Q4 2001 Earnings Release

Ed Gams
Sr. VP & Director
Investor Relations
(847) 576-6873

or

Bob Hubberts
Manager
Investor Relations
(847) 576-4995
FOR IMMEDIATE RELEASE
January 22, 2002

MOTOROLA REPORTS FOURTH-QUARTER, FULL-YEAR RESULTS

SCHAUMBURG, Ill. - Motorola, Inc. (NYSE:MOT) today reported sales
from ongoing operations, which excludes exited businesses, of $7.3
billion in the fourth quarter of 2001. This is a decrease of 25
percent from $9.8 billion a year earlier. Excluding special items
and exited businesses, the company incurred a net loss of $90
million, or (4) cents per share, compared with net earnings of $362
million, or 16 cents per share, in the year-ago quarter.
Edward Breen, president and chief operating officer, said,
“While the end markets Motorola serves continue to be weak, the
company is making good progress in improving its strategic focus and
in reducing its cost structure. We are particularly pleased with the
improving profitability in the Personal Communications segment. We
are also pleased with the Broadband Communications and Commercial,
Government and Industrial Systems segments’ ability to maintain a
strong level of profitability under current market conditions. We
made great progress in strengthening our balance sheet by generating
$1.9 billion in positive operating cash flow and reducing net debt
by more than one-half, from $7.2 billion to $3.1 billion during
2001. We are confident we are taking the right steps to position the
company to return to the level of profitability that it is capable
of generating as its end markets recover.”

1

In the fourth quarter of 2001, Motorola reported special items
resulting in a net charge of $1.7 billion pre-tax, or $1.1 billion
after-tax. In the fourth quarter of 2000, Motorola reported special
items resulting in a net charge of $113 million pre-tax, or $240
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 generally
accepted accounting principles (GAAP), the company reported fourth-
quarter 2001 sales of $7.3 billion, compared with sales of $10.1
billion a year earlier. The GAAP net loss was $1.2 billion, or (55)
cents per share, compared with net earnings of $135 million, or 6
cents per share, for the fourth quarter of 2000.
For the full year 2001, sales from ongoing operations,
excluding the results of the two businesses sold during the year,
were $29.5 billion, compared with sales of $36.8 billion in 2000.
The full-year net loss during 2001 from ongoing operations,
excluding the results of the two businesses sold during the year and
special items, was $697 million, or (31) cents per share, compared
with full-year net earnings of $2.0 billion, or 91 cents per share,
in 2000.
For the full year 2001, Motorola reported special items
resulting in a net charge of $4.5 billion pre-tax, or $3.3 billion
after-tax. For the full year 2000, Motorola reported special items
resulting in a net charge of $651 million pre-tax, or $733 million
after-tax. (Details of the special items are presented in a table
preceding the footnotes at the end of this press release.)
On a GAAP basis, Motorola reported full year 2001 sales of
$30.0 billion, compared to sales of $37.6 billion in 2000. The 2001
full-year net loss was $3.9 billion, or (1.78) cents per share,
compared to net earnings of $1.3 billion, or 58 cents per share in
2000.
Breen reviewed the following results of major operations for
the fourth quarter of 2001 compared with the fourth quarter of 2000.
This review is based on ongoing operations, excluding the results of
the businesses sold during the year and special items.

