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Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
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Motorola Q3 2007 Motorola Q3 2007 Earnings Conference CallEarnings Conference Call
October 25, 2007October 25, 2007
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
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Dean LindrothDean LindrothInvestor Relations OfficerInvestor Relations Officer
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Safe HarborSafe HarborA 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 in this morning’s press release, on pages 16 through 24 in item 1A of Motorola’s 2006 Annual Report on Form 10-K and in Motorola’s other SEC filings.
This presentation is being made on the 25th of October 2007. 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. 2007
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
Slide - 4
Ed Ed ZanderZanderChairman & Chief Executive OfficerChairman & Chief Executive Officer
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
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Q3 2007 Q3 2007 Earnings CallEarnings Call
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
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Tom MeredithTom MeredithChief Financial OfficerChief Financial Officer
Liquidity
Profitability Growth
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Q3 2007 Financial ResultsQ3 2007 Financial Results($ Millions) Q3 2007 Q2 2007 Q3 2006GAAPSales 8,811$ 8,732$ 10,603$
Operating Earnings (Loss) (10)$ (158)$ 968$
Operating Margin -0.1% -1.8% 9.1%
Earnings (Loss) from Continuing Operations 40$ (38)$ 727$
EPS from Continuing Operations 0.02$ (0.02)$ 0.29$
Excluding Highlighted ItemsOperating Earnings (Loss) 169$ (32)$ 1,172$ *
Operating Margin 1.9% -0.4% 11.1% *
Earnings (Loss) from Continuing Operations 147$ 41$ 792$ *
EPS from Continuing Operations 0.06$ 0.02$ 0.32$ *
* Excludes previously highlighted item for stock compensation expense of $62M from Q3 2006
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Cash Flow and Net CashCash Flow and Net CashQ3 Q2 Q3
($ in Millions) 2007 2007 2006
Net Earnings (Loss) 40$ (38)$ 727$
Depreciation, Amortization and Other, net 161 132 517
Change in Assets and Liabilities, net 141 (129) 346
Net Cash provided by (used for) Operating Activities 342$ (35)$ 1,590$
($ in Billions)
Cash* 8.4$ 8.7$ 14.9$
Short-term & Current Debt** (1.5) (1.8) (0.5)
Long-Term Debt (2.7) (2.6) (3.8)
Total Debt (4.2) (4.4) (4.3)
Net Cash 4.2$ 4.3$ 10.6$
*Cash and cash equivalents, Sigma funds, and Short-term investments**Notes payable and current portion of long-term debt
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Cash Conversion CycleCash Conversion Cycle
Qtr1 '06 Qtr2 '06 Qtr3 '06 Qtr4 '06 Qtr1 '07 Qtr2 '07 Qtr3 '07Mobile Devices 18 26 21 26 48 49 37 Home & Networks Mobility 71 67 73 62 71 50 52 Enterprise Mobility Solutions 52 57 60 65 65 53 47 Total Motorola 31 36 35 38 56 50 43
Cash Conversion Cycle
15
25
35
45
55
65
75
Qtr1 '06 Qtr2 '06 Qtr3 '06 Qtr4 '06 Qtr1 '07 Qtr2 '07 Qtr3 '07
Cas
h C
onve
rsio
n D
ays
Mobile Devices Home & Networks Mobility Enterprise Mobility Solutions Total Motorola
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Return on Invested CapitalReturn on Invested Capital
17%
7%
13%
21%
5%
30%31%
0%
5%
10%
15%
20%
25%
30%
35%
2003 2004 2005 2006 Q1 '07 Q2 '07 Q3 '07
ROIC
Return on Invested Capital (ROIC)
= (12mth Rolling Operating Earnings excluding Highlighted Items and including Foreign Currency Gain/(Loss)) Tax Affected / 4 Quarter Average of (Shareholder’s Equity + Total Debt - Excess Cash**)
*Tax rate used is the GAAP tax less taxes on highlighted items divided by the PBT excluding highlighted items for the rolling 12 month period.
**Excess Cash = Rolling 4 Quarter Average of Total Cash & Short-term Investments – 5% of Rolling Net Sales
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office. .
