Adobe PDF 	Q4 2005 Motorola Inc. Earnings Conference Call Presentation
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Adobe PDF Q4 2005 Motorola Inc. Earnings Conference Call Presentation Presentation Transcript

  • 1. Motorola Q4 2005 Earnings Release Conference Call January 19, 2006 Slide - 1 Q4 2005 Earnings Release- January 19, 2006 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
  • 2. Ed Gams Corporate Vice President of Investor Relations Slide - 2 Q4 2005 Earnings Release- January 19, 2006 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
  • 3. Safe Harbor Statement A number of forward-looking statements will be made during this presentation. Forward-looking statements are any statements that are not historical facts. These forward-looking statements are based on the current expectations of Motorola and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties, Motorola’s actual results could differ materially from these statements. Information about factors that could cause, and in some cases have caused, such differences can be found on pages 70 through 80 of Motorola’s 2004 Annual Report on Form 10-K and in Motorola’s other SEC filings. This presentation is being made on the afternoon of January 19, 2006. The content of this presentation contains time-sensitive information that is accurate only as of the time hereof. If any portion of this presentation is rebroadcast, retransmitted or redistributed at a later date, Motorola will not be reviewing or updating the material that is contained herein. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006 Q4 Earnings Release- January 19, 2006 Slide -- 3 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 4. Ed Zander Chief Executive Officer Slide - 4 Q4 2005 Earnings Release- January 19, 2006 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
  • 5. The Big Bet …Seamless Mobility @home transition transition in out in the the auto world transition transition @work Q4 Earnings Release- January 19, 2006 Slide -- 5 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 6. David Devonshire Chief Financial Officer Slide - 6 Q4 2005 Earnings Release- January 19, 2006 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
  • 7. Motorola Inc. Financial Results Q4 Q4 Fav/ Q4 2005 2004 (Unfav) Sales ($M) $ 10,433 $ 8,842 18% Earnings Per Share * $ 0.47 $ 0.28 68% Annual Annual Fav/ ANNUAL 2005 2004 (Unfav) Sales ($M) $ 36,843 $ 31,323 18% Earnings Per Share * $ 1.82 $ 0.90 102% * From Continuing Operations Q4 Earnings Release- January 19, 2006 Slide -- 7 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 8. Significant Items Discussed in the Earnings Press Release Q4 2005 Reported EPS From Continuing Operations * $ 0.47 Includes: Collection Related to Telsim 0.13 Tax Adjustments 0.02 Loss on Sale of Investment (0.02) Charge For Past Use of Kodak Intellectual Property (0.01) $ 0.12 Q4 2004 Reported EPS From Continuing Operations * $ 0.28 Includes: Gains on Sales of Investments and Businesses 0.02 Reorganization of Businesses 0.01 Collection of Receivables That Had Been Previously Deemed Uncollectible (Telsim) 0.01 CMS Goodwill Impairment (0.02) In Process R&D Related to Acquisitions (Mesh and Crisnet) (0.01) $ 0.01 * See appendix for reconciliation Excluding Significant Items From Both Years, Our Growth in Earnings Per Share for Q4 is 30% Q4 Earnings Release- January 19, 2006 Slide -- 8 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 9. Motorola Sales Trend $ Billions 12 10.4 10 9.4 8.8 8.8 8.2 7.4 7.5 7.5 8 6.9 2003 5.9 6 5.2 5.1 2004 2005 4 2 0 Q1 Q2 Q3 Q4 For the Full Year, Sales Increased 18% ’05 vs. ‘04 Q4 Earnings Release- January 19, 2006 Slide -- 9 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 10. Revenue Per Employee $(000)’s $550 $534 $513 $500 $486 $472 $463 $450 $400 $350 $300 Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05 4 Quarter Rolling Average Q4 Earnings Release- January 19, 2006 Slide -- 10 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 11. Motorola Operating Earnings Trend % of Sales 20.0% 16.8% 15.0% 11.7% 11.5% 11.1% 10.6% 10.4% 2003 9.2% 8.6% 10.0% 2004 6.7% 2005 5.2% 5.0% 4.6% 5.0% 0.0% Q1 Q2 Q3 Q4 Excluding Significant Items, Q4’05 Operating Margin Was 12.5% vs. 11.8% in Q4’04 Q4 Earnings Release- January 19, 2006 Slide -- 11 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 12. Cash Flow and Debt Cash Flow Cash & Debt Year End Year End 2005 2004 ($ in Billions) Q4 2005 ($ in Billions) Operating Cash Flow $ 2.1 Cash/Equiv/Mkt Sec $ 14.8 $ 10.7 Short Term/ Current Debt $ (0.5) $ (0.7) Free Cash Flow $ 1.9 Long Term Debt $ (3.8) $ (4.6) Total Debt $ (4.3) $ (5.3) Net Cash/ (Net Debt) $ 10.5 $ 5.4 •Debt to Total Capital Now At 20.3% vs. 28.4% at 12/31/04 •$500M Received From Telsim Settlement, $410M Additional Anticipated in 2006 Q4 Earnings Release- January 19, 2006 Slide -- 12 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 13. Stock Repurchase Update • May 19, 2005 Authorized to Purchase $4B over 3 Years • In Q4 Purchased ~16M Shares, Average Price of $22.40 • Inception to Date Purchased 41.7M Shares, Cash Used ~ $870M Q4 Earnings Release- January 19, 2006 Slide -- 13 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 14. Q1 2006 Guidance Sales $9.3B-$9.5B Earnings Per Share $.27-.29 (excluding Stock Option Expense) Tax Rate 36% Shares Outstanding 2.56 Billion Stock Option Expense $.02 Per Share Q4 Earnings Release- January 19, 2006 Slide -- 14 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 15. Comments on 2006 • Stock Option Expense Estimated Annual Impact of $250M - $300M • Estimated Tax Rate is 36% • Additional Collection Related to Telsim Expected in the First Half • Further Improvement in Operating Margin Versus 2005, Continuing Progress to 13-15% Goal Q4 Earnings Release- January 19, 2006 Slide -- 15 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 16. Q4 Earnings Release- January 19, 2006 Slide -- 16 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 17. Mobile Devices Business Results All-time Motorola record for units! All-time record for Mobile Devices sales! All-time record for Mobile Devices operating earnings! … and we increased market-share again, driven by wickedly cool and compelling products and rich experiences! Q4 Earnings Release- January 19, 2006 Slide -- 17 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 18. Wickedly Cool Products RAZR is world’s best-selling clamshell handset Ultra-slim SLVR is redefining the “candy bar” Our “Thin Platform” is hot! … 12.9M units in Q4! UMTS units are up by 87% vs. Q3 Another record iDEN performance! GSMA award driving sales across price tiers in world’s High-Growth Markets 26 new launches: 13 GSM, 6 CDMA, 3 UMTS, 4 iDEN Q4 Earnings Release- January 19, 2006 Slide -- 18 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 19. Market Share Momentum 19% global share: the clear #2 and gaining! #1 in North America #1 in Latin American #2 in Europe #2 in North Asia #3 in High-Growth Markets Q4 Earnings Release- January 19, 2006 Slide -- 19 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 20. Q4 2005 Q4’05 vs. Q4’04 Sales $M $6,537 Up 30% Operating Earnings $M $663 Up 25% Operating Margin 10.1% * Down 0.5 pts Units 44.7M Up 40% Market Share Est. – Q4 19.0% Up 3.1 ppts Up 0.4 pts vs. Q3’05 * Excluding Significant Items, Q4 Operating Margin Was 11.0% vs. 10.2% in Q4’04 Q4 Earnings Release- January 19, 2006 Slide -- 20 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 21. 