of ~~2011~~both asparties ~~compared~~were subsequently transferred to the ~~first~~Northern ~~nine~~District ~~months~~ of ~~2010, gross margin and R&D expenditures increased and SG&A expenses decreased~~Illinois.

~~Reorganization~~On October 29, 2010, Apple Inc. filed two complaints alleging patent infringement against Motorola, Inc. and Motorola Mobility, Inc. in Apple Inc. v. Motorola, Inc. and Motorola Mobility, Inc., in the United States District Court for the Western District of ~~Businesses~~Wisconsin. The complaints allege infringement of six patents by Motorola, Inc. and Motorola Mobility, Inc. The complaints allege that Motorola, Inc. and Motorola Mobility, Inc. directly infringe, contributorily infringe and/or induce others to infringe the patents-in-suit by making, using, offering for sale and selling in the United States certain mobile devices and related software. The complaint seeks unspecified monetary damages and injunctive relief. On November 9, 2010, Motorola Mobility, Inc. filed counterclaims against Apple to their complaints alleging infringement by Apple of twelve Motorola Mobility, Inc. patents originally asserted by Motorola Mobility, Inc. in the Northern District of Illinois as above. The Western District of Wisconsin transferred the actions to the Northern District of Illinois. A trial is currently scheduled for June 11, 2012 that may involve four Apple patents and three Motorola Mobility, Inc. patents.

~~2011~~On ~~Activity~~October 29, 2010, Apple Inc. filed a complaint alleging patent infringement against Motorola, Inc. and Motorola Mobility, Inc. with the United States International Trade Commission. The matter is entitled In the Matter of Certain Mobile Devices and Related Software (Inv. No. 337-TA-750). The complaint alleges infringement of three patents by Motorola, Inc. and Motorola Mobility, Inc. The complaint alleges that Motorola, Inc. and Motorola Mobility, Inc. directly infringe, contributorily infringe and/or induce others to infringe the three patents by manufacturing, marketing and selling in the United States mobile devices, such as smartphones, and associated software, including operating systems, user interfaces, and other application software designed for use on, and loaded onto, such devices. The complaint seeks the issuance of an exclusion order barring from entry into the United States certain mobile devices and related software and a cease and desist order prohibiting Motorola from importing, selling, transporting, and other related activities of certain mobile devices and related software. On November 30, 2010, the ITC instituted the investigation. On January 13, 2012, the Administrative Law Judge found that no violation existed for the three asserted Apple patents. Apple has filed a petition to review the findings of the Administrative Law Judge. The ITC reviewed the initial determination and confirmed the finding of no violation on the three asserted Apple patents, terminating the investigation on March 16, 2012.

~~During~~On ~~the~~March 11, ~~three~~2011, ~~months~~Apple ~~ended~~filed ~~October 1,~~counterclaims ~~2011~~against Motorola Mobility, Inc. in the ~~Company~~ ~~recorded~~ITC noproceeding ~~additional~~which ~~charges~~were subsequently ~~related~~removed to ~~restructuring~~the ~~actions~~United ~~under~~States ~~Other~~District ~~charges~~Court infor the ~~Company’s~~Western ~~condensed~~District ~~consolidated~~of ~~statements~~Wisconsin, and instituted a new action in the Western District of ~~operations~~Wisconsin, ~~and~~Apple deInc. ~~minimis~~v. ~~reversals~~Motorola Mobility, Inc., alleging that Motorola Mobility, Inc. breached commitments to various standards setting organizations. The counterclaims include equitable estoppel, waiver, breach of ~~reorganization~~contract, violation of ~~business~~Section 2 ~~charges~~of ~~for~~the ~~accruals~~Sherman noAct, unfair competition and interference with contract. Apple seeks ~~longer~~declaratory ~~needed~~judgments that Motorola Mobility, Inc.’s license offers involving standards essential patents have not been on reasonable and non-discriminatory terms and conditions, that Motorola Mobility, Inc. is not entitled to injunctive relief and that Motorola Mobility, Inc. has committed patent misuse.

~~During~~In ~~the~~March ~~nine~~and ~~months~~April ~~ended October 1~~2011, ~~2011~~Motorola Mobility, ~~the~~Inc. ~~Company~~filed ~~recorded~~patent infringement ~~$6 million~~complaints ofin ~~net~~Mannheim, ~~reversals~~Germany ~~of reorganization~~alleging ofthat ~~business~~Apple ~~charges,~~Retail ~~including~~Germany $3GmbH, ~~million~~Apple ofSales ~~Separation-related~~International, ~~adjustments~~and ~~for~~Apple ~~employees~~Inc. ~~that~~infringe ~~remained~~three ~~with~~patents ~~the~~owned ~~Former~~by ~~Parent~~Motorola ~~and~~Mobility, ~~$4 million~~Inc., two of ~~reversals~~which ~~for~~are ~~accruals~~standards-essential nopatents. ~~longer~~In ~~needed~~December 2011 and February 2012, ~~partially~~the ~~offset~~court byin $1Mannheim, ~~million~~Germany found that Apple products infringe two of ~~additional~~ ~~charges~~the ~~related~~three toMotorola ~~restructuring~~Mobility ~~actions~~patents—one ~~under~~standards-essential ~~Other~~and ~~charges~~one innon-essential—and ~~the~~granted ~~Company’s~~injunctions. ~~condensed~~The ~~consolidated~~injunction ~~statements~~on ofthe ~~operations~~standard essential patent is currently stayed.

OnFrom ~~October~~May ~~24, 2011, Company management approved a workforce reduction action under which the Company will record a net pre-tax charge~~ to ~~earnings during the quarter ended~~ December ~~31,~~ 2011, ~~of approximately~~Apple ~~$31~~Inc. ~~million,~~filed ~~comprised~~patent ofinfringement ~~$27~~complaints ~~million~~in ofMunich, Düsseldorf ~~severance costs related to approximately 800 employees impacted by the action~~ and ~~approximately~~Mannheim, $4Germany ~~million~~alleging ofthat ~~facility~~Motorola ~~exit~~Mobility, ~~costs~~Inc. ~~Both~~and ofMotorola ~~the~~Mobility ~~Company’s~~Germany ~~business~~GmbH ~~segments~~infringe ~~(the~~utility ~~Mobile Devices~~patents ~~business~~ and ~~the~~design ~~Home~~patents ~~business),~~owned asby ~~well~~Apple. asThe ~~various~~design ~~corporate~~patents ~~functions,~~ are ~~impacted~~being byasserted ~~the~~against ~~action~~Motorola ~~and~~Mobility’s ~~the action affects employees globally~~tablet products. ~~Under~~The ~~the~~court ~~Company’s~~in ~~employee~~Munich ~~severance~~found ~~plan,~~that ~~policies~~two orfeatures ~~applicable~~on ~~law,~~certain ~~severance~~Motorola ~~payments to~~Mobility ~~employees~~smartphones ~~affected~~infringed bytwo ~~this action~~of ~~will~~the beApple ~~made~~utility ~~substantially~~patents ~~over~~and ~~the~~granted ~~next~~an ~~12 months~~injunction.

~~Table of Contents~~39

35In January 2012, Motorola Mobility, Inc. filed a second complaint for patent infringement in the U.S. District court for the Southern District of Florida alleging infringement of six patents (previously asserted in Florida) against new Apple products. Apple filed a counterclaim and asserted infringement of four patents (previously asserted) against new Motorola Mobility products and adding six additional Apple patents to the action. Motorola Mobility responded by amending the complaint and adding six additional Motorola Mobility patents to the action against Apple products.

~~The~~On ~~following~~February ~~table~~10, ~~displays~~2012, Apple Inc. and Apple Sales International commenced litigation against Motorola Mobility, Inc. in the ~~net~~U.S. ~~charges~~District Court ~~(reversals~~for the Southern District of ~~accruals)~~California ~~incurred~~in byApple ~~business~~Inc. and Apple Sales International v. Motorola Mobility, Inc. The complaint requests declaratory and injunctive relief based on an alleged breach of contract. Apple alleges that it is a ~~segment:~~third party beneficiary under a Patent Licensing Agreement between Motorola Mobility, Inc. and Qualcomm, Inc. The complaint alleges that Motorola Mobility’s rights under two patents it is asserting against Apple in Germany are exhausted under the Patent Licensing Agreement and asks the court to enjoin Motorola Mobility from prosecuting and enforcing its claims against Apple in Germany. On April 2, 2012, Apple Inc. and Apple Sales International filed an amended complaint asking the court to limit any relief against Motorola Mobility to certain claims brought by Motorola Mobility against Apple anywhere outside of Germany.

