Motorola Reports Third-Quarter Results

SCHAUMBURG, Ill.--(BUSINESS WIRE)--Oct. 9, 2001--Motorola (NYSE:MOT - news):
Highl...
Total Consolidated Results
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    Excluding pro forma adjustments, a comparison of results from
op...
company also introduced three new CDMA 1X handsets for Korea, and it received acceptance for
the entry-level Talkabout 182...
Broadband Communications Segment
Segment sales and orders decreased 31 percent to $637 million and $647 million, respectiv...
Motorola's Energy Systems Group announced a strategic alliance with TTP Communications plc
(TTPCom), a supplier of technol...
proactive portfolio management. As the marketplace can see, we are fulfilling our key objectives
for divestitures, which a...
MOTOROLA and the Stylized M Logo are registered in the U.S. Patent & Trademark Office. All
other product or service names ...
Motorola, Inc. and Subsidiaries
                      Consolidated Statements of Operations
                     (In milli...
For the Quarter September 30, 2000
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Motorola, Inc. and Subsidiaries
                      Consolidated Statements of Operations
                     (In milli...
For the Nine Months Ended September 30, 2000
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Motorola, Inc. and Subsidiaries
                    Condensed Consolidated Balance Sheets
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Motorola, Inc. and Subsidiaries
                          Segment Information
                             (In millions)

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Motorola, Inc. and Subsidiaries
                          Segment Information
                             (In millions)

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For the Quarter Ended September 30, 2000
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Motorola, Inc. and Subsidiaries
                          Segment Information
                             (In millions)

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Motorola, Inc. and Subsidiaries
                          Segment Information
                             (In millions)

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For the Nine Months Ended September 30, 2000
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Q3 2001 Earnings Release

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Q3 2001 Earnings Release

  1. 1. Motorola Reports Third-Quarter Results SCHAUMBURG, Ill.--(BUSINESS WIRE)--Oct. 9, 2001--Motorola (NYSE:MOT - news): Highlights included: -Reduction in sequential pro forma loss versus second quarter; -Return to profitability in wireless handsets and continuing gain in market share versus last year; -Reduction of net debt by $2.4 billion from second quarter; -Positive operating cash flow; and, -Incurred as reported net charge of $2.0 billion, which does not adversely impact cash. Motorola, Inc. (NYSE:MOT - news) today reported sales of $7.4 billion in the third quarter of 2001. This is a decrease of 22 percent from $9.5 billion a year earlier. Including pro forma adjustments, the company incurred a loss of $153 million, or (7) cents per share, compared with earnings of $643 million, or 28 cents per share a year ago. Robert L. Growney, president and chief operating officer, said, ``We are pleased to report that our wireless handset business returned to profitability and again reported higher market share compared to last year. In total, Motorola made important progress in sequentially reducing its pro forma operating loss, although we won't be satisfied until we return to solid and growing profitability throughout our portfolio of businesses. We also reduced Motorola's net debt by an additional $2.4 billion and generated positive operating cash flow of approximately $200 million during the third quarter, thus further strengthening our balance sheet. We will continue to be focused on efforts to control operating expenses and to maintain the health of our balance sheet during this period of uncertainty.'' In the third quarter of 2001, Motorola reported pro forma adjustments resulting in a net charge of $2.0 billion pre-tax, or (57) cents per share after-tax. Charges were incurred primarily for investment impairments, cost-reduction activities and approximately $1.3 billion in additional reserves that relate to a defaulted $2 billion financing to Telsim, a cellular operator in Turkey. These charges were partially offset by a gain from the sale of a business. In the third quarter of 2000, Motorola reported pro forma adjustments resulting in a net charge of $144 million pretax, or 5 cents per share after tax. Excluding pro forma adjustments, the third-quarter 2001 loss was $1.4 billion, or (64) cents per share, compared with earnings of $531 million, or 23 cents per share, in the third quarter of 2000. -0- Consolidated Results for Ongoing Operations, Including Pro Forma Adjustments -------------------------------------------- Including pro forma adjustments, a comparison of results from ongoing operations is as follows: (Dollars in millions, except per-share amounts) Third Quarter Nine Months ------------- ----------- 2001 2000 2001 2000 ---- ---- ---- ---- Sales $7,406 $9,493 $22,680 $27,500 Net Earnings (Loss) $(153) $643 $(591) $1,675 Earnings (Loss) Per Share $(.07) $.28 $(.27) $.74 Net Margin on Sales -2.1% 6.8% -2.6% 6.1%
  2. 2. Total Consolidated Results -------------------------- Excluding pro forma adjustments, a comparison of results from operations is as follows: (Dollars in millions, except per-share amounts) Third Quarter Nine Months ------------- ----------- 2001 2000 2001 2000 ---- ---- ---- ---- Sales $7,406 $9,493 $22,680 $27,516 Net Earnings (Loss) $(1,408) $531 $(2,700) $1,183 Earnings (Loss) Per Share $(.64) $.23 $(1.23) $.52 Net Margin on Sales -19.0% 5.6% -11.9% 4.3% The impact of pro forma adjustments (as defined in a footnote to this press release) on segment results is shown in the segment information tables at the end of this press release. Growney reviewed the following results of major operations for the third quarter of 2001 compared with the third quarter of 2000. This review is based on operations, including pro forma adjustments. Personal Communications Segment Segment sales were $2.7 billion, down 16 percent. Orders were $3.0 billion, down 12 percent. The