2005 2005 vs. 2004 Sales $M $21,455 Up 25% Operating Earnings $M $2,198 Up 27% Operating Margin 10.2% * Up 0.1 pt Units 146.0M Up 40% * Excluding Significant Items, 2005 Operating Margin Was 10.7% vs. 9.9% in 2004 Q4 Earnings Release- January 19, 2006 Slide -- 21 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 22. Q4 Earnings Release- January 19, 2006 Slide -- 22 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 23. • #1 at 3 of top 4 wireless operators! • Strong market-share leadership • Units up 8% vs. Q4’04 • Launched RAZR for EV-DO in Americas – ahead of plan • Focus: Drive new icons, expand CDMA, strengthen brand Source: Motorola, Inc. Shares are calculated on Q4 05 Unit Shipments, includes iDEN. Q4 Earnings Release- January 19, 2006 Slide -- 23 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 24. • #1 in Venezuela, Argentina and Brazil! • Market-share leadership • Units up 29% vs. Q4’04 • Delivered strength across price tiers – from C115 to RAZR • Focus: Grow brand and share across price tiers Source: Motorola, Inc. Shares are calculated on Q4 05 Unit Shipments, includes iDEN. Q4 Earnings Release- January 19, 2006 Slide -- 24 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 25. … and growing! • Best quarter ever for sales and units; RAZR is best-selling device in Europe • Market share up 5 ppts vs. Q4‘04 • Units up 60% vs. Q4‘04 • Launched V3x for UMTS networks across Europe • Focus: Build brand and share across price tiers Source: Motorola, Inc. Shares are calculated on Q4 05 Unit Shipments, includes iDEN. Q4 Earnings Release- January 19, 2006 Slide -- 25 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 26. • RAZR is a hit across region; A780 is #1 smartphone in China! • Market share up 4.7 ppts vs. Q4’04 • Units up 90% vs. Q4‘04 • Expanded distribution channels throughout China • Focus: Grow brand and share across price tiers Source: Motorola, Inc. Shares are calculated on Q4 05 Unit Shipments, includes iDEN. Q4 Earnings Release- January 19, 2006 Slide -- 26 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 27. • RAZR, SLVR and GSMA driving sales • Market share up more than 4 ppts vs. Q4‘04 • Units up 103% vs. Q4’04 • Expanded distribution channels throughout India • Focus: Growth and expansion through GSMA awards Source: Motorola, Inc. Shares are calculated on Q4 05 Unit Shipments, includes iDEN. Q4 Earnings Release- January 19, 2006 Slide -- 27 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 28. GSM, Edge, CDMA 1X, EV-DO, UMTS SILVER, BLACK, PINK, BLUE & GOLD Q4 Earnings Release- January 19, 2006 Slide -- 28 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 29. Q4 Earnings Release- January 19, 2006 Slide -- 29 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 30. “Connecting the unconnected” Q4 Earnings Release- January 19, 2006 Slide -- 30 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 31. Get more music – up to 500 mp3 tracks – even faster! Get your music in stereo! And go wireless – discreetly! Q4 Earnings Release- January 19, 2006 Slide -- 31 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 32. searching messaging imaging Q4 Earnings Release- January 19, 2006 Slide -- 32 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 33. The new standard for QWERTY Productivity: video, still images, voice, data, email and more – and all on Microsoft Windows Mobile 5.0 Only 11.5mm! Q4 Earnings Release- January 19, 2006 Slide -- 33 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 34. grow profitably with … wickedly compelling products … and rich experiences … with quality and efficiency. Q4 Earnings Release- January 19, 2006 Slide -- 34 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 35. on a year-over-year basis … • increased sales • increased units and market share • and continued Op Margin expansion and on a sequential basis … • less than normal seasonality Q4 Earnings Release- January 19, 2006 Slide -- 35 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 