Q3 2001 Earnings Release

Motorola Reports Third-Quarter Results

SCHAUMBURG, Ill.--(BUSINESS WIRE)--Oct. 9, 2001--Motorola (NYSE:MOT - news):
Highlights included:
-Reduction in sequential pro forma loss versus second quarter;
-Return to profitability in wireless handsets and continuing gain in market share versus last year;
-Reduction of net debt by $2.4 billion from second quarter;
-Positive operating cash flow; and,
-Incurred as reported net charge of $2.0 billion, which does not adversely impact cash.
Motorola, Inc. (NYSE:MOT - news) today reported sales of $7.4 billion in the third quarter of
2001. This is a decrease of 22 percent from $9.5 billion a year earlier. Including pro forma
adjustments, the company incurred a loss of $153 million, or (7) cents per share, compared with
earnings of $643 million, or 28 cents per share a year ago.
Robert L. Growney, president and chief operating officer, said, ``We are pleased to report that our
wireless handset business returned to profitability and again reported higher market share
compared to last year. In total, Motorola made important progress in sequentially reducing its pro
forma operating loss, although we won't be satisfied until we return to solid and growing
profitability throughout our portfolio of businesses. We also reduced Motorola's net debt by an
additional $2.4 billion and generated positive operating cash flow of approximately $200 million
during the third quarter, thus further strengthening our balance sheet. We will continue to be
focused on efforts to control operating expenses and to maintain the health of our balance sheet
during this period of uncertainty.''
In the third quarter of 2001, Motorola reported pro forma adjustments resulting in a net charge of
$2.0 billion pre-tax, or (57) cents per share after-tax. Charges were incurred primarily for
investment impairments, cost-reduction activities and approximately $1.3 billion in additional
reserves that relate to a defaulted $2 billion financing to Telsim, a cellular operator in Turkey.
These charges were partially offset by a gain from the sale of a business.
In the third quarter of 2000, Motorola reported pro forma adjustments resulting in a net charge of
$144 million pretax, or 5 cents per share after tax.
Excluding pro forma adjustments, the third-quarter 2001 loss was $1.4 billion, or (64) cents per
share, compared with earnings of $531 million, or 23 cents per share, in the third quarter of 2000.
-0-

Consolidated Results for Ongoing Operations, Including Pro Forma
Adjustments
--------------------------------------------
Including pro forma adjustments, a comparison of results from
ongoing operations is as follows:

(Dollars in millions, except per-share amounts)

Third Quarter Nine Months
------------- -----------
2001 2000 2001 2000
---- ---- ---- ----
Sales $7,406 $9,493 $22,680 $27,500
Net Earnings (Loss) $(153) $643 $(591) $1,675
Earnings (Loss) Per Share $(.07) $.28 $(.27) $.74
Net Margin on Sales -2.1% 6.8% -2.6% 6.1%

Total Consolidated Results
--------------------------
Excluding pro forma adjustments, a comparison of results from
operations is as follows:

(Dollars in millions, except per-share amounts)

Third Quarter Nine Months
------------- -----------
2001 2000 2001 2000
---- ---- ---- ----
Sales $7,406 $9,493 $22,680 $27,516
Net Earnings (Loss) $(1,408) $531 $(2,700) $1,183
Earnings (Loss) Per Share $(.64) $.23 $(1.23) $.52
Net Margin on Sales -19.0% 5.6% -11.9% 4.3%