October 1, 2011	Three MonthsEnded		Nine MonthsEnded
Mobile Devices		$—		$(3)
Home		—		—
		$—		$(3)

On April 2, 2012, the European Commission, Competition Director-General (the “Commission”) initiated two proceedings to investigate allegations made by Apple on February 17, 2012 and Microsoft on February 23, 2012 that Motorola Mobility has failed to honor the commitment it gave to the European Telecommunications Standards Institute (“ETSI”) that it would license patents it declared essential to certain ETSI standards (“SEPs”) on fair, reasonable and non-discriminatory (“FRAND”) terms. In particular, the Commission will investigate the allegation that Motorola Mobility has infringed the competition rules in licensing negotiations, including by seeking and enforcing injunctions in national courts in relation to some of its ETSI SEPs. On March 2, 2012 and March 11, 2012, respectively, Motorola Mobility responded to the Apple and Microsoft complaints denying the allegations and providing the background of the disputes with Apple and Microsoft.

~~Cash~~ITC ~~payments~~Matters ~~for~~Generally exit costs and employee separations in connection with reorganization plans were $28 million during the nine months ended October 1, 2011. The $10 million reorganization of businesses accrual at October 1, 2011, includes (i) $1 million relating to employee separation costs that are expected to be paid in 2011 and (ii) $9 million relating to lease termination obligations that are expected to be paid over a number of years.

~~2010~~In ~~Activity~~our rapidly evolving and highly competitive industry, companies invest heavily in developing and acquiring intellectual property rights to seek incremental advantages in the marketplace. Such companies also vigorously pursue and protect their intellectual property rights with patent litigation. The ITC (U.S. International Trade Commission) has increasingly become an important forum to litigate intellectual property disputes because an ultimate loss for a company or its suppliers in an ITC action could result in a prohibition on importing infringing products into the U.S.

~~During~~As ~~the~~previously ~~three~~disclosed, ~~months~~we ~~ended~~are ~~October 2,~~currently ~~2010,~~engaged ~~the~~in ~~Company~~significant ~~recorded~~patent ~~net~~litigation ~~reorganization~~with ofMicrosoft ~~business~~and ~~charges~~Apple ofin many different forums ~~$18 million~~within and outside the U.S., including $5in ~~million~~the ofITC. ~~charges~~We expect final determinations in ~~Costs~~the Microsoft ITC 744 proceeding in May 2012 with a sixty-day presidential review period subject to any applicable bonding requirements. An ultimate loss for the Company or its suppliers in an ITC action could result in a prohibition on importing infringing products or products incorporating infringing components into the U.S. In light of ~~sales~~the U.S. being a very important market and ~~$13 million~~our ofsubstantial manufacturing ~~charges~~operations ~~under~~overseas, ~~Other~~a ~~charges~~prohibition inon importation could have a negative impact on the Company’s, ~~condensed~~including ~~consolidated~~the ~~statements~~inability to import many important products into the U.S. The impact also could necessitate workarounds to shift to non-infringing products or limit certain features of ~~operations~~our products. ~~Included~~Such patent litigation could also result in increased costs for the ~~aggregate~~Company ~~$18 million~~associated ~~are~~with ~~charges~~damages, development of ~~$25 million~~ ~~for~~non-infringing ~~employee~~products, ~~separation~~licenses ~~costs~~to the subject intellectual property or, ~~partially~~when ~~offset~~applicable, bydifficulties ~~$7 million~~seeking indemnification from suppliers. It may also result in our competitors obtaining additional freedom of ~~reversals~~action. ~~for~~Intellectual ~~accruals~~property norisks ~~longer~~are ~~needed~~further discussed in “Part I. Item 1A. Risk Factors”.

~~During~~TiVo ~~the~~Matters nine months ended October 2, 2010, the Company recorded net reorganization of business charges of $45 million, including $11 million of charges in Costs of sales and $34 million of charges under Other charges in the Company’s condensed consolidated statements of operations. Included in the aggregate $45 million are charges of $61 million for employee separation costs, partially offset by $16 million of reversals for accruals no longer needed.

~~The~~In ~~following table~~August ~~displays~~2009, ~~the~~TiVo, ~~net~~Inc. ~~charges~~(“TiVo”) ~~incurred~~commenced bylitigation against two customers of our Home business ~~segment:~~in TiVo, Inc. v. Verizon Comms., Inc. et. al. and TiVo, Inc. v. AT&T Inc. in the U.S. District Court for the Eastern

October 2, 2010	Three MonthsEnded		Nine MonthsEnded
Mobile Devices		$13		$30
Home		5		15
		$18		$45


40

~~Cash~~ District ~~payments~~of ~~for~~Texas ~~exit~~alleging ~~costs~~patent ~~and~~infringement ~~employee~~related ~~separations~~to incertain ~~connection~~digital ~~with~~video ~~reorganization~~recording ~~plans~~(“DVR”) ~~were~~equipment ~~$64~~sold by Motorola Mobility to these customers. The complaints seek damages and ~~million~~injunctions ~~during~~against ~~the~~our ~~nine~~customers ~~months~~related ~~ended~~to ~~October 2,~~our ~~2010~~DVR equipment. Verizon and AT&T have made indemnification demands to us based on the lawsuits.

~~Liquidity~~On February 25, 2011, Motorola Mobility, Inc. and ~~Capital~~General ~~Resources~~Instrument Corporation (our indirect wholly owned subsidiary) filed a patent infringement complaint against TiVo in the U.S. District Court for the Eastern District of Texas, Motorola Mobility, Inc. and General Instrument Corporation v. TiVo, Inc. The complaint alleges infringement of three patents by TiVo DVR products, and requests a declaration that two patents of TiVo are invalid and not infringed by certain DVR products of Motorola Mobility, Inc. and General Instrument Corporation. Our complaint asserts that an actual controversy exists between TiVo and Motorola Mobility, Inc./General Instrument Corporation based on TiVo’s accusations of infringement related to our Home business’ DVR products in the TiVo-Verizon lawsuit, Verizon’s indemnification demand to Motorola Mobility, Inc./General Instrument Corporation, and subsequent discovery in the TiVo-Verizon lawsuit directed at our Home business’ DVR products. On March 26, 2012, TiVo filed its Amended Counterclaims to add a new patent and a new party, Time Warner Cable, as a defendant.

AsOn ~~highlighted~~June in2 ~~the~~and ~~condensed~~3, ~~consolidated~~2011, ~~statements~~TiVo offiled ~~cash~~for ~~flows,~~reexamination with the ~~Company’s~~U.S. ~~liquidity~~patent and ~~available~~trademark ~~capital~~office ~~resources~~(“PTO”) ~~are~~on the Verizon patents. On ~~impacted~~July by22, ~~four~~2011, ~~key~~Verizon ~~components:~~filed ~~(i) cash~~reexaminations ~~and~~with ~~cash~~the ~~equivalents,~~PTO ~~(ii) operating~~on ~~activities,~~two ~~(iii) investing~~of ~~activities,~~the ~~and~~three ~~(iv) financing~~TiVo ~~activities~~patents.

~~Cash~~On ~~and~~January 4, ~~Cash~~2012, ~~Equivalents~~the TiVo v. AT&T matter was settled and ~~Cash~~on ~~Deposits~~January 6, 2012 it was dismissed by the court.

~~The~~Rambus ~~Company’s cash and cash equivalents (which are highly-liquid investments with an original maturity of three months or less) were $3~~Inc.~~1 billion~~ ~~at October 1, 2011~~v. AtMotorola ~~October 1~~Mobility, ~~2011, $2~~Inc.~~1 billion of this amount was held in the U.S. and~~, ~~$1.0 billion~~et ~~was held by the Company or its subsidiaries in other countries~~al. Our intent is to indefinitely reinvest a portion of our earnings from foreign operations. The Company has sufficient U.S. cash and cash equivalents to fund its U.S. operations, without the need for funds from foreign operations. In

~~Table~~On December 1, 2010, Rambus Inc. (“Rambus”) commenced an Investigation for patent infringement against several companies including Motorola, Inc. in Certain Semiconductor Chips and Products Containing Same (Inv. No. 337-TA-753) in the U.S. International Trade Commission (“ITC”). The complaint alleges that Motorola, Inc. designs, imports, and sells wireless gateways, wireless routers, DSL modems, set-top boxes, and digital video recorders incorporating at least Broadcom and LSI products that infringe claims of ~~Contents~~five Rambus patents. The ITC complaint seeks exclusion and cease and desist orders. On December 29, 2010, the ITC instituted the investigation. On February 15, 2011, Motorola Mobility, Inc. was substituted for Motorola, Inc.