2

Personal Communications Segment
Segment sales were $3.0 billion, down 14 percent from the
comparable year-ago quarter. Orders were $2.2 billion, down 23
percent. The segment recorded operating earnings, excluding special
items, of $189 million for the fourth quarter of 2001 versus
operating earnings, excluding special items, of $83 million a year
ago.
Excluding special items, this was the second consecutive
profitable quarter for the segment. Improvements in financial
performance were driven by the segment’s implementation of its
platform design strategy, reductions in product portfolio and parts
complexity, new products, and improved relationships with operators
worldwide.
The segment estimated its worldwide handset market share at
approximately 17 percent in the fourth quarter of 2001 and believes it
maintained its leading market-share position in China.
In Global System for Mobile (GSM) Communications devices,
Motorola maintained its position as the leading handset provider in
China due to very strong consumer demand for its entry-level,
feature-rich Talkabout® 191 and the more stylish V.series 60. In
Europe, shipments increased substantially for both the Talkabout 191
and for the Timeport 280, which helps operators increase average
revenue per unit. A portfolio of fashionable accessories also helped
to drive orders and shipments for the V.series 60 and 66. In North
America, the segment saw volume shipments of the entry-level,
feature-rich Talkabout 193, the V.series 60g and the Timeport 7389i
for GSM.
Motorola continued to strengthen its leadership position in 2.5
Generation (2.5G) General Packet Radio Service (GPRS) by announcing
several agreements with Java 2 Platform Micro Edition (J2ME)
technology developers for applications in gaming, business productivity,
and handset personalization. Availability of applications is key to
increasing consumer demand for GPRS handsets.
Motorola offers a complete portfolio of GPRS handsets including
the Accompli 008, which blends voice, “always-on” Internet access
and personal organizer functionality; the V.series 60 and 66 for
consumers who enjoy fashion and style; the Timeport 280 for business

3

users on the go; and the Talkabout 193 for cost-conscious, entry-
level consumers. During the quarter, Motorola began shipping the
Timeport 280 and the Talkabout 193 to operators in North America who
launched GPRS service.
In December, Motorola introduced the V.series 8060, the company’s
first Code Division Multiple Access (CDMA) phone in China. Motorola also
partnered with China Unicom in October to make its first live CDMA 1X
data call. Earlier this month, Motorola introduced its first CDMA 1X
mobile phone for the Americas, the 120x, the company’s fourth 1X handset
product offering globally.
In Time Division Multiple Access (TDMA) handsets, Motorola began
shipping the V.series 60t in volume in North America and expanded
shipments in Mexico and Brazil.

Motorola, demonstrating its leadership in end-to-end solutions,
introduced two additional iDEN® handsets, the i90c and i80c, which
enable users to download and run applications and to perform a
variety of functions. These new mobile telephones are among the
first five handsets in North America -- all from Motorola -- that
use Java technology to enable users to customize their handsets with
downloadable applications. A variety of business and entertainment
applications can be downloaded over-the-air to this new generation
of devices.

Global Telecom Solutions Segment
Segment sales were $1.4 billion, down 33 percent from the
comparable year-ago quarter. Orders declined 39 percent to $1.1
billion. The segment incurred an operating loss, excluding special
items, of $120 million, compared with operating earnings, excluding
special items, of $193 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 lower average selling prices.
In China, Motorola announced two expansions of China Mobile’s
GPRS network. Motorola now has 22 GPRS infrastructure contracts with
15 operators globally. In addition, Motorola won a $178 million
contract for a GSM network in South India, a $70 million contract to

4

install a GSM network in Western India and a $44 million contract to
expand GSM network infrastructure in Malaysia.
Motorola announced two CDMA2000 1X contracts during the quarter
including a $35 million contract with Horizon PCS in the United
States. In China, Motorola signed a $35 million contract with China
Unicom to expand the operator’s CDMA network in Hebei province.

Commercial, Government and Industrial Systems Segment
Segment sales, excluding the business sold, increased 7 percent
to $1.2 billion and orders decreased 6 percent to $1.1 billion.
Operating earnings, excluding the results of the business sold and
special items, decreased to $167 million from $171 million a year
ago.
In the fourth quarter, Motorola won a $68 million order from
the Los Angeles County Metropolitan Transportation Authority for an
integrated voice and data system; a $19 million order from Wake
County, N.C., for Astro® digital equipment and a computer-aided
dispatch system; and a multi-million dollar, 20-year contract to
provide technical support for the Airwave radio network in the U.K.
During the quarter, Motorola achieved several digital
technology milestones. Motorola began shipping its Astro 25 Voice
over IP (VoIP) communications systems, making it the first company
to deliver IP-based, Project 25-compliant equipment. The segment
also announced Dimetra™ IP, the industry’s first fully IP-based,
TETRA-compliant network, as well as Compact TETRA, a scalable
solution for small and medium-sized businesses. Motorola also began
shipping new generation Project 25-compatible and TETRA-compatible
portable and mobile radios.
Motorola’s Printrak subsidiary became the first vendor
certified by the Royal Canadian Mounted Police for criminal and
applicant fingerprint/palm print submissions in Canada and was
selected by the London Fire Authority in the U.K. to implement
Motorola’s advanced command and control emergency response system.

