Q4 2002 Earnings Release Presentation

Motorola – Q4 2002
Earnings Release
Conference Call

Q4 2002 Motorola Earnings Conference Call – Jan. 22, 2003

SLIDE 1

Ed Gams
Senior Vice President
Director of Investor Relations
Motorola Inc.


SLIDE 2

Safe Harbor Statement
“ A number of forward-looking statements will be made during this conference call.
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 in yesterday’s earnings press release, on pages F-35
through F-40 of Motorola’s Proxy Statement for the 2002 annual meeting of
stockholders and in Motorola’s other SEC filings.”
This presentation is being made on the morning of January 22, 2003. 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.quot;
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. 2002.


SLIDE 3

Chris Galvin
Chief Executive Officer
Chairman of the Board of Directors
Motorola Inc.


SLIDE 4

5-Point Plan for
Building Investor Value
1. Persistent Enhancement of the Management Team
and Work Environment
2. Aggressive Focus on Strengthening the Balance Sheet
and Cash
3. Relentless Pursuit of Cost Competitiveness, Quality
and Customer Satisfaction
4. Growth through Profitable Innovative Products,
Systems, Software and Customer Relationships
5. Continuous Reassessment and Improvement of our
Business Strategies and Portfolio

SLIDE 5

Exceeded Many of Our
Interim Turnaround
Goals
BUT
We Are Not Satisfied
With Profit and Growth

SLIDE 6

David Devonshire
Chief Financial Officer
Executive Vice President,
Motorola Inc.


SLIDE 7

Motorola Inc. Financial Results
% Favorable
(Unfavorable)
Q4 2002 Q4 2001 Q3 2002 Q4 Q3
2001 2002
Sales $M $7,546 $7,312 $6,371 3% 18%

Earnings Per Share GAAP $0.08 -$0.55 $0.05

Earnings Per Share $0.13 -$0.04 $0.06
Excluding Special Items

Sales and EPS exceeded expectations
All Major Segments Had Positive Operating Earnings Excluding Special Items
for Second Consecutive Quarter
Operating Earnings Excluding Special Items increased $566M from Q4 2001
Versus Q4 2001 Largest Improvement in Operating Earnings in SPS, PCS & GTSS
Versus Q3 2002 Largest Improvement in Operating Earnings in CGISS & PCS


SLIDE 8

Gross Margin
(Ongoing Operations, Excluding Special Items and Exited Businesses)
40%
% of Sales
35%
30%
25%
20%
15%
10%
5%
0%
Q1'01 Q2'01 Q3'01 Q4'01 Q1'02 Q2'02 Q3'02 Q4'02

Gross Margin Improved 4.2% Points from Q4 2001 to Q4 2002 and 5.3% Points for
Full Year 2002 Versus 2001
Sequential Decline in Gross Margin Due Largely to:
— Sales Mix Shift Towards PCS Segment Which has Lower Gross Margin Than
Corporate Average.
— We Focused SPS on Cash Flow By Cutting Back Production. As Expected This
Resulted in Unabsorbed Fixed Mfg. Costs Adversely Affecting Gross Margin


SLIDE 9

Selling, General and Administrative Expenses
$ in Millions

17.3%
$1,600 18.0%
16.7%
15.7% 15.9% 15.8%
$1,500
15.1% 16.0%
14.6%
14.2%
$1,400
13.1% 14.0%
$1,300

$1,200 12.0%

$1,100
10.0%
$1,000
8.0%
$900

$800 6.0%
Q4'00

Q1'01

Q2'01

Q3'01

Q4'01

Q1'02

Q2'02

Q3'02

Q4'02

SLIDE 10

Motorola Work Force Trend
160 150 147
136
140 125 121
120 111 107
Work Force (Thousands)

102 100 97
100 93
80
60
40
20
0
Aug-00

Mar-01

Jun-01

Mar-02

Jun-02

Jun-03 Est
Dec-00

Sep-01

Dec-01

Sep-02

Dec-02

SLIDE 11

Research & Development Expenses
$ in Millions % of Sales
$1,200 15.5% 16.0%
15.1%
14.8%
14.7% 15.0%
14.2%
14.0% 14.0%
$1,100
14.0%

