Adobe PDF Q4 2005 Motorola Inc. Earnings Conference Call Presentation

Motorola Q4 2005 Earnings
Release Conference Call

January 19, 2006

Slide - 1
Q4 2005 Earnings Release- January 19, 2006
MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
.

Ed Gams
Corporate Vice President
of Investor Relations

Slide - 2
.

Safe Harbor Statement
A number of forward-looking statements will be made during
this presentation. Forward-looking statements are any statements that are not
historical facts. These forward-looking statements are based on the current
expectations of Motorola and there can be no assurance that such
expectations will prove to be correct. Because forward-looking statements
involve risks and uncertainties, Motorola’s actual results could differ
materially from these statements. Information about factors that could cause,
and in some cases have caused, such differences can be found on pages 70
through 80 of Motorola’s 2004 Annual Report on Form 10-K and in Motorola’s
other SEC filings.

This presentation is being made on the afternoon of January 19, 2006. The
content of this presentation contains time-sensitive information that is
accurate only as of the time hereof. If any portion of this presentation is
rebroadcast, retransmitted or redistributed at a later date, Motorola will not be
reviewing or updating the material that is contained herein.

MOTOROLA and the Stylized M Logo are registered in the US Patent &
Trademark Office. All other product or service names are the property of their
respective owners. © Motorola, Inc. 2006

Q4 Earnings Release- January 19, 2006 Slide -- 3

Ed Zander
Chief Executive Officer

Slide - 4
.

The Big Bet …Seamless Mobility

@home
transition
transition

in
out in
the
the
auto
world

transition transition
@work


David Devonshire
Chief Financial Officer

Slide - 6
.

Motorola Inc. Financial Results
Q4 Q4 Fav/
Q4 2005 2004 (Unfav)

Sales ($M) $ 10,433 $ 8,842 18%

Earnings Per Share * $ 0.47 $ 0.28 68%

Annual Annual Fav/
ANNUAL 2005 2004 (Unfav)

Sales ($M) $ 36,843 $ 31,323 18%

Earnings Per Share * $ 1.82 $ 0.90 102%

* From Continuing Operations


Significant Items Discussed in the Earnings Press Release

Q4 2005 Reported EPS From Continuing Operations * $ 0.47
Includes:
Collection Related to Telsim 0.13
Tax Adjustments 0.02
Loss on Sale of Investment (0.02)
Charge For Past Use of Kodak Intellectual Property (0.01)
$ 0.12

Q4 2004 Reported EPS From Continuing Operations * $ 0.28
Includes:
Gains on Sales of Investments and Businesses 0.02
Reorganization of Businesses 0.01
Collection of Receivables That Had Been Previously Deemed Uncollectible (Telsim) 0.01
CMS Goodwill Impairment (0.02)
In Process R&D Related to Acquisitions (Mesh and Crisnet) (0.01)
$ 0.01

* See appendix for reconciliation

Excluding Significant Items From Both Years, Our Growth
in Earnings Per Share for Q4 is 30%

Motorola Sales Trend
$ Billions
12
10.4

10 9.4
8.8
8.8
8.2
7.4 7.5 7.5
8 6.9
2003
5.9
6 5.2
5.1 2004
2005
4

2

0
Q1 Q2 Q3 Q4

For the Full Year, Sales Increased 18% ’05 vs. ‘04

Revenue Per Employee
$(000)’s
$550
$534

$513

$500 $486
$472
$463

$450

$400

$350

$300
Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05

4 Quarter Rolling Average


Motorola Operating Earnings Trend
% of Sales
20.0%
16.8%

15.0%
11.7% 11.5%
11.1%
10.6% 10.4%
2003
9.2% 8.6%
10.0%
2004
6.7%
2005
5.2%
5.0%
4.6%
5.0%

0.0%
Q1 Q2 Q3 Q4

Excluding Significant Items, Q4’05 Operating Margin Was
12.5% vs. 11.8% in Q4’04

Cash Flow and Debt
Cash Flow Cash & Debt
Year End Year End
2005 2004
($ in Billions) Q4 2005 ($ in Billions)

Operating Cash Flow $ 2.1 Cash/Equiv/Mkt Sec $ 14.8 $ 10.7

Short Term/ Current Debt $ (0.5) $ (0.7)
Free Cash Flow $ 1.9
Long Term Debt $ (3.8) $ (4.6)

Total Debt $ (4.3) $ (5.3)

Net Cash/ (Net Debt) $ 10.5 $ 5.4

•Debt to Total Capital Now At 20.3% vs. 28.4% at 12/31/04
•$500M Received From Telsim Settlement, $410M
Additional Anticipated in 2006