36On January 17, 2012, the International Trade Commission, terminated the Investigation as to Broadcom in view of the Settlement Agreement and Patent License Agreement executed between Broadcom and Rambus (the “Agreements”). The Agreements also resolve the dispute between Rambus and Broadcom as to products of customer respondents, like Motorola Mobility, to the extent claims are based on Broadcom products incorporated into such customer respondent products. Nvidia, another supplier respondent, settled with Rambus in February 2012 and entered into a license agreement. On February 13, 2012, Nvidia filed a motion to terminate the investigation as to itself and its customers to the extent claims are based on Nvidia products incorporated into customer respondent products. On March 2, 2012, the Administrative Law Judge terminated the investigation as to Motorola Mobility, Inc. On March 29, 2012, the ITC decided not to review that determination.

~~the~~Digitude ~~event~~Innovations ~~funds~~LLC ~~from foreign operations are needed to fund operations or other strategic initiatives in the U~~v.~~S.,~~ ~~the Company may incur foreign withholding tax costs in order to distribute the~~Motorola ~~earnings~~Mobility ~~and~~Holdings, ~~cash back to the U~~Inc.S. ~~The Company would not incur a U.S. tax liability as a result of the distribution given its available U.S. tax attributes.~~

AtOn ~~October 1~~December 2, 2011, ~~Cash~~Digitude ~~deposits~~Innovations ~~were~~LLC ~~$181 million.~~(“Digitude”) Atcommenced ~~October 1,~~an ~~2011~~Investigation for patent infringement against Motorola Mobility Holdings, ~~$21~~Inc. ~~million~~in ofCertain ~~this~~Portable ~~amount~~Communication ~~was~~Devices ~~current~~(Inv. ~~and~~No. ~~included~~337-TA-827) in ~~Other~~the ~~current~~U.S. ~~assets~~International Trade Commission, and an action for patent infringement in the ~~Company’s~~U.S. ~~condensed consolidated~~District ~~balance~~Court ~~sheet~~for the ~~(all~~District of ~~which~~Delaware. On February 10, 2012, Motorola Mobility, Inc. was ~~held~~substituted for Motorola Mobility Holdings, Inc. in the UDistrict of Delaware.S On February 10, 2012, the Delaware court stayed the district court action pending the ITC investigation.) The complaints in both Delaware and ~~$160~~the ~~million~~ITC allege infringement of ~~this~~the ~~amount~~same ~~was~~four ~~non-current~~patents. ~~(including~~Digitude ~~$155~~alleges ~~million~~that ~~held~~Motorola ~~outside~~Mobility manufactures, markets, sells and/or imports infringing mobile electronic devices incorporating technology that infringe the Upatents at issue.S The ITC complaint seeks exclusion and cease and desist orders.) On April 19, 2012, the parties settled the dispute.

Prior to separation, the Company participated in our Former Parent’s cash management program. Our Former Parent primarily used a worldwide, centralized approach to cash management in which cash accounts are principally consolidated on a daily basis. Therefore, the financing of the Company’s operations and the related activity between the Company and our Former Parent prior to the separation is reflected as Net transfers from (to) Motorola, Inc. in our combined statements of business equity and of cash flows. As a result, the Company has recorded no cash, cash equivalents or cash deposits on its combined balance sheet prior to separation. 41

~~Deferred~~Graphics ~~Contribution~~Properties ~~from~~Holdings, ~~Former~~Inc. ~~Parent~~v. Motorola Mobility Holdings, Inc.

~~Our~~On ~~Former~~January ~~Parent~~30, ~~agreed~~2012, toGraphics ~~contribute~~Properties toHoldings, usInc. (“GPH”) filed an ~~additional~~Amended ~~$300~~International ~~million~~Trade Commission Complaint for patent infringement, adding Motorola Mobility, Inc, and Motorola Mobility Holdings, Inc, to the investigation it commenced in ~~cash~~the ifU.S. International Trade Commission captioned In Re Certain Consumer Electronics and ~~when~~Display ~~our~~Devices ~~Former~~and ~~Parent~~Products Containing ~~receives~~Same ~~cash~~and ~~distributions~~an asaction afor ~~result~~patent ofinfringement in the ~~reduction~~U.S. inDistrict ~~registered~~Court ~~capital~~for the District of anDelaware ~~overseas subsidiary~~in ~~(the~~Graphics ~~“Deferred~~Properties ~~Contribution”)~~Holdings, Inc. Onv. ~~July 22~~Motorola Mobility Holdings, ~~2011~~Inc. At the request of GPH, wethe ~~received~~ITC ~~our~~has ~~first Deferred~~delayed ~~Contribution~~a ofvote ~~$75~~on whether ~~million~~or ~~from~~not ~~our~~to ~~Former~~institute ~~Parent~~an investigation. ~~This~~Four ~~contribution~~patents isare ~~presented~~asserted asagainst ~~cash~~components ~~provided~~in byMotorola ~~financing~~Mobility’s ~~activities~~products. inThe ~~the~~Amended ~~third~~Complaint seeks a limited exclusion and cease and desist orders. In March 2012, Motorola Mobility settled ~~quarter~~the ofdispute ~~2011~~with GPH and the legal proceedings were dismissed with prejudice.

~~Operating~~Personal ~~Activities~~Injury Cases

~~The~~Cases ~~net~~relating ~~cash generated from operating activities in the first nine months of 2011 was $132 million, compared~~ to ~~$381 million~~Wireless ofTelephone ~~cash~~Usage generated from operating activities in the first nine months of 2010. The primary contributors to the net cash generation in the first nine months of 2011 were: (i) a $125 million increase in accounts payable and accrued liabilities, (ii) a $96 million net increase in other assets and liabilities, (iii) an $80 million decrease in net inventories, and (iv) the net loss (adjusted for non-cash items) of $77 million, partially offset by a $246 million increase in net accounts receivable. The primary contributors to the net cash generation in the first nine months of 2010 were: (i) an $686 increase in accounts payable and accrued liabilities, and (ii) net earnings (adjusted for non-cash items) of $135 million, which included the receipt of $175 million in cash related to a legal settlement, partially offset by: (i) a $225 million increase in net accounts receivable, (ii) a $166 million increase in net inventories, and (iii) a $42 million net increase in other assets and liabilities.

~~Accounts~~Dahlgren ~~Receivable: The Company’s net accounts receivable were $1~~v.8 ~~billion at October 1~~Motorola, ~~2011, compared to $1~~Inc.~~6 billion at December 31~~, ~~2010.~~et ~~Compared to December 31, 2010, net accounts receivable at October 1, 2011 were higher in the Mobile Devices segment and lower in the Home segment~~al. The Company’s businesses sell their products in a variety of markets throughout the world and payment terms can vary by market type and geographic location. Accordingly, the Company’s levels of net accounts receivable can be impacted by the timing and level of sales that are made by its various businesses and by the geographic locations in which those sales are made.

