Adobe PDF Q1 2003 Earnings Release Presentation

Motorola
Q1 2003
Earnings
Release
Conference
Call

Q1 EARNINGS RELEASE – April 16, 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-33 through F-40 of Motorola’s Proxy Statement for the
2003 annual meeting of stockholders and in Motorola’s other SEC filings.

This presentation is being made on the morning of April 16, 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.

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. 2003

SLIDE 3

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

SLIDE 4

5-Point Plan for Improving
Motorola’s Financial Performance
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

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

SLIDE 6

Motorola Inc. Financial Results

Favorable
Q1 2003 Q1 2002 (Unfavorable)
Sales $M $6,043 $6,181 (2%)

Earnings Per Share Excluding $0.01 ($0.08) +$0.09
Special Items
Earnings Per Share GAAP $0.07 ($0.20) +$0.27

! EPS Met Expectations, Sales Slightly Below Expectations
! EPS Excluding Special Items Improved $0.09, Despite 2% Sales Decline
! GAAP Results Reflect Gain on Sale of 25 Million Nextel Shares

SLIDE 7

Gross Margin
(Ongoing Operations Excluding Special Items)
% of Sales
% of Sales
40%
40%
Multi-Year Trend of
1st Quarter Gross
Margin
35%
35% 32.7%
30.1%
30% 30%
27.2%

25% 25%
Q1'01 Q3'01 Q1'02 Q3'02 Q1'03 Q1'01 Q1'02 Q1'03

! Gross Margin Improved 2.6% Points vs. Q1 2002 and 5.5% Points vs. Q1 2001
! Improvement Reflects Continuing Success of Restructuring/Cost Reduction
! Largest Improvement versus Q1 2002 in SPS and GTSS

SLIDE 8

Selling, General and Administrative Expenses
$ in Millions
$ in Millions
Multi-Year Trend of
$2,000 $2,000 25.0%
1st Quarter SG&A
20.0%
18.1%
$1,500 $1,500
15.4% 14.8
% 15.0%
$1,000 $1,000
10.0%

$500 $500
5.0%

$0 $0 0.0%
Q1'01 Q3'01 Q1'02 Q3'02 Q1'03 Q1'01 Q1'02 Q1'03

! Very Tight Budgetary Control on Discretionary First Quarter Spending
! SG&A Improved 3.3% Points from Q1 2002
! Improvement Reflects Continuing Success of Restructuring/Cost Reduction
! Lower G&A Partially Offset by Higher Selling/Advertising

SLIDE 9

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

120 111
107102
100 97 94
100 90
80
60
40
20
0
Aug- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Dec-
00 00 01 01 01 01 02 02 02 02 03 03
Est

! New Estimate of Approximately 90,000 By or Before End of 2003
! Further Decrease Driven By:
! Announced Outsourcing of Portions of IT and HR
! Attrition
! Selective Work Force Reductions

SLIDE 10

Research & Development Expenses
$ in Millions
$ in Millions
$2,000 25.0%
$2,000
Multi-Year Trend of
1st Quarter
R&D 20.0%
$1,500
$1,500
15.1% 15.7%
14.7%
15.0%
$1,000 $1,000
10.0%

$500 $500
5.0%

$0 $0 0.0%
Q1'01 Q3'01 Q1'02 Q3'02 Q1'03 Q1'01 Q1'02 Q1'03

R&D Spending Remains Relatively Stable

SLIDE 11

Operating Margin %
(Ongoing Operations, Excluding Special Items)
% of Sales
% of Sales
Multi-Year Trend of
8% 8%
1st Quarter
6% Operating Margin
6%
4% 4%
2.2%
2% 2%
Q1’01 Q1’02
0% 0%
Q1’03
-2% Q1'01 Q3'01 Q1'02 Q3'02 Q1'03
-2%
-4% -2.7%
-4% -3.4%

! Considering Seasonality of Q1, Operating Margin Continues to Trend Upward
! Operating Margin Improved 4.9% Points Vs. Q1 2002, & 5.6% Points Vs. Q1 2001
! Operating Earnings Excl. Special Items Increased $300M from Q1 2002
! Largest Improvement from Q1 2002 in SPS and GTSS

SLIDE 12

Net Special Items in Q1 2003
$ millions Pretax Impact
Gains on Sales of Investments ($279)
Iridium – Reduction of Reserves No Longer Necessary ($59)
Restructuring Reserves No Longer Necessary ($39)
Restructuring / Employee Separation / Exit Cost $43
Fixed Asset Impairments $62
Investment Impairments $47
NET SPECIAL ITEM – PRETAX ($225) = $0.06 EPS

! Net Special Items for 2003 Are Expected to be Approximately $0. The
Company Expects to Have Special Item Charges During 2003 Related to:
quot; Acquisition Related Charges Associated with Winphoria/Next Level
quot; The Initiation of Additional Actions to Improve Cost Competitiveness
.