36. Government & Enterprise Mobility Solutions – Q4 Q4 2005 Q4'05 vs. Q4'04 Sales $M $ 1,816 Up 8% Operating Earnings $M $ 314 Up 41% 4.1 pts * Operating Margin 17.3% Up * Excluding Significant Items in Q4 2004 Operating Margin Improved 3.3 pts Q4 Earnings Release- January 19, 2006 Slide -- 36 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 37. Government Markets - Global Emphasis on Interoperability United States • State of Indiana • Fresno County (CA) • Laredo, Texas • Nassau County (FL) • Colorado Springs • Petersburg (VA) • Ann Arundel County (MD) Asia Pacific • Korea Government Radio Network - 140 agencies on single communications platform Europe • O2 Airwave Ambulance Fleet Q4 Earnings Release- January 19, 2006 Slide -- 37 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 38. Product Leadership & Innovation First Pocket PDA for TETRA • 1st PDA to Operate on TETRA Networks • Meets Rugged Public Safety Requirements • Delivers Mission Critical Data Applications to First Responders on the Move: - Individual Records - Vehicle Records - Crime Reports - Accident Reports Strong Mesh Momentum • 34 New Orders; 10 New Customers • Shipment of New 4.9 GHz MOTOMESH Multi-radio Broadband Network Q4 Earnings Release- January 19, 2006 Slide -- 38 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 39. Q4 – Enterprise & Automotive Activity Enterprise • Acquired Wireless Valley Communications - Leading Provider of Software Solutions for Effective Design & Management of Wireless Networks • HC700-L - First Entry Into the Commercial-off-the-Shelf, Rugged, Handheld Mobile Computing Market Automotive • More Than $1 billion in New Lifetime Sales Awards • Strong Sales in Automotive Aftermarket Accessories Q1 Guidance: Sales Up, Operating Earnings Up Versus Prior Year Q4 Earnings Release- January 19, 2006 Slide -- 39 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 40. A1 Networks Business Q4 Q4 2005 Q4’05/Q4’04 Sales $M 1,494 Down 4% Operating Earnings $M 225 Down 18% * Operating Margin 15.1% Down 2.7 pts * Excluding Significant Items in Q4 2004 Operating Margin Decrease was 2.3 pts Q4 Earnings Release- January 19, 2006 Slide -- 40 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 41. Q4’05 Networks – Other Developments – CDMA2000 EV-DO award from VIVO in Brazil – 4 New FTTP Awards - Bulloch Telephone, ComSouth, PBT Telecom and ATMC – VIBO in Taiwan UMTS Island-Wide Launch – Canopy Macedonia Nationwide Network Announced on January 16 – Earthlink Metro WiFi Canopy Agreement for Philadelphia, Anaheim, and Other Cities Announced Today Q1 Guidance: Sales and Operating Earnings Down Versus Prior Year Q4 Earnings Release- January 19, 2006 Slide -- 41 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 42. Connected Home – Q4 Q4 2005 Q4’05 vs. Q4’04 Sales $M $675 Up 1% Operating Earnings $M $60 Up 40% Operating Margin 8.9% Up 2.5 pts Q4 Earnings Release- January 19, 2006 Slide -- 42 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 43. Connected Home – Q4 Highlights • Shipped ~ 1.4M Set-Tops, Including ~ 700K HD/DVR Enabled • Chile’s Largest Operator, VTR, Selected Motorola Digital Video Platform • Began Shipping QIP Set-Tops – First With Built-in Home Media Networking • Verizon Expands FiOS TV Deployments in Markets in Texas, Virginia, and Florida Using Motorola Digital Video Technology • Expanded IP Voice Portfolio - Announced Plans for a Joint Development Collaboration with Juniper Networks - Acquired Advanced RF Technology from Broadband Innovations -Shipped ~500K Voice Modems • In January, Announced Acquisition of Kreatel to Expand IP Video Position Q1 Guidance: Sales Flat and Operating Earnings Up Guidance For Q4 Year Versus Prior - ????? Q4 Earnings Release- January 19, 2006 Slide -- 43 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 44. 