q1 2002 earnings release

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Ed Gams Sr. VP & Director Investor Relations (847) 576-6873 or Bob Hubberts Manager Investor Relations (847) 576-4995

FOR IMMEDIATE RELEASE April 16, 2002

MOTOROLA REPORTS FIRST-QUARTER RESULTS

?? Results exceed consensus expectations and earlier guidance ?? Positive operating cash flow of approximately $150 million

SCHAUMBURG, Ill. - Motorola, Inc. (NYSE:MOT) today reported sales

of $6.0 billion in the first quarter of 2002. For ongoing

operations, which exclude exited businesses, this is a decrease

of 20 percent from $7.5 billion a year earlier. Excluding special

items, the company incurred a net loss of $174 million, or (8)

cents per share, compared with a net loss of $211 million, or

(10) cents per share, in the year-ago quarter.

Edward Breen, president and chief operating officer, said,

“We are making solid progress in repositioning Motorola to return

to profitability in the second half of this year as our end markets recover. We have demonstrated the ability to lower our

break-even sales level, which is now reduced by more than 20

percent from its peak in 2000. Our focus on balance sheet

management continues to yield solid results. During the past

quarter, we generated operating cash flow of approximately $150

million on top of the $2.0 billion generated for the full year

2001.”

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In the first quarter of 2002, Motorola reported special

items resulting in a net charge of $388 million pre-tax, or $275

million after-tax. In the first quarter of 2001, Motorola

reported special items resulting in a net charge of $279 million pre-tax, or $327 million after-tax. (Details of the special items

are presented in a table preceding the footnotes at the end of this press release.)

Presented on an as reported basis in accordance with U.S.

generally accepted accounting principles (GAAP), the company

reported first-quarter 2002 sales of $6.0 billion, compared with

sales of $7.7 billion a year earlier. The GAAP net loss was $449

million, or (20) cents per share, compared with a net loss of

$533 million, or (24) cents per share, for the first quarter of

2001.

Breen reviewed the following results of major operations for

the first quarter of 2002 compared with the first quarter of

2001. This review is based on ongoing operations, excluding

special items.

Personal Communications Segment

Segment sales were $2.3 billion, up 1 percent from the

comparable year-ago quarter. Orders were $2.5 billion, down 11

percent from a year ago. Excluding special items, the segment

recorded operating earnings of $108 million versus an operating

loss of $382 million a year ago.

This was the segment’s third consecutive quarter of positive

operating earnings. Improvements in operating earnings, versus

last year, were driven by improved gross margins, lower research

and development expenses and lower selling, general and

administrative expenses.

During the quarter, Motorola introduced a host of new products

from its 2002 portfolio, including six new, distinctively designed handsets, three existing handset models with additional enhanced

technology and eight companion accessories that provide additional

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entertainment and functionality. Among the new handsets are the A820

and the i95cl iDEN handsets. Motorola’s A820 meets a full array of

enterprise communication and entertainment needs in one handheld,

compact device with a color display and is expected to be the first

commercially available handset for third generation (3G) systems. The

i95cl boasts a large color display that utilizes the advantages of

Java™ technology by enabling enhanced current mobile applications including entertainment and graphics, and future applications

including mapping and streaming video.

The new 2002 portfolio includes fashionable form factors

such as the "swivel-flip" V70 handset; color displays on the

T720, A820, i95cl and the entire set of offerings for Korea; and

Enhanced Messaging Service (EMS) capabilities featured on models

including the A388, T720, and C330, which are winning marketplace

recognition. Additionally, at the entry level, the C330 provides the youth/mass-market segment a cost-effective and feature-rich

wireless communication handset with EMS, polyphonic audio, and

digital and physical personalization options for both carriers

and consumers.

On April 15, Motorola said it plans to collaborate with

Siemens Information and Communication Mobile to develop new

handsets for Universal Mobile Telecommunications Systems (UMTS) based on Motorola’s i.300 Innovative Convergence™ platform (for

more information see Semiconductor Products Segment report below). Motorola also said it would, starting in the fourth

quarter, supply Siemens with Motorola’s new A820 handset which

Siemens will, in turn, market under its own name. It's the first

time Motorola will manufacture handsets that will be sold to a

competing wireless handset producer. Motorola’s A820 handset is

based on the i.300 Innovative Convergence platform.