5

Broadband Communications Segment
Segment sales decreased 45 percent to $580 million and orders
decreased 51 percent to $525 million. The year-over-year declines
resulted from a slow down by cable operators in making capital
investments and deploying subscriber equipment. Operating earnings,
excluding special items, decreased to $86 million compared with $163
million a year ago as a result of the decline in sales.
During the fourth quarter, Motorola completed its acquisition
of RiverDelta Networks and earlier this month completed its
acquisition of Synchronous, Inc. These acquisitions provide Motorola
with leading-edge routing and transport technologies that will be
leveraged throughout the company's broadband product lines to offer
comprehensive, integrated end-to-end solutions for the delivery of
video, voice and data. Cox Communications selected Motorola’s
broadband services router for the delivery of high-speed data and
advanced broadband services to more than one million customers in
Orange County, Cleveland and Las Vegas.
Motorola also announced two new digital set-top boxes, the
DCT2500 and DCT2600, that provide multiple applications, improved
graphics, guide enhancements and 'watch and surf' capabilities. AT&T
Broadband has agreed to purchase 200,000 of the DCT2500 set-top
boxes in 2002. Also during the quarter, Motorola shipped its 2
millionth digital set-top to Comcast Communications; saw it's
DVi5000 become the world's first digital set-top terminal to be
EuroDOCSIS-qualified; and, announced that its fourth-generation
SURFboard® cable modem had received SB4200E's certification for
interoperability.

Semiconductor Products Segment
Segment sales fell 41 percent to $1.1 billion and orders fell
36 percent to $1.0 billion. The segment had an operating loss,
excluding special items, of $335 million versus operating earnings,
excluding special items, of $171 million a year ago, due to the
decline in sales as the worldwide semiconductor industry continued
to experience its sharpest decline in history.

6

Last week, the segment announced plans to provide Benq
Corporation, formerly Acer Communication and Multimedia, Inc. of
Taiwan, with Motorola’s 2.5G Innovative Convergence™ (i.250)
platform. The i.250 platform is a comprehensive silicon-to-software
solution for designing and manufacturing 2.5G GSM/GPRS wireless
handsets. The platform is a major advancement in the industry's
ongoing effort to enable anytime, anywhere communication for
consumers by providing a solid architectural foundation to original
equipment manufacturers and original design manufacturers, including
Benq.
During the quarter, the segment announced a number of design
wins from leading global automotive customers for its advanced 16-
bit microcontroller unit family. The microcontroller, which helps
enable smarter, highly personalized vehicles, is expected to be used
beginning in model year 2003 and the design wins are estimated to be
worth more than $1 billion.
Motorola expanded its industry leading PowerQUICC™ II
communication processor family, which has been awarded more than
4,000 networking design wins. The new MPC8250 device is targeted for
use in small-office-home-office routers and edge control plane
applications. Motorola also expanded its PowerPC™-compliant
microcontroller products. These include the MPC500 family, which
offers 32-bit, reprogrammable solutions with on-board flash for
appliances, vehicles, computer peripherals and telephones, and the
MPC600 family for avionics, industrial control, robotics, high-end
motor controllers and analysis equipment applications.

Integrated Electronic Systems Segment
Segment sales decreased 29 percent to $540 million and orders
decreased 32 percent to $483 million compared to the same quarter
last year. The segment incurred an operating loss, excluding special
items, of $32 million versus operating earnings, excluding special
items, of $70 million a year ago due primarily to the downturn in
the telecommunications industry.
Automotive Communications and Electronic Systems (ACES) Group
sales were down and orders decreased compared with the same quarter

7

in 2000, due largely to a decrease in vehicle production in the U.S.
and Europe during the quarter. ACES announced a contract with
Mercedes Benz to provide the V.series 60 hands-free integrated phone
system on all 2002 Mercedes Benz automobiles sold in North America.