The impact of pro forma adjustments (as defined in a footnote to this press release) on segment
results is shown in the segment information tables at the end of this press release.
Growney reviewed the following results of major operations for the third quarter of 2001
compared with the third quarter of 2000. This review is based on operations, including pro forma
adjustments.
Personal Communications Segment
Segment sales were $2.7 billion, down 16 percent. Orders were $3.0 billion, down 12 percent.
The segment's market share for wireless handsets increased by approximately two percentage
points versus a year ago to between 17 and 18 percent. The segment recorded operating
earnings of $19 million versus operating earnings of $189 million a year ago. The decline in
financial performance compared to a year ago was due to lower worldwide demand for wireless
handsets by service providers.
On a sequential basis versus the second quarter, financial performance improved. Sales
increased 8 percent and orders increased 3 percent. This is the third consecutive quarter in which
orders have exceeded sales, reflecting the market's strong reception to the segment's new
product portfolio. The segment returned to profitability following two quarters of losses and
increased its market share slightly.
During the quarter, Motorola continued to strengthen its market position in 2.5 Generation (2.5G)
General Packet Radio Service (GPRS) by delivering its second generation of GPRS wireless
handsets that operate on Global System for Mobile (GSM) communication systems. Motorola
shipped an estimated 1.5 million GPRS wireless handsets in the third quarter and expects to ship
five million GPRS units by year-end 2001.
Industry experts continue to report that only Motorola has a complete portfolio of commercially
available GPRS solutions, which offer the potential to increase average revenue per unit for
service providers. These include the Motorola Accompli(TM) 008, which blends voice, ``always-
on'' Internet access and personal organizer functionality; the Motorola V.series(TM) 60, 66 and
100, a blend of style and technology for consumers; the Motorola Timeport(TM) 280, which
provides increased productivity for business users on the go; and the Motorola Talkabout(TM)
193 for cost-conscious, entry-level consumers.
Motorola shipped a variety of its second-generation GPRS handsets to Europe and announced
the availability of the first two GPRS wireless handsets in North America. In Asia, Motorola
continues to lead in the delivery of GPRS by shipping two new GPRS products in the region.
In Code Division Multiple Access (CDMA) handsets, Motorola continues to win customer
approvals for the V.series 120c and 60c and for the Timeport 270c, which are shipping in volume.
These products feature Motorola's new, simple to navigate, next-generation user interface. The

company also introduced three new CDMA 1X handsets for Korea, and it received acceptance for
the entry-level Talkabout 182 from several operators in Latin America.
In Time Division Multiple Access (TDMA) handsets, Motorola has won numerous customer
approvals for the V.series 60t, including customers in Mexico and Brazil. U.S. customers also
have begun field trials of the product.
The company also made a number of iDEN® technology announcements. Motorola shipped the
i55sr handset for use in harsh environments, the first handset of its kind in North America with
Java(TM) technology. This is also the third handset from Motorola with Java 2 Platform, Micro
Edition (J2ME(TM)) technology, allowing users to customize the phone with software applications
to fit their business and personal lifestyles. Motorola also introduced the iBoard(TM), the first
portable, full-sized keyboard for wireless handsets which provides users with the ability to
compose e-mail messages and enter date book appointments. The iBoard leverages and extends
the mobile computing power of Motorola's i85s, i50sx and i55sr Internet-ready wireless handsets.
Global Telecom Solutions Segment
Segment sales were $1.8 billion, down 10 percent. Orders declined 13 percent to $1.6 billion.
Operating earnings declined to $33 million, compared with $247 million a year ago. Operating
earnings declined due to a decrease in sales stemming from lower worldwide demand for
wireless infrastructure equipment by service providers and an increase in manufacturing costs.
During the quarter, Motorola was awarded a CDMA2000 1X digital wireless infrastructure contract
with Telekom Malaysia, signed six GSM communications expansion contracts with China Unicom
and announced the launch of a nationwide GPRS network for LibanCell in Lebanon.
After the quarter ended, Motorola announced it had won two CDMA 1X infrastructure contracts,
including one in the Ukraine and a CDMA network expansion with Horizon PCS in six states in
the U.S. The contract with Horizon PCS includes upgrades and expansion of the operator's
current system to provide 3G CDMA 1X voice and data services capability.
Motorola also won India's single largest contract for a new GSM system for Bharat Sanchar
Nigam, Ltd.; a new GSM network contract including GPRS services for Bharti Enterprises in
India; a GSM network contract with Telekom Cellular Sdn. Bhd. in Malaysia; and, a GPRS
expansion contract with China Mobile.
Motorola and Nextel announced new enhancements to the iDEN wireless network technology
which are expected to lead to a doubling of wireless voice capacity. These enhancements are
expected to become available in 2003.
Commercial, Government and Industrial Systems Segment
Segment sales declined 10 percent to $1.0 billion and orders decreased 17 percent to $1.0
billion. Operating earnings decreased to $87 million from $120 million a year ago due largely to
the decline in sales.
In the third quarter, Motorola received equipment orders from customers in Australia, China,
Germany, Italy, Korea, Malaysia, Mexico, the Netherlands, Spain, the U.K. and the U.S.
Motorola was awarded a contract from Burlington County, N.J. for an integrated digital two-way
radio communications system that will be used by public-safety and other county agencies. In
addition, the City of Phoenix agreed to expand its Project 25-compliant infrastructure project,
which enables seamless radio communications within the Phoenix/Mesa area. Project 25 is the
U.S. standard for digital public-safety radio communications.
Motorola successfully completed a wireless wideband data trial in Pinellas County, Fla. The
technology, which represents the next generation of public-safety communications, is many times
faster than the current U.S. public-safety standard and enables simultaneous live wireless mobile
video, voice and high-speed Intranet/Internet data transmission on one system.
At the end of the quarter, Motorola completed the sale of this segment's defense and government
electronics business to General Dynamics for $825 million in cash.