! Reductions to Reserves Previously Established Through Special Item Charges
Have Been Consistently Reflected as a Special Item.

SLIDE 13

Cash Flow
($ in Billions) Fcst
Q1 Annual Annual
2003 2003 2002
Operating Cash Flow without $0.7 $2.4 $2.4
Restructuring/Other
Cash for Restructuring/Other ($0.2) ($0.8) ($1.1)
Operating Cash Flow $0.5 $1.6 $1.3
Capital Expenditures ($0.1) ($1.0) ($0.6)

Free Cash Flow $0.4 $0.6 $0.7

! Ninth Consecutive Quarter of Positive Operating Cash Flow
! Expect Annual Depreciation of Approximately $1.6B
! Expect Cash Contribution to Pension Fund of Approximately $200M
! Expect Neutral/Slightly Positive Working Capital Impact to Cash Flow

SLIDE 14

Average Working Capital / Sales Ratio
Accounts Receivable + Inventory - Accounts Payable
% to Sales
25.0% 21.6% 22.7% 22.3% 21.9%
19.9%
18.4%
20.0% 17.4% 17.0% 17.0% 17.1%

15.0%
Long Term
Target of 12%
4 Quarter Rolling Average
10.0%
Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4'02 Q1'03

Accounts Receivable Performance Remains Good
#
Inventory Performance Continues to Need Improvement
#

SLIDE 15

Cash and Debt
$ in Billions Mar. 2003 Dec. 2002 Dec 2001
Short Term/Current Debt $0.8 $1.6 $0.9
Long Term Debt $6.0 $6.0 $7.2
Long Term Debt Linked to $1.2 $1.2 $1.2
Equity Units
TOTAL DEBT $8.0 $8.8 $9.2
Cash & Cash Equivalents ($6.4) ($6.6) ($6.2)
NET DEBT $1.6 $2.3 $3.1
NET DEBT/ NET 12.3% 16.7% 18.4%
DEBT+EQUITY

! Total Debt Down $800M in Q1 2003, Net Debt Down $700M
! PURS ($825M) Retired February 2003
! Net Debt Ratio Improved by Over 4 Percentage Points Compared To Dec. 2002

SLIDE 16

Low Level of Debt Maturities
(Excludes Commercial Paper)
2003/2004/2005
$ in Billions
$1.5

$1.0

~$0.5
~$0.4
$0.5
~$0.2

$0.0
Q2/Q3/Q4 2003 2004 2005

Strong Position to Meet Debt Maturities With $6.4B in Cash

SLIDE 17

Mike Zafirovski
President and
Chief Operating Officer
Motorola Inc.

SLIDE 18

Motorola Objectives for 2003
Commitment to Continued Earnings And Balance
#
Sheet Improvement
Conservatively Managing Cost Structure
―
Continued Focus on Positive Cash Flow
―
Drive Continuous Improvement
―

90% of Employee Bonuses Based on Achieving
Operating Earnings and Cash Flow Goals

Return to Growth
#
Accelerate Addressing Opportunities and Fixing
#
Strategic Issues
SLIDE 19

Performance of Motorola’s 6 Major Sectors
Number of Sectors
Q1 2003 Q2 2003 2003 Annual
Actual Estimate Estimate
Operating Earnings
Year Over Year Improvement 5 4/5 5
(Excluding Special Items)

Positive Operating Earnings 5 5 6

Positive Operating Cash Flow 6 5 6

Continued Improvement in a Tough Environment

SLIDE 20

Segment
Updates & Guidance

SLIDE 21

Personal Communications Segment
( Excluding Special Items) Favorable
Orders $M $2,495 $2,644 (6%)
Sales $M $2,447 $2,406 2%
Operating Earnings $M $108 $106 2%
Operating Margin 4.4% 4.4% -