12.7%
$1,000 13.0%

12.0%
$900
11.0%

$800 10.0%
Q1'01

Q2'01

Q3'01

Q4'01

Q1'02

Q2'02

Q3'02

Q4'02

SLIDE 12

Operating Margin %
% of Sales
10%

8%

6%

4%

2%

0%
Q1'01

Q2'01

Q3'01

Q4'01

Q1'02

Q2'02

Q3'02

Q4'02
-2%

-4%

-6%
Q4 2002 Operating Margin of 7.2%, Highest Operating Margin
Since Q3 2000


SLIDE 13

Net Special Items in Q4 2002
$ millions Impact
Additional Reserve for Restructuring Actions $150
Debt Redemption Charges (net) $98
Investment/Fixed Asset/Goodwill $74
Impairments/Other
Gains on Sales of Investments ($24)
Reduction of Reserves No Longer Necessary ($95)
NET SPECIAL ITEM – PRETAX $203
INCOME TAXES ($78)
NET SPECIAL ITEM – AFTER TAX $125

• Reductions to Reserves Previously Established Through Special Item Charges Have Been
and Will Consistently be Reflected as a Special Item and Not Included in Normal Operating
Results.
.
• Complete Reconciliation and Disclosure Provided in our Press Release, and Quarterly and
Annual SEC Filings


SLIDE 14

Cash Flow
($ in Billions) Q4 Annual
2002 2002 2001 2000

Operating Cash Flow without $0.6 $2.3 $2.8 ($1.1)
Restructuring/Other
Cash for Restructuring/Other ($0.1) ($1.0) ($0.8) ($0.1)
Operating Cash Flow $0.5 $1.3 $2.0 ($1.2)

Capital Expenditures ($0.2) ($0.6) ($1.3) ($4.1)

Free Cash Flow $0.3 $0.7 $0.7 ($5.3)

Emphasis on Cash Continues With Positive Operating and
Positive Free Cash Flow Each Quarter of the Last Two Years

SLIDE 15

Average Working Capital / Sales Ratio
Accounts Receivable + Inventory - Accounts Payable
(% to Sales)
25.0% 22.0% 22.7% 22.5% 21.8%
20.3%
18.9%
17.7% 17.4% 17.4%
20.0%

15.0%

Long Term
10.0% Target of 12%
Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4'02

Institutionalizing Continuous Improvement
Cash Benefit in 2001/2002 of Approximately $1.4B


SLIDE 16

$ in Billions
Cash and Debt
Dec. 2002 Dec 2001 Dec. 2000
Short Term/Current Debt $1.5 $0.9 $6.4
Long Term Debt $6.1 $7.2 $4.3
Long Term Debt Linked $1.2 $1.2 $0.0
to Equity Units
TOTAL DEBT $8.8 $9.2 $10.7
Cash & Cash Equivalents ($6.6) ($6.2) ($3.7)
NET DEBT $2.3 $3.1 $7.0
NET DEBT/ NET 16.7% 18.4% 27.4%
DEBT+EQUITY

Total Debt Down $400M in 2002, Net Debt Down $800M
Decline in Long Term Debt due Largely to Shift of $825M PURS to Current Maturities
PURS ($825M) scheduled to be Retired 2/03/03
Net Debt Ratio Improved by Approximately 2 Percentage Points During 2002


SLIDE 17

Low Level of Debt Maturities*
2003/2004/2005
$ in Billions
$1.5

* Debt Maturities
~$1.0 (Excluding Commercial
$1.0
Paper of $0.5B)

~$0.5
~$0.4
$0.5
PURS - $825M
Scheduled To Be
Repurchased in Feb.
$0.0
2003
Debt Maturities 2004 2005
in 2003

Strong Position to Meet Debt Maturities With $6.6B in Cash


SLIDE 18

2003 Operating & Free Cash Flow Forecast
Earnings: ~$925M (EPS of $0.40)

Depreciation: ~$1.6B

Working Capital: Continue to Reduce Ratio to Sales
Neutral to Slightly Positive Cash Effect
Cash for Restructuring: ~$0.7B

Pension Contribution: ~$0.2B

OPERATING CASH ~$1.6 B
FLOW
Capital Expenditures: ~$1.0 B

FREE CASH FLOW ~$0.6 B


SLIDE 19

Mike Zafirovski
President and
Chief Operating Officer
Motorola Inc.