2006 Priorities “WOW” Products/End-to End Solutions Strengthen Financial Performance Customer “Delight” Market Share/Thought Leadership Supply Chain Efficiency Refine and Execute On Strategic Direction Q4 Earnings Release- January 19, 2006 Slide -- 44 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 45. Motorola Q&A Participants David Devonshire Ed Zander Chief Financial Officer Chief Executive Officer Greg Brown Ron Garriques President, Government & Enterprise President, Mobile Devices Business Mobility Solutions Dan Moloney Ed Gams Vice President, Investor Relations President, Connected Home Q4 Earnings Release- January 19, 2006 Slide -- 45 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 46. Use of Non-GAAP Measurements In addition to the GAAP results provided during this conference call, Motorola has presented certain non-GAAP measurements. Motorola has provided these non-GAAP measurements as a measure to help investors better understand its core operating performance, enhance comparisons of Motorola’s core operating performance from period to period and to allow better comparisons of Motorola’s operating performance to that of its competitors. Among other things, the Company’s management uses these operating results, excluding the identified items, to evaluate the performance of its businesses and to evaluate results relative to incentive compensation targets. Management uses operating results excluding these items because they believe this measure enables them to make better period-to-period evaluations of the financial performance of its core business operations. There are inherent limitations in the use of operating results excluding these items because the company's GAAP results do include the impact of these items. The non-GAAP measures are intended only as a supplement to the comparable GAAP measures and the company compensates for the limitations inherent in the use of non-GAAP measures by using GAAP measures in conjunction with the non- GAAP measures. As a result, investors should consider these non-GAAP measures in addition to, and not in substitution for, or as superior to, measures of financial performance prepared in accordance with GAAP. Details of the these items and reconciliations of the non-GAAP measurements provided during this call to GAAP measurements can be found: (i) in the Form 8-K filed by Motorola on January 19, 2006 (which attached this afternoon’s earnings press release), (ii) within the text of the slides that accompany this webcast, or (iii) on the company’s website. Each of these items can be found on Motorola’s website at www.motorola.com/investor. Q4 Earnings Release- January 19, 2006 Slide -- 46 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 47. Significant Items Discussed- Quarter Q4 2005 Q4 2005 PBT Q4 2005 Tax Q4 2005 PAT (Inc)/Exp Inc/(Exp) (Inc)/Exp EPS impact Collection related to Telsim $ (504) $ (181) $ (323) $ 0.13 Loss on sale of investment 77 29 48 (0.02) Charge for past use of Kodak IP 57 22 35 (0.01) Tax adjustments - 68 (68) 0.02 TOTAL IMPACT $ (370) $ (62) $ (308) $ 0.12 Q4 2004 Q4 2004 PBT Q4 2004 Tax Q4 2004 PAT (Inc)/Exp Inc/(Exp) (Inc)/Exp EPS impact Gains on sales of investments and businesses (93) (36) (57) 0.02 Reorganization of business (28) (10) (18) 0.01 Collection of receivables that had been previosuly deemed uncollectible (Telsim) (23) (9) (14) 0.01 CMS Goodwill Impairment $ 58 $ - $ 58 $ (0.02) IPR&D charges related to acquisitions (Mesh and Crisnet) 17 - 17 (0.01) TOTAL IMPACT $ (69) $ (54) $ (15) $ 0.01 Q4 Earnings Release- January 19, 2006 Slide -- 47 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 48. OE Reconciliation of Significant Items- Quarter Q4 2005 Net Sales $ 10,433 Operating earnings $ 1,749 Operating earnings as a percentage of net sales 16.8% Operating earnings $ 1,749 Less: Significant items discussed (447) Operating earnings excluding significant items discussed $ 1,302 Operating earnings as a percentage of net sales 12.5% Q4 2004 Net Sales $ 8,842 Operating earnings $ 1,018 Operating earnings as a percentage of net sales 11.5% Operating earnings $ 1,018 Less: Significant items discussed 24 Operating earnings excluding significant items discussed $ 1,042 Operating earnings as a percentage of net sales 11.8% Q4 Earnings Release- January 19, 2006 Slide -- 48 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 49. OE Reconciliation By Segment of Significant Items From Continuing Operations-Quarter Q4 2005 TOTAL Mobile Devices Networks GEMS Conn.Home Other/Elims Net Sales $ 10,433 $ 6,537 $ 1,494 $ 1,816 $ 675 $ (89) Operating earnings 1,749 663 225 314 60 487 Operating earnings as a percentage of net sales 16.8% 10.1% 15.1% 17.3% 8.9% -547.2% Operating earnings 1,749 663 225 314 60 487 Less: Significant items discussed (447) 57 0 0 0 (504) Operating earnings excluding significant items discussed $ 1,302 $ 720 $ 225 $ 314 $ 60 $ (17) Operating earnings as a percentage of net sales 12.5% 11.0% 15.1% 17.3% 8.9% 19.1% Q4 2004 TOTAL Mobile Devices Networks GEMS Conn.Home Other/Elims Net Sales $ 8,842 $ 5,017 $ 1,549 $ 1,676 $ 669 $ (69) Operating earnings 1,018 532 275 222 43 (54) Operating earnings as a percentage of net sales 11.5% 10.6% 17.8% 13.2% 6.4% 78.3% Operating earnings 1,018 532 275 222 43 (54) Less: Significant items discussed 24 (18) (6) 13 0 35 Operating earnings excluding significant items discussed $ 1,042 $ 514 $ 269 $ 235 $ 43 $ (19) Operating earnings as a percentage of net sales 11.8% 10.2% 17.4% 14.0% 6.4% 27.5% Q4 Earnings Release- January 19, 2006 Slide -- 49 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 50. Significant Items Discussed- Annual 2005 YTD 2005 PBT 2005 Tax 2005 PAT (Inc)/Exp Inc/(Exp) (Inc)/Exp Reorganization of Business $ 116 $ 29 $ 87 Collection related to Telsim (504) (181) (323) Charge for past use of Kodak IP 57 22 35 Gains on sales of investments and businesses (1,803) (676) (1,127) Sprint/Nextel derivative (52) (19) (33) Debt retirement Costs 137 52 85 Other - Repayment of previously-reserved loan (Iridium) (30) (11) (19) Tax adjustments - 443 (443) TOTAL IMPACT $ (2,079) $ (342) $ (1,738) 2004 YTD 2004 PBT 2004 Tax 2004 PAT (Inc)/Exp Inc/(Exp) (Inc)/Exp Reorganization of Business $ (6) $ (1) $ (5) Collection of receivables that had been previously deemed uncollectible (Telsim) (44) (17) (27) IPR&D charges related to acquisitions 32 - 32 Goodwill impairment (CMS) 125 - 125 Gains on sales of investments and businesses (418) (160) (258) Reversal of reserves relating to the previous sale of a business (CPD) (20) (8) (12) Partial recovery of a previously impaired investment (Callahan) (20) (8) (12) Charges related to debt retirement and cancellation of interest rate swaps 81 31 50 Tax adjustments - (236) 236 TOTAL IMPACT $ (272) $ (399) $ 127 Q4 Earnings Release- January 19, 2006 Slide -- 50 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 51. OE Reconciliation of Significant Items- Annual 2005 YTD Net Sales $ 36,843 Operating earnings 4,696 Operating earnings as a percentage of net sales 12.7% Operating earnings 4,696 Less: Significant items discussed (331) Operating earnings excluding significant items discussed $ 4,365 Operating earnings as a percentage of net sales 11.8% 2004 YTD Net Sales $ 31,323 Operating earnings 3,132 Operating earnings as a percentage of net sales 10.0% Operating earnings 3,132 Less: Significant items discussed 106 Operating earnings excluding significant items discussed $ 3,238 Operating earnings as a percentage of net sales 10.3% Q4 Earnings Release- January 19, 2006 Slide -- 51 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 52. OE Reconciliation By Segment of Significant Items From