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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________ 
Form 10-Q
 ____________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            
Commission file number: 1-7221
___________________________________________ 
MOTOROLA SOLUTIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
____________________________________________ 
Delaware 36-1115800
(State of Incorporation)(I.R.S. Employer Identification No.)
500 W. Monroe Street, Chicago, Illinois 60661
(Address of Principal Executive Offices, Zip Code)
(847576-5000
(Registrant’s Telephone Number, Including Area Code)
Not applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
____________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock$0.01Par ValueMSINew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer 
Non-accelerated filer 
Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 
The number of shares of the registrant's Common Stock, $0.01 par value per share, outstanding as of October 28, 2022 was 167,203,209.



TABLE OF CONTENTS
For the Quarter Ended October 1, 2022
 
PART I. FINANCIAL INFORMATION
Page No.
Item 1.
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations (Unaudited)
(In millions, except per share amounts)Three Months EndedNine Months Ended
October 1, 2022October 2, 2021October 1, 2022October 2, 2021
Net sales from products$1,439 $1,221 $3,697 $3,250 
Net sales from services934 886 2,708 2,601 
Net sales2,373 2,107 6,405 5,851 
Costs of products sales659 559 1,844 1,516 
Costs of services sales683 503 1,683 1,478 
Costs of sales1,342 1,062 3,527 2,994 
Gross margin1,031 1,045 2,878 2,857 
Selling, general and administrative expenses378 351 1,069 985 
Research and development expenditures197 183 577 545 
Other charges83 60 262 209 
Operating earnings373 451 970 1,118 
Other income (expense):
Interest expense, net(60)(56)(171)(154)
Gain on sales of investments and businesses, net1  3  
Other, net19 10 50 70 
Total other expense(40)(46)(118)(84)
Net earnings before income taxes333 405 852 1,034 
Income tax expense53 97 75 186 
Net earnings280 308 777 848 
Less: Earnings attributable to non-controlling interests1 1 3 4 
Net earnings attributable to Motorola Solutions, Inc.$279 $307 $774 $844 
Earnings per common share:
Basic$1.67 $1.81 $4.62 $4.98 
Diluted$1.63 $1.76 $4.50 $4.87 
Weighted average common shares outstanding:
Basic167.2 169.2 167.5 169.3 
Diluted171.5 174.1 171.9 173.4 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
1


Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 Three Months EndedNine Months Ended
(In millions)October 1, 2022October 2, 2021October 1, 2022October 2, 2021
Net earnings$280 $308 $777 $848 
Foreign currency translation adjustments(162)(44)(317)(19)
Defined benefit plans15 16 58 49 
Total other comprehensive income (loss), net of tax(147)(28)(259)30 
Comprehensive income133 280 518 878 
Less: Earnings attributable to non-controlling interests1 1 3 4 
Comprehensive income attributable to Motorola Solutions, Inc. common shareholders$132 $279 $515 $874 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

2


Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except par value)October 1, 2022December 31, 2021
ASSETS
Cash and cash equivalents$822 $1,874 
Accounts receivable, net1,368 1,386 
Contract assets1,033 1,105 
Inventories, net1,157 788 
Other current assets327 259 
Total current assets4,707 5,412 
Property, plant and equipment, net866 1,042 
Operating lease assets338 382 
Investments146 209 
Deferred income taxes988 916 
Goodwill2,851 2,565 
Intangible assets, net1,177 1,105 
Other assets552 558 
Total assets$11,625 $12,189 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current portion of long-term debt$1 $5 
Accounts payable885 851 
Contract liabilities1,549 1,650 
Accrued liabilities1,333 1,557 
Total current liabilities3,768 4,063 
Long-term debt6,012 5,688 
Operating lease liabilities302 313 
Other liabilities1,937 2,148 
Preferred stock, $100 par value: 0.5 shares authorized; none issued and outstanding
  
Common stock, $0.01 par value:
2 2 
Authorized shares: 600.0
Issued shares: 10/1/22—168.6; 12/31/21—169.6
Outstanding shares: 10/1/22—167.5; 12/31/21—168.7
Additional paid-in capital1,239 987 
Retained earnings989 1,350 
Accumulated other comprehensive loss(2,638)(2,379)
Total Motorola Solutions, Inc. stockholders’ equity (deficit)(408)(40)
Non-controlling interests14 17 
Total stockholders’ equity (deficit)(394)(23)
Total liabilities and stockholders’ equity (deficit)$11,625 $12,189 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