segment's market share for wireless handsets increased by approximately two percentage points versus a year ago to between 17 and 18 percent. The segment recorded operating earnings of $19 million versus operating earnings of $189 million a year ago. The decline in financial performance compared to a year ago was due to lower worldwide demand for wireless handsets by service providers. On a sequential basis versus the second quarter, financial performance improved. Sales increased 8 percent and orders increased 3 percent. This is the third consecutive quarter in which orders have exceeded sales, reflecting the market's strong reception to the segment's new product portfolio. The segment returned to profitability following two quarters of losses and increased its market share slightly. During the quarter, Motorola continued to strengthen its market position in 2.5 Generation (2.5G) General Packet Radio Service (GPRS) by delivering its second generation of GPRS wireless handsets that operate on Global System for Mobile (GSM) communication systems. Motorola shipped an estimated 1.5 million GPRS wireless handsets in the third quarter and expects to ship five million GPRS units by year-end 2001. Industry experts continue to report that only Motorola has a complete portfolio of commercially available GPRS solutions, which offer the potential to increase average revenue per unit for service providers. These include the Motorola Accompli(TM) 008, which blends voice, ``always- on'' Internet access and personal organizer functionality; the Motorola V.series(TM) 60, 66 and 100, a blend of style and technology for consumers; the Motorola Timeport(TM) 280, which provides increased productivity for business users on the go; and the Motorola Talkabout(TM) 193 for cost-conscious, entry-level consumers. Motorola shipped a variety of its second-generation GPRS handsets to Europe and announced the availability of the first two GPRS wireless handsets in North America. In Asia, Motorola continues to lead in the delivery of GPRS by shipping two new GPRS products in the region. In Code Division Multiple Access (CDMA) handsets, Motorola continues to win customer approvals for the V.series 120c and 60c and for the Timeport 270c, which are shipping in volume. These products feature Motorola's new, simple to navigate, next-generation user interface. The
  3. 3. company also introduced three new CDMA 1X handsets for Korea, and it received acceptance for the entry-level Talkabout 182 from several operators in Latin America. In Time Division Multiple Access (TDMA) handsets, Motorola has won numerous customer approvals for the V.series 60t, including customers in Mexico and Brazil. U.S. customers also have begun field trials of the product. The company also made a number of iDEN® technology announcements. Motorola shipped the i55sr handset for use in harsh environments, the first handset of its kind in North America with Java(TM) technology. This is also the third handset from Motorola with Java 2 Platform, Micro Edition (J2ME(TM)) technology, allowing users to customize the phone with software applications to fit their business and personal lifestyles. Motorola also introduced the iBoard(TM), the first portable, full-sized keyboard for wireless handsets which provides users with the ability to compose e-mail messages and enter date book appointments. The iBoard leverages and extends the mobile computing power of Motorola's i85s, i50sx and i55sr Internet-ready wireless handsets. Global Telecom Solutions Segment Segment sales were $1.8 billion, down 10 percent. Orders declined 13 percent to $1.6 billion. Operating earnings declined to $33 million, compared with $247 million a year ago. Operating earnings declined due to a decrease in sales stemming from lower worldwide demand for wireless infrastructure equipment by service providers and an increase in manufacturing costs. During the quarter, Motorola was awarded a CDMA2000 1X digital wireless infrastructure contract with Telekom Malaysia, signed six GSM communications expansion contracts with China Unicom and announced the launch of a nationwide GPRS network for LibanCell in Lebanon. After the quarter ended, Motorola announced it had won two CDMA 1X infrastructure contracts, including one in the Ukraine and a CDMA network expansion with Horizon PCS in six states in the U.S. The contract with Horizon PCS includes upgrades and expansion of the operator's current system to provide 3G CDMA 1X voice and data services capability. Motorola also won India's single largest contract for a new GSM system for Bharat Sanchar Nigam, Ltd.; a new GSM network contract including GPRS services for Bharti Enterprises in India; a GSM network contract with Telekom Cellular Sdn. Bhd. in Malaysia; and, a GPRS expansion contract with China Mobile. Motorola and Nextel announced new enhancements to the iDEN wireless network technology which are expected to lead to a doubling of wireless voice capacity. These enhancements are expected to become available in 2003. Commercial, Government and Industrial Systems Segment Segment sales declined 10 percent to $1.0 billion and orders decreased 17 percent to $1.0 billion. Operating earnings decreased to $87 million from $120 million a year ago due largely to the decline in sales. In the third quarter, Motorola received equipment orders from customers in Australia, China, Germany, Italy, Korea, Malaysia, Mexico, the Netherlands, Spain, the U.K. and the U.S. Motorola was awarded a contract from Burlington County, N.J. for an integrated digital two-way radio communications system that will be used by public-safety and other county agencies. In addition, the City of Phoenix agreed to expand its Project 25-compliant infrastructure project, which enables seamless radio communications within the Phoenix/Mesa area. Project 25 is the U.S. standard for digital public-safety radio communications. Motorola successfully completed a wireless wideband data trial in Pinellas County, Fla. The technology, which represents the next generation of public-safety communications, is many times faster than the current U.S. public-safety standard and enables simultaneous live wireless mobile video, voice and high-speed Intranet/Internet data transmission on one system. At the end of the quarter, Motorola completed the sale of this segment's defense and government electronics business to General Dynamics for $825 million in cash.