SLIDE 20

Key Takeaways
Continued Progress in a Very Tough Environment
“5 Point Plan” Focus In All We Do
—

Impact of Restructuring/Rebuilding Reflected in Operating Results
Commitment to Earnings And Balance Sheet Improvement
Eight Consecutive Quarters of Positive Operating Cash Flow
—

Q4 2002 Operating Earnings On a GAAP Basis
—

5 out of 6 Major Segments Had Positive Operating Earnings
—

All 6 Major Segments Improved from Q4 2001
—

Q4 2002 Operating Earnings Excluding Special Items
—

All 6 Major Segments had Positive Operating Earnings for 2nd
—
Quarter in a Row
4 of 6 Segments Increased Operating Earnings from Q4 2001
—

Q1 2003 Operating Earnings on GAAP Basis Versus Q1 2002
—

5 of 6 Major Segments Guiding to Higher Operating Earnings
—


SLIDE 21

Segment
Updates & Guidance


SLIDE 22

Personal Communications Segment
(Ongoing Operations, Excluding Special Items)
% Favorable
(Unfavorable)
Q4 2002 Q4 2001 Q3 2002 Q4 2001 Q3 2002
Orders $M $2,142 $2,202 $2,481 (3%) (14%)

Sales $M $3,293 $2,975 $2,631 11% 25%
Operating Earnings $M $301 $208 $224 45% 34%
Operating Margin 9.1% 7.0% 8.5%

• Q4 2002 Operating Earnings Highest Since 1997
• 2002 Earnings Improvements Driven By:
• Improved Customer Relationship
• Compelling Mix of Products Across All Technologies
• Manufacturing, Platform Design and Supply Chain Efficiencies
• Reductions in Operating Expenses as a % of Sales


SLIDE 23

Units and Market Share

Q4 2002 Q4 2001 Growth 2002 2001 Growth

Unit 22.2 17.5 27% 70.2 62.5 12%
Shipments Million Million Million Million

Market ~19% ~17% Up 2 ~17.5% ~16.5% Up 1
Share Points Point


SLIDE 24

Trends - Estimated Market Share
Q4 2002 Market Q4 2002 Market 2002
Share Compared Share Compared Annual Market
to Q4 2001 to Q3 2002 Share Trend

North America Up Up ~29%
Latin America Up Up ~28%
Asia Down Up ~15%
Europe, Mideast, Flat Up ~10%
Africa
Worldwide Up Up ~18%

Continue to Focus on Improving Market Share in Every Region
Q4 2002 Market Share Performance Highest Since Q2 1999


SLIDE 25

Unit Shipments by Technology
Q4 2002 Change from Annual 2002 Change
Q4 2001 from Annual 2001
CDMA Unit Shipments Up 51% Up 23%

GSM Unit Shipments Up 11% Up 7%

TDMA Unit Shipments Up 146% Up 69%

iDEN Unit Shipments Down 12% Up 5%

iDEN Decline in Unit Shipments a Result of Nextel Inventory Adjustments
Resulting from Adoption of our Direct Fulfillment Program


SLIDE 26

Q4 2002 High Volume Products

V60i
C33X
T720
Series
120

V66i
i95cl

SLIDE 27

Average Selling Price
Q4 2002
Down 3% from Q3 2002
Down 11% from Q4 2001
Annual 2003 Estimate
Annual 2002
Down 5% from 2001 Flat to Down 5%

• ASP Without iDEN Flat Q4 2002 from Q3 2002
• ASP Decline versus Q4 2001 Due to Higher Mix of Entry Level Products
• Rebates Adequately Provided For In Q4 Operating Earnings


SLIDE 28

2002 Industry Handset Forecast
Sell Through Units

Q4 2002
~115 Million

Annual 2002
~400 Million


SLIDE 29

2003 Industry Handset Forecast
Sell Through Units

Q1 2003
90 Million – 95 Million

Annual 2003
430 Million – 440 Million


SLIDE 30

New Products For 2003

A835
UMTS
Color
388c E365 - Color
T725
Color C350
Integrated Camera Integrated Video
EDGE
PDA Camera
Color
Color

V295 A380 V600
Color Color Color
Integrated Camera Integrated Camera


SLIDE 31

Q1 2003 Forecast
Compared to Compared to
Q1 2002 Q4 2002
Sales Up Down Substantially

Operating Margin % Higher Lower
(Q1 2003 Based on GAAP
results Versus Prior Periods
Results Excluding Special
Items)

• Expect Normal Seasonality in Q1 versus Holiday Driven Sales in Q4

• Flat Indicates a Variance of 0.5% or Less, Slight or Slightly Indicates a Variance of up to 5%, Substantial or Substantially
Indicates a Variance From 15% up to 25%. Very Substantial or Very Substantially Indicates a Variance of 25% or More.
• The terms Flat, Slightly, Substantially and Very Substantially are Only Used in Forecasting Sales on this Slide