! Excluding Discontinued Paging Business from Q1 2002:
! Sales Up 4%, Orders down 2%, Operating Earnings up 11%
! Sales & Orders Near Parity in Q1 Now That New Order Process In Place
! Higher Gross Margin Offset By Investment in R&D, Selling/Advertising
! Internet Software Content Group Integrated Into PCS
! Positive Operating Cash Flow During Q1 2003 and In 4 of Last 5 Quarters

SLIDE 22

Units and Market Share

Q1 2003 Q1 2002 Growth
Unit Shipments 16.7 Million 14.2 Million 18%

Market Share ~19% ~16% Up 3 Points

SLIDE 23

Q1 2003 Estimated Sell-In Market Share
Compared Compared
to Q1 2002 to Q4 2002
North America Up Strongly Up
Asia Down Down
Europe Up Slightly Up Slightly
Latin America Up Strongly Down Slightly

Worldwide Up Up Slightly

! Became a Clear #1 in Both U.S. and Canada
! Share is Down In China, But We Remain # 1 by More than 5 % Points
! Local Companies in China Continue to Gain Share
! Modest Share Gain in Europe
! Latin America Share More than Double Q102, Modest Decline from Q402

SLIDE 24

China Market Actions
!Strong New Product Portfolio
quot; Recently Accelerated Launch Dates
$ 3 New Products Launched In Q1
$ 2 More In Q2
$ 9 More In Q3
! Supporting New Product Launches with Digital Content
and Personalization Features
! Increasing R&D Resources Focused on China Market
! Strengthening Distribution
quot; Aligning Support Around Distributors AND Operators
quot; Extending Distribution Coverage of Smaller Cities
quot; Initiatives to Work Directly with Large Retailers
quot; Closer Collaboration with Operators

SLIDE 25

Unit Shipments by Technology
Q1 2003 Change from
Q1 2002
CDMA Unit Shipments Up 58%

GSM Unit Shipments Down 5%

TDMA Unit Shipments Up 315%

iDEN Unit Shipments Down 7%

! CDMA/TDMA Growth Driven By Americas
! GSM Weakness in Asia Partially Offset by Strength in Americas
! iDEN Decline From Ongoing Shift to Direct Fulfillment Program With Nextel

SLIDE 26

NEW COLOR PHONES SHIPPING IN Q1

C350
A388c PDA
GSM
GSM (Shipping in Asia
(Shipping in Asia) and Europe)

SLIDE 27

NEW COLOR GSM PHONES SHIPPING IN 3rd QUARTER

E365 A760
T725
E390
Integrated Java+Linux
EDGE
Integrated
Camera PDA
Camera,
3D Audio

V295 E380 V600
Integrated Integrated
Camera Camera

SLIDE 28

NEW COLOR CDMA PHONES SHIPPING IN 2ND HALF

… and More Than
10 to Come in the
Second Half of
2003. Most Will
Be Announced
During Q2
V810
Integrated
Camera E310
(Q4 2003) (Q3 2003)
SLIDE 29

Average Selling Price
Q1 2003
Down 5% from Q4 2002 Down 12% from Q1 2002
ASP Decline Primarily Due To Higher Mix of Entry Level Products

Annual 2003 Estimate
Down ~5%
ASP’s Expected to Increase Slightly in Second Half of 2003 as a Higher
Percentage of Color, Camera and Other Feature Rich Phones Ship

SLIDE 30

Handset Industry Perspective

Q1 2003 Sell-Through Estimate
~90 to 93 Million Units

Global Industry in Channel Inventory
! Industry Inventory Was Reduced by Approximately 4 to 5 Million Units in Q1
! Industry Inventory in the Channel is Approximately 9 Weeks
! Highest Weeks of Industry Inventory in Asia at 11 to 12 Weeks
! China Higher than Elsewhere in Asia

Motorola in Channel Inventory
! Motorola Global Channel Inventory Approximately 7 Weeks
! Within Historical Industry Norm of 6 to 8 Weeks
! Motorola Channel Inventory in Asia is Within Normal Range of 6-8 Weeks

SLIDE 31

2003 Industry Handset Forecast
Sell-Through Units

Q2 2003
~98 Million to 103 Million

Annual 2003
~430 Million

SLIDE 32

Q2 2003 Forecast
Compared to Compared to
Q2 2002 Q1 2003
Up Slightly Up
Sales

Up Slightly Higher
Operating Margin %

! Expect Competitive Environment in China to be Comparable to Q1 2003
! China Market Channel Inventory, While Down Approx. 1 Million Units
Still is Too High