Motorola also continued to strengthen its leadership

position in 2.5 generation (2.5G) General Packet Radio Service

(GPRS) and Java 2 Platform, Micro Edition (J2ME™), which enable consumers to continually upgrade the applications on a device.

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Motorola today has a broad product portfolio, including more than

a dozen wireless phones with J2ME technology, a robust Java

download solution, more than 100 branded applications and a full-

service program to assist software developers in creating and

certifying new wireless applications.

To help drive the availability of applications and services,

Motorola launched its Mobile Services Café, which includes a rich

menu of mobile services, applications and middleware. This

enables network operators to more quickly offer customers a wide

selection of content and services that can be customized to help

transform any Internet-enabled mobile device into an "extension"

of the user’s personality and preferences.

Global Telecom Solutions Segment

Segment sales were $1.1 billion, down 36 percent compared to a year ago. Orders declined 17 percent to $1.3 billion.

Excluding special items, the segment reported an operating loss

of $49 million, compared with operating earnings of $42 million a

year ago. The loss was due to lower sales.

During the quarter, Japan’s KDDI successfully launched its

third generation (3G) Code Division Multiple Access (CDMA) 2000

1X network services nationwide using Motorola equipment. Motorola

also announced two other major contracts in Asia, a $253 million

Global System for Mobile (GSM) communications system with TA

Orange in Thailand and a $170 million dual-band GSM network

contract with Telkomsel in Indonesia. In January, China Unicom

launched its nationwide CDMA network services for which Motorola

was the largest infrastructure provider. Motorola completed its first UMTS voice call that is in

compliance with Third Generation Partnership Project Standard

Release 99 version. The achievement is a major step towards

successful deployment of future UMTS networks.

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Commercial, Government and Industrial Solutions Segment

Segment sales were $799 million, down 10 percent compared to

a year ago. Orders decreased 12 percent to $874 million.

Operating earnings, excluding special items, increased to $53

million from $43 million a year ago. Improvements in operating

earnings, versus last year, were driven by lower research and development expenses and lower selling, general and

administrative expenses.

During the quarter, Motorola received an order from ARINC

Incorporated for 25,000 handheld data terminals that will be used

by the air transport industry for cargo tracking and positive bag

matching as well as asset and security management at airports.

Motorola also received an order from Montgomery County, Penn., to

upgrade its public safety voice and data systems and was awarded

a contract to supply an 800 MHz iDEN system to Unicom Guomai, the

leading public access mobile radio service provider in China.

Other equipment orders were received in China, Egypt, El

Salvador, Haiti, Indonesia, Japan, Saudi Arabia, the United

States and Venezuela. Motorola successfully implemented South Africa’s first

digital public safety radio system, a TETRA-compliant system in

the City of Cape Town. Motorola also announced it will design,

manufacture and market infrastructure and portable and mobile

two-way radio products for use in the 220 MHz band by enterprises

and private carriers in the U.S.

Motorola’s Printrak subsidiary will provide a Regional

Automated Fingerprint Identification Access System for use

throughout Canada. The subsidiary will also provide a Canada-wide

security network for airports and border patrol sites based on

Motorola’s LiveScan Station 3000N™ product, an integrated booking

solution with mugshot, palm and fingerprint capabilities in a

single, stand-alone unit.

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Broadband Communications Segment


a year ago. Orders decreased 41 percent to $537 million as a

result of the continuing slow down by cable operators in making

capital investments and deploying subscriber equipment. Operating

earnings, excluding special items, decreased to $59 million

compared with $118 million a year ago due to the decline in sales partially offset by aggressive product cost reductions, supply

chain savings and overhead cost control actions in 2001.