3


Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)
(In millions, except per share data)SharesCommon Stock and Additional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Retained
Earnings
Noncontrolling
Interests
Balance as of December 31, 2021169.6 $989 $(2,379)$1,350 $17 
Net earnings267 1 
Other comprehensive loss(5)
Issuance of common stock and stock options exercised1.2 50 
Share repurchase program(2.2)(493)
Share-based compensation expenses37 
Dividends declared $0.79 per share
(132)
ASU 2020-06 modified retrospective adoption(10)10 
Balance as of April 2, 2022168.6 $1,066 $(2,384)$1,002 $18 
Net earnings228 1 
Other comprehensive loss(107)
Issuance of common stock and stock options exercised2 
Share repurchase program(0.7)(162)
Share-based compensation expenses44 
Dividends declared $0.79 per share
(132)
Dividends paid to non-controlling interest on subsidiary common stock(6)
Balance as of July 2, 2022167.9 $1,112 $(2,491)$936 $13 
Net earnings279 1 
Other comprehensive loss(147)
Issuance of common stock and stock options exercised1.1 84 
Share repurchase program(0.4)(94)
Share-based compensation expenses45 
Dividends declared $0.79 per share
(132)
Balance as of October 1, 2022168.6 $1,241 $(2,638)$989 $14 

4


(In millions, except per share data)SharesCommon Stock and Additional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Retained
Earnings
Noncontrolling
Interests
Balance as of December 31, 2020170.2 $761 $(2,446)$1,127 $17 
Net earnings244 1 
Other comprehensive income36 
Issuance of common stock and stock options exercised1.4 44 
Share repurchase program(1.0)(170)
Share-based compensation expenses29 
Dividends declared $0.71 per share
(121)
Balance as of April 3, 2021170.6 $834 $(2,410)$1,080 $18 
Net earnings293 1 
Other comprehensive income22 
Issuance of common stock and stock options exercised0.2 14 
Share repurchase program(0.5)(102)
Share-based compensation expenses31 
Dividends declared $0.71 per share
(120)
Dividends paid to non-controlling interest on subsidiary common stock(5)
Balance as of July 3, 2021170.3 $879 $(2,388)$1,151 $14 
Net earnings307 1 
Other comprehensive loss(28)
Issuance of common stock and stock options exercised0.3 39 
Share repurchase program(0.6)(137)
Share-based compensation expenses34 
Dividends declared $0.71 per share
(120)
Balance as of October 2, 2021170.0 $952 $(2,416)$1,201 $15 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
5