Stock Repurchase Update

• May 19, 2005 Authorized to Purchase $4B
over 3 Years

• In Q4 Purchased ~16M Shares, Average Price
of $22.40

• Inception to Date Purchased 41.7M Shares,
Cash Used ~ $870M


Q1 2006 Guidance
Sales $9.3B-$9.5B

Earnings Per Share $.27-.29
(excluding Stock Option Expense)

Tax Rate 36%

Shares Outstanding 2.56 Billion

Stock Option Expense $.02 Per Share

Comments on 2006
• Stock Option Expense Estimated Annual
Impact of $250M - $300M
• Estimated Tax Rate is 36%
• Additional Collection Related to Telsim
Expected in the First Half
• Further Improvement in Operating Margin
Versus 2005, Continuing Progress to 13-15%
Goal


Mobile Devices Business Results

All-time Motorola record for units!
All-time record for Mobile Devices sales!
All-time record for Mobile Devices operating earnings!

… and we increased market-share again,
driven by wickedly cool and compelling products
and rich experiences!


Wickedly Cool Products
RAZR is world’s best-selling clamshell handset
Ultra-slim SLVR is redefining the “candy bar”
Our “Thin Platform” is hot! … 12.9M units in Q4!
UMTS units are up by 87% vs. Q3
Another record iDEN performance!
GSMA award driving sales across price tiers
in world’s High-Growth Markets
26 new launches: 13 GSM, 6 CDMA,
3 UMTS, 4 iDEN

Market Share Momentum
19% global share: the clear #2 and gaining!
#1 in North America
#1 in Latin American
#2 in Europe
#2 in North Asia
#3 in High-Growth Markets


Q4 2005 Q4’05 vs. Q4’04
Sales $M $6,537 Up 30%
Operating Earnings $M $663 Up 25%
Operating Margin 10.1% * Down 0.5 pts

Units 44.7M Up 40%

Market Share Est. – Q4 19.0% Up 3.1 ppts
Up 0.4 pts vs. Q3’05

* Excluding Significant Items, Q4 Operating Margin Was 11.0%
vs. 10.2% in Q4’04


2005 2005 vs. 2004
Sales $M $21,455 Up 25%
Operating Earnings $M $2,198 Up 27%
Operating Margin 10.2% * Up 0.1 pt

Units 146.0M Up 40%

* Excluding Significant Items, 2005 Operating Margin Was
10.7% vs. 9.9% in 2004


• #1 at 3 of top 4 wireless operators!
• Strong market-share leadership
• Units up 8% vs. Q4’04
• Launched RAZR for EV-DO in Americas – ahead of plan
• Focus: Drive new icons, expand CDMA, strengthen brand

Source: Motorola, Inc. Shares are calculated on Q4 05 Unit Shipments, includes iDEN.

• #1 in Venezuela, Argentina and Brazil!
• Market-share leadership
• Delivered strength across price tiers – from C115 to RAZR
• Focus: Grow brand and share across price tiers



… and growing!

• Best quarter ever for sales and units; RAZR is best-selling
device in Europe
• Market share up 5 ppts vs. Q4‘04
• Units up 60% vs. Q4‘04
• Launched V3x for UMTS networks across Europe
• Focus: Build brand and share across price tiers



• RAZR is a hit across region; A780 is #1 smartphone in China!
• Market share up 4.7 ppts vs. Q4’04
• Units up 90% vs. Q4‘04
• Expanded distribution channels throughout China
• Focus: Grow brand and share across price tiers



• RAZR, SLVR and GSMA driving sales
• Market share up more than 4 ppts vs. Q4‘04
• Expanded distribution channels throughout India
• Focus: Growth and expansion through GSMA awards



GSM, Edge,
CDMA 1X, EV-DO, UMTS
SILVER, BLACK,
PINK, BLUE & GOLD


“Connecting the unconnected”


Get more music – up to 500 mp3 tracks
– even faster!

Get your music in stereo!