In the first quarter, Motorola completed its acquisition of

Synchronous, Inc., a leading provider of fiber optic transmission

systems for video, data and voice transmission. The acquisition

expands Motorola’s existing optical product suite with best-in-

class optical networking capabilities, including Synchronous’

1550nm technology.

Time Warner Cable approved Motorola’s Omnistar GX2 optical

broadband transmission platform, the first to meet Time Warner

Cable’s stringent standards for next-generation, 1310nm high-

density optical transmitters. In Germany, eKabel awarded Motorola

the network upgrade for its existing broadband network. Motorola was selected by Digeo, Inc. to collaboratively

design and manufacture a new class of advanced set-top devices

called broadband media centers (BMC). Charter Communications is

expected to be the first cable operator to deploy the BMC this

fall.

Motorola also announced a new SURFboard® cable modem retail

distribution agreement with Micro Center, a national computer

retailer operating in 17 major U.S. markets. Through February,

industry market data indicates that Motorola has outsold all

other modem suppliers combined in retail outlets.

Motorola and Nortel announced an agreement to create and

deliver an integrated voice over IP (VoIP) solution for the

broadband cable market. This non-exclusive agreement is intended to simplify the deployment of VoIP equipment by broadband network

operators worldwide.

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Shortly after the quarter ended, Motorola announced that Cox

Communications of Las Vegas, one of the fastest-growing regional

cable systems, had surpassed industry norms by supporting more

than 14,500 cable modem customers on a single Motorola Broadband

Services Router (BSR 64000).

Semiconductor Products Segment

Segment sales were $1.1 billion, down 26 percent compared to

the year-ago quarter. Orders were up 18 percent to $1.3 billion.

Excluding special items, the segment had an operating loss of

$226 million versus an operating loss of $95 million a year ago.

The larger loss compared to the year-ago quarter was due to the

decline in sales. The losses reported during both quarters were

the result of the worldwide semiconductor industry’s sharpest

decline in history.

On April 12, Motorola announced plans to join two other

leading semiconductor manufacturers, Philips and

STMicroelectronics, to create a five-year, jointly funded alliance aimed at developing breakthrough, future-generation

technologies and chipset solutions more quickly and cost-

effectively. Sharing the development costs of advanced

technologies is a significant next step in the implementation of

the segment’s new business model. The alliance is expected to

reduce Motorola’s expenses and capital investments associated

with maintaining a leadership position in next generation process

technology. Initial savings from the venture are anticipated in

late 2003 and are eventually expected to reduce by two-thirds the

cost of maintaining this aspect of the segment’s process

technology roadmap.

On April 15, Motorola said it plans to supply Siemens

Information and Communication Mobile with its new i.300 Innovative Convergence platform chips for building third

generation 3G handsets in early 2004. Motorola’s i.300 is a

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comprehensive, integrated solution that provides mobile handset

users faster Internet access on 3G UMTS wireless systems.

During the first quarter, Motorola announced that Eastern

Communications Co. Ltd. (Eastcom) had selected the i.250

Innovative Convergence 2.5G wireless platform to develop state-

of-the-art cellular phones for GSM/GPRS. Eastcom, a large

manufacturer of cellular handsets in China, now joins Benq Corporation (formerly Acer Communication and Multimedia, Inc.)

and Siemens as the third merchant market customer to select

Motorola’s silicon-to-software platform to build either 2.5G or

3G wireless handsets.

Siemens VDO Automotive, one of the world's largest suppliers

of automotive electronic systems, chose Motorola's MPC500 family

of 32-bit micro-controllers for its integrated power-train

management systems to increase fuel economy and reduce emissions.

An agreement was also announced with Fonix® Corporation to

integrate that company's software development kit for embedded

speech recognition technology with Motorola's mobileGT™

development platform for automotive telematics systems. This

will enable auto manufacturers to use speech recognition to provide drivers with hands-free management of radios, security

systems and climate controls.

Integrated Electronic Systems Segment


a year ago. Orders increased 11 percent to $570 million. Excluding special items, the segment reported operating earnings

of $24 million versus $22 million a year ago.

During the quarter, Automotive Communications and Electronic

Systems Group sales were up and orders increased very

significantly.