Motorola Computer Group (MCG) sales and orders were down very
significantly due to the current downturn in the telecommunications
industry, MCG’s largest market. During the quarter, MCG announced
that Nortel Networks is using Motorola's open, high-availability
embedded computing hardware and software to enhance the power of its
new compact, IP-based softswitch.

Motorola’s Energy Systems Group (ESG) sales were down and
orders were down significantly due to the year-over-year downturn in
wireless handset demand throughout the industry. At the same time,
ESG had record unit shipments of notebook computer batteries during
the quarter. ESG announced a strategic alliance with Elitetron
Electronic Co. (EEC), Ltd., a distributor of electronic components
in the Asia Pacific region, to distribute Motorola’s portfolio of
lithium-ion and lithium-ion polymer technology energy solutions.

Review and Outlook
Christopher B. Galvin, chairman and chief executive officer,
said, “2001 will go down in the history of the global
telecommunications equipment and semiconductor industries as one of
the most difficult years. The global recession, which we began to
anticipate in the third quarter of 2000, began in earnest in early
2001, hurting many strong businesses, especially those involved in
telecommunications and semiconductors. The events of September 11
compounded the impact.
“That stated, while we expect to incur losses in the first and
second quarters of 2002, we expect to return to profitability in the
second half of the year and be profitable for the full year, barring
any unforeseen political or economic disruptions. Motorola has
continued to position its cost structure, R&D investments and
manufacturing capacity for both an expected modest economic recovery
in the second half of 2002 and the expected revitalization of our
strategic markets.

8

“We are staying the course with our five point strategy:
#1: Revitalizing our management team (We have placed new
leaders in 70 of Motorola's 100 most important assignments within
the last 18 months. And, I'm delighted to have chosen Ed Breen as
president and chief operating officer);
#2: Stabilizing our balance sheet and improving financial
flexibility (We generated more than $1.9 billion in positive
operating cash flow this past year and reduced ratio of net debt to
net debt plus equity from 27 percent to 18 percent);
#3: Reducing our costs and manufacturing capacity (We
announced an employee population reduction of about one-third while
closing five businesses, closing five manufacturing facilities and
announced in 2001 the future closure of four additional facilities);
#4: Producing new, innovative products and growing customer
relationships (Some examples include our recent i.250 platform
wireless chipset design win, additional design wins worth a
potential $2 billion, enhancing our market leadership position in
telematics, and the success of our V.60 and GPRS phones worldwide);
and,
#5: Evaluating and re-evaluating our business plans to remain
competitive in this ever-changing business climate (We launched a
renewed China growth strategy, launched an “asset light” business
model for SPS, divested two non-strategic businesses and made
selected strategic acquisitions).
“We are focused on returning Motorola to profitability in 2002,
securing our long-term leadership in the strategic markets in which
we choose to participate, growing our sales and enhancing
shareholder value. The work is not complete. But due to actions
taken in 2001 and our continuing efforts to innovate, find new
business efficiencies and realize cost reductions, we enter 2002 a
much leaner, more competitive and highly energized company. This is
our mandate.quot;

9

Consolidated Results for Ongoing Operations, Excluding Results of
Businesses Sold and Special Items
Excluding the results of the two businesses sold during the
year and special items, a comparison of results from ongoing
operations is as follows:
(Dollars in millions, except per-share amounts)

Fourth Quarter Full Year

2001 2000 2001 2000

Sales $7,324 $9,824 $29,451 $36,755
Net Earnings (Loss) $(90) $362 $(697) $2,045
Net Earnings (Loss) Per Share $(.04) $.16 $(.31) $.91
Net Margin on Sales -1.2% 3.7% -2.4% 5.6%