SLIDE 32

Semiconductor Products Segment
% Favorable
(Unfavorable)
Q4 2002 Q4 2001 Q3 2002 Q4 2001 Q3 2002
Orders $M $1,189 $1,012 $1,258 17% (5%)

Sales $M $1,286 $1,123 $1,223 15% 5%
Operating Earnings $M $9 ($284) $13 >100% (31%)
Operating Margin 0.7% (25.3%) 1.1%

Operating Earnings Improvement Versus Q4 2001 Driven By Higher Gross
Margin and Much Lower Operating Expenses
Operating Earnings Flat Versus Q3 2002 Driven By Lower Gross Margin Offset
by Lower Operating Expenses. Lower Gross Margin Due to Our Decision to
Scale Back Production and Generate Cash.


SLIDE 33

Wafer Fab Consolidations
25

18
20
16
15
11
9 8
10

5

0
Dec. 2000 Dec. 2001 Sept. 2002 Dec. 2002 March 2003
Estimate


SLIDE 34

SPS – Other Developments
TCL Mobile Communications, China’s Largest Locally
Headquartered Handset Manufacturer, Became 10th
Merchant Market Customer to Adopt Motorola’s Wireless
Chipset Architecture
Cost Reduction Actions Will Continue to be
Implemented in 1st Half 2003. Breakeven Sales Expected
to be Reduced to Approximately $4.8-$4.9B by Mid-2003.
SPS Capex in 2002 of $220M, 2003 Capex Forecasted
to be Approximately $350M
Worldwide Semiconductor Industry Growth in 2003
Forecasted to Be Approximately 10%

SLIDE 35

Q1 2003 Forecast
Q1 2002 Q4 2002
Sales Up Down

Operating Margin % Small Loss Small Loss in Q1 2003
Compared to Compared to Small
Large Loss Positive Operating
Earnings in Q4 2002
Results Excluding Special
Items)

Effect of Lower Sales in Q1 2003 Versus Q4 2002 Expected to Be
Partially Offset By Improved Gross Margin


SLIDE 36

Global Telecom Solutions Segment
% Favorable
(Unfavorable)
Q4 2002 Q4 2001 Q3 2002 Q4 2001 Q3 2002
Orders $M $1,091 $1,120 $880 (3%) 24%

Sales $M $1,220 $1,365 $1,014 (11%) 20%
Operating Earnings $M $3 ($109) $5 >100% (40%)

Operating Earnings Improvement Versus Q4 2001 Driven By Higher Gross
Margin and Much Lower Operating Expenses.
Operating Earnings Flat Versus Q3 2002 On Higher Sales Due to:
Lower Gross Margin Resulting From Different Mix of Technologies
Shipped & Lower Prices
Partially Offset by Lower Operating Expenses.


SLIDE 37

GTSS – Other Developments
GTSS Signed Contracts Totaling $446M For Deployment of
CDMA 1X System For China Unicom
Largest Award of Any Single Infrastructure Vendor
Much of Equipment Shipped in Q4 2002
Delivered Phase 1 of iDEN Nationwide Direct Connect to
Nextel.
Wireless Infrastructure Industry Revenue Expected to
Decline 6-12% in 2003
Cost Reduction Activities will Continue To Be Implemented
in 1st Half of 2003. Breakeven Sales Expected to be Reduced
to Approximately $4.0B by Mid-2003.


SLIDE 38

Global Telecom Solutions Segment
Q1 2003 Forecast
Q1 2002 Q4 2002
Sales Down Down Very Substantially

Operating Margin % Smaller Loss Small Loss in Q1 2003
Compared to Breakeven
(Q1 2003 Based on GAAP results
in Q4 2002
versus Prior Periods Results
Excluding Special Items)

Sequential Sales Decline Versus Q4 2002 (Due in Large Part to Lower
Shipments to China Unicom) Will Lower Gross Margin Which Will Only
Partially Be Offset By Lower Operating Expenses
Smaller Loss Versus Q1 2002 Despite Lower Sales Due to Improved Gross
Margin and Much Lower Operating Expenses

SLIDE 39

Commercial Govt. and Industrial System Segment
% Favorable
(Unfavorable)
Q4 2002 Q4 2001 Q3 2002 Q4 2001 Q3 2002
Orders $M $1,081 $1,141 $987 (5%) 10%