AsOn ~~further~~September 9, ~~described~~2002, ~~below under~~Dahlgren v. Motorola, Inc., et al., was filed in the D.C. Superior Court containing class claims alleging deceptive and misleading actions by defendants for failing to disclose the alleged “~~Sales~~debate” related to the safety of ~~Receivables~~wireless phones reflected in studies that allegedly show wireless phones can cause harm . On December 9,” ~~from~~2005, ~~time~~Plaintiff filed an amended complaint in Dahlgren. On March 5, 2008, the court stayed Dahlgren pending the outcome of Murray v. Motorola, Inc., et al. After the Murray decision, the Court lifted the stay and the Plaintiff amended the complaint to ~~time~~remove the class allegations and sue in a representative capacity on behalf of the General Public of the District of Columbia. Dahlgren seeks treble damages or statutory damages in the amount of $1,500 per violation, whichever is greater, disgorgement of profits, punitive damages, attorneys’ fees, costs or disbursements. On July 8, 2010, the ~~Company~~court ~~elects~~granted Defendant’s motion to ~~sell~~dismiss ~~accounts~~in ~~receivable~~part and denied it in part. The court dismissed claims asserting that Defendants failed to ~~third~~disclose the “safety debate” regarding cellular telephones and certain claims pre-~~parties~~dating October 2000. The ~~Company~~court denied Defendants’ argument that federal preemption barred Plaintiff’s ~~levels~~claims ofin ~~net~~their ~~accounts~~entirety. ~~receivable~~Plaintiff ~~can~~filed bea ~~impacted~~third byamended ~~the~~complaint ~~timing~~on ~~and~~September 21, ~~amount~~2010. ofOn ~~such~~March ~~sales~~15, ~~which~~2012, ~~can~~the ~~vary~~D.C. Superior byCourt ~~period~~entered ~~and~~summary ~~can~~judgment bein ~~impacted~~favor byof ~~numerous~~Motorola ~~factors~~Mobility. Plaintiff did not appeal and the judgment is final.

~~Inventories:~~Jean ~~The Company’s net inventories were $746 million at October 1~~Brooks, ~~2011, compared to $843 million at December 31, 2010. The decrease in the Company’s net inventories was reflective of a decrease in both segments, primarily driven by the Home segment. Inventory~~ ~~reserves~~individually ~~decreased~~and byas ~~$166 million in~~ the ~~first~~representative ~~nine months~~ of ~~2011 primarily due to~~ the ~~scrapping~~Estate of ~~excess~~Herbert ~~and~~Brooks ~~obsolete inventory~~v. ~~Inventory~~Motorola ~~management~~Mobility, ~~continues~~Inc. toet. beal. ~~an area of focus as the Company balances the need to maintain strategic inventory levels to~~

~~Table~~On April 12, 2012, Jean Brooks, individually and as the representative of ~~Contents~~the Estate of Herbert Brooks filed suit in the Superior Court for the District of Columbia alleging that use of cellular phone caused Mr. Brooks’ brain cancer. The complaint contains counts for fraud and intentional misrepresentation, negligent misrepresentation, strict liability, failure to warn, negligence, breach of implied warranty, loss of consortium, survival, and wrongful death. The complaint seeks $50 million in compensatory damages plus punitive damages.

37Tax Proceedings in Brazil

Brazilian tax authorities have proposed assessments against the Company’s Brazilian subsidiary relating to various technology ~~ensure~~transfer ~~delivery~~taxes, duties, value added taxes, certain other taxes and labor related matters related to ~~its~~the ~~customers~~subsidiary’s ~~against~~operations for calendar years 1997 through 2010. As of March 31, 2012, these assessments collectively represent reasonably possible loss contingencies under the ~~risk~~applicable accounting standards of ~~inventory~~up ~~excess~~to approximately $449 million, based on the exchange rate in effect at March 31, 2012, including interest and ~~obsolescence~~penalties. ~~due~~However, tothe ~~rapidly~~Company ~~changing~~is ~~technology~~vigorously disputing these matters, believes it has valid defenses that are supported by the law, and ~~customer~~believes ~~demand~~that this amount is not a meaningful indicator of liability. These matters are progressing through the multiple levels of administrative and judicial review available in Brazil. Although we are vigorously disputing these matters, in the event of a loss of these matters at the intermediate administrative level, in order to continue to dispute the matters in Brazil’s judicial system, the Company may be required to deposit additional cash, bank or insurance bonds or pledge assets while the underlying matter is

Accounts Payable: The Company’s accounts payable were approximately $1.7 billion at both October 1, 2011 and December 31, 2010. Accounts payable increased in the Mobile Devices segment and decreased in the Home segment. The Company buys products in a variety of markets throughout the world and payment terms can vary by market type and geographic location. Accordingly, the Company’s levels of accounts payable can be impacted by the timing and level of purchases made by its various businesses and by the geographic locations in which those purchases are made. 42

~~Reorganization~~ pending ofjudicial ~~Businesses:~~review ~~The~~to ~~Company~~cover ~~has~~an ~~implemented~~amount ~~reorganization~~equal ofto ~~businesses~~the ~~plans.~~full ~~Cash~~value ~~payments~~of ~~for~~the ~~exit~~alleged ~~costs~~tax ~~and employee~~assessment ~~separations~~plus inpenalties ~~connection~~and ~~with~~interest, awhich ~~number~~may ofnegatively ~~these~~impact ~~plans were $28 million in~~ the ~~first~~Company’s ~~nine~~cash ~~months of 2011~~liquidity, potentially assignificantly ~~compared to $64 million~~ in ~~the~~some ~~first nine months of 2010~~cases. OfDue to the ~~$10~~complexities ~~million~~and ~~reorganization~~uncertainty ofsurrounding ~~businesses~~the ~~accrual~~administrative ~~at October 1,~~and ~~2011,~~judicial $1process ~~million~~in ~~relates~~Brazil toand ~~employee separation costs that are expected to be paid over~~ the ~~remainder~~nature of ~~2011.~~the ~~The~~claims ~~remaining~~asserted, $9we ~~million~~do innot ~~accruals~~expect ~~relate~~a tofinal ~~lease~~resolution ~~termination~~of ~~obligations~~these ~~that~~matters ~~are~~for ~~expected to be paid over a number of~~several years.

~~Investing~~For ~~Activities~~additional information regarding litigation and its potential impact on the Company, see “Part I. Item 1A. Risk Factors”.

~~Net~~The ~~cash~~Company ~~used~~is ~~for~~involved ~~investing~~in ~~activities~~various ~~was~~other ~~$191~~lawsuits, ~~million~~claims inand ~~the~~investigations ~~first~~arising ~~nine~~in the ~~months~~normal course of ~~2011,~~business ~~compared~~and relating to ~~net~~our ~~cash~~business, ~~used~~such ofas ~~$121 million~~intellectual inproperty disputes, contractual disputes, and employment matters. In the ~~first~~opinion ~~nine~~of ~~months~~management, the ultimate disposition of ~~2010.~~these ~~The~~matters ~~$70~~is ~~million~~not ~~increase~~expected into ~~net~~have a ~~cash~~material ~~used~~adverse ~~for~~effect ~~investing~~on ~~activities~~Motorola ~~was~~Mobility’s ~~primarily~~consolidated ~~due~~financial toposition, liquidity or results of operations. However, an unfavorable resolution could have a ~~$68~~material ~~million~~adverse ~~increase~~effect on the Company’s consolidated financial position, liquidity or results of operations in ~~capital~~the ~~expenditures~~periods in which the matters are ultimately resolved.

~~Acquisitions and Investments: The Company used $65~~Item ~~million of cash for acquisitions and new investment activities in the first nine months of 2011, compared to cash used of $66 million in the first nine months of 2010~~1A. ~~The cash used in the first nine~~ ~~months~~Risk ofFactors ~~2011 and 2010 was primarily for small strategic acquisitions and investments across the Company.~~

~~Proceeds~~The ~~from Sales~~reader ofshould ~~Investments:~~carefully ~~The~~consider, ~~Company~~in ~~received~~connection ~~$29~~with ~~million~~the ofother ~~cash~~information asin ~~proceeds~~this ~~from~~report, the ~~sale~~factors discussed ~~of investments~~ in ~~the~~“Part ~~first~~I. ~~nine~~Item 1A. ~~months~~Risk ofFactors” ~~2011~~on ~~compared~~pages 14 tothrough ~~$12~~34 ~~million~~of in the ~~first~~Company’s ~~nine~~2011 ~~months~~Annual ofReport ~~2010~~on Form 10-K. ~~The~~These ~~proceeds~~factors ~~received~~could ~~during~~cause ~~the~~our ~~first~~actual ~~nine~~results ~~months of~~to ~~2011~~differ ~~are~~materially ~~primarily~~from ~~related~~those tostated ~~the~~in forward-looking ~~disposal~~statements ofcontained ~~the~~in ~~available-for-sale~~this ~~equity~~document ~~securities~~and ~~portfolio~~elsewhere.

~~Capital Expenditures: Capital expenditures were $136~~Item ~~million~~2. inUnregistered ~~the~~Sales ~~first nine months~~ of ~~2011, compared to $68 million in the first nine months of 2010. The Company’s emphasis in making capital expenditures is to focus on strategic~~Equity ~~investments~~Securities ~~driven by customer demand, new design capability~~ and ~~process~~Use ~~improvements,~~of ~~including IT systems~~Proceeds.