Condensed Consolidated Statements of Cash Flows (Unaudited)
 Nine Months Ended
(In millions)October 1, 2022October 2, 2021
Operating
Net earnings$777 $848 
Adjustments to reconcile Net earnings to Net cash provided by operating activities:
Depreciation and amortization331 325 
Non-cash other charges (income)20 (6)
Loss on ESN fixed asset impairment147  
Share-based compensation expenses126 94 
Gain on sales of investments and businesses, net(3) 
Loss from the extinguishment of long-term debt6 18 
Changes in assets and liabilities, net of effects of acquisitions, dispositions, and foreign currency translation adjustments:
Accounts receivable5 189 
Inventories(360)(99)
Other current assets and contract assets(38)(136)
Accounts payable, accrued liabilities and contract liabilities(183)(39)
Other assets and liabilities(66)(62)
Deferred income taxes(212)2 
Net cash provided by operating activities550 1,134 
Investing
Acquisitions and investments, net(590)(360)
Proceeds from sales of investments and businesses, net38 4 
Capital expenditures(183)(175)
Proceeds from sales of property, plant and equipment 6 
Net cash used for investing activities(735)(525)
Financing
Net proceeds from issuance of debt595 844 
Repayments of debt(283)(351)
Revolving credit facility renewal fees (7)
Issuances of common stock137 99 
Purchases of common stock(749)(397)
Payments of dividends(398)(362)
Payments of dividends to non-controlling interests(6)(5)
Net cash used for financing activities(704)(179)
Effect of exchange rate changes on total cash and cash equivalents(163)(31)
Net increase (decrease) in total cash and cash equivalents(1,052)399 
Cash and cash equivalents, beginning of period1,874 1,254 
Cash and cash equivalents, end of period$822 $1,653 
Supplemental Cash Flow Information  
Cash paid during the period for:
Interest paid$157 $155 
Income and withholding taxes, net of refunds$270 $230 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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Notes to Condensed Consolidated Financial Statements (Unaudited)
(Dollars in millions, except as noted)
1.Basis of Presentation
The condensed consolidated financial statements as of October 1, 2022 and for the three and nine months ended October 1, 2022 and October 2, 2021 include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to state fairly the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Stockholders' Equity (Deficit), and Statements of Cash Flows of Motorola Solutions, Inc. (“Motorola Solutions” or the “Company”) for all periods presented.
The Company operates on a 52-week fiscal year, with each fiscal year ending on December 31. With respect to each fiscal quarter, the Company operates on a 13-week fiscal quarter, with all fiscal quarters ending on a Saturday.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States 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, 2021 (the "Form 10-K"). The results of operations for the three and nine months ended October 1, 2022 are not necessarily indicative of the operating results to be expected for the full year.
The preparation of financial statements 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.
Business Overview
The Company reports net sales in the following three major products and services (which the Company refers to as “technologies” in this Quarterly Report on Form 10-Q (this “Form 10-Q”)): Land Mobile Radio Communications (“LMR” or “LMR Communications”), Video Security and Access Control ("Video"), and Command Center Software.
LMR Communications: Infrastructure, devices (two-way radio and broadband, including both for public safety and Professional Commercial Radio ("PCR")) and software that enable communications, inclusive of installation and integration, backed by services, to assure availability, security and resiliency.
Video Security and Access Control: Cameras (fixed, body-worn, in-vehicle), access control, infrastructure, video management, software and artificial intelligence-enabled analytics that enable visibility “on scene” and bring attention to what’s important.
Command Center Software: Software suite that enables collaboration and seamless information sharing through the public safety workflow from "911 call to case closure."
Recent Acquisitions
Subsequent to quarter end, on October 25, 2022, the Company acquired Futurecom Systems Group, ULC ("Futurecom"), a leading provider of radio coverage extension solutions for public safety agencies, for $30 million, net of cash acquired. Futurecom designs and manufactures radio frequency repeaters. This acquisition further expands the Company's radio network and device portfolios. The business is a part the Products and Systems Integration segment.
On August 8, 2022, the Company acquired Barrett Communications Pty Ltd ("Barrett Communications"), a global provider of specialized radio communications, for $18 million, net of cash acquired. This acquisition complements the Company's existing radio portfolio, allowing the Company to use high frequency and very high frequency radio communications to support mission-critical operations. The business is a part of the Products and Systems Integration segment.
On May 12, 2022, the Company acquired Videotec S.p.A. ("Videotec"), a global provider of ruggedized video security solutions, for $23 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $4 million to certain key employees that will be expensed over a service period of one year. This acquisition extends the Company's breadth of high-performance video products, reinforcing the Company's strategy to be a global leader in video security solutions. The business is a part of the Products and Systems Integration segment.
On April 19, 2022, the Company acquired Calipsa, Inc. ("Calipsa"), a technology leader in cloud-native advanced video analytics, for $39 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $4 million to certain key employees that will be expensed over a service period of two years. This acquisition extends the Company's intelligent analytics across video security solutions and supports the accelerating trend of enterprises using cloud technologies to enhance safety and security. The business is a part of the Software and Services segment.
On March 23, 2022, the Company acquired TETRA Ireland Communications Limited ("TETRA Ireland"), the provider of Ireland's National Digital Radio Service, for $120 million, net of cash acquired. The Company was an initial shareholder of TETRA Ireland and acquired the remaining interest in the entity from the other shareholders. This acquisition expands the Company's portfolio of delivering mission-critical voice and data communications solutions to first responders and frontline workers. The business is part of the Software and Services segment.