Broadband Communications Segment
Segment sales and orders decreased 31 percent to $637 million and $647 million, respectively.
These declines resulted from a slow down by cable operators in making capital investments and
deploying subscriber equipment. Operating earnings decreased to $120 million compared with
$160 million a year ago as a result of the decline in sales. Operating earnings as a percent of
sales increased due to continued cost reductions, a strong mix of North American digital cable
sales and focused overhead cost management.
Shortly after the quarter ended, Callahan Associates International awarded Motorola a second
network upgrade in Baden-Wurttemburg, Germany. Under the agreement, Motorola will supply
network infrastructure electronics, Voice over IP (VoIP) consumer premise equipment and cable
modem termination system technology. This will enable Callahan to offer advanced interactive
broadband video, voice and data services to potentially more than 7.4 million homes in Germany.
Semiconductor Products Segment
Segment sales decreased 48 percent to $1.1 billion and orders declined 49 percent to $1.1
billion. The segment had an operating loss of $355 million versus operating earnings of $202
million a year ago, due to the decline in sales, as the worldwide semiconductor industry continued
to experience its sharpest decline in history.
On a sequential basis versus the second quarter, this segment's sales declined 14 percent,
however, its operating loss remained flat as the result of major cost-reduction efforts over the past
several quarters. Orders increased sequentially and the level of orders slightly exceeded the level
of sales for the first time since the third quarter of 2000.
Motorola announced plans to offer complete, embedded wireless 2.5G and 3G semiconductor
and software solutions to handset manufacturers and designers worldwide. The company also
introduced its first 2.5G platform for the merchant market, the 2.5G Innovative Convergence(TM)
i.250.
Motorola also announced that Cisco Systems, Inc. had selected its newest member of the G4
PowerPC(TM) microprocessor family for use in several of Cisco's high-end routers. Applications
for this microprocessor family include networking, telecom, high-end embedded systems,
scientific computing and desktop computing.
Motorola said it will join with Delphi Automotive Systems to develop next-generation powertrain
control systems based on the e500 core architecture.
The company also announced an alliance with Palm, Inc. to provide Palm OS® licensees with the
next-generation DragonBall(TM) microprocessors, the DragonBall MX family, that will be based
on ARM® technology. Motorola's DragonBall processors currently power more than 75 percent of
the world's personal digital assistants according to a leading market research group.
Integrated Electronic Systems Segment
Segment sales and orders decreased 30 percent to $513 million and $545 million, respectively.
The segment incurred an operating loss of $14 million versus operating earnings of $47 million a
year ago due to the decline in sales, especially a decline in sales of higher margin products.
During the quarter, Motorola's Automotive Communications and Electronic Systems Group
announced several new contracts with major automakers. BMW and Motorola signed an
agreement that is estimated to be worth several hundred million dollars over several years to
develop telematics solutions for the U.S., German and Japanese markets. Audi AG awarded
Motorola a strategic, worldwide, six-year contract to provide it with the latest integrated
information and entertainment solutions. Motorola also announced that it will provide telematics
vehicle communications systems on Ford's 2002 Lincoln automobiles.
Motorola Computer Group unveiled plans for a Multi-Service Packet Transport Platform, which is
based on newly ratified industry standards, and creates a multi-service architecture with
performance that surpasses the industry in high availability, speed and bandwidth.