  4. 4. Broadband Communications Segment Segment sales and orders decreased 31 percent to $637 million and $647 million, respectively. These declines resulted from a slow down by cable operators in making capital investments and deploying subscriber equipment. Operating earnings decreased to $120 million compared with $160 million a year ago as a result of the decline in sales. Operating earnings as a percent of sales increased due to continued cost reductions, a strong mix of North American digital cable sales and focused overhead cost management. Shortly after the quarter ended, Callahan Associates International awarded Motorola a second network upgrade in Baden-Wurttemburg, Germany. Under the agreement, Motorola will supply network infrastructure electronics, Voice over IP (VoIP) consumer premise equipment and cable modem termination system technology. This will enable Callahan to offer advanced interactive broadband video, voice and data services to potentially more than 7.4 million homes in Germany. Semiconductor Products Segment Segment sales decreased 48 percent to $1.1 billion and orders declined 49 percent to $1.1 billion. The segment had an operating loss of $355 million versus operating earnings of $202 million a year ago, due to the decline in sales, as the worldwide semiconductor industry continued to experience its sharpest decline in history. On a sequential basis versus the second quarter, this segment's sales declined 14 percent, however, its operating loss remained flat as the result of major cost-reduction efforts over the past several quarters. Orders increased sequentially and the level of orders slightly exceeded the level of sales for the first time since the third quarter of 2000. Motorola announced plans to offer complete, embedded wireless 2.5G and 3G semiconductor and software solutions to handset manufacturers and designers worldwide. The company also introduced its first 2.5G platform for the merchant market, the 2.5G Innovative Convergence(TM) i.250. Motorola also announced that Cisco Systems, Inc. had selected its newest member of the G4 PowerPC(TM) microprocessor family for use in several of Cisco's high-end routers. Applications for this microprocessor family include networking, telecom, high-end embedded systems, scientific computing and desktop computing. Motorola said it will join with Delphi Automotive Systems to develop next-generation powertrain control systems based on the e500 core architecture. The company also announced an alliance with Palm, Inc. to provide Palm OS® licensees with the next-generation DragonBall(TM) microprocessors, the DragonBall MX family, that will be based on ARM® technology. Motorola's DragonBall processors currently power more than 75 percent of the world's personal digital assistants according to a leading market research group. Integrated Electronic Systems Segment Segment sales and orders decreased 30 percent to $513 million and $545 million, respectively. The segment incurred an operating loss of $14 million versus operating earnings of $47 million a year ago due to the decline in sales, especially a decline in sales of higher margin products. During the quarter, Motorola's Automotive Communications and Electronic Systems Group announced several new contracts with major automakers. BMW and Motorola signed an agreement that is estimated to be worth several hundred million dollars over several years to develop telematics solutions for the U.S., German and Japanese markets. Audi AG awarded Motorola a strategic, worldwide, six-year contract to provide it with the latest integrated information and entertainment solutions. Motorola also announced that it will provide telematics vehicle communications systems on Ford's 2002 Lincoln automobiles. Motorola Computer Group unveiled plans for a Multi-Service Packet Transport Platform, which is based on newly ratified industry standards, and creates a multi-service architecture with performance that surpasses the industry in high availability, speed and bandwidth.