~~Cash deposits:~~None The Company made cash deposits of $24 million in the first nine months of 2011, compared to no cash deposits being made in the first nine months of 2010. The cash deposits made in the first nine months of 2011 were primarily related to supply chain activities.

Investments: The Company views its investments as an additional source of liquidity. The majority of these securities are available-for-sale and cost-method investments in technology companies. The fair market values of these securities are subject to substantial price volatility. In addition, the realizable values of these securities are subject to market and other conditions. At OctoberItem ~~1, 2011, the Company did not have an available-for-sale equity securities portfolio~~3. AtDefaults ~~December 31,~~Upon ~~2010,~~Senior ~~the Company’s available-for-sale equity securities portfolio had an approximate fair market value of $21 million, comprised of a cost basis of $7 million and a net unrealized gain of $14 million~~Securities. ~~The Company’s available-for-sale investments are included in Investments in the Company’s condensed consolidated balance sheets.~~

~~Financing~~None ~~Activities~~

~~Net cash provided by financing activities was $3.2~~Item ~~billion in the first nine months of 2011, compared to $293 million of net cash used in the first nine months of 2010~~4. ~~Cash~~Mine ~~provided~~Safety byDisclosures financing activities in the first nine months of 2011 was primarily comprised of $3.0 billion of cash and cash equivalents received from our Former Parent at the time of the Distribution and an additional $75 million of cash received during the third

~~Table~~None ~~of Contents~~

38Item 5. Other Information.

~~quarter.~~None The contribution from our Former Parent also included $168 million of cash deposits, primarily related to various legal disputes, which are included in Cash deposits in the Company’s condensed consolidated balance sheet at October 1, 2011. Cash used for financing activities in the first nine months of 2010 was due to net cash transfers to our Former Parent.

Our Former Parent primarily used a worldwide centralized approach to cash management and the financing of its operations with all related activity, prior to separation, between the Company and our Former Parent reflected as equity transactions in Owner’s net investment in the Company’s combined balance sheets. When necessary, our Former Parent had provided the Company funds for its operating cash needs. The Company’s funds in excess of working capital needs had been advanced to our Former Parent. Intercompany accounts were maintained for such borrowings that occur between the Company’s operations and our Former Parent. Types of intercompany transactions between the Company and our Former Parent included: (i) cash deposits from the Company’s businesses which were transferred to our Former Parent on a regular basis, (ii) cash borrowings from our Former Parent used to fund operations, capital expenditures or acquisitions, (iii) charges (benefits) for income taxes, and (iv) allocations of our Former Parent’s corporate expenses described elsewhere in this document. For purposes of the combined statements of cash flows prior to the separation, the Company reflected intercompany activity as a financing activity. The net cash transferred to our Former Parent was $293 million in the first nine months of 2010. 43

~~Credit~~Item 6. ~~Facilities~~Exhibits

On January 4, 2011, the Company entered into a $500 million unsecured three-year credit agreement (the “Credit Agreement”) with a syndicate of lenders. The Credit Agreement provides for a revolving credit facility and a letter of credit facility, is guaranteed by certain of the Company’s subsidiaries, and contains restrictive covenants. The Company may use any borrowings under the Credit Agreement for general corporate purposes. No obligations are outstanding under the Credit Agreement as of October 1, 2011.


Exhibit No.		Exhibits
*31.1		Certification of Dr. Sanjay K. Jha pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2		Certification of Marc E. Rothman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1		Certification of Dr. Sanjay K. Jha pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.2		Certification of Marc E. Rothman pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**101.INS		XBRL Instance Document
**101.SCH		XBRL Taxonomy Extension Scheme Document
**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

~~Our~~* ~~ability~~Filed to obtain standby letters of credit, performance bonds, surety bonds (collectively referred to as “Letters of Credit”), credit facilities, and foreign exchange lines primarily depends upon our capitalization, working capital, past performance, management expertise and reputation, and certain external factors, including the condition of the capital markets, the overall capacity of Letters of Credit and foreign exchange markets. Financial institutions providing these instruments consider such factors in relationship to their underwriting/credit standards, which may change from time to time. herewith

~~Sales~~** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of ~~Receivables~~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.

~~Prior~~MOTOROLA toand ~~separation, our Former Parent sold accounts receivable generated from its business units to third-parties in transactions that qualified as “true-sales.” Through separation,~~ the ~~Company’s~~Stylized ~~businesses~~M ~~participated~~Logo inare ~~this~~trademarks ~~activity~~or byregistered ~~transferring~~trademarks ~~certain~~ of ~~their~~Motorola ~~accounts~~Trademark ~~receivable~~Holdings, ~~balances to our Former Parent~~LLC. ~~The~~GOOGLE ~~Company~~and ~~also~~ANDROID ~~has agreements under which the~~are ~~Company~~trademarks ~~sells~~of ~~its~~Google ~~accounts receivable directly to a third party in transactions that qualify as “true sales~~Inc.”

~~For the~~All ~~three~~other ~~months~~product ~~ended~~or ~~October 1,~~service ~~2011~~names ~~and~~are ~~October 2, 2010, total accounts receivable sold by~~ the ~~Company~~property ~~were~~of ~~$43~~their ~~million~~respective ~~and $57 million, respectively~~owners. ~~For the nine months ended October 1, 2011 and October 2, 2010, total~~ ~~accounts~~© ~~receivable~~2012 ~~sold~~Motorola ~~by the Company were $140 million and $173 million~~Mobility, ~~respectively~~Inc. AsAll ofrights ~~October 1, 2011, there were no accounts receivable outstanding under these programs for which the Company retained servicing obligations, compared to $43 million at December 31, 2010~~reserved.

~~Other Contingencies~~ 44

~~Potential~~SIGNATURES 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 Motorola Mobility receives 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

~~Table~~Pursuant to the requirements of ~~Contents~~the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

39Motorola Mobility Holdings, Inc. By: /s/ MARK R. VALENTINE Mark R. ValentineVice President and Controller (Principal Accounting Officer)

~~contracts~~Date: ~~could~~May ~~result~~1, in2012 ~~expenses to Motorola Mobility that are far in excess of the revenue received from the counterparty in connection with the contract.~~

Indemnification Provisions: Motorola Mobility may provide indemnifications for losses associated with indemnification and/or warranty provisions contained in certain commercial and intellectual property agreements. Historically, Motorola Mobility has not made significant payments under these indemnifications. However, there is an increasing risk in relation to intellectual property indemnities given the current legal climate. In particular, two customers of the Company have made indemnification demands of the Company related to patent infringement claims by TiVo, Inc. against our products. 45

~~Generally,~~EXHIBIT inINDEX indemnification cases, payment by Motorola Mobility is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow Motorola Mobility to challenge the other party’s claims. Further, Motorola Mobility’s obligations under these agreements for indemnification are generally limited in terms of duration, typically not more than 24 months, and for amounts not in excess of the contract value, except with respect to certain intellectual property infringement claims. In some instances, Motorola Mobility may have recourse against third-parties for certain payments made by Motorola Mobility.

Furthermore, pursuant to the Master Separation and Distribution Agreement and certain other agreements with our Former Parent, Motorola Mobility agreed to indemnify our Former Parent for certain liabilities, and our Former Parent agreed to indemnify Motorola Mobility for certain liabilities, in each case for uncapped amounts.