Sales $M $1,170 $1,198 $874 (2%) 34%
Operating Earnings $M $170 $181 $77 (6%) >100%

Q4 2002 Results Showed Normal Seasonal Strength Versus Q3 2002
Q4 2002 Orders Slightly Lower Than Q4 2001 Due to Large System
Procurement Delays By Governmental Customers in North America as
Homeland Security Programs Still Being Finalized


SLIDE 40

CGISS – Other Developments
CGISS Received Prestigious 2002 Malcolm Baldrige National
Quality Award For Operational Excellence and Quality
Achievement

Homeland Security Update –
U.S. Department of Homeland Security Established in Q4
Clearer View of Homeland Security Opportunity Should
Be Available As 2003 Unfolds

Greg Brown Joined Motorola from Micromuse to be
President and CEO of CGISS.
2003 Two-Way Radio Industry Growth Forecasted to be 5-8%


SLIDE 41

Commercial Govt. and Industrial System Segment
Q1 2003 Forecast
Q1 2002 Q4 2002

Sales Up Slightly Down Very Substantially

Versus Prior Periods Results

Versus Q1 2002 Expect Higher Sales and Lower Operating Expenses
Should Contribute to Higher Operating Margin
Versus Q4 2002 Expect Normal Seasonal Sales Decline Will Cause
Operating Margin to be Lower

SLIDE 42

Broadband Communications Segment
% Favorable
(Unfavorable)
Q4 2002 Q4 2001 Q3 2002 Q4 2001 Q3 2002
Orders $M $353 $525 $385 (33%) (8%)

Sales $M $489 $579 $519 (16%) (6%)
Operating Earnings $M $65 $78 $75 (17%) (13%)

Sales and Orders Down Versus Last Year and Q3 2002 as Cable Service
Providers Reduce Capital Expenditures and Shorten Order Cycle Time
Excellent Cost Controls Have Allowed BCS to Maintain Double Digit
Operating Margin Despite Sales Decline


SLIDE 43


Change Change
From From
Q4 2001 Q3 2002 Maintaining Market Share
in Set-Top Boxes
Set Top Box Down Down
Unit Shipments ~300K ~100K
~1.2 Million Continue to Have Market
Share That is Greater Than
Cable Modem Up Up
2X Our Nearest Competitor in
Unit Shipments ~100K ~100K
Cable Modems
~1.1 Million


SLIDE 44

BCS – Other Developments
Motorola BCS Remains Strong #1 in Overall Cable
Equipment Market Share

BCS Continues to Have Broadband Technology
Leadership as Recently Demonstrated at Broadband Plus
Show and Consumer Electronics Show

Broadband Equipment Industry Revenue Expected to
decline 10% in 2003 as Cable Operators Reduce Capital
Expenditures Again


SLIDE 45

Q1 2003 Forecast
Q1 2002 Q4 2002

Sales Down Down
Substantially

Operating Margin % Lower Lower
Versus Prior Periods Results

Sales Decline Driven by Lower Capital Spending From Cable Operators
Operating Margin Decline Results from Decrease in Sales Partially Offset
by Lower Operating Expenses


SLIDE 46

Integrated Electronic Systems Segment
% Favorable
(Unfavorable)
Q4 2002 Q4 2001 Q3 2002 Q4 2001 Q3 2002
Orders $M $558 $483 $562 15% (1%)

Sales $M $570 $540 $544 6% 5%
Operating Earnings $M $32 ($27) $28 >100% 14%

Versus Q3 2002 Showed Consistent Results
Versus Q4 2001 Operating Earnings Improved From:
Higher Sales
Higher Gross Margin
Lower Operating Expenses


SLIDE 47

IESS – Other Developments
Dennis Carey Joined Motorola from Home Depot to
be President and CEO of IESS
2002 Revenue Dynamics
Very Substantial Growth in Automotive Electronics
Slight Decline in Energy Systems
Very Substantial Decline in Motorola Computer
Group as Telecom Market Weakness Has Continued
Automotive, Energy Systems and Motorola Computer
Group All Improved Operating Earnings in 2002


SLIDE 48

Integrated Electronic Systems Segment
Q1 2003 Forecast

Q1 2002 Q4 2002

Sales Up Slightly Down

Results Excluding Special Items)


SLIDE 49

Key Takeaways
Continued Progress in a Very Tough Environment
“5 Point Plan” Focus In All We Do
—