And go wireless – discreetly!


searching messaging
imaging


The new standard for QWERTY

Productivity: video, still
images, voice, data, email and
more – and all on Microsoft
Windows Mobile 5.0

Only 11.5mm!


grow profitably with …
wickedly compelling products …
and rich experiences …

with quality and efficiency.


on a year-over-year basis …
• increased sales
• increased units and market share
• and continued Op Margin expansion
and on a sequential basis …
• less than normal seasonality


Government & Enterprise Mobility Solutions – Q4
Q4 2005 Q4'05 vs. Q4'04

Sales $M $ 1,816 Up 8%

Operating Earnings $M $ 314 Up 41%

4.1 pts *
Operating Margin 17.3% Up

* Excluding Significant Items in Q4 2004 Operating
Margin Improved 3.3 pts


Government Markets - Global Emphasis on
Interoperability
United States
• State of Indiana
• Fresno County (CA)
• Laredo, Texas
• Nassau County (FL)
• Colorado Springs
• Petersburg (VA)
• Ann Arundel County (MD)

Asia Pacific
• Korea Government Radio Network
- 140 agencies on single communications platform

Europe
• O2 Airwave Ambulance Fleet


Product Leadership & Innovation
First Pocket PDA for TETRA
• 1st PDA to Operate on TETRA Networks
• Meets Rugged Public Safety Requirements
• Delivers Mission Critical Data Applications to
First Responders on the Move:
- Individual Records
- Vehicle Records
- Crime Reports
- Accident Reports

Strong Mesh Momentum
• 34 New Orders; 10 New Customers
• Shipment of New 4.9 GHz MOTOMESH
Multi-radio Broadband Network


Q4 – Enterprise & Automotive Activity

Enterprise
• Acquired Wireless Valley Communications
- Leading Provider of Software Solutions for Effective Design &
Management of Wireless Networks
• HC700-L - First Entry Into the Commercial-off-the-Shelf, Rugged,
Handheld Mobile Computing Market

Automotive
• More Than $1 billion in New Lifetime Sales Awards
• Strong Sales in Automotive Aftermarket Accessories

Q1 Guidance: Sales Up, Operating
Earnings Up Versus Prior Year


A1

Networks Business Q4

Q4 2005 Q4’05/Q4’04

Sales $M 1,494 Down 4%

Operating Earnings $M 225 Down 18%

*
Operating Margin 15.1% Down 2.7 pts

* Excluding Significant Items in Q4 2004 Operating
Margin Decrease was 2.3 pts


Q4’05 Networks – Other Developments

– CDMA2000 EV-DO award from VIVO in Brazil

– 4 New FTTP Awards - Bulloch Telephone, ComSouth, PBT Telecom
and ATMC

– VIBO in Taiwan UMTS Island-Wide Launch

– Canopy Macedonia Nationwide Network Announced on January 16

– Earthlink Metro WiFi Canopy Agreement for Philadelphia, Anaheim, and
Other Cities Announced Today

Q1 Guidance: Sales and Operating Earnings Down
Versus Prior Year


Connected Home – Q4

Q4 2005 Q4’05 vs. Q4’04

Sales $M $675 Up 1%

Operating Earnings $M $60 Up 40%

Operating Margin 8.9% Up 2.5 pts


Connected Home – Q4 Highlights
• Shipped ~ 1.4M Set-Tops, Including ~ 700K HD/DVR Enabled

• Chile’s Largest Operator, VTR, Selected Motorola Digital Video
Platform

• Began Shipping QIP Set-Tops – First With Built-in Home Media Networking

• Verizon Expands FiOS TV Deployments in Markets in Texas, Virginia,
and Florida Using Motorola Digital Video Technology

• Expanded IP Voice Portfolio
- Announced Plans for a Joint Development Collaboration with Juniper
Networks
- Acquired Advanced RF Technology from Broadband Innovations
-Shipped ~500K Voice Modems

• In January, Announced Acquisition of Kreatel to Expand IP Video Position
Q1 Guidance: Sales Flat and Operating Earnings Up
Guidance For Q4 Year
Versus Prior - ?????

2006 Priorities

“WOW” Products/End-to End Solutions
Strengthen Financial Performance
Customer “Delight”
Market Share/Thought Leadership
Supply Chain Efficiency
Refine and Execute On Strategic Direction


Motorola Q&A Participants

David Devonshire
Ed Zander
Chief Financial Officer
Chief Executive Officer

Greg Brown
Ron Garriques
President, Government & Enterprise
President, Mobile Devices Business
Mobility Solutions

Dan Moloney Ed Gams
Vice President, Investor Relations
President, Connected Home


Use of Non-GAAP Measurements
In addition to the GAAP results provided during this conference call, Motorola has presented certain
non-GAAP measurements. Motorola has provided these non-GAAP measurements as a measure to
help investors better understand its core operating performance, enhance comparisons of Motorola’s
core operating performance from period to period and to allow better comparisons of Motorola’s
operating performance to that of its competitors. Among other things, the Company’s management
uses these operating results, excluding the identified items, to evaluate the performance of its
businesses and to evaluate results relative to incentive compensation targets. Management uses
operating results excluding these items because they believe this measure enables them to make
better period-to-period evaluations of the financial performance of its core business operations. There
are inherent limitations in the use of operating results excluding these items because the company's
GAAP results do include the impact of these items. The non-GAAP measures are intended only as a
supplement to the comparable GAAP measures and the company compensates for the limitations
inherent in the use of non-GAAP measures by using GAAP measures in conjunction with the non-
GAAP measures. As a result, investors should consider these non-GAAP measures in addition to,
and not in substitution for, or as superior to, measures of financial performance prepared in
accordance with GAAP.