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)
2001 2000 2001 2000

Sales $7,324 $10,064 $30,004 $37,580
Net Earnings (Loss) $(1,237) $135 $(3,937) $1,318
Net Earnings (Loss) Per Share $(.55) $.06 $(1.78) $.58
Net Margin on Sales -16.9% 1.3% -13.1% 3.5%

Special Item Description:
For the fourth quarters and full years of 2001 and 2000,
respectively, Motorola reported special items as follows:
(Dollars in millions)


2001 2000 2001 2000

10

Employee Severance $463 $114 $1,123 $140
Exit Costs 152 117 376 174
Fixed Asset Impairments 402 167 857 344
Investment Impairments 158 - 1,234 -
Goodwill/Intangible Asset
Impairments 44 - 116 -
Amortization of Goodwill 40 45 165 170
In-Process Research and
Development Charges 20 13 40 332
Litigation/Arbitration
Settlements 365 - 398 87
Product Portfolio
Simplification Write-Offs - 367 583 825
Potentially Uncollectible
Finance Receivables 48 - 1,501 -
General Instrument Merger
Integration Costs - - - 98
Other 61 13 21 51
Gains on Sale of
Investments and Businesses (33) (723) (1,931) (1,570)
Pre-tax Special Items 1,720 113 4,483 651
Income Tax Provision (573) 127 (1,227) 82
After-tax Special Items $1,147 $240 $3,256 $733

The impact on the segment results of the sales of the two
Motorola businesses and the special items above is shown in the
segment information tables at the end of this press release.

Notes:
Segment operating earnings (loss) represent earnings (loss) before
income taxes for the respective segment.

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.

11

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 impact of recently completed
acquisitions; the impact of design wins on sales and earnings; the
commercial availability and performance of new products; 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 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 impact of the slowdown 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) the decline in the telecommunications,
semiconductor and broadband industries; (vi) the company's continuing
ability to access the capital markets on favorable terms; (vii) demand for
the company's products, including products related to new technologies;
(viii) the company's ability to continue to increase profitability and
market share in its wireless handset business; (ix) the company's success
in the emerging 3G market; (x) the demand for vendor financing and the
company's ability to provide that financing in order to remain
competitive; (xi) unexpected liabilities or expenses, including
unfavorable outcomes to any currently pending or future litigation,
including any relating to the Iridium project; (xii) the levels at which
design wins become actual orders and sales; (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.

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.

PowerPC is a trademark of the IBM Corp. and used by Motorola, Inc.
under licensing agreements.

Motorola, Inc. (NYSE:MOT) is a global leader in providing integrated
communications and embedded electronic solutions. Sales in 2001
were $30 billion.
###

12

Motorola, Inc. and Subsidiaries
Consolidated Statements of Operations
(In millions, except per share amounts)
For the Quarter Ended December 31, 2001
---------------------------------------------------
Ongoing
Operations
Special Excluding Exited Excluding
GAAP Items Special Businesses Special
Results Inc/(Exp) Items Inc/(Exp) Items
-------- ------------------- --------------------
Net sales $7,324 $- $7,324 $- $7,324

Costs and expenses
Manufacturing and
other costs of sales 5,035 (152) 4,883 - 4,883
Selling, general and
administrative
expenses 894 (40) 854 - 854
Research and development
expenditures 1,023 - 1,023 - 1,023
Depreciation expense 584 - 584 - 584
Reorganization of
businesses 865 (865) - - -
Other charges 696 (696) - - -
Interest expense, net 113 - 113 - 113
Gains on sales of
investments and
businesses (33) 33 - - -
-------- ------------------- --------------------
Total costs and
expenses 9,177 (1,720) 7,457 - 7,457
-------- ------------------- --------------------
Loss before
income taxes (1,853) (1,720) (133) - (133)
Income tax provision (616) 573 (43) - (43)
-------- ------------------- --------------------
Net loss $(1,237) $(1,147) $(90) $- $(90)
======== =================== ====================