Continuing Operations-Annual 2005 YTD TOTAL Mobile Devices Networks GEMS Conn.Home Other/Elims Net Sales $ 36,843 $ 21,455 $ 6,332 $ 6,597 $ 2,765 $ (306) Operating earnings 4,696 2,198 990 882 185 441 Operating earnings as a percentage of net sales 12.7% 10.2% 15.6% 13.4% 6.7% -144.1% Operating earnings 4,696 2,198 990 882 185 441 Less: Significant items discussed (331) 88 3 67 4 (493) Operating earnings excluding significant items discussed $ 4,365 $ 2,286 $ 993 $ 949 $ 189 $ (52) Operating earnings as a percentage of net sales 11.8% 10.7% 15.7% 14.4% 6.8% 17.0% 2004 YTD TOTAL Mobile Devices Networks GEMS Conn.Home Other/Elims Net Sales $ 31,323 $ 17,108 $ 6,026 $ 6,228 $ 2,214 $ (253) Operating earnings 3,132 1,728 718 842 146 (302) Operating earnings as a percentage of net sales 10.0% 10.1% 11.9% 13.5% 6.6% 119.4% Operating earnings 3,132 1,728 718 842 146 (302) Less: Significant items discussed 106 (26) 15 26 (4) 95 Operating earnings excluding significant items discussed $ 3,238 $ 1,702 $ 733 $ 868 $ 142 $ (207) Operating earnings as a percentage of net sales 10.3% 9.9% 12.2% 13.9% 6.4% 81.8% Q4 Earnings Release- January 19, 2006 Slide -- 52 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 53. Reconciliation of Revenue Per Headcount 2003 2004 Q1 '05 Q2 '05 Q3 '05 Q4 '05 Headcount 65,639 67,641 67,952 68,568 68,777 68,971 Rolling 12 Months of Sales 23,155 31,323 32,043 33,326 35,252 36,842 *Revenue / HC (In 000's) 353 463 472 486 513 534 * Revenue Per Head = Rolling 12 Months of Sales / Qtr Ending Headcount Q4 Earnings Release- January 19, 2006 Slide -- 53 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
  • 54. Safe Harbor Statement During this call we have made a number of forward-looking statements. Forward-looking statements are any statements that are not historical facts. These forward-looking statements are based on the current expectations of Motorola and there can be no assurance that such expectations will prove to be correct. Such forward-looking statements include, but are not limited to, our comments and answers relating to the following topics: (1) guidance for Motorola’s sales and earnings per share for the first quarter of 2006; (2) Motorola’s expected effective tax rate and shares outstanding in the first quarter of 2006; (3) expectations regarding the volume and impact of our stock repurchase program; (4) Motorola’s expected stock option expense in 2006; (5) expected gains from the sale of investments in 2006; (6) future sales, profitability, operating earnings, operating margin and market share for each of Motorola’s segments; (7) expectations for Motorola’s future operating margin and various factors in its improvement, (8) expected timing for the announcement, launch and shipment of new products; (9) the sales impact and pricing of new products; and (10) the size of the worldwide handset and infrastructure markets in 2006. Because forward-looking statements involve risks and uncertainties, Motorola’s actual results could differ materially from those stated in the forward looking statements. Information about factors that could cause such differences can be found in this afternoon's press release, on pages 70 through 80 of Motorola’s 2004 Annual Report on Form 10-K and in Motorola’s other SEC filings. This presentation is being made on the afternoon of January 19, 2006. The content of this presentation contains time-sensitive information that is accurate only as of the time hereof. If any portion of this presentation is rebroadcast, retransmitted or redistributed at a later date, Motorola will not be reviewing or updating the material that is contained herein. MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. © Motorola, Inc. 2006 Q4 Earnings Release- January 19, 2006 Slide -- 54 MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.