Details of the these items and reconciliations of the non-GAAP measurements provided during this
call to GAAP measurements can be found: (i) in the Form 8-K filed by Motorola on January 19, 2006
(which attached this afternoon’s earnings press release), (ii) within the text of the slides that
accompany this webcast, or (iii) on the company’s website. Each of these items can be found on
Motorola’s website at www.motorola.com/investor.


Significant Items Discussed- Quarter
Q4 2005

Q4 2005 PBT Q4 2005 Tax Q4 2005 PAT
(Inc)/Exp Inc/(Exp) (Inc)/Exp EPS impact

Collection related to Telsim $ (504) $ (181) $ (323) $ 0.13
Loss on sale of investment 77 29 48 (0.02)
Charge for past use of Kodak IP 57 22 35 (0.01)
Tax adjustments - 68 (68) 0.02
TOTAL IMPACT $ (370) $ (62) $ (308) $ 0.12

Q4 2004

Q4 2004 PBT Q4 2004 Tax Q4 2004 PAT
(Inc)/Exp Inc/(Exp) (Inc)/Exp EPS impact

Gains on sales of investments and businesses (93) (36) (57) 0.02
Reorganization of business (28) (10) (18) 0.01
Collection of receivables that had been previosuly deemed uncollectible (Telsim) (23) (9) (14) 0.01
CMS Goodwill Impairment $ 58 $ - $ 58 $ (0.02)
IPR&D charges related to acquisitions (Mesh and Crisnet) 17 - 17 (0.01)
TOTAL IMPACT $ (69) $ (54) $ (15) $ 0.01


OE Reconciliation of Significant Items- Quarter
Q4 2005

Net Sales $ 10,433

Operating earnings $ 1,749
Operating earnings as a percentage of net sales 16.8%

Less: Significant items discussed (447)
Operating earnings excluding significant items discussed $ 1,302

Q4 2004

Net Sales $ 8,842


Less: Significant items discussed 24


OE Reconciliation By Segment of Significant
Items From Continuing Operations-Quarter
Q4 2005

TOTAL Mobile Devices Networks GEMS Conn.Home Other/Elims

Net Sales $ 10,433 $ 6,537 $ 1,494 $ 1,816 $ 675 $ (89)

Operating earnings 1,749 663 225 314 60 487
Operating earnings as a percentage of net sales 16.8% 10.1% 15.1% 17.3% 8.9% -547.2%

Operating earnings 1,749 663 225 314 60 487
Less: Significant items discussed (447) 57 0 0 0 (504)
Operating earnings excluding significant items discussed $ 1,302 $ 720 $ 225 $ 314 $ 60 $ (17)
Operating earnings as a percentage of net sales 12.5% 11.0% 15.1% 17.3% 8.9% 19.1%

Q4 2004


Net Sales $ 8,842 $ 5,017 $ 1,549 $ 1,676 $ 669 $ (69)

Operating earnings 1,018 532 275 222 43 (54)

Operating earnings 1,018 532 275 222 43 (54)
Less: Significant items discussed 24 (18) (6) 13 0 35
Operating earnings excluding significant items discussed $ 1,042 $ 514 $ 269 $ 235 $ 43 $ (19)


Significant Items Discussed- Annual
2005 YTD

2005 PBT 2005 Tax 2005 PAT
(Inc)/Exp Inc/(Exp) (Inc)/Exp

Reorganization of Business $ 116 $ 29 $ 87
Collection related to Telsim (504) (181) (323)
Charge for past use of Kodak IP 57 22 35
Gains on sales of investments and businesses (1,803) (676) (1,127)
Sprint/Nextel derivative (52) (19) (33)
Debt retirement Costs 137 52 85
Other - Repayment of previously-reserved loan (Iridium) (30) (11) (19)
Tax adjustments - 443 (443)
TOTAL IMPACT $ (2,079) $ (342) $ (1,738)