Exhibit No.		Exhibits
*31.1		Certification of Dr. Sanjay K. Jha pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2		Certification of Marc E. Rothman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1		Certification of Dr. Sanjay K. Jha pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.2		Certification of Marc E. Rothman pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**101.INS		XBRL Instance Document
**101.SCH		XBRL Taxonomy Extension Scheme Document
**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

~~Legal~~* ~~Matters: The~~Filed Company is involved in various lawsuits, claims and investigations arising in the normal course of business and relating to our business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on Motorola Mobility’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. See “Item 1. Legal Proceedings” for more details. herewith

~~Tax and~~** ~~Regulatory~~XBRL ~~Proceedings~~(Extensible inBusiness ~~Brazil: The~~Reporting ~~Company~~Language) ~~had~~information ~~approximately~~is ~~$150~~furnished ~~million~~and ofnot ~~cash~~filed ~~deposits,~~or ~~including~~a ~~accrued~~part ~~interest,~~of related to various legal disputes in Brazil. The cash deposit balance decreased during the third quarter primarily related to foreign currency exchange rate fluctuations in Brazil. The balance may increase at some point in 2012 because a ~~trade~~registration ~~compliance matter is pending~~statement inor ~~the~~prospectus ~~intermediate administrative~~for ~~level.~~purposes ~~If we~~of ~~receive~~Sections an11 ~~adverse~~or ~~ruling and are~~12 ~~forced~~of ~~to continue to dispute~~ the ~~matter~~Securities ~~in Brazil’s~~Act ~~judicial~~of ~~system~~1933, weis ~~may~~deemed benot ~~required~~filed tofor ~~deposit~~purposes ~~approximately~~of ~~$320~~Section ~~million,~~18 ~~based~~of on the ~~exchange~~Securities ~~rate~~Exchange ~~in effect~~Act ~~at October 1, 2011,~~ of ~~additional collateral with the Brazil judicial system~~1934, ~~which~~and ~~could~~otherwise beis innot ~~the~~subject ~~form~~to ofliability ~~cash,~~under ~~bank~~these ~~or insurance bonds or pledged assets~~sections.

Significant Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s condensed 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

— Warranty reserves

— Inventory valuation

— Income taxes

— Restructuring activities

— Valuation and recoverability of goodwill

— Valuation and recoverability of long-lived assets

Recently Issued Accounting Pronouncements

In May 2011, the FASB issued authoritative guidance that changes the wording used to describe many of the requirements for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. The guidance also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively during interim and annual periods beginning after December 15, 2011. The Company anticipates that the adoption of this standard will not materially expand its consolidated financial statement footnote disclosures or change the way it measures fair value.

In June 2011, the FASB issued authoritative guidance which amends current comprehensive income guidance. This guidance eliminates the option to present the components of comprehensive income as part of the statement of stockholders’ equity. Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. This guidance will be effective for the Company during the interim and annual periods beginning after December 15, 2011. The adoption of this guidance will not have an impact on the Company’s consolidated statements of operations, balance sheets or cash flows as it only requires a change in the format of the current presentation.

In September 2011, the FASB issued new accounting guidance intended to simplify goodwill impairment testing. The Company will be allowed to perform a qualitative assessment on goodwill impairment to determine whether a quantitative assessment is necessary. This guidance is effective for goodwill impairment tests performed in interim and annual periods for fiscal years beginning after December 15, 2011 with early adoption permitted. The Company expects to early adopt this guidance in the fourth quarter effective October 2, 2011 for its fiscal 2011 annual impairment test. The Company does not expect the adoption of this guidance will have a material impact on our results of operations or financial position.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Derivative Financial Instruments

Foreign Currency Risk

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 operating business units’ assessment of risk. The Company enters into derivative contracts for some of the Company’s non-functional currency 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 firm commitments and 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.

As of October 1, 2011 and December 31, 2010, the Company had outstanding foreign exchange contracts with notional values totaling $265 million and $608 million, respectively. 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 are charged to Other within Other income (expense) in the Company’s condensed 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 October 1, 2011 and the corresponding positions as of December 31, 2010:

	Notional Amount
Net Buy (Sell) by Currency	October 1,2011			December 31,2010
Canadian Dollar		$25			$35
Indian Rupee		(25	)		(43	)
Chinese Yuan		(29	)		14
Euro		(66	)		(54	)
Japanese Yen		(67	)		(5	)

Brazil Functional Currency

Effective July 3, 2011, based on cumulatively significant changes in economic facts and circumstances, the Company determined that for purposes of financial statement translation the local Brazilian currency should be the functional currency of the Company’s wholly owned Brazilian subsidiary, Motorola Industrial Ltda. Prior to July 3, 2011, the functional currency was the U.S. dollar. As a result of this change, there was an immaterial adjustment to the previously reported values of non-monetary assets offset by an adjustment to the Foreign currency translation adjustment, a component of accumulated other comprehensive loss in Stockholders’ equity in the condensed consolidated balance sheets. As a result of this change in the functional currency, for financial periods beginning on or after July 3, 2011, changes in the Brazilian exchange rates will result in gains or losses, which will be recorded in Other, net in the condensed consolidated statements of operations related to the revaluation of U.S. dollar denominated monetary assets and liabilities, such as cash and cash equivalents and accounts payable held by our Brazilian subsidiary.

Interest Rate Risk

At October 1, 2011 and December 31, 2010, the Company did not have any interest rate agreements in place.

Counterparty Risk

The use of derivative financial instruments exposes the Company to counterparty credit risk in the event of nonperformance by counterparties. However, the risk is limited to the fair value of the instruments when the derivative is in an asset position. At the present time, all of the counterparties have investment grade credit ratings. As of October 1, 2011 the Company was exposed to an aggregate credit risk of approximately $14 million with all counterparties.

Fair Value of Financial Instruments

The Company’s financial instruments include accounts receivable, accounts payable, accrued liabilities, derivative financial instruments and other financing commitments. The Company’s available-for-sale investment portfolios and derivative financial instruments are recorded in the Company’s condensed consolidated balance sheets at fair value. All other financial instruments are carried at cost, which is not materially different than the instruments’ fair values.

Forward-Looking Statements

Except for historical matters, the matters discussed in this Form 10-Q are forward-looking statements within the meaning of applicable federal securities law. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes”, “expects”, “intends”, “anticipates”, “estimates” and similar expressions. We can give no assurance that any future results or events discussed in these statements will be achieved. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Readers are cautioned that such forward-looking statements are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from the statements contained in this Form 10-Q. Forward-looking statements include, but are not limited to, for example: (1) our business strategies, plans and objectives, including the anticipated impact of such strategies, plans and objectives; (2) our future operating and financial performance; (3) our future investment strategies; (4) future levels of revenues, operating margins, income from operations, net income, earnings per share and other financial information; (5) expectations regarding the Company’s ability to finance its operations and its ability to obtain, and the cost of, letters of credit, credit facilities and foreign exchange lines; (6) future hedging activities; (7) anticipated levels of demand for our products and services; (8) expectations regarding our research and development activities and intellectual property, including expectations regarding the competitiveness of the patent portfolio; (9) expectations regarding patent litigation, including trends and the impact and timing of a potentially negative result for the Company; (10) the success or timing of completion of ongoing or anticipated capital or maintenance projects; (11) expectations regarding opportunities for growth; (12) expectations regarding availability of materials and components, energy supplies and labor; (13) the resolution, potential effects and timing of judicial or other proceedings on our business, financial condition, results of operations, cash flows and liquidity; (14) the potential effect of the financial markets on our business, financial condition, results of operations, cash flows and liquidity; (15) the anticipated effects of actions of third-parties such as competitors, counterparties, or federal, foreign, state or local regulatory authorities, or plaintiffs in litigation; and (16) statements that describe the proposed Merger transaction with Google, including its financial impact, and other statements of management’s beliefs, intentions or goals. Motorola Mobility undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise, except as required by law.

Some of the risk factors that affect the Company’s business and financial results are discussed in “Item 1A: Risk Factors” on pages 13 through 34 of our 2010 Annual Report on Form 10-K and in “Item 1A: Risk Factors” in this Quarterly Report on Form 10-Q. We wish to caution the reader that the risk factors discussed in each of these documents and those described 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 4. Controls and Procedures

(a) 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 quarterly 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 Mobility, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports, is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) accumulated and communicated to Motorola Mobility’s management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. Except as described below, there have been no changes in our internal control over financial reporting that occurred during the quarter ended October 1, 2011, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

The Company has an ongoing initiative to upgrade its enterprise resource planning (ERP) system. The upgrade, which began during 2010, will be implemented in stages over multiple years. Management believes that necessary procedures are in place to maintain effective internal control over financial reporting during the upgrade process. The procedures include pre-implementation planning, design and testing, as well as extensive planned post-implementation monitoring and testing of the effectiveness of internal control over financial reporting in the upgraded ERP environment. To date, the Company has not identified any significant internal control issues in connection with the implementation or operation of the ERP system upgrade.

Part II—Other Information

Item 1. Legal Proceedings

Personal Injury Cases

Cases relating to Wireless Telephone Usage

Farina v. Nokia, Inc., et al.