  5. 5. Motorola's Energy Systems Group announced a strategic alliance with TTP Communications plc (TTPCom), a supplier of technology for the wireless communications industry, to provide equipment manufacturers with an optimized energy system for TTPCom turnkey designs. Other The quarter's pro forma adjustments are principally comprised of a non-cash $1.3 billion charge to increase Motorola's reserve relating to $2.0 billion in financing to Telsim, a GSM operator in Turkey, which is currently in default. Thus far Telsim has been largely uncooperative in restructuring the loan or in entering into a transaction with third-party investors to either sell, or bring new equity into, the company. With this additional reserve, the net amount of the receivable from Telsim on Motorola's books is now $530 million. Regardless of the reserves already taken, Motorola intends to continue to pursue a collaborative solution with Telsim or, if need be, to pursue all remedies to address Telsim's breach of contract and collect the $2 billion Telsim owes to Motorola. The company also had a non-cash charge of approximately $850 million relating to impairments in Motorola's investment portfolio, comprised of interests in other technology companies; and a charge of approximately $220 million relating to cost-reduction activities. These charges were partially offset by a gain of approximately $525 million realized from the sale for cash of the Integrated Information Systems Group to General Dynamics. Motorola announced that Motorola Labs had scored a technological break-through that had eluded the semiconductor industry for 30 years by successfully developing compound semiconductors such as gallium arsenide on silicon wafers. This discovery has the potential to open the doors to producing smarter and even more exciting, less expensive new electronic products. Review and Outlook Christopher B. Galvin, chairman and chief executive officer, said, ``A little more than a year ago, the Motorola management team sensed the beginning of the economic downturn, especially in the telecommunications and semiconductor industries. Some aspects of our business model remain predictors of the overall global economic trends. From that point, we have been reducing costs, focusing on operational cash flow and strengthening our balance sheet, while at the same time maintaining our sizeable investments in research and product development. ``Until the unexpected and horrific atrocities of September 11th, our predictive indicators seemed to indicate that the world would most probably return to more positive economic growth in the first or second quarter of 2002. These events make near-term forecasting more challenging. Overall though, we believe the unpredictability of future military and other responses associated with a global war on terrorism will be offset by the positive near-term stimulus of tax relief, interest rate reduction and a massive infusion of liquidity by government authorities. Nonetheless, calling the specific timing of a broad economic turnaround is difficult. Because of this uncertainty, Motorola will continue to be very prudent in managing the costs associated with doing business and in the utilization of its assets. We are controlling the things we can control. ``There are numerous examples of what we can control. Our new portfolio of wireless handsets is being very well received by both service providers and consumers. We continue to recapture wireless handset market share versus last year and have returned to profitability in that business segment. Motorola is the leader in broadband technology including Voice over IP, and we are well positioned for market leadership in an industry with a bright future. Additionally, Motorola is the industry leader in two-way radio technology, a technology that continues to serve the police, fire and rescue operations on the city, state and federal levels. ``In addition, we continue to identify the strategic businesses we must be in to succeed. This includes the purchase of new companies that complement our portfolio and divestiture of businesses better served outside Motorola's current and future business portfolio. This quarter, the sale of our government electronics business to General Dynamics, the purchase of Blue Wave Systems and the pending purchase of River Delta Networks, Inc. are examples of this
  6. 6. proactive portfolio management. As the marketplace can see, we are fulfilling our key objectives for divestitures, which are to seek the highest value for Motorola shareholders and to find buyers with whom our employees will have the potential to prosper going forward. ``Last week, I selected Ed Breen, currently president of Motorola's Network Sector, to join me in the Office of the Chairman as president and chief operating officer on January 1, 2002, succeeding Bob Growney. Bob, Motorola's president and COO since 1997, a friend and partner in the Office of the Chairman, is retiring on March 31, 2002 after 36 contribution-filled years. I look forward to working with Ed and words cannot express my heart-felt appreciation to Bob for his tireless work on behalf of Motorola over all these years and throughout this senior management transition. ``Recently, the world was reminded of the extraordinary communications benefits that wireless handsets, pagers and public safety two-way radios bring to our society. When you couple the ongoing future of these systems and products with Motorola's ability to bridge the broadband gap in the last mile, make the networked car possible, offer important invention in semiconductor materials and in embedded systems, Motorola is positioned for a very bright long-term future. The entire Motorola team is dedicated to the goal of building Motorola into the leader in these key industries. We are also dedicated to enhancing the confidence of our customers, the marketplace, and our shareholders in Motorola. We are prepared to succeed in the tough times and flourish when economic growth returns.'' Note: Pro Forma adjustments include unusual charges, amortization of goodwill, investment and asset impairments, and gains (losses) on sales of investments and businesses. The use of the word ``significant'' in this press release indicates a change of greater than 25 percent. The use of the words ``very significant'' indicates a change of greater than 50 percent. Business Risks: Statements in this press release that are not historical facts are forward-looking statements based on current expectations that involve risks and uncertainties. Such forward-looking statements include, but are not limited to, statements about: expected shipments of 3G wireless handsets; the timing and impact of enhancements to the iDEN network; the value of contracts to supply 3G and telematics products; the commercial availability and performance of new products; the recoverability of amounts due under the loan to Telsim; the completion of pending transactions; as well as, the statements in ``Review and Outlook''. Motorola wishes to caution the reader that the factors below and those on pages F-29 through F-33 of the appendix to Motorola's Proxy Statement for the 2001 annual meeting of stockholders and in its other SEC filings could cause Motorola's actual results to differ materially from those stated in the forward-looking statements. These factors include: (i) the impact of the slowdown in the overall economy and the uncertainty of current economic conditions; (ii) the impact of ongoing tax relief, interest rate reduction and liquidity infusion efforts to stimulate the economy; (iii) the duration and severity of the difficulties experienced by the telecommunications and semiconductor industries; (iv) the success of Motorola's cost-reduction efforts; (v) Motorola's continuing ability to access the capital markets on favorable terms; (vi) demand for Motorola's products, including products related to new technologies; (vii) Motorola's ability to increase profitability in its wireless handset business; (viii) a reversal of the sharp decline in the worldwide semiconductor industry; (ix) Motorola's success in the emerging 3G market; (x) the demand for vendor financing and Motorola's ability to provide that financing in order to remain competitive; (xi) the outcome of ongoing efforts to obtain repayment of Motorola's defaulted loan to Telsim; (xii) unexpected liabilities or expenses, including unfavorable outcomes to any currently pending or future litigation, including any relating to the Iridium project; (xiii) the success of alliances and agreements with other companies to develop new products and services; (xiv) difficulties in integrating the operations of newly- acquired businesses and achieving strategic objectives, cost savings and other benefits; (xv) volatility in the market value of securities held by Motorola; (xvi) the impact of foreign currency fluctuations; and (xvii) the impact of changes in governmental policies, laws or regulations.