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On March 3, 2022, the Company acquired Ava Security Limited ("Ava"), a global provider of cloud-native video security and analytics, for $388 million, net of cash acquired. In addition, the Company issued restricted stock and restricted stock units at a fair value of $7 million to certain key employees that will be expensed over an average service period of two years. This acquisition expands the Company's portfolio of intelligent video solutions that help to enhance safety and streamline operations. The business is a part of both the Products and Systems Integration segment and the Software and Services segment.
On December 16, 2021, the Company acquired 911 Datamaster, Inc. ("911 Datamaster"), a Next Generation 911 ("NG911") data solutions provider, for $35 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $3 million to certain key employees that will be expensed over a service period of two years. This acquisition reinforces the Company's strategy to be a leader in command center solutions and further supports 911 call centers’ unique organizational workflows as they transition to NG911 technologies. The business is a part of the Software and Services segment.
On October 29, 2021, the Company acquired Envysion, Inc. ("Envysion"), a leader in enterprise video security and business analytics, for $124 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $1 million to certain key employees that will be expensed over a service period of one year. This acquisition expands the Company's presence in the industry and reinforces the Company's strategy to be a global leader in end-to-end video security solutions within Video. The business is a part of both the Products and Systems Integration segment and the Software and Services segment.
On July 15, 2021, the Company acquired Openpath Security Inc. ("Openpath"), a cloud-based mobile access control provider for $298 million, net of cash acquired. In addition, the Company issued restricted stock at a fair value of $29 million to certain key employees that will be expensed over an average service period of three years. The transaction also includes the potential for the Company to make earn-out payments based on Openpath's achievement of certain financial targets from January 1, 2022 through December 31, 2022. This acquisition expands the Company's ability to combine video security and access control solutions within Video to help support enterprise customers. The business is a part of both the Products and Systems Integration segment and the Software and Services segment.
Recent Accounting Pronouncements
In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations,” which requires disclosures to enhance transparency about an entity’s use of supplier finance programs. The amendments require a buyer that uses supplier finance programs to disclose the program’s key terms, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period and a description of where in the financial statements outstanding amounts are presented. Only the amount outstanding at the end of the period must be disclosed in interim periods. The amendments are effective for all entities for fiscal years beginning after December 15, 2022 on a retrospective basis, including interim periods within those fiscal years, except for the requirement to disclose rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. Early adoption is permitted upon issuance of the update. The Company is continuing to evaluate the impact of the adoption of this ASU on its financial statements and disclosures.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) - Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity," which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments. The new guidance removes the separation models for convertible debt with a cash conversion feature or a beneficial conversion feature. In addition, the new standard requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The Company adopted ASU No. 2020-06 on January 1, 2022, using the modified retrospective method of adoption. As a result of the adoption of this ASU, the Company's $1 billion of 1.75% senior convertible notes due 2024 issued to Silver Lake Partners (the "Senior Convertible Notes") are accounted as a single liability measured at its amortized cost, given the embedded conversion feature does not require bifurcation and recognition as a derivative. Upon adoption of this ASU, amounts previously recognized in additional paid-in capital from the original embedded conversion feature of $10 million were reclassified to retained earnings. The Company uses the if-converted method as required under ASU No. 2020-06 to determine the dilutive effect of the convertible instrument. Refer to Note 4, "Other Financial Data" to our condensed consolidated financial statements included in this Part I, Item 1 of this Form 10-Q for the effect of the Senior Convertible Notes on diluted earnings per common share.
In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which requires companies to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a business combination in accordance with ASC Topic 606. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 results in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. The ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted this ASU as of January 1, 2022 on a prospective basis and the adoption of this standard did not have a material impact on the Company's financial statements and
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disclosures. The Company anticipates that this adoption will generally result in the Company recognizing larger contract liabilities in connection with business combinations.
In November 2021, the FASB issued ASU No. 2021-10, "Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance." This ASU requires disclosures to increase the transparency of transactions with a governmental entity accounted for by applying a grant or contribution accounting model by analogy, including disclosures around: (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The ASU was effective for the Company on January 1, 2022, including interim periods, with early adoption permitted. The Company adopted this ASU as of January 1, 2022 on a prospective basis, and the adoption of this standard did not have a material impact on the Company's financial statements and disclosures.