Motorola's Energy Systems Group announced a strategic alliance with TTP Communications plc
(TTPCom), a supplier of technology for the wireless communications industry, to provide
equipment manufacturers with an optimized energy system for TTPCom turnkey designs.
Other
The quarter's pro forma adjustments are principally comprised of a non-cash $1.3 billion charge
to increase Motorola's reserve relating to $2.0 billion in financing to Telsim, a GSM operator in
Turkey, which is currently in default. Thus far Telsim has been largely uncooperative in
restructuring the loan or in entering into a transaction with third-party investors to either sell, or
bring new equity into, the company. With this additional reserve, the net amount of the receivable
from Telsim on Motorola's books is now $530 million. Regardless of the reserves already taken,
Motorola intends to continue to pursue a collaborative solution with Telsim or, if need be, to
pursue all remedies to address Telsim's breach of contract and collect the $2 billion Telsim owes
to Motorola.
The company also had a non-cash charge of approximately $850 million relating to impairments
in Motorola's investment portfolio, comprised of interests in other technology companies; and a
charge of approximately $220 million relating to cost-reduction activities. These charges were
partially offset by a gain of approximately $525 million realized from the sale for cash of the
Integrated Information Systems Group to General Dynamics.
Motorola announced that Motorola Labs had scored a technological break-through that had
eluded the semiconductor industry for 30 years by successfully developing compound
semiconductors such as gallium arsenide on silicon wafers. This discovery has the potential to
open the doors to producing smarter and even more exciting, less expensive new electronic
products.
Review and Outlook
Christopher B. Galvin, chairman and chief executive officer, said, `À little more than a year ago,
the Motorola management team sensed the beginning of the economic downturn, especially in
the telecommunications and semiconductor industries. Some aspects of our business model
remain predictors of the overall global economic trends. From that point, we have been reducing
costs, focusing on operational cash flow and strengthening our balance sheet, while at the same
time maintaining our sizeable investments in research and product development.
`Ùntil the unexpected and horrific atrocities of September 11th, our predictive indicators seemed
to indicate that the world would most probably return to more positive economic growth in the first
or second quarter of 2002. These events make near-term forecasting more challenging. Overall
though, we believe the unpredictability of future military and other responses associated with a
global war on terrorism will be offset by the positive near-term stimulus of tax relief, interest rate
reduction and a massive infusion of liquidity by government authorities. Nonetheless, calling the
specific timing of a broad economic turnaround is difficult. Because of this uncertainty, Motorola
will continue to be very prudent in managing the costs associated with doing business and in the
utilization of its assets. We are controlling the things we can control.
``There are numerous examples of what we can control. Our new portfolio of wireless handsets is
being very well received by both service providers and consumers. We continue to recapture
wireless handset market share versus last year and have returned to profitability in that business
segment. Motorola is the leader in broadband technology including Voice over IP, and we are well
positioned for market leadership in an industry with a bright future. Additionally, Motorola is the
industry leader in two-way radio technology, a technology that continues to serve the police, fire
and rescue operations on the city, state and federal levels.
`Ìn addition, we continue to identify the strategic businesses we must be in to succeed. This
includes the purchase of new companies that complement our portfolio and divestiture of
businesses better served outside Motorola's current and future business portfolio. This quarter,
the sale of our government electronics business to General Dynamics, the purchase of Blue
Wave Systems and the pending purchase of River Delta Networks, Inc. are examples of this

proactive portfolio management. As the marketplace can see, we are fulfilling our key objectives
for divestitures, which are to seek the highest value for Motorola shareholders and to find buyers
with whom our employees will have the potential to prosper going forward.
``Last week, I selected Ed Breen, currently president of Motorola's Network Sector, to join me in
the Office of the Chairman as president and chief operating officer on January 1, 2002,
succeeding Bob Growney. Bob, Motorola's president and COO since 1997, a friend and partner
in the Office of the Chairman, is retiring on March 31, 2002 after 36 contribution-filled years. I look
forward to working with Ed and words cannot express my heart-felt appreciation to Bob for his
tireless work on behalf of Motorola over all these years and throughout this senior management
transition.
``Recently, the world was reminded of the extraordinary communications benefits that wireless
handsets, pagers and public safety two-way radios bring to our society. When you couple the
ongoing future of these systems and products with Motorola's ability to bridge the broadband gap
in the last mile, make the networked car possible, offer important invention in semiconductor
materials and in embedded systems, Motorola is positioned for a very bright long-term future. The
entire Motorola team is dedicated to the goal of building Motorola into the leader in these key
industries. We are also dedicated to enhancing the confidence of our customers, the
marketplace, and our shareholders in Motorola. We are prepared to succeed in the tough times
and flourish when economic growth returns.''
Note:
Pro Forma adjustments include unusual charges, amortization of goodwill, investment and asset
impairments, and gains (losses) on sales of investments and businesses.
The use of the word ``significant'' in this press release indicates a change of greater than 25
percent. The use of the words ``very significant'' indicates a change of greater than 50 percent.
Business Risks:
Statements in this press release that are not historical facts are forward-looking statements based
on current expectations that involve risks and uncertainties. Such forward-looking statements
include, but are not limited to, statements about: expected shipments of 3G wireless handsets;
the timing and impact of enhancements to the iDEN network; the value of contracts to supply 3G
and telematics products; the commercial availability and performance of new products; the
recoverability of amounts due under the loan to Telsim; the completion of pending transactions;
as well as, the statements in ``Review and Outlook''. Motorola wishes to caution the reader that
the factors below and those on pages F-29 through F-33 of the appendix to Motorola's Proxy
Statement for the 2001 annual meeting of stockholders and in its other SEC filings could cause
Motorola's actual results to differ materially from those stated in the forward-looking statements.
These factors include: (i) the impact of the slowdown in the overall economy and the uncertainty
of current economic conditions; (ii) the impact of ongoing tax relief, interest rate reduction and
liquidity infusion efforts to stimulate the economy; (iii) the duration and severity of the difficulties
experienced by the telecommunications and semiconductor industries; (iv) the success of
Motorola's cost-reduction efforts; (v) Motorola's continuing ability to access the capital markets on
favorable terms; (vi) demand for Motorola's products, including products related to new
technologies; (vii) Motorola's ability to increase profitability in its wireless handset business; (viii)
a reversal of the sharp decline in the worldwide semiconductor industry; (ix) Motorola's success in
the emerging 3G market; (x) the demand for vendor financing and Motorola's ability to provide
that financing in order to remain competitive; (xi) the outcome of ongoing efforts to obtain
repayment of Motorola's defaulted loan to Telsim; (xii) unexpected liabilities or expenses,
including unfavorable outcomes to any currently pending or future litigation, including any relating
to the Iridium project; (xiii) the success of alliances and agreements with other companies to
develop new products and services; (xiv) difficulties in integrating the operations of newly-
acquired businesses and achieving strategic objectives, cost savings and other benefits; (xv)
volatility in the market value of securities held by Motorola; (xvi) the impact of foreign currency
fluctuations; and (xvii) the impact of changes in governmental policies, laws or regulations.