  7. 7. MOTOROLA and the Stylized M Logo are registered in the U.S. Patent & Trademark Office. All other product or service names are the property of their respective owners. Motorola, Inc. 2001 Java is a trademark owned by Sun Microsystems, Inc. ``ARM'' is used to represent ARM Holdings plc.; its operating company ARM Limited; and the regional subsidiaries ARM, INC.; ARM KK; ARM Korea Ltd.; ARM Taiwan. Palm OS is a registered trademark of Palm, Inc. and/or its subsidiaries. -0-
  8. 8. Motorola, Inc. and Subsidiaries Consolidated Statements of Operations (In millions, except per share amounts) For the Quarter Ended September 29, 2001 ------------------------------------------------------ Total Excl Pro Forma Pro Forma Impact of Pro Forma Total Adjustments Total Exited Ongoing Motorola Inc/(Exp) Motorola Businesses Operations ---------- --------------------- --------------------- Net sales $ 7,406 $ -$ 7,406 $ -$ 7,406 Costs and expenses Manufacturing and other costs of sales 5,256 (98) 5,158 - 5,158 Selling, general and administrative expenses 834 (39) 795 - 795 Research and development expenditures 1,037 - 1,037 - 1,037 Depreciation expense 533 - 533 - 533 Reorganization of businesses 133 (133) - - - Other charges 2,260 (2,260) - - - Interest expense, net 114 - 114 - 114 Gains on sales of investments and businesses (542) 542 - - - ---------- --------------------- --------------------- Total costs and expenses 9,625 (1,988) 7,637 - 7,637 ---------- --------------------- --------------------- Earnings (loss) before income taxes (2,219) 1,988 (231) - (231) Income tax provision (811) 733 (78) - (78) ---------- --------------------- --------------------- Net earnings (loss) $ (1,408)$ 1,255 $ (153)$ -$ (153) ========== ===================== ===================== Net earnings (loss) per common share ------------------------------------ Basic $ (0.64)$ 0.57 $ (0.07)$ -$ (0.07) Diluted $ (0.64)$ 0.57 $ (0.07)$ -$ (0.07) Weighted average common shares outstanding ------------------------------------------ Basic 2,217.1 2,217.1 2,217.1 2,217.1 2,217.1 Diluted 2,217.1 2,217.1 2,217.1 2,217.1 2,217.1 Dividends paid per share $ 0.04 $ 0.04 $ 0.04 Net margin on sales -19.0% -2.1% -2.1%
  9. 9. For the Quarter September 30, 2000 ------------------------------------------------------ Total Excl Pro Forma Pro Forma Impact of Pro Forma Total Adjustments Total Exited Ongoing Motorola Inc/(Exp) Motorola Businesses Operations ---------- --------------------- --------------------- Net sales $ 9,493 $ -$ 9,493 $ -$ 9,493 Costs and expenses Manufacturing and other costs of sales 6,130 (499) 5,631 - 5,631 Selling, general and administrative expenses 1,185 (62) 1,123 - 1,123 Research and development expenditures 1,171 - 1,171 - 1,171 Depreciation expense 592 - 592 - 592 Reorganization of businesses 220 (220) - - - Other charges 90 (90) - - - Interest expense, net 74 - 74 - 74 Gains on sales of investments and businesses (727) 727 - - - ---------- --------------------- --------------------- Total costs and expenses 8,735 (144) 8,591 - 8,591 ---------- --------------------- --------------------- Earnings (loss) before income taxes 758 144 902 - 902 Income tax provision 227 32 259 - 259 ---------- --------------------- --------------------- Net earnings (loss) $ 531 $ 112 $ 643 $ -$ 643 ========== ===================== ===================== Net earnings (loss) per common share ------------------------------------ Basic $ 0.24 $ 0.05 $ 0.29 $ -$ 0.29 Diluted $ 0.23 $ 0.05 $ 0.28 $ -$ 0.28 Weighted average common shares outstanding ------------------------------------------ Basic 2,182.3 2,182.3 2,182.3 2,182.3 2,182.3 Diluted 2,266.0 2,266.0 2,266.0 2,266.0 2,266.0 Dividends paid per share $ 0.04 $ 0.04 $ 0.04 Net margin on sales 5.6% 6.8% 6.8%