• GAAP Operating Margin % is Expected to be Higher in Q2 2003 Compared to Q2 2002 and Higher Compared to Q1 2003.
Special Items Excluded Above are Described Further in the Company's Q1 2003 Earnings Press Release.
• The terms Flat, Slightly, Substantially and Very Substantially are Only Used in Forecasting Sales on this Slide
• 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.
SLIDE 33

Semiconductor Products Segment
( Excluding Special Items)
Favorable
Orders $M $1,104 $1,319 (16%)
Sales $M $1,151 $1,127 2%
Operating Earnings $M ($74) ($227) 67%
Operating Margin (6.4%) (20.1%) 13.7 % Points

! Order Decline is Indicative of Ongoing Weakness in Served Markets
! Book to Bill Ratio of 0.96
! Lower Operating Loss Driven by:
! Higher Gross Margin, Lower Operating Expenses
! Sales Up Substantially in Wireless, Up in Transportation and Down
Substantially in Networking/Computing.

SLIDE 34

SPS – Other Developments

Announced 11th Merchant Market Chipset Customer
#

Motorola Wafer Fab. In Scotland Closing by End of
#
April 2003. Wafer Fabs Will then Total 8
Cost Reduction Activities will Continue To Be
#
Implemented in 1st Half 2003. Breakeven Sales
Expected To Be Reduced to Approximately $5.0 Billion.
Capex Expected to be $350M in 2003
#

We Now Forecast Our Served Semiconductor
#
Markets to Grow Approximately 5-10% in 2003

SLIDE 35

Semiconductor Products Segment
Q2 2003 Forecast
Q2 2002 Q1 2003
Down Up Slightly
Sales

Smaller Loss Smaller Loss
Operating Margin %

Compared to Q1 2003
! Sales Expected to be Up in Transportation, Flat in Wireless & Networking
! Operating Margin Expected to Improve Due to Leverage on Higher Sales

• GAAP Operating Margin % is Expected to be a Smaller Loss in Q2 2003 Compared to Q2 2002 and Compared to Q1 2003.

SLIDE 36

Global Telecom Solutions Segment
Favorable
Orders $M $935 $1,293 (28%)
Sales $M $952 $1,085 (12%)
Operating Earnings $M $23 ($51) >100%
Operating Margin 2.4% (4.7%) 7.1 % Points

! Decline in Orders and Sales Indicative of Industry Condition
! Profitability Driven by Strong Execution:
! Higher Gross Margin & Lower Operating Expenses
! Four Consecutive Quarters with Positive Operating Earnings

SLIDE 37

GTSS – Other Developments

Breakeven Sales Now Reduced to Slightly Below $4.0B.
#

Announced Acquisition of Winphoria
#

Adds Next Generation Packet-based Switching to
#
Wireless Networking Solutions Portfolio
Adding Soft-Switch, to Supplement Existing Outsourced
#
Circuit Switch Portfolio, Addresses Long-Standing Need
for Core Switching Offering from GTSS
Wireless Infrastructure Industry Revenue Expected to
#
Decline 6-12% in 2003.

SLIDE 38

Global Telecom Solutions Segment
Q2 2003 Forecast
Q2 2002 Q1 2003
Down Substantially Up
Sales

Flat Flat
Operating Margin %

! Financial Performance is Stabilizing on a Sequential Basis

• GAAP Operating Margin % is Expected to be a Smaller Loss in Q2 2003 Compared to Q2 2002 and a Loss Compared to a
Profit in Q1 2003. Special Items Excluded Above are Described Further in the Company's Q1 2003 Earnings Press Release.

SLIDE 39

Commercial Govt. and Industrial System Segment

Favorable
Orders $M $905 $877 3%
Sales $M $863 $802 8%
Operating Margin 8.0% 6.2% 1.8% Points

! Orders, Sales, Operating Earnings, Operating Margin All Increased
! Increase in Operating Earnings Driven by:
! Sales Growth Driven by Strength in North America
! Higher Gross Margin
SLIDE 40

CGISS – Other Developments
# U.S. Federal Government Business Improving
# U.S. State and Local Government Business Still Weak
# International Business Improving – Q1 Tetra Contracts
− Hong Kong
− Taiwan
− UK
− Venezuela
− Mainland China
− Singapore
! 2003 Two-Way Radio Industry Growth Forecasted to be
2-8%

SLIDE 41

Commercial Govt. and Industrial System Segment
Q2 2003 Forecast
Q2 2002 Q1 2003
Up Slightly Up
Sales

Higher Higher
Operating Margin %

• GAAP Operating Margin % is Expected to be a Profit in Q2 2003 Compared to a Loss in Q2 2002 and a Higher Profit in Q2 2003
Compared to Q1 2003. Special Items Excluded Above are Described Further in the Company's Q1 2003 Earnings Press Release.
• 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.