On April 19, 2001, Farina v. Nokia, Inc., et al., was filed in the Pennsylvania Court of Common Pleas, Philadelphia County. Farina, filed on behalf of a Pennsylvania class, claimed that the failure to incorporate a remote headset into cellular phones or warning against using a phone without a headset rendered the phones defective by exposing users to alleged biological injury and health risks and sought compensatory damages and injunctive relief. After removal to federal court, transfer and consolidation with now-dismissed similar cases, an appeal, remand to state court and a second removal, the case proceeded in the federal district court in Philadelphia. The original complaint was amended to add allegations that cellular telephones sold without headsets are defective because they present a safety risk when used while driving. In the current complaint, Plaintiff seeks actual damages in the form of the greater of $100 or the difference in value of a Motorola phone as delivered and with a headset, the amount necessary to modify the phones to permit safe use, out of pocket expenses, including the purchase of headsets, treble damages and attorney’s fees and costs. On September 2, 2008, the federal district court in Philadelphia dismissed the Farina case, finding that the complaint is preempted by federal law. On October 22, 2010, the U.S. Court of Appeals for the Third Circuit affirmed the dismissal of the complaint. On February 22, 2011, Plaintiff filed a petition for writ of certiorari to the U.S. Supreme Court. On October 3, 2011, the U.S. Supreme Court denied plaintiff’s petition for writ of certiorari. The decision of the Court of Appeals dismissing the complaint is final.

Patent Related Cases

Microsoft Corporation v. Motorola, Inc.

On October 1, 2010, Microsoft Corporation (“Microsoft”) filed complaints against Motorola, Inc. in the International Trade Commission (“ITC”) and the United States District Court for the Western District of Washington (“District Court”) alleging patent infringement based on products manufactured and sold by Motorola, Inc. The ITC matter is entitled In the Matter of Mobile Devices, Associated Software, and Components Thereof (Inv. No. 337-TA-744). On October 6, 2010 and October 12, 2010, Microsoft amended the District Court and ITC complaints, respectively, to add Motorola Mobility, Inc. as a defendant. The complaints, as amended, allege infringement of claims in nine patents based on Motorola, Inc.’s and Motorola Mobility, Inc.’s manufacture and sale of Android-based mobile phones. The ITC complaint seeks exclusion and cease and desist orders. On November 5, 2010, the ITC instituted the investigation. Microsoft subsequently dropped its patent infringement claims with respect to two patents in the ITC investigation. The District Court complaint seeks unspecified monetary damages and injunctive relief.

On November 9, 2010, Microsoft filed a complaint in the United States District Court for the Western District of Washington against Motorola, Inc. and Motorola Mobility, Inc. (the “Motorola Defendants”) alleging that the Motorola Defendants breached a contractual obligation to license certain patents related to 802.11 wireless networking technology and H.264 video coding technology on reasonable and non-discriminatory terms and conditions. The complaint seeks unspecified monetary damages and injunctive relief including a declaration that the Motorola Defendants have not offered royalties to Microsoft under reasonable rates with reasonable terms and conditions that are demonstrably free of any unfair discrimination. On February 23, 2011, Microsoft amended the complaint to add General Instrument Corporation (our indirect wholly-owned subsidiary) as a defendant.

In November 2010, Motorola Mobility, Inc. and General Instrument Corporation (our indirect wholly-owned subsidiary) filed complaints alleging patent infringement against Microsoft in the ITC and in the U.S. District Courts for the Southern District of Florida, Motorola Mobility, Inc. v. Microsoft Corporation, and the

Western District of Wisconsin, Motorola Mobility, Inc. and General Instrument Corporation v. Microsoft Corporation and Motorola Mobility, Inc. and General Instrument Corporation v. Microsoft Corporation. The ITC matter is entitled In the Matter of Certain Gaming and Entertainment Consoles, Related Software, and Components Thereof (Inv. No. 337-TA-752). Among the complaints, Motorola Mobility, Inc. and General Instrument Corporation are asserting infringement of claims in seventeen patents by Microsoft’s PC and Server software, Windows mobile software and Xbox products. The ITC complaint seeks exclusion and cease and desist orders. On December 23, 2010, the ITC instituted the investigation. The District Court complaints seek monetary damages and injunctive relief. In December 2010 and February 2011, Motorola Mobility, Inc. subsequently asserted claims of four additional patents in the Western District of Wisconsin, Motorola Mobility, Inc. v. Microsoft Corporation.

Between December 23, 2010 and January 25, 2011, Microsoft filed counterclaims against Motorola Mobility, Inc. in these actions, alleging infringement of a total of fourteen additional Microsoft patents. Three of the complaints filed by Motorola Mobility, Inc. and General Instrument Corporation in the Western District of Wisconsin and the Southern District of Florida have been transferred to the U.S. District Court for the Western District of Washington.

On June 24, 2011, Motorola Mobility, Inc. filed counterclaims against Microsoft Corporation in the ITC proceeding which we subsequently removed to the Northern District of California, and instituted a new action in the Northern District of California, Motorola Mobility, Inc. v. Microsoft Corporation, alleging that Microsoft Corporation breached commitments to license certain patents. The counterclaims include breach of contract, promissory estoppel, violation of Section 2 of the Sherman Act and unfair competition.

In July 2011, Motorola Mobility, Inc. and General Instrument Corporation filed patent infringement complaints in Mannheim, Germany alleging that Microsoft Deutschland GmbH infringes four patents owned by Motorola Mobility, Inc. and General Instrument Corporation.

In September 2011, Microsoft filed patent infringement complaints in Munich, Germany alleging that Motorola Mobility Germany GmbH infringe three utility patents owned by Microsoft.

ITC Matters Generally

In our rapidly evolving and highly competitive industry, companies invest heavily in developing and acquiring intellectual property rights to seek incremental advantages in the marketplace. Such companies also vigorously pursue and protect their intellectual property rights with patent litigation. The ITC (U.S. International Trade Commission) has increasingly become an important forum to litigate intellectual property disputes because an ultimate loss for a company or its suppliers in an ITC action could result in a prohibition on importing infringing products into the U.S.

As previously disclosed, we are currently engaged in significant patent litigation with Microsoft and Apple in many different forums within and outside the U.S., including in the ITC. We expect results on the Microsoft matter at the ITC in April 2012 and on the Apple matter at the ITC in May 2012, each with a sixty-day presidential review period thereafter. The Company and several of our chip suppliers are also facing an ITC matter brought by Rambus, as discussed in the Company’s Annual Report on Form 10-K, and a result is expected at the ITC in May 2012 with a sixty-day presidential review period thereafter. An ultimate loss for the Company or its suppliers in an ITC action could result in a prohibition on importing infringing products or products incorporating infringing components into the U.S. In light of the U.S. being a very important market and our substantial manufacturing operations overseas, a prohibition on importation could have a significant negative impact on the Company, including the inability to import many important products into the U.S. The impact also could necessitate workarounds to shift to non-infringing products or limit certain features of our products. Such patent litigation could also result in increased costs for the Company associated with damages, development of non-infringing products, licenses to the subject intellectual property or, when applicable, difficulties seeking indemnification from suppliers. It may also result in our competitors obtaining additional freedom of action. Intellectual property risks are further discussed in “Part I. Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K.

Tax Proceedings in Brazil

Brazilian tax authorities have proposed assessments against the Company’s Brazilian subsidiary relating to various technology transfer taxes, duties, value added taxes, certain other taxes and labor related matters related to the subsidiary’s operations for calendar years 1997 through 2010. As of October 1, 2011, these assessments collectively represent reasonably possible loss contingencies under the applicable accounting standards of up to approximately $466 million, based on the exchange rate in effect at October 1, 2011, including interest and penalties. However, the Company is vigorously disputing these matters, believes it has valid defenses that are supported by the law, and believes that this amount is not a meaningful indicator of liability. These matters are progressing through the multiple levels of administrative and judicial review available in Brazil. Although we are vigorously disputing these matters, in the event of a loss of these matters at the intermediate administrative level, in order to continue to dispute the matters in Brazil’s judicial system, the Company may be required to deposit additional cash, bank or insurance bonds or pledge assets while the underlying matter is pending judicial review to cover an amount equal to the full value of the alleged tax assessment plus penalties and interest, which may negatively impact the Company’s cash liquidity, potentially significantly in some cases. Due to the complexities and uncertainty surrounding the administrative and judicial process in Brazil and the nature of the claims asserted, we do not expect a final resolution of these matters for several years.