MOTOROLA and the Stylized M Logo are registered in the U.S. Patent & Trademark Office. All
other product or service names are the property of their respective owners.
Motorola, Inc. 2001
Java is a trademark owned by Sun Microsystems, Inc.
``ARM'' is used to represent ARM Holdings plc.; its operating company ARM Limited; and the
regional subsidiaries ARM, INC.; ARM KK; ARM Korea Ltd.; ARM Taiwan. Palm OS is a
registered trademark of Palm, Inc. and/or its subsidiaries.
-0-

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

For the Quarter Ended September 29, 2001
------------------------------------------------------
Total Excl
Pro Forma Pro Forma Impact of Pro Forma
Total Adjustments Total Exited Ongoing
Motorola Inc/(Exp) Motorola Businesses Operations
---------- --------------------- ---------------------
Net sales $ 7,406 $ -$ 7,406 $ -$ 7,406

Costs and
expenses
Manufacturing
and other
costs of
sales 5,256 (98) 5,158 - 5,158
Selling,
general and
administrative
expenses 834 (39) 795 - 795
Research and
development
expenditures 1,037 - 1,037 - 1,037
Depreciation
expense 533 - 533 - 533
Reorganization
of businesses 133 (133) - - -
Other charges 2,260 (2,260) - - -
Interest
expense, net 114 - 114 - 114
Gains on sales
of investments
and businesses (542) 542 - - -
---------- --------------------- ---------------------
Total costs and
expenses 9,625 (1,988) 7,637 - 7,637
---------- --------------------- ---------------------
Earnings (loss)
before income
taxes (2,219) 1,988 (231) - (231)
Income tax
provision (811) 733 (78) - (78)
---------- --------------------- ---------------------
Net earnings
(loss) $ (1,408)$ 1,255 $ (153)$ -$ (153)
========== ===================== =====================

Net earnings (loss) per common share
------------------------------------
Basic $ (0.64)$ 0.57 $ (0.07)$ -$ (0.07)
Diluted $ (0.64)$ 0.57 $ (0.07)$ -$ (0.07)

Weighted average common shares outstanding
------------------------------------------
Basic 2,217.1 2,217.1 2,217.1 2,217.1 2,217.1
Diluted 2,217.1 2,217.1 2,217.1 2,217.1 2,217.1

Dividends paid
per share $ 0.04 $ 0.04 $ 0.04
Net margin on
sales -19.0% -2.1% -2.1%

For the Quarter September 30, 2000
------------------------------------------------------
Total Excl
---------- --------------------- ---------------------
Net sales $ 9,493 $ -$ 9,493 $ -$ 9,493