Net loss per common share
-------------------------
Basic $(0.55) $(0.04)
Diluted $(0.55) $(0.04)
Weighted average common shares outstanding
------------------------------------------
Basic 2,236.8 2,236.8
Diluted 2,236.8 2,236.8

Dividends paid
per share $0.04 $0.04
Net margin on sales -16.9% -1.2%

13

---------------------------------------------------
Ongoing
Operations
-------- ------------------- --------------------
Net sales $10,064 $- $10,064 $240 $9,824
Costs and expenses
Manufacturing and
other costs of sales 6,790 (388) 6,402 (159) 6,243
administrative
expenses 1,346 (61) 1,285 (40) 1,245
expenditures 1,144 - 1,144 (17) 1,127
Depreciation expense 634 - 634 (6) 628
Reorganization of
businesses 376 (376) - - -
Gains on sales of
investments and
businesses (723) 723 - - -
-------- ------------------- --------------------
Total costs and
expenses 9,651 (113) 9,538 (222) 9,316
-------- ------------------- --------------------
Earnings (loss) before
income taxes 413 (113) 526 18 508
Income tax provision 278 (127) 151 (5) 146
-------- ------------------- --------------------
Net earnings (loss) $135 $(240) $375 $13 $362
======== =================== ====================
Net earnings per common share
-----------------------------
Basic $0.06 $0.17
Diluted $0.06 $0.16

------------------------------------------
Basic 2,188.7 2,188.7
Diluted 2,240.6 2,240.6

Dividends paid
per share $0.04 $0.04
Net margin on sales 1.3% 3.7%

14

Consolidated Statements of Operations
(In millions, except per share amounts)
For the Year Ended December 31, 2001
-----------------------------------------------------
Ongoing
Operations
---------- ------------------- --------------------
Net sales $30,004 $- $30,004 $553 $29,451

Costs and expenses
Manufacturing and
other costs of sales 21,445 (1,081) 20,364 (383) 19,981
administrative
expenses(2) 3,703 (125) 3,578 (99) 3,479
expenditures 4,318 - 4,318 (31) 4,287
Depreciation
expense (2) 2,357 - 2,357 (17) 2,340
Reorganization of
businesses 1,858 (1,858) - - -
Other charges 3,328 (3,328) - - -
Interest expense, net 437 (22) 415 - 415
Gains on sales of
investments and
businesses (1,931) 1,931 - - -
---------- ------------------- --------------------
Total costs and
expenses 35,515 (4,483) 31,032 (530) 30,502
---------- ------------------- --------------------
income taxes (5,511) (4,483) (1,028) 23 (1,051)
Income tax provision (1,574) 1,227 (347) (7) (354)
---------- ------------------- --------------------
Net earnings (loss) $(3,937) $(3,256) $(681) $16 $(697)
========== =================== ====================

Net loss per common share
-------------------------
Basic $(1.78) $(0.31)
Diluted $(1.78) $(0.31)

------------------------------------------
Basic 2,213.3 2,213.3
Diluted 2,213.3 2,213.3
Dividends paid
per share $0.16 $0.16
Net margin on sales -13.1% -2.4%

Return on average

invested capital(1) -18.0%

15


-----------------------------------------------------
Ongoing
Operations
---------- ------------------- --------------------
Net sales $37,580 $- $37,580 $825 $36,755
Costs and expenses
Manufacturing and
other costs of sales 23,628 (887) 22,741 (555) 22,186
administrative
expenses 5,141 (221) 4,920 (180) 4,740
expenditures 4,437 - 4,437 (57) 4,380
Depreciation expense 2,352 - 2,352 (25) 2,327
Reorganization of
businesses 596 (596) - - -
Gains on sales of
investments and
businesses (1,570) 1,570 - - -
---------- ------------------- --------------------
Total costs and
expenses 35,349 (651) 34,698 (817) 33,881
---------- ------------------- --------------------
income taxes 2,231 (651) 2,882 8 2,874
Income tax provision 913 (82) 831 (2) 829
---------- ------------------- --------------------
Net earnings (loss) $1,318 $(733) $2,051 $6 $2,045
========== =================== ====================
Net earnings per common share
-----------------------------
Basic $0.61 $0.94
Diluted $0.58 $0.91

------------------------------------------
Basic 2,170.1 2,170.1
Diluted 2,256.6 2,256.6

Dividends paid
per share $0.16 $0.16
Net margin on sales 3.5% 5.6%
Return on average
invested capital(1) 6.3%

(1) Based on the performance of the four preceding quarters ending

December 31, 2001 and December 31, 2000.