SLIDE 42

Integrated Electronic Systems Segment
% Favorable
Orders $M $529 $570 (7%)
Sales $M $521 $509 2%
Operating Margin 4.4% 4.3% 0.1 % Points

! Sales, Operating Earnings and Operating Margin Slightly Higher
! Sales Growth in Automotive, Largely Offset By Declines in Other Groups
! Operating Cash Flow Slightly Positive During Q1 2003 and Positive In 4
of Last 5 Quarters

SLIDE 43

Integrated Electronic Systems Segment
Q2 2003 Forecast
Q2 2002 Q1 2003
Down Slightly Up Slightly
Sales

Slightly Higher Higher
Operating Margin %

! Continued Strong Performance in Automotive Compared to Q2 2002
! Compared to Q1 2003 Sales Expected to be Up Slightly in Energy
and Motorola Computer Group and Flat in Automotive

• GAAP Operating Margin % is Expected to be a Profit in Q2 2003 Compared to a Loss in Q2 2002 and a Higher Profit in Q2 2003
Compared to Q1 2003. Special Items Excluded Above are Described Further in the Company's Q1 2003 Earnings Press Release.
• 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.
SLIDE 44

Broadband Communications Segment
% Favorable
Orders $M $343 $537 (36%)
Sales $M $405 $525 (23%)
Operating Earnings $M $26 $47 (45%)
Operating Margin 6.4% 9.0% -2.6 % Points

! Sales Decline Driven by Lower Capital Expenditures by Cable Operators
! Operating Margin Decline Due to Decrease in Sales Partially Offset by
Lower Operating Expenses.
! Positive Operating Cash Flow During Q1 2003 and In Last 5 Quarters
! Remains Technology and Market Share Leader in Cable Equipment

SLIDE 45

BCS – Other Developments
# Shipped 1.1 Million Set Top Boxes During Q1 2003, Down 300K from Q102
# Shipped 1.0 Million Cable Modems During Q1 2003, Up 400K from Q102
# Still Investing in Brand Advertising and R&D for Broadband
# Expanded Motorola’s Presence in the Consumer Market, Launching the
Broadband “Connected Home” Strategy
# Significant Win from MTV for Their Multi-network Conversion from Analog to
Digital
# Two Major Technology Wins in Mexico
– Cablevisión Monterrey -Infrastructure & Digital Set-tops
– Multioperadora de Sistemas -Motorola IP Technology for the Delivery of
High-Speed Data
! Broadband Equipment Industry Revenue Expected to decline 10%-15% in
2003 as Cable Operators Continue To Reduce Capital Expenditures

SLIDE 46

Broadband Communications Segment
Q2 2003 Forecast
Q2 2002 Q1 2003
Down Very Flat to Up Slightly
Sales
Substantially

Lower Flat
Operating Margin %

! Sales Decline Compared to Prior Year Driven by Lower Capital Spending from
Cable Operators, Product Mix and Reduced ASPs
! Operating Margins Compared to prior Year Impacted by Lower Sales and ASP
Reductions, Partially Offset by Lower Operating Expenses
• GAAP Operating Margin % is Expected to be Lower in Q2 2003 Compared to Q2 2002 and Lower Compared to Q1 2003.
SLIDE 47

Motorola Objectives for 2003
Commitment to Continued Earnings And Balance
#
Sheet Improvement
Conservatively Managing Cost Structure
―
Continued Focus on Positive Cash Flow
―
Drive Continuous Improvement
―

90% of Employee Bonuses Based on Achieving
Operating Earnings and Cash Flow Goals

Return to Growth
#
Accelerate Addressing Opportunities and Fixing
#
Strategic Issues
SLIDE 48

Motorola, Inc.
Driving the Next Step Change in our Cost Competitiveness

Phase II
Phase I
Digital Six Sigma
Mostly Restructuring Actions

•Cost of Poor Quality
• Staff Reductions
•Sourcing Effectiveness
• Facility Closures
• New Product Intro./ Eng. Effectiveness
• Outsourcing

Targeting $3 B
Approximately $4B
Cost Reductions
Cost Reductions

2003/2004
2001/2002

SLIDE 49

Guidance Update

David Devonshire
Executive Vice President,
Motorola Inc.