Merger Related Litigation

Sixteen putative class-action complaints challenging the proposed Google Merger have been filed against Motorola Mobility and its directors. Four of these complaints were filed in the Circuit Court of Cook County, Illinois: Keating v. Motorola Mobility Holdings, Inc. et al., Case No. 11CH28854, Cinotto v. Motorola Mobility Holdings, Inc. et al., Case No. 11CH29297, Grossman v. Motorola Mobility Holdings, Inc. et al., Case No. 11CH29738, and Colaco v. Barfield et al., Case No. 11CH30541. Eight additional putative class-action complaints were filed in the Circuit Court of the Nineteenth Judicial District, Lake County, Illinois: Groveman and Schnider v. Motorola Mobility Holdings, Inc. et al., Case No. 11CH3719, Johnson v. Jha et al., Case No. 11CH3751, Midler v. Motorola Mobility Holdings Inc. et al., Case No. 11CH3783, Mulholland and Ryan v. Motorola Mobility Holdings, Inc. et al., Case No. 11CH3816, Iron Workers District Council of Tennessee Valley & Vicinity Pension Plan v. Motorola Mobility Holdings, Inc., et al., Case No. 11CH3820, Lassoff v. Motorola Mobility Holdings, Inc., Case No. 11CH3831, Lang v. Motorola Mobility Holdings, Inc. et al., Case No. 11CH3832 and Blumstein v. Motorola Mobility Holdings, Inc., No. 11CH4336. Three additional putative class-action complaints were filed in the Delaware Court of Chancery: Goldfein v. Motorola Mobility Holdings, Inc. et al., Case No. 6787, Driscoll v. Motorola Mobility Holdings, Inc. et al., Case No. 6794, and Beren v. Jha et al., Case No. 6799. One additional putative class-action complaint was filed in the United States District Court for the Northern District of Illinois, Eastern Division: Stein v. Jha et al., Case No. 11-cv-06100.

Each of the above-named complaints has been brought on behalf of a putative class of Motorola Mobility’s stockholders and each alleges that, in approving the proposed transaction, the directors of Motorola Mobility breached the fiduciary duties they owe to the members of the putative class. Each complaint alleges further that Motorola Mobility itself aided and abetted the alleged breaches of fiduciary duty, and all complaints other than Johnson name Google a defendant and allege that Google aided and abetted the alleged breaches of fiduciary duty. Finally, the complaints in Midler, Lang, Driscoll, Beren and Stein allege that RB98 Inc. also aided and abetted the alleged breaches of duty.

All sixteen putative class-action complaints seek, among other things, injunctive relief barring the named defendants from consummating the proposed transaction, as well as attorneys’ fees and costs. Motions were filed in Cook County, Lake County, and Delaware to consolidate the putative class-actions there pending. No judicial action has been taken on the consolidation motion filed in Delaware. On September 27, the Circuit Court for Lake County consolidated the eight actions before it into Mulholland. On October 3, the Circuit Court for Cook County consolidated the four actions before it into Keating. Also on October 3, defendants moved the Cook County and Lake County courts for an order designating the single venue for disposition of the Mulholland and Keating actions. After that motion was filed, but before the courts could act upon it, plaintiffs agreed to coordinate the various lawsuits on a consolidated basis in the Keating action, pending in Cook County. As a result, on October 12, the Lake County court entered a stay in the Mulholland action.

For additional information regarding litigation and its potential impact on the Company, see “Part I. Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K.

The Company is involved in various other lawsuits, claims and investigations arising in the normal course of business and relating to our business, such as intellectual property disputes, contractual disputes, and employment matters. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on Motorola Mobility’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.

Item 1A. Risk Factors

The reader should carefully consider, in connection with the other information in this report, the factors discussed in Part I, “Item 1A: Risk Factors” on pages 13 through 34 of the Company’s 2010 Annual Report on Form 10-K. These factors could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere. In addition to the factors included in the Form 10-K and elsewhere, the reader should also consider the following risk factors:

The pendency of our agreement to be acquired by Google could have a negative impact on our business.

On August 15, 2011, we entered into Merger Agreement with Google pursuant to which a wholly-owned subsidiary of Google will, subject to the satisfaction or waiver of the conditions contained in the Merger Agreement, merge with and into Motorola Mobility, and Motorola Mobility will be the surviving corporation of the Merger and will become a wholly owned subsidiary of Google. Pursuant to the terms of the Merger Agreement and subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock of Motorola Mobility issued and outstanding immediately prior to the Effective Time will be cancelled and converted into the right to receive $40.00 in cash, without interest and less any applicable tax withholdings.

The announcement and pendency of the Merger may have a negative impact on our business, financial results and operations or disrupt our business by:

• intensifying existing litigation or increasing new legal claims from our competitors and other third parties, particularly as companies vigorously pursue and protect their intellectual property rights with patent litigation;

• intensifying competition as our competitors may seek opportunities related to our pending Merger;

• affecting our relationships with our customers, distributors, suppliers and employees;

• limiting certain of our business operations prior to completion of the Merger which may prevent us from pursuing certain opportunities without Google’s approval;

• causing us to forego certain opportunities we might otherwise pursue absent the Merger Agreement;

• impairing our ability to attract, recruit, retain, and motivate current and prospective employees who may be uncertain about their future roles and relationships with Google following the completion of the Merger; and

• creating distractions from our strategy and day-to-day operations for our employees and management and a strain on resources.

The failure to complete the Merger with Google could negatively impact our business.

There is no assurance that the Merger with Google or any other transaction will occur or that the conditions to the Merger will be satisfied in a timely manner or at all. If the proposed Merger or a similar transaction is not completed, the share price of our common stock may drop to the extent that the current market price of our common stock reflects an assumption that a transaction will be completed. In addition, under circumstances defined in the Merger Agreement, we may be required to pay a termination fee of up to approximately $375 million. Certain costs associated with the Merger are already incurred or may be payable even if the Merger is not completed. Further, a failed transaction may result in negative publicity and a negative impression of us in the investment community. Finally, any disruptions to our business resulting from the announcement and pendency of the Merger and from intensifying competition from our competitors, including

any adverse changes in our relationships with our customers, vendors and employees or recruiting and retention efforts, could continue or accelerate in the event of a failed transaction. There can be no assurance that our business, these relationships or our financial condition will not be negatively impacted, as compared to the condition prior to the announcement of the Merger, if the Merger is not consummated.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. (Removed and Reserved)

Item 5. Other Information.

On October 24, 2011, Company management approved a workforce reduction action under which the Company will record a net pre-tax charge to earnings during the quarter ended December 31, 2011, of approximately $31 million, comprised of $27 million of severance costs related to approximately 800 employees impacted by the action and approximately $4 million of facility exit costs. Both of the Company’s business segments (the Mobile Devices business and the Home business), as well as various corporate functions, are impacted by the action and the action affects employees globally. Under the Company’s employee severance plan, policies or applicable law, severance payments to employees affected by this action will be made substantially over the next 12 months.

Item 6. Exhibits

Exhibit No.		Exhibits
2.1		Agreement and Plan of Merger, by and among Google Inc., RB98 Inc., and Motorola Mobility Holdings, Inc., dated as of August 15, 2011 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on August 18, 20111 (File No. 1-34805)).
*31.1		Certification of Dr. Sanjay K. Jha pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2		Certification of Marc E. Rothman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1		Certification of Dr. Sanjay K. Jha pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.2		Certification of Marc E. Rothman pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**101.INS		XBRL Instance Document
**101.SCH		XBRL Taxonomy Extension Scheme Document
**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.

MOTOROLA and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Motorola Mobility Holdings, Inc. By: /S/ MARK R. VALENTINE Mark R. ValentineVice President and Controller (Principal Accounting Officer)

Date: October 27, 2011

EXHIBIT INDEX

Exhibit No.		Exhibits
2.1		Agreement and Plan of Merger, by and among Google Inc., RB98 Inc., and Motorola Mobility Holdings, Inc., dated as of August 15, 2011 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on August 18, 20111 (File No. 1-34805)).
*31.1		Certification of Dr. Sanjay K. Jha pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2		Certification of Marc E. Rothman pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1		Certification of Dr. Sanjay K. Jha pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*32.2		Certification of Marc E. Rothman pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**101.INS		XBRL Instance Document
**101.SCH		XBRL Taxonomy Extension Scheme Document
**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

Filing Compare · Motorola Mobility Holdings, Inc