  10. 10. Motorola, Inc. and Subsidiaries Consolidated Statements of Operations (In millions, except per share amounts) For the Nine Months Ended September 29, 2001 ------------------------------------------------------ Total Excl Pro Forma Pro Forma Impact of Pro Forma Total Adjustments Total Exited Ongoing Motorola Inc/(Exp) Motorola Businesses Operations ---------- --------------------- --------------------- Net sales $ 22,680 $ -$ 22,680 $ -$ 22,680 Costs and expenses Manufacturing and other costs of sales 16,410 (929) 15,481 - 15,481 Selling, general and administrative expenses 2,833 (85) 2,748 - 2,748 Research and development expenditures 3,295 - 3,295 - 3,295 Depreciation expense 1,749 - 1,749 - 1,749 Reorganization of businesses 993 (993) - - - Other charges 2,654 (2,654) - - - Interest expense, net 302 - 302 - 302 Gains on sales of investments and businesses (1,898) 1,898 - - - ---------- --------------------- --------------------- Total costs and expenses 26,338 (2,763) 23,575 - 23,575 ---------- --------------------- --------------------- Earnings (loss) before income taxes (3,658) 2,763 (895) - (895) Income tax provision (958) 654 (304) - (304) ---------- --------------------- --------------------- Net earnings (loss) $ (2,700)$ 2,109 $ (591)$ -$ (591) ========== ===================== ===================== Net earnings (loss) per common share ------------------------------------ Basic $ (1.23)$ 0.96 $ (0.27)$ -$ (0.27) Diluted $ (1.23)$ 0.96 $ (0.27)$ -$ (0.27) Weighted average common shares outstanding ------------------------------------------ Basic 2,204.7 2,204.7 2,204.7 2,204.7 2,204.7 Diluted 2,204.7 2,204.7 2,204.7 2,204.7 2,204.7 Dividends paid per share $ 0.12 $ 0.12 $ 0.12 Net margin on sales -11.9% -2.6% -2.6% Return on average invested capital (1) -11.2%
  11. 11. For the Nine Months Ended September 30, 2000 ------------------------------------------------------ Total Excl Pro Forma Pro Forma Impact of Pro Forma Total Adjustments Total Exited Ongoing Motorola Inc/(Exp) Motorola Businesses Operations ---------- --------------------- --------------------- Net sales $ 27,516 $ -$ 27,516 $ (16)$ 27,500 Costs and expenses Manufacturing and other costs of sales 16,838 (499) 16,339 (15) 16,324 Selling, general and administrative expenses 3,795 (160) 3,635 - 3,635 Research and development expenditures 3,293 - 3,293 - 3,293 Depreciation expense 1,718 - 1,718 - 1,718 Reorganization of businesses 220 (220) - - - Other charges 506 (506) - - - Interest expense, net 175 - 175 - 175 Gains on sales of investments and businesses (847) 847 - - - ---------- --------------------- --------------------- Total costs and expenses 25,698 (538) 25,160 (15) 25,145 ---------- --------------------- --------------------- Earnings (loss) before income taxes 1,818 538 2,356 (1) 2,355 Income tax provision 635 45 680 - 680 ---------- --------------------- --------------------- Net earnings (loss) $ 1,183 $ 493 $ 1,676 $ (1)$ 1,675 ========== ===================== ===================== Net earnings (loss) per common share ------------------------------------ Basic $ 0.55 $ 0.22 $ 0.77 $ -$ 0.77 Diluted $ 0.52 $ 0.22 $ 0.74 $ -$ 0.74 Weighted average common shares outstanding ------------------------------------------ Basic 2,164.1 2,164.1 2,164.1 2,164.1 2,164.1 Diluted 2,258.2 2,258.2 2,258.2 2,258.2 2,258.2 Dividends paid per share $ 0.12 $ 0.12 $ 0.12 Net margin on sales 4.3% 6.1% 6.1% Return on average invested capital (1) 7.9% (1) Based on the performance of the four preceding quarters ended September 29, 2001 and September 30, 2000.