SLIDE 50

Q2 2003 Guidance
Favorable (Unfavorable)
Q2 2003 Q2 Q1 Q2 2002 Q1 2003
2002 2003
Sales $6.4B-$6.6B $6.9B $6.0B (4%)-(7%) 6%-9%
Earnings Per Share $0.03 -$0.05 $0.02 $0.01 $0.01 -$0.03 $0.02 -$0.04

Earnings Per Share $0.01-$0.03 ($1.02) $1.03 -$1.05 ($0.04)-($0.06)
$0.07
(on a GAAP Basis)

! Versus Q2 2002 Improvement in Operating Earnings On Sales Decline of 4-7%
Due to Beneficial Results of Restructuring and Cost Reductions
! Expect Special Items Charge of Approx. $0.02 Per Share Consisting Mostly of:
quot; Acquisition Related Charges for Winphoria/Next Level Transactions
quot; Charges For Additional Cost Reduction Actions Which Could Not Be
Recorded in Q1 2003

SLIDE 51

Annual 2003 Guidance
Previous
2003 Guidance 2002 2001
Sales $27.5 to $28.0B ~$28.0B $27.3B $30.5B
Earnings Per Share $0.35 to $0.40 ~$0.40 $0.12 ($0.33)

$0.35 to $0.40 ~$0.40 ($1.09) ($1.78)
Equal To Or Greater
Earnings Per Share
Than EPS Excluding
(GAAP)
Special Items

! Sales Guidance Lowered Slightly Due to Slow Pace of Economic Recovery which
Slightly Reduced our Industry Forecasts for Handsets, Semiconductors and Broadband
! Sales Growth Expected in PCS, CGISS, SPS and IESS
! Expect Positive Operating Earnings and Positive Operating Cash Flow in
Each of our Six Major Business Segments
! Earnings Leverage Potential When Served Markets Improve

SLIDE 52

Estimated Quarterly EPS
$0.25
$0.20
$0.15
$0.10
$0.05
$0.00
Q1 Q2 EST Q3 EST Q4 EST
-$0.05
-$0.10
-$0.15
2002 2003 Lower End of Range 2003 Upper End of Range

2nd Half Increase in EPS and Operating Margin Driven By:
! Continued Implementation of Margin Improvement Programs in PCS
(Platform Strategy, Supply Chain Savings and Q3/Q4 2003 New Products)
! Volume Leverage Expected To Return SPS to Profitability in 2nd Half of 2003
! Impact of Additional Cost Reduction Actions To Be Implemented in 2003
! Normal Seasonal Q4 Operating Margin Improvements In PCS and CGISS

SLIDE 53

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

SLIDE 54

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 55

Use of Non-GAAP Measurements
In addition to the GAAP results provided during this conference call, non-GAAP
measurements, which present operating results on a basis excluding special items,
have been provided. Management, as well as certain investors, use these results of
operations, excluding special items, to measure Motorola's current and future
financial performance. The non-GAAP measurements do not replace the presentation
of Motorola's GAAP financial results. These measurements provide supplemental
information to assist investors in analyzing Motorola's financial position and results of
operations. Motorola has chosen to provide this information to investors to enable
them to perform meaningful comparisons of past, present and future operating results
and as a means to emphasize the results of core on-going operations.
Details of the special 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 April 8, 2003, (ii) in the Form 8-K filed by Motorola on April 15,
2003 (which attached yesterday’s earnings press release, and (iii) within the text of
the slides that accompany this webcast. Each of these items can be found on
Motorola’s website at www.motorola.com/investor

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 Q2 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) expectations for Motorola’s
operating cash flow and free cash flow during 2003; (5) selling, general and administrative expenses; (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) the future direction of Chinese markets; (16) worldwide semiconductor industry
growth; (16) the continued implementation and effectiveness of the “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-33 through F-40 of Motorola’s Proxy Statement for the 2003 annual meeting of stockholders and in
Motorola’s other SEC filings.

SLIDE 57

SLIDE 58

Adobe PDF Q1 2003 Earnings Release Presentation

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Adobe PDF Q1 2003 Earnings Release Presentation