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Greg BrownGreg BrownPresident & Chief Operating OfficerPresident & Chief Operating Officer
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Mobile Devices FinancialsMobile Devices Financials($ Millions) Q3 2007 Q2 2007 Q3 2006GAAPSales 4,496$ 4,273$ 7,034$
Operating Earnings (Loss) (248)$ (332)$ 843$
Operating Margin -5.5% -7.8% 12.0%
Excluding Highlighted ItemsOperating Earnings (Loss) (138)$ (264)$ 843$
Operating Margin -3.1% -6.2% 12.0%
Units (M) 37.2 35.5 53.7Market Share (Estimate) 13.0% 13.5% 22.4%
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Mobile Devices HighlightsMobile Devices Highlights• Shipped 37.2M units
• Improvements in channel inventory
• Improvement in gross margin %
• Reduction in operating expenses
• Progress in software and silicon
• Introduced WiMAX chipset optimized for size, cost, power and speed
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Mass Market Feature Multimedia Productivity
Product SegmentationProduct Segmentation
W175 / W175 / W180W180
W385W385
Z6mZ6m
NEWNEW
W377W377
W156 / W156 / W160W160
NEWNEW
U9U9
NEWNEW
V8 V8 LuxLux. Edition. Edition
NEWNEWNEWNEW
Q700Q700
W220W220
W375W375
NEWNEW
NEWNEW
W206 / W206 / W213W213
C115C115
A1200A1200
K1mK1mV3V3
V9mV9m V9V9Z8Z8
iC602iC602
NEWNEW
Z6Z6NEWNEW
NEWNEW
Q9hQ9h
Q9mQ9m
Z6tvZ6tv
NEWNEWNEWNEW NEWNEW
Q8Q8
NEWNEW
C139C139
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Home and Networks Mobility FinancialsHome and Networks Mobility Financials($ Millions) Q3 2007 Q2 2007 Q3 2006GAAPSales 2,389$ 2,564$ 2,262$
Operating Earnings 159$ 191$ 181$
Operating Margin 6.7% 7.4% 8.0%
Excluding Highlighted ItemsOperating Earnings 165$ 207$ 231$
Operating Margin 6.9% 8.1% 10.2%
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Home and Networks Mobility HighlightsHome and Networks Mobility Highlights
• Maintained market leadership in digital entertainment devices
• Shipped two-millionth IP set top device
• Introduced DSR-6000 product line
• Conducted world’s first WiMAX 802.16e mobile handoff
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Enterprise Mobility Solutions FinancialsEnterprise Mobility Solutions Financials($ Millions) Q3 2007 Q2 2007 Q3 2006GAAPSales 1,954$ 1,920$ 1,329$
Operating Earnings 328$ 303$ 254$
Operating Margin 16.8% 15.8% 19.1%
Excluding Highlighted ItemsOperating Earnings 336$ 302$ 280$
Operating Margin 17.2% 15.7% 21.1%
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Enterprise Mobility Solutions HighlightsEnterprise Mobility Solutions Highlights
• Strong performance in Government & Public Safety and Enterprise markets
• TETRA and MOTOTRBO two-way radio successes
• Shipped one-millionth MC9000, rugged mobile computer
• Shipping the new MC17 mobile computer
• Good software integrated on new enterprise devices
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
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Q&A ParticipantsQ&A Participants
Ed ZanderChairman and Chief Executive Officer
Greg BrownPresident and Chief Operating Officer
Tom MeredithChief Financial Officer
Dean LindrothInvestor Relations Officer
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
Slide -- 20
Safe HarborSafe HarborA 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 in this morning’s press release, on pages 16 through 24 in item 1A of Motorola’s 2006 Annual Report on Form 10-K and in Motorola’s other SEC filings.
This presentation is being made on the 25th of October 2007. 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. 2007
Q3 2007 Earnings Release- October 25, 2007MOTOROLA and the Stylized M Logo are registered in the US Patent & Trademark Office.
Slide -- 21
Use of NonUse of Non--GAAP MeasuresGAAP MeasuresIn 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 not 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 these items and reconciliations of the non-GAAP measurements provided during this call to GAAP measurements can be found on Motorola’s website at www.motorola.com/investor.