Costs and
expenses
Manufacturing
and other
costs of sales 6,130 (499) 5,631 - 5,631
Selling,
general and
administrative
expenses 1,185 (62) 1,123 - 1,123
Research and
development
expenditures 1,171 - 1,171 - 1,171
Depreciation
expense 592 - 592 - 592
Reorganization
Other charges 90 (90) - - -
Interest
expense, net 74 - 74 - 74
Gains on sales
of investments
---------- --------------------- ---------------------
Total costs and
expenses 8,735 (144) 8,591 - 8,591
---------- --------------------- ---------------------
Earnings (loss)
before income
taxes 758 144 902 - 902
Income tax
provision 227 32 259 - 259
---------- --------------------- ---------------------
Net earnings
(loss) $ 531 $ 112 $ 643 $ -$ 643
========== ===================== =====================

------------------------------------
Basic $ 0.24 $ 0.05 $ 0.29 $ -$ 0.29
Diluted $ 0.23 $ 0.05 $ 0.28 $ -$ 0.28

------------------------------------------
Basic 2,182.3 2,182.3 2,182.3 2,182.3 2,182.3
Diluted 2,266.0 2,266.0 2,266.0 2,266.0 2,266.0

Dividends paid
per share $ 0.04 $ 0.04 $ 0.04
Net margin on
sales 5.6% 6.8% 6.8%

Consolidated Statements of Operations
(In millions, except per share amounts)

For the Nine Months Ended September 29, 2001
------------------------------------------------------
Total Excl
---------- --------------------- ---------------------
Net sales $ 22,680 $ -$ 22,680 $ -$ 22,680

Costs and
expenses
Manufacturing
and other
costs of sales 16,410 (929) 15,481 - 15,481
Selling,
general and
administrative
expenses 2,833 (85) 2,748 - 2,748
Research and
development
expenditures 3,295 - 3,295 - 3,295
Depreciation
expense 1,749 - 1,749 - 1,749
Reorganization
Other charges 2,654 (2,654) - - -
Interest
expense, net 302 - 302 - 302
Gains on sales
of investments
and businesses (1,898) 1,898 - - -
---------- --------------------- ---------------------
Total costs and
expenses 26,338 (2,763) 23,575 - 23,575
---------- --------------------- ---------------------
Earnings (loss)
before income
taxes (3,658) 2,763 (895) - (895)
Income tax
provision (958) 654 (304) - (304)
---------- --------------------- ---------------------
Net earnings
(loss) $ (2,700)$ 2,109 $ (591)$ -$ (591)
========== ===================== =====================

------------------------------------
Basic $ (1.23)$ 0.96 $ (0.27)$ -$ (0.27)
Diluted $ (1.23)$ 0.96 $ (0.27)$ -$ (0.27)

------------------------------------------
Basic 2,204.7 2,204.7 2,204.7 2,204.7 2,204.7
Diluted 2,204.7 2,204.7 2,204.7 2,204.7 2,204.7

Dividends paid
per share $ 0.12 $ 0.12 $ 0.12
Net margin on
sales -11.9% -2.6% -2.6%
Return on
average
invested
capital (1) -11.2%

------------------------------------------------------
Total Excl
---------- --------------------- ---------------------
Net sales $ 27,516 $ -$ 27,516 $ (16)$ 27,500

Costs and
expenses
Manufacturing
and other
costs of sales 16,838 (499) 16,339 (15) 16,324
Selling,
general and
administrative
expenses 3,795 (160) 3,635 - 3,635
Research and
development
expenditures 3,293 - 3,293 - 3,293
Depreciation
expense 1,718 - 1,718 - 1,718
Reorganization
Other charges 506 (506) - - -
Interest
expense, net 175 - 175 - 175
Gains on sales
of investments
---------- --------------------- ---------------------
Total costs and
expenses 25,698 (538) 25,160 (15) 25,145
---------- --------------------- ---------------------
Earnings (loss)
before income
taxes 1,818 538 2,356 (1) 2,355
Income tax
provision 635 45 680 - 680
---------- --------------------- ---------------------
Net earnings
(loss) $ 1,183 $ 493 $ 1,676 $ (1)$ 1,675
========== ===================== =====================

------------------------------------
Basic $ 0.55 $ 0.22 $ 0.77 $ -$ 0.77
Diluted $ 0.52 $ 0.22 $ 0.74 $ -$ 0.74

------------------------------------------
Basic 2,164.1 2,164.1 2,164.1 2,164.1 2,164.1
Diluted 2,258.2 2,258.2 2,258.2 2,258.2 2,258.2

Dividends paid
per share $ 0.12 $ 0.12 $ 0.12
Net margin on
sales 4.3% 6.1% 6.1%
Return on
average
invested
capital (1) 7.9%

(1) Based on the performance of the four preceding quarters ended
September 29, 2001 and September 30, 2000.