2004 YTD

2004 PBT 2004 Tax 2004 PAT
(Inc)/Exp Inc/(Exp) (Inc)/Exp

Reorganization of Business $ (6) $ (1) $ (5)
Collection of receivables that had been previously deemed uncollectible (Telsim) (44) (17) (27)
IPR&D charges related to acquisitions 32 - 32
Goodwill impairment (CMS) 125 - 125
Gains on sales of investments and businesses (418) (160) (258)
Reversal of reserves relating to the previous sale of a business (CPD) (20) (8) (12)
Partial recovery of a previously impaired investment (Callahan) (20) (8) (12)
Charges related to debt retirement and cancellation of interest rate swaps 81 31 50
Tax adjustments - (236) 236
TOTAL IMPACT $ (272) $ (399) $ 127


OE Reconciliation of Significant Items- Annual
2005 YTD

Net Sales $ 36,843

Operating earnings 4,696

Less: Significant items discussed (331)

2004 YTD

Net Sales $ 31,323


Less: Significant items discussed 106


OE Reconciliation By Segment of Significant
Items From Continuing Operations-Annual
2005 YTD


Net Sales $ 36,843 $ 21,455 $ 6,332 $ 6,597 $ 2,765 $ (306)

Operating earnings 4,696 2,198 990 882 185 441
Operating earnings as a percentage of net sales 12.7% 10.2% 15.6% 13.4% 6.7% -144.1%

Operating earnings 4,696 2,198 990 882 185 441
Less: Significant items discussed (331) 88 3 67 4 (493)
Operating earnings excluding significant items discussed $ 4,365 $ 2,286 $ 993 $ 949 $ 189 $ (52)

2004 YTD


Net Sales $ 31,323 $ 17,108 $ 6,026 $ 6,228 $ 2,214 $ (253)

Operating earnings 3,132 1,728 718 842 146 (302)

Operating earnings 3,132 1,728 718 842 146 (302)
Less: Significant items discussed 106 (26) 15 26 (4) 95
Operating earnings excluding significant items discussed $ 3,238 $ 1,702 $ 733 $ 868 $ 142 $ (207)


Reconciliation of Revenue Per Headcount
2003 2004 Q1 '05 Q2 '05 Q3 '05 Q4 '05
Headcount 65,639 67,641 67,952 68,568 68,777 68,971
Rolling 12 Months of Sales 23,155 31,323 32,043 33,326 35,252 36,842
*Revenue / HC (In 000's) 353 463 472 486 513 534

* Revenue Per Head = Rolling 12 Months of Sales / Qtr Ending Headcount


Safe Harbor Statement
During this call we have made a number of forward-looking statements. Forward-looking statements
are any statements that are not historical facts. These forward-looking statements are based on the
current expectations of Motorola and there can be no assurance that such expectations will prove to
be correct. Such forward-looking statements include, but are not limited to, our comments and
answers relating to the following topics: (1) guidance for Motorola’s sales and earnings per share for
the first quarter of 2006; (2) Motorola’s expected effective tax rate and shares outstanding in the first
quarter of 2006; (3) expectations regarding the volume and impact of our stock repurchase
program; (4) Motorola’s expected stock option expense in 2006; (5) expected gains from the sale of
investments in 2006; (6) future sales, profitability, operating earnings, operating margin and market
share for each of Motorola’s segments; (7) expectations for Motorola’s future operating margin and
various factors in its improvement, (8) expected timing for the announcement, launch and shipment of
new products; (9) the sales impact and pricing of new products; and (10) the size of the worldwide
handset and infrastructure markets in 2006. Because forward-looking statements involve risks and
uncertainties, Motorola’s actual results could differ materially from those stated in the forward looking
statements. Information about factors that could cause such differences can be found in this
afternoon's press release, on pages 70 through 80 of Motorola’s 2004 Annual Report on Form 10-K
and in Motorola’s other SEC filings.

This presentation is being made on the afternoon of January 19, 2006. The content of this
presentation contains time-sensitive information that is accurate only as of the time hereof. If any
portion of this presentation is rebroadcast, retransmitted or redistributed at a later date, Motorola will
not be reviewing or updating the material that is contained herein.

MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. All other
product or service names are the property of their respective owners. © Motorola, Inc. 2006

Adobe PDF Q4 2005 Motorola Inc. Earnings Conference Call Presentation

Recomendados

Recomendados

Mais conteúdo relacionado

Destaque

Destaque (6)

Semelhante a Adobe PDF Q4 2005 Motorola Inc. Earnings Conference Call Presentation

Semelhante a Adobe PDF Q4 2005 Motorola Inc. Earnings Conference Call Presentation (20)

Mais de finance7

Mais de finance7 (20)

Último

Último (20)

Adobe PDF Q4 2005 Motorola Inc. Earnings Conference Call Presentation