2.    Revenue from Contracts with Customers
Disaggregation of Revenue
The following table summarizes the disaggregation of the Company's revenue by segment, region, major products and services and customer type for the three and nine months ended October 1, 2022 and October 2, 2021, consistent with the information reviewed by the Company's chief operating decision maker for evaluating the financial performance of the Company's reportable segments:
Three Months Ended
October 1, 2022October 2, 2021
(In millions)Products and Systems IntegrationSoftware and ServicesTotalProducts and Systems IntegrationSoftware and ServicesTotal
Regions:
North America$1,166 $521 $1,687 $992 $457 $1,449 
International363 323 686 333 325 658 
$1,529 $844 $2,373 $1,325 $782 $2,107 
Major Products and Services:
LMR Communications$1,243 $569 $1,812 $1,111 $547 $1,658 
Video Security and Access Control286 133 419 214 102 316 
Command Center Software 142 142  133 133 
$1,529 $844 $2,373 $1,325 $782 $2,107 
Customer Types:
Direct$902 $769 $1,671 $838 $703 $1,541 
Indirect627 75 702 487 79 566 
$1,529 $844 $2,373 $1,325 $782 $2,107 
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Nine Months Ended
October 1, 2022October 2, 2021
(In millions)Products and Systems IntegrationSoftware and ServicesTotalProducts and Systems IntegrationSoftware and ServicesTotal
Regions:
North America$2,961 $1,514 $4,475 $2,603 $1,343 $3,946 
International957 973 1,930 935 970 1,905 
$3,918 $2,487 $6,405 $3,538 $2,313 $5,851 
Major Products and Services:
LMR Communications$3,190 $1,684 $4,874 $2,948 $1,642 $4,590 
Video Security and Access Control728 368 1,096 590 284 874 
Command Center Software 435 435  387 387 
$3,918 $2,487 $6,405 $3,538 $2,313 $5,851 
Customer Types:
Direct$2,271 $2,259 $4,530 $2,148 $2,099 $4,247 
Indirect1,647 228 1,875 1,390 214 1,604 
$3,918 $2,487 $6,405 $3,538 $2,313 $5,851 
Remaining Performance Obligations
Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations that are unsatisfied, or partially unsatisfied, as of the end of a period. The transaction values associated with remaining performance obligations which were not yet satisfied as of October 1, 2022 was $9.1 billion. A total of $4.8 billion was from Products and Systems Integration performance obligations that were not yet satisfied as of October 1, 2022, of which $2.9 billion is expected to be recognized in the next twelve months. The remaining amounts will generally be satisfied over time as systems are implemented. A total of $4.3 billion was from Software and Services performance obligations that were not yet satisfied as of October 1, 2022. The determination of Software and Services performance obligations that are not satisfied takes into account a contract term that may be limited by the customer’s ability to terminate for convenience. Where termination for convenience exists in the Company's service contracts, its disclosure of the remaining performance obligations that are unsatisfied assumes the contract term is limited until renewal. The Company expects to recognize $1.4 billion from unsatisfied Software and Services performance obligations over the next twelve months, with the remaining performance obligations to be recognized over time as services are performed and software is implemented.
Contract Balances
(In millions)October 1, 2022December 31, 2021
Accounts receivable, net$1,368 $1,386 
Contract assets1,033 1,105 
Contract liabilities1,549 1,650 
Non-current contract liabilities327 306 
Revenue recognized during the three months ended October 1, 2022 which was previously included in Contract liabilities as of July 2, 2022 was $437 million, compared to $472 million of revenue recognized during the three months ended October 2, 2021 which was previously included in Contract liabilities as of July 3, 2021. Revenue recognized during the nine months ended October 1, 2022 which was previously included in Contract liabilities as of December 31, 2021 was $939 million, compared to $946 million recognized during the nine months ended October 2, 2021 which was previously included in Contract liabilities as of December 31, 2020. The Company reversed $3 million of revenue during the three months ended October 1, 2022 related to performance obligations satisfied, or partially satisfied, in previous periods, compared to $2 million of reversals for the three months ended October 2, 2021, primarily driven by changes in the estimates of progress on system contracts. Revenue of $23 million was reversed during the nine months ended October 1, 2022 related to performance obligations satisfied or partially satisfied, in previous periods, primarily driven by changes in the estimates of progress on system contracts, compared to $15 million of reversals for the nine months ended October 2, 2021.
There were no material expected credit losses recorded on contract assets during each of the three and nine months ended October 1, 2022 and October 2, 2021.
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Contract Cost Balances
(In millions)October 1, 2022December 31, 2021
Current contract cost assets$52 $30 
Non-current contract cost assets120 124 
Amortization of non-current contract cost assets was $14 million and $41 million for the three and nine months ended October 1, 2022, respectively, and $12 million and $37 million for the three and nine months ended October 2, 2021, respectively.

3.    Leases
Components of Lease Expense
Three Months EndedNine Months Ended
(in millions)October 1, 2022October 2, 2021October 1, 2022October 2, 2021
Lease expense:
Operating lease cost$32 $34 $98 $101 
Finance lease cost
Amortization of right-of-use assets$1 $2 $