  12. 12. Motorola, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In millions) ASSETS September December 29, 31, 2001 2000 ---------- ---------- Cash and cash equivalents $ 5,371 $ 3,301 Short-term investments 272 354 Accounts receivable, net 5,114 7,092 Inventories, net 3,250 5,242 Other current assets 4,974 3,896 ---------- ---------- Total current assets 18,981 19,885 ---------- ---------- Property, plant and equipment, net 9,711 11,157 Investments 2,553 5,926 Other assets 3,014 5,375 ---------- ---------- Total assets $ 34,259 $ 42,343 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Notes payable and current portion of long-term debt $ 2,717 $ 6,391 Accounts payable 2,765 3,492 Accrued liabilities 5,863 6,374 ---------- ---------- Total current liabilities 11,345 16,257 ---------- ---------- Long-term debt 6,608 4,293 Other liabilities 1,537 2,696 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely company- guaranteed debentures 485 485 Stockholders' equity 14,284 18,612 ---------- ---------- Total liabilities and stockholders' equity $ 34,259 $ 42,343 ========== ==========
  13. 13. Motorola, Inc. and Subsidiaries Segment Information (In millions) Summarized below are the Company's segment sales as defined by reportable segment for the three months ended September 29, 2001 and September 30, 2000. For the Quarter Ended September 29, 2001 ----------------------------------------------- Segment Sales ----------------------------------------------- Excl Impact Total of Exited Ongoing % Change Motorola Businesses Operations from 2000 ----------------------------------------------- Personal Communications Segment $ 2,693 $- $ 2,693 -16% Global Telecom Solutions Segment 1,771 - 1,771 -10% Commercial, Govt, and Industrial Systems Segment 1,029 - 1,029 -10% Broadband Communications Segment 637 - 637 -31% Semiconductor Products Segment 1,080 - 1,080 -48% Integrated Electronic Systems Segment 513 - 513 -30% Other Products Segment 140 - 140 -49% Adjustments & Eliminations (457) - (457) 45% ------------------------------------ Segment Totals $ 7,406 $- $ 7,406 -22% ============================================== For the Quarter Ended September 30, 2000 ----------------------------------------------- Segment Sales ----------------------------------------------- Excl Impact Total of Exited Ongoing Motorola Businesses Operations ----------------------------------------------- Personal Communications Segment $ 3,221 $- $ 3,221 Global Telecom Solutions Segment 1,960 - 1,960 Commercial, Govt, and Industrial Systems Segment 1,145 - 1,145 Broadband Communications Segment 917 - 917 Semiconductor Products Segment 2,071 - 2,071 Integrated Electronic Systems Segment 737 - 737 Other Products Segment 272 - 272 Adjustments & Eliminations (830) - (830) ---------------------------------------------- Segment Totals $ 9,493 $- $ 9,493 ==============================================
  14. 14. Motorola, Inc. and Subsidiaries Segment Information (In millions) Summarized below are the Company's segment operating earnings (loss) before taxes as defined by reportable segment for the three months ended September 29, 2001 and September 30, 2000. For the Quarter Ended September 29, 2001 ---------------------------------------------------------------------- Segment Operating Earnings (Loss) before Taxes ---------------------------------------------------------------------- Total Pro Excl Forma Impact Pro Adjust- Pro of Forma ments Forma Exited Ongoing Total (Inc)/ Total Busin- Opera- Motorola Exp Motorola esses tions % Sales -------- --------------- ------------------------ Personal Communications Segment $ (338) $ 357 $ 19 $- $ 19 1% Global Telecom Solutions Segment (957) 990 33 - 33 2% Commercial, Govt, and Industrial Systems Segment 493 (406) 87 - 87 8% Broadband Communications Segment (488) 608 120 - 120 19% Semiconductor Products Segment (481) 126 (355) - (355) -33% Integrated Electronic Systems Segment (56) 42 (14) - (14) -3% Other Products Segment (198) 108 (90) - (90) -64% Adjustments & Eliminations 70 1 71 - 71 -16% -------- --------------- ------------------------ Segment Totals (1,955) 1,826 (129) - (129) -2% General Corporate (264) 162 (102) - (102) -------- --------------- ------------------------ Earnings (Loss) Before Income Taxes $ (2,219)$ 1,988 $ (231) $- $ (231) -3% ======== =============== ========================
  15. 15. For the Quarter Ended September 30, 2000 ---------------------------------------------------------------------- Segment Operating Earnings (Loss) before Taxes ---------------------------------------------------------------------- Total Pro Excl Forma Impact Pro Adjust- Pro of Forma ments Forma Exited Ongoing Total (Inc)/ Total Busin- Opera- Motorola Exp Motorola esses tions % Sales -------- --------------- ------------------------ Personal Communications Segment $ (197) $ 386 $ 189 $- $ 189 6% Global Telecom Solutions Segment 136 111 247 - 247 13% Commercial, Govt, and Industrial Systems Segment 109 11 120 - 120 10% Broadband Communications Segment 757 (597) 160 - 160 17% Semiconductor Products Segment 68 134 202 - 202 10% Integrated Electronic Systems Segment 14 33 47 - 47 6% Other Products Segment (172) 59 (113) - (113) -42% Adjustments & Eliminations (1) 1 - - - 0% -------- --------------- ------------------------ Segment Totals 714 138 852 - 852 9% General Corporate 44 6 50 - 50 -------- --------------- ------------------------ Earnings (Loss) Before Income Taxes $ 758 $ 144 $ 902 $- $ 902 9% ======== =============== ========================