Motorola Computer Group sales and orders were down very

significantly due to the continuing slump in the

telecommunications industry.

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Energy Systems Group sales were lower, however, orders

increased compared to the year-ago quarter. The group reported

another record quarter of shipments of notebook computer battery

packs to manufacturers of personal computers.

Review and Outlook

Christopher B. Galvin, Motorola's chairman and CEO, said "These are challenging and turbulent markets worldwide and

economic and political volatility makes predictions uncertain.

Still, we continue to believe Motorola will return to

profitability during the second half of 2002 and be profitable

for the full year, excluding special items and barring any

unforeseen political or economic disruptions. We also believe the

U.S. and global economies should firm in the second half of 2002

and further improve in 2003 given stable world affairs.

“Motorola will continue to achieve its improving financial

performance by adhering to my five-point plan to enhance

shareholder value: continual strengthening of our management

team; an aggressive focus on the balance sheet; lowering the

break-even sales level by reducing selling, general and administrative expenses and manufacturing costs; growth through

innovative products, software applications and customer

relationships; and constant evaluation of strategic options and

business portfolio.

”Over the last 18 months I have named new leaders in

approximately 70 percent of Motorola’s 100 most leveraged

management positions corporate-wide. This refreshed leadership

team shares a commitment to our shareholders to operate with

extraordinary financial discipline. We intend to excel in every

aspect of our business, to exceed the expectations of our

customers, to drive profits and cash, to return Motorola to it’s

historic double-digit growth in the major business segments we

serve and to enhance value for our shareholders.”

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Consolidated Results for Ongoing Operations, Excluding Results of

Businesses Sold and Special Items

Excluding the results of the two businesses sold during 2001

and special items, a comparison of results from ongoing

operations is as follows:

(Dollars in millions, except per-share amounts)

First Quarter 2002 2001

Sales $6,023 $7,486

Net Loss $(174) $(211)

Net Loss Per Share $(.08) $(.10)

Net Margin on Sales -2.9% -2.8%

Consolidated GAAP Results

On an as reported GAAP basis, a comparison of results from

operations is as follows:

(Dollars in millions, except per-share amounts)

First Quarter

2002 2001

Sales $6,023 $7,683

Net Loss $(449) $(533)

Net Loss Per Share $(.20) $(.24)

Net Margin on Sales -7.5% -6.9%

Special Items Description:

For the first quarters of 2002 and 2001, respectively,

Motorola reported special items as follows:

(Dollars in millions, bracketed amounts represent income)

First Quarter

2002 2001

Employee Severance $53 $220

Exit Costs (1) 33

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Fixed Asset Impairments 155 108

Investment Impairments 188 29

Goodwill/Intangible Asset

Impairments -- 72

Amortization of Intangibles/

Goodwill 14 43

In-Process Research and Development Charges 11 --

Product Portfolio

Simplification Write-Offs -- 404

Other (21) (16)

Gains on Sales of

Investments and Businesses (11) (614)

Pre-tax Special Items 388 279

Income Tax Provision (113) 48

After-tax Special Items $275 $327

Notes: 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: the company’s return to profitability; the impact of strategic alliances including the new semiconductor alliance; the impact of design wins on sales and earnings; the commercial availability and performance of new products and applications; as well as, the statements in "Review and Outlook". Motorola wishes to caution the reader that the factors below and those on pages F-35 through F-40 of the appendix to Motorola's Proxy Statement for the 2002 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 company's ability to effectively carry out the planned cost-reduction actions; (ii) the potential for unanticipated results from cost-reduction activities on productivity; (iii) the rate of the recovery in the overall economy and the uncertainty of current economic conditions; (iv) the impact of ongoing tax relief, interest rate reduction and liquidity infusion efforts to stimulate the economy; (v) lack of predictability of future operating results; (vi) the decline in