Condensed Consolidated Balance Sheets
(In millions)

ASSETS September December
29, 31,
2001 2000
---------- ----------
Cash and cash equivalents $ 5,371 $ 3,301
Short-term investments 272 354
Accounts receivable, net 5,114 7,092
Inventories, net 3,250 5,242
Other current assets 4,974 3,896
---------- ----------
Total current assets 18,981 19,885
---------- ----------
Property, plant and equipment, net 9,711 11,157
Investments 2,553 5,926
Other assets 3,014 5,375
---------- ----------
Total assets $ 34,259 $ 42,343
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable and current portion of
long-term debt $ 2,717 $ 6,391
Accounts payable 2,765 3,492
Accrued liabilities 5,863 6,374
---------- ----------
Total current liabilities 11,345 16,257
---------- ----------
Long-term debt 6,608 4,293
Other liabilities 1,537 2,696

Company-obligated mandatorily redeemable
preferred securities of subsidiary
trust holding solely company-
guaranteed debentures 485 485

Stockholders' equity 14,284 18,612
---------- ----------

Total liabilities and stockholders' equity $ 34,259 $ 42,343
========== ==========

Segment Information
(In millions)

Summarized below are the Company's segment sales as defined by
reportable segment for the three months ended September 29, 2001 and
September 30, 2000.

-----------------------------------------------
Segment Sales
-----------------------------------------------
Excl Impact
Total of Exited Ongoing % Change
Motorola Businesses Operations from 2000
-----------------------------------------------

Personal Communications
Segment $ 2,693 $- $ 2,693 -16%
Global Telecom
Solutions Segment 1,771 - 1,771 -10%
Commercial, Govt, and
Industrial Systems
Segment 1,029 - 1,029 -10%
Broadband
Communications Segment 637 - 637 -31%
Semiconductor Products
Segment 1,080 - 1,080 -48%
Integrated Electronic
Systems Segment 513 - 513 -30%
Other Products Segment 140 - 140 -49%
Adjustments &
Eliminations (457) - (457) 45%
------------------------------------
Segment Totals $ 7,406 $- $ 7,406 -22%
==============================================

-----------------------------------------------
Segment Sales
-----------------------------------------------
Excl Impact
Total of Exited Ongoing
Motorola Businesses Operations
-----------------------------------------------

Segment $ 3,221 $- $ 3,221
Global Telecom
Solutions Segment 1,960 - 1,960
Industrial Systems
Segment 1,145 - 1,145
Broadband
Communications Segment 917 - 917
Segment 2,071 - 2,071
Systems Segment 737 - 737
Other Products Segment 272 - 272
Adjustments &
Eliminations (830) - (830)
----------------------------------------------
Segment Totals $ 9,493 $- $ 9,493
==============================================

Segment Information
(In millions)

Summarized below are the Company's segment operating earnings (loss)
before taxes as defined by reportable segment for the three months
ended September 29, 2001 and September 30, 2000.

----------------------------------------------------------------------
Segment Operating Earnings (Loss) before Taxes
----------------------------------------------------------------------
Total
Pro Excl
Forma Impact Pro
Adjust- Pro of Forma
ments Forma Exited Ongoing
Total (Inc)/ Total Busin- Opera-
Motorola Exp Motorola esses tions % Sales
-------- --------------- ------------------------
Personal
Communications
Segment $ (338) $ 357 $ 19 $- $ 19 1%
Global Telecom
Solutions Segment (957) 990 33 - 33 2%
Commercial, Govt,
and Industrial
Systems Segment 493 (406) 87 - 87 8%
Broadband
Communications
Segment (488) 608 120 - 120 19%
Semiconductor
Products Segment (481) 126 (355) - (355) -33%
Systems Segment (56) 42 (14) - (14) -3%
Other Products
Segment (198) 108 (90) - (90) -64%
Adjustments &
Eliminations 70 1 71 - 71 -16%
-------- --------------- ------------------------
Segment Totals (1,955) 1,826 (129) - (129) -2%
General Corporate (264) 162 (102) - (102)
-------- --------------- ------------------------
Earnings (Loss) Before
Income Taxes $ (2,219)$ 1,988 $ (231) $- $ (231) -3%
======== =============== ========================