Impact of Restructuring/Rebuilding Reflected in Operating Results
Commitment to Earnings And Balance Sheet Improvement
Eight Consecutive Quarters of Positive Operating Cash Flow
—

Q4 2002 Operating Earnings On a GAAP Basis
—

5 out of 6 Major Segments Had Positive Operating Earnings
—

All 6 Major Segments Improved from Q4 2001
—

Q4 2002 Operating Earnings Excluding Special Items
—

All 6 Major Segments had Positive Operating Earnings for 2nd
—
Quarter in a Row
4 of 6 Segments Increased Operating Earnings from Q4 2001
—

Q1 2003 Operating Earnings on GAAP Basis Versus Q1 2002
—

5 of 6 Major Segments Guiding to Higher Operating Earnings
—


SLIDE 50

Guidance Update

David Devonshire
Executive Vice President,
Motorola Inc.


SLIDE 51

Q1 2003 Guidance % Favorable
(Unfavorable)
Q1 Q1 Q4 Q1 Q4
2003 2002 2002 2002 2002
Sales 0%-3% (17%-20%)
$6.0B-$6.2B $6.0B $7.5B

Breakeven-$0.02 ($0.20) $0.08
Earnings Per Share
(on a GAAP Basis)

Earnings Per Share Breakeven-$0.02 ($0.08) $0.13
(Excluding Special Items)

Versus Q1 2002 Very Substantial Improvement in Operating Earnings on
Flat to Slightly Higher Sales Due to Beneficial Results of Restructuring
Driving Higher Gross Margin and Lower Operating Expenses

Entire Reason For Sequential Decline in EPS is Gross Margin Impact of
Sequential Decline in Sales, Partially Offset By Lower Operating Expenses


SLIDE 52

Annual 2003 Guidance
Previous 2002
2003 Guidance Actual 2001
$27.5B $27.5B $26.6B $29.9B
Sales

$0.40 $0.40 ($1.09) ($1.78)
Earnings Per Share
(On a GAAP Basis)

No Change from Previous Guidance
Sales Growth Expected in PCS, CGISS, SPS and IESS
Sales Decline Expected in GTSS and BCS
Expect Positive Operating Earnings and Positive Operating Cash Flow in
Each Business Segment
Earnings Leverage Potential When Served Markets Improve


SLIDE 53

Chris Galvin
Chief Executive Officer
Chairman of the Board of Directors
Motorola,Inc.


SLIDE 54

2003

NEXT PHASE OF
MOTOROLA’S
POSITIVE RENEWAL

SLIDE 55

Motorola Q&A Participants

Mike Zafirovski
Chris Galvin
Chief Executive Officer President
Chairman of the Board of Directors Chief Operating Officer

Ed Gams
David Devonshire
Senior Vice President
Executive Vice President
Director of Investor Relations


SLIDE 56

Safe Harbor Statement
“ During this call we have made a number of forward-looking statements that are based on current
expectations and involve risks and uncertainties. Such forward-looking statements include, but are not limited
to, our comments and answers relating to the following topics: (1) expectations for Motorola sales and
earnings per share for Q1 2003 and full year 2003; (2) the expected timing for completion of our restructuring
actions, including the reduction of our employee population and the closing of facilities; (3) the impact of our
restructuring actions on our financial performance, including cost savings; (4) plans to reduce debt; (5)
expectations for Motorola’s operating cash flow and free cash flow during 2003; (6) research and development
expenses; (7) capital expenditures; (8) depreciation expense; (9) working capital plans; (10) expectations for
sales, profitability, orders, cash flow, operating earnings, operating margin and market share for each of
Motorola’s segments; (11) trends in average selling prices; (12) the timing, sales impact and pricing of new
products; (13) order and backlog positions over the next several quarters, including the impact of new
business models on these numbers; (14) projected worldwide industry shipments of wireless handsets; (15)
worldwide semiconductor industry growth; (16) the implementation and effectiveness of our “asset-light”
semiconductor business model; (17) worldwide wireless infrastructure industry growth; (18) growth in the
worldwide two-way radio industry; (19) timing and impact of governmental spending on homeland security,
and (20) projected broadband equipment industry revenue.
Motorola’s actual results could differ materially from those stated in the forward looking statements and
information about factors that could cause such differences can be found in yesterday’s press release, on
pages F-35 through F-40 of Motorola’s Proxy Statement for the 2002 annual meeting of stockholders and in
Motorola’s other SEC filings.

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. 2002


SLIDE 57


SLIDE 58

Q4 2002 Earnings Release Presentation

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