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the telecommunications, semiconductor and broadband industries; (vii) the company's continuing ability to access the capital markets on favorable terms; (viii) demand for the company's products, including products related to new technologies; (ix) the company's ability to continue to increase profitability and market share in its wireless handset business; (x) the company's success in the emerging 3G market; (xi) the demand for vendor financing and the company's ability to provide that financing in order to remain competitive; (xii) unexpected liabilities or expenses, including unfavorable outcomes to any currently pending or future litigation, including any relating to the Iridium project; (xiii) the levels at which design wins become actual orders and sales; (xiv) the success of alliances and agreements with other companies to develop new products, technologies and services; (xv) difficulties in integrating the operations of newly acquired businesses and achieving strategic objectives, cost savings and other benefits; (xvi) volatility in the market value of securities held by Motorola; (xvii) the impact of foreign currency fluctuations; and (xviii) the impact of changes in governmental policies, laws or regulations. About Motorola: 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. 2002 Java and all other Java-based marks are trademarks or registered trademarks of Sun Microsystems, Inc. in the U.S. and other countries. Motorola, Inc. (NYSE:MOT) is a global leader in providing integrated communications and embedded electronic solutions. Sales in 2001 were $30 billion.

# # #

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Motorola, Inc. and SubsidiariesConsolidated Statements of Operations(In millions, except per share amounts)

For the Quarter Ended March 30, 2002

GAAP ResultsSpecial Items

Inc/(Exp)Excluding

Special Items

Exited Businesses

Inc/(Exp)

Ongoing Operations Excluding

Special Items

Net sales 6,023$ -$ 6,023$ -$ 6,023$ Costs of sales 4,249 (8) 4,241 - 4,241 Gross margin 1,774 (8) 1,782 - 1,782

Selling, general and administrative expenses 1,035 (2) 1,033 - 1,033 Research and development expenses 892 - 892 - 892 Reorganization of businesses 198 (198) - - - Other charges 3 (3) - - - Operating loss (354) (211) (143) - (143)

Other income/(expense) Interest expense, net (116) - (116) - (116) Gains on sales of investments and businesses 11 11 - - - Other (192) (188) (4) - (4) Total other income/(expense) (297) (177) (120) - (120) Loss before income taxes (651) (388) (263) - (263) Income tax provision (202) 113 (89) - (89) Net loss (449)$ (275)$ (174)$ -$ (174)$

Net loss per common share Basic (0.20)$ (0.08)$ Diluted (0.20)$ (0.08)$

Weighted average common shares outstanding Basic 2,253.5 2,253.5 Diluted 2,253.5 2,253.5

Dividends paid per share 0.04$ 0.04$ Net margin on sales -7.5% -2.9%Return on average invested capital -19.0%



Inc/(Exp)Excluding

Special Items

Exited Businesses

Inc/(Exp)


Special Items

Net sales 7,683$ -$ 7,683$ 197$ 7,486$ Costs of sales 6,117 (524) 5,593 (135) 5,458 Gross margin 1,566 (524) 2,090 62 2,028

Selling, general and administrative expenses 1,187 (27) 1,160 (42) 1,118 Research and development expenses 1,172 - 1,172 (11) 1,161 Reorganization of businesses 241 (241) - - - Other charges 72 (72) - - - Operating earnings (loss) (1,106) (864) (242) 9 (251)

Other income/(expense) Interest expense, net (61) - (61) (2) (59) Gains on sales of investments and businesses 614 614 - - - Other (38) (29) (9) - (9) Total other income/(expense) 515 585 (70) (2) (68) Earnings (loss) before income taxes (591) (279) (312) 7 (319) Income tax provision (58) (48) (106) (2) (108) Net earnings (loss) (533)$ (327)$ (206)$ 5$ (211)$

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Motorola, Inc. and SubsidiariesCondensed Consolidated Balance Sheets

(In millions)

ASSETS March 30, December 31,2002 2001

Cash and cash equivalents 5,879$ 6,082$ Short-term investments 121 80 Accounts receivable, net 4,115 4,583 Inventories, net 2,530 2,756 Other current assets 3,623 3,648 Total current assets 16,268 17,149 Property, plant and equipment, net 8,288 8,913 Investments 2,032 2,995 Other assets 5,164 4,341 Total assets 31,752$ 33,398$

LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable and current portion of long-term debt 1,576$ 870$ Accounts payable 2,197 2,434 Accrued liabilities 5,815 6,394 Total current liabilities 9,588 9,698 Long-term debt 7,460 8,372 Other liabilities 1,198 1,152

Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely company- guaranteed debentures 485 485 Stockholders' equity 13,021 13,691

Total liabilities and stockholders' equity 31,752$ 33,398$

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Motorola, Inc. and SubsidiariesSegment Information

(In millions)

Summarized below are the Company's sales as defined by reportable segment for the three monthsended March 30, 2002 and March 31, 2001.


Segment Net Sales

GAAP Results

Exited Businesses

Inc/(Exp)Ongoing

Operations% Change from 2001

Personal Communications Segment 2,301$ -$ 2,301$ 1%Global Telecom Solutions Segment 1,069 - 1,069 -36%Commercial, Govt, and Industrial Solutions Segment 799 - 799 -10%Broadband Communications Segment 525 - 525 -36%Semiconductor Products Segment 1,093 - 1,093 -26%Integrated Electronic Systems Segment 509 - 509 -20%Other Products Segment 107 - 107 -47%Adjustments & Eliminations (380) - (380) 22% Segment Totals 6,023$ -$ 6,023$ -20%


Segment Net Sales

GAAP Results

Exited Businesses

Inc/(Exp)Ongoing

Operations

Personal Communications Segment 2,275$ -$ 2,275$ Global Telecom Solutions Segment 1,669 - 1,669 Commercial, Govt, and Industrial Solutions Segment 1,043 154 889 Broadband Communications Segment 818 - 818 Semiconductor Products Segment 1,483 - 1,483 Integrated Electronic Systems Segment 637 - 637 Other Products Segment 245 43 202 Adjustments & Eliminations (487) - (487) Segment Totals 7,683$ 197$ 7,486$

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Motorola, Inc. and SubsidiariesSegment Information

(In millions)

Summarized below are the Company's operating earnings (loss) as defined by reportable segment for the three months endedMarch 30, 2002 and March 31, 2001.


Segment Operating Earnings (Loss)


Inc/(Exp)Excluding

Special Items

Exited Businesses

Inc/(Exp)


Special Items % Sales

Personal Communications Segment (34)$ (142)$ 108$ -$ 108$ 5%Global Telecom Solutions Segment (50) (1) (49) - (49) -5%Commercial, Govt, and Industrial Solutions Segment 41 (12) 53 - 53 7%Broadband Communications Segment 58 (1) 59 - 59 11%Semiconductor Products Segment (238) (12) (226) - (226) -21%Integrated Electronic Systems Segment 9 (15) 24 - 24 5%Other Products Segment (91) (19) (72) - (72) -67%Adjustments & Eliminations - - - - - 0% Segment Totals (305) (202) (103) - (103) -2%General Corporate (49) (9) (40) - (40) Operating Earnings (Loss) (354)$ (211)$ (143)$ -$ (143)$ -2%


Segment Operating Earnings (Loss)


Inc/(Exp)Excluding

Special Items

Exited Businesses

Inc/(Exp)


Special Items % Sales

Personal Communications Segment (880)$ (498)$ (382)$ -$ (382)$ -17%Global Telecom Solutions Segment 27 (15) 42 - 42 3%Commercial, Govt, and Industrial Solutions Segment (6) (63) 57 14 43 5%Broadband Communications Segment 101 (17) 118 - 118 14%Semiconductor Products Segment (251) (156) (95) - (95) -6%Integrated Electronic Systems Segment 7 (15) 22 - 22 3%Other Products Segment (97) (77) (20) (5) (15) -7%Adjustments & Eliminations 30 - 30 - 30 -6% Segment Totals (1,069) (841) (228) 9 (237) -3%General Corporate (37) (23) (14) - (14) Operating Earnings (Loss) (1,106)$ (864)$ (242)$ 9$ (251)$ -3%

q1 2002 earnings release

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