----------------------------------------------------------------------
----------------------------------------------------------------------
Total
Pro Excl
Forma Impact Pro
-------- --------------- ------------------------
Personal
Communications
Segment $ (197) $ 386 $ 189 $- $ 189 6%
Global Telecom
Solutions
Segment 136 111 247 - 247 13%
Commercial, Govt,
and Industrial
Systems Segment 109 11 120 - 120 10%
Broadband
Communications
Segment 757 (597) 160 - 160 17%
Semiconductor
Products Segment 68 134 202 - 202 10%
Systems Segment 14 33 47 - 47 6%
Other Products
Segment (172) 59 (113) - (113) -42%
Adjustments &
Eliminations (1) 1 - - - 0%
-------- --------------- ------------------------
Segment Totals 714 138 852 - 852 9%
General Corporate 44 6 50 - 50
-------- --------------- ------------------------
Earnings (Loss)
Before Income
Taxes $ 758 $ 144 $ 902 $- $ 902 9%
======== =============== ========================

Segment Information
(In millions)

Summarized below are the Company's segment sales as defined by
reportable segment for the nine months ended September 29, 2001 and
September 30, 2000.

-----------------------------------------------
Segment Sales
-----------------------------------------------
Excl Impact
Total of Exited Ongoing % Change
Motorola Businesses Operations from 2000
-----------------------------------------------

Segment $ 7,473 $- $ 7,473 -24%
Global Telecom
Solutions Segment 5,172 - 5,172 -10%
Industrial Systems
Segment 3,120 - 3,120 -5%
Broadband
Communications Segment 2,275 - 2,275 -4%
Segment 3,813 - 3,813 -36%
Systems Segment 1,699 - 1,699 -19%
Other Products Segment 633 - 633 -18%
Adjustments &
Eliminations (1,505) - (1,505) 40%
------------------------------------
Segment Totals $ 22,680 $- $ 22,680 -18%
===============================================

-----------------------------------------------
Segment Sales
-----------------------------------------------
Excl Impact
Total of Exited Ongoing
Motorola Businesses Operations
-----------------------------------------------

Segment $ 9,789 $- $ 9,789
Global Telecom
Solutions Segment 5,726 - 5,726
Industrial Systems
Segment 3,280 - 3,280
Broadband
Communications Segment 2,363 - 2,363
Segment 5,971 - 5,971
Systems Segment 2,105 (16) 2,089
Other Products Segment 776 - 776
Adjustments &
Eliminations (2,494) - (2,494)
-----------------------------------------------
Segment Totals $ 27,516 $ (16) $ 27,500
===============================================

Segment Information
(In millions)

Summarized below are the Company's segment operating earnings (loss)
before taxes as defined by reportable segment for the nine months
ended September 29, 2001 and September 30, 2000.

----------------------------------------------------------------------
----------------------------------------------------------------------
Total
Pro Excl
Forma Impact Pro
-------- --------------- ------------------------

Personal
Communications
Segment $ (1,895) $ 1,275 $ (620) $- $ (620) -8%
Global Telecom
Solutions Segment (1,044) 1,178 134 - 134 3%
Commercial, Govt,
and Industrial
Systems Segment 525 (316) 209 - 209 7%
Broadband
Communications
Segment (351) 746 395 - 395 17%
Semiconductor
Products Segment (1,286) 419 (867) - (867) -23%
Systems Segment (102) 104 2 - 2 0%
Other Products
Segment 680 (869) (189) - (189) -30%
Adjustments &
Eliminations 161 1 162 - 162 -11%
--------- ---------------- ----------------------
Segment Totals (3,312) 2,538 (774) - (774) -3%
General Corporate (346) 225 (121) - (121)
--------- ---------------- ----------------------
Income Taxes $ (3,658) $ 2,763 $ (895) $- $ (895) -4%
========= ================ ======================

----------------------------------------------------------------------
----------------------------------------------------------------------
Total
Pro Excl
Forma Impact Pro
-------- --------------- ------------------------

Personal
Communications
Segment $ 47 $ 331 $ 378 $- $ 378 4%
Global Telecom
Solutions Segment 674 112 786 - 786 14%
Commercial, Govt,
and Industrial
Systems Segment 307 26 333 - 333 10%
Broadband
Communications
Segment 972 (576) 396 - 396 17%
Semiconductor
Products Segment 136 370 506 - 506 8%
Systems Segment 131 8 139 (1) 138 7%
Other Products
Segment (379) 161 (218) - (218) -28%
Adjustments &
Eliminations - - - - - 0%
-------- --------------- -----------------------
Segment Totals 1,888 432 2,320 (1) 2,319 8%
General Corporate (70) 106 36 - 36
-------- --------------- -----------------------
Income Taxes $ 1,818 $ 538 $ 2,356 $ (1) $ 2,355 9%
======== =============== =======================

Contact:
Motorola, Inc.
Ed Gams, 847/576-6873

Q3 2001 Earnings Release

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