  16. 16. Motorola, Inc. and Subsidiaries Segment Information (In millions) Summarized below are the Company's segment sales as defined by reportable segment for the nine months ended September 29, 2001 and September 30, 2000. For the Nine Months Ended September 29, 2001 ----------------------------------------------- Segment Sales ----------------------------------------------- Excl Impact Total of Exited Ongoing % Change Motorola Businesses Operations from 2000 ----------------------------------------------- Personal Communications Segment $ 7,473 $- $ 7,473 -24% Global Telecom Solutions Segment 5,172 - 5,172 -10% Commercial, Govt, and Industrial Systems Segment 3,120 - 3,120 -5% Broadband Communications Segment 2,275 - 2,275 -4% Semiconductor Products Segment 3,813 - 3,813 -36% Integrated Electronic Systems Segment 1,699 - 1,699 -19% Other Products Segment 633 - 633 -18% Adjustments & Eliminations (1,505) - (1,505) 40% ------------------------------------ Segment Totals $ 22,680 $- $ 22,680 -18% =============================================== For the Nine Months Ended September 30, 2000 ----------------------------------------------- Segment Sales ----------------------------------------------- Excl Impact Total of Exited Ongoing Motorola Businesses Operations ----------------------------------------------- Personal Communications Segment $ 9,789 $- $ 9,789 Global Telecom Solutions Segment 5,726 - 5,726 Commercial, Govt, and Industrial Systems Segment 3,280 - 3,280 Broadband Communications Segment 2,363 - 2,363 Semiconductor Products Segment 5,971 - 5,971 Integrated Electronic Systems Segment 2,105 (16) 2,089 Other Products Segment 776 - 776 Adjustments & Eliminations (2,494) - (2,494) ----------------------------------------------- Segment Totals $ 27,516 $ (16) $ 27,500 ===============================================
  17. 17. Motorola, Inc. and Subsidiaries Segment Information (In millions) Summarized below are the Company's segment operating earnings (loss) before taxes as defined by reportable segment for the nine months ended September 29, 2001 and September 30, 2000. For the Nine Months Ended September 29, 2001 ---------------------------------------------------------------------- Segment Operating Earnings (Loss) before Taxes ---------------------------------------------------------------------- Total Pro Excl Forma Impact Pro Adjust- Pro of Forma ments Forma Exited Ongoing Total (Inc)/ Total Busin- Opera- Motorola Exp Motorola esses tions % Sales -------- --------------- ------------------------ Personal Communications Segment $ (1,895) $ 1,275 $ (620) $- $ (620) -8% Global Telecom Solutions Segment (1,044) 1,178 134 - 134 3% Commercial, Govt, and Industrial Systems Segment 525 (316) 209 - 209 7% Broadband Communications Segment (351) 746 395 - 395 17% Semiconductor Products Segment (1,286) 419 (867) - (867) -23% Integrated Electronic Systems Segment (102) 104 2 - 2 0% Other Products Segment 680 (869) (189) - (189) -30% Adjustments & Eliminations 161 1 162 - 162 -11% --------- ---------------- ---------------------- Segment Totals (3,312) 2,538 (774) - (774) -3% General Corporate (346) 225 (121) - (121) --------- ---------------- ---------------------- Earnings (Loss) Before Income Taxes $ (3,658) $ 2,763 $ (895) $- $ (895) -4% ========= ================ ======================
  18. 18. For the Nine Months Ended September 30, 2000 ---------------------------------------------------------------------- Segment Operating Earnings (Loss) before Taxes ---------------------------------------------------------------------- Total Pro Excl Forma Impact Pro Adjust- Pro of Forma ments Forma Exited Ongoing Total (Inc)/ Total Busin- Opera- Motorola Exp Motorola esses tions % Sales -------- --------------- ------------------------ Personal Communications Segment $ 47 $ 331 $ 378 $- $ 378 4% Global Telecom Solutions Segment 674 112 786 - 786 14% Commercial, Govt, and Industrial Systems Segment 307 26 333 - 333 10% Broadband Communications Segment 972 (576) 396 - 396 17% Semiconductor Products Segment 136 370 506 - 506 8% Integrated Electronic Systems Segment 131 8 139 (1) 138 7% Other Products Segment (379) 161 (218) - (218) -28% Adjustments & Eliminations - - - - - 0% -------- --------------- ----------------------- Segment Totals 1,888 432 2,320 (1) 2,319 8% General Corporate (70) 106 36 - 36 -------- --------------- ----------------------- Earnings (Loss) Before Income Taxes $ 1,818 $ 538 $ 2,356 $ (1) $ 2,355 9% ======== =============== ======================= Contact: Motorola, Inc. Ed Gams, 847/576-6873

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