(2) Includes $24 million reclassification of third quarter costs from

selling, general and administrative expenses to depreciation expense.

16

Condensed Consolidated Balance Sheets
(In millions)
ASSETS December 31, December 31,
2001 2000
------------- -------------
Cash and cash equivalents $6,082 $3,301
Short-term investments 80 354
Accounts receivable, net 4,583 7,092
Inventories, net 2,756 5,242
Other current assets 3,648 3,896
------------- -------------
Total current assets 17,149 19,885
------------- -------------
Property, plant and equipment, net 8,913 11,157
Investments 2,995 5,926
Other assets 4,341 5,375
------------- -------------
Total assets $33,398 $42,343
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable and current portion of
long-term debt $870 $6,391
Accounts payable 2,434 3,492
Accrued liabilities 6,394 6,374
------------- -------------
Total current liabilities 9,698 16,257
------------- -------------
Long-term debt 8,372 4,293
Other liabilities 1,152 2,696
Company-obligated mandatorily redeemable
preferred securities of subsidiary
trust holding solely company-
guaranteed debentures 485 485

Stockholders' equity 13,691 18,612
------------- -------------
Total liabilities and stockholders' equity $33,398 $42,343
============= =============

17

Segment Information
(In millions)

Summarized below are the Company's segment net sales by reportable segment

for the three months ended December 31, 2001 and December 31, 2000.

------------------------------------------
Segment Net Sales
------------------------------------------
Exited
GAAP Businesses Ongoing % Change
Results Inc/(Exp) Operations from 2000
------------------------------------------
Personal Communications Segment $2,975 $- $2,975 -14%
Global Telecom Solutions Segment 1,376 - 1,376 -33%
Commercial, Govt, and Industrial
Systems Segment 1,198 - 1,198 7%
Broadband Communications Segment 580 - 580 -45%
Semiconductor Products Segment 1,123 - 1,123 -41%
Integrated Electronic Systems
Segment 540 - 540 -29%
Other Products Segment 122 - 122 -46%
Adjustments & Eliminations (590) - (590) 25%
-------------------------------
Segment Totals $7,324 $- $7,324 -25%
==========================================
------------------------------------------
Segment Net Sales
------------------------------------------
Exited
GAAP Businesses Ongoing
Results Inc/(Exp) Operations
------------------------------------------
Personal Communications Segment $3,478 $- $3,478
Global Telecom Solutions Segment 2,065 - 2,065
Systems Segment 1,300 185 1,115
Broadband Communications Segment 1,053 - 1,053
Semiconductor Products Segment 1,905 - 1,905
Integrated Electronic Systems Segment 764 - 764
Other Products Segment 281 55 226
Adjustments & Eliminations (782) - (782)
------------------------------------------
Segment Totals $10,064 $240 $9,824
==========================================

18

Segment Information
(In millions)

Summarized below are the Company's segment operating earnings (loss)

before taxes by reportable segment for the three months ended December 31,

2001 and December 31, 2000.


-------------------------------------------------------
Segment Operating Earnings (Loss) before Taxes
-------------------------------------------------------
Ongoing
Operations
GAAP Items Special Businesses Special %
Results Inc/(Exp) Items Inc/(Exp) Items Sales
-------- ------------------- -------------------------
Personal
Communications
Segment $102 $(87) $189 $- $189 6%
Global Telecom
Solutions Segment (344) (224) (120) - (120) -9%
Commercial, Govt,
and Industrial
Systems Segment 2 (165) 167 - 167 14%
Broadband
Communications
Segment (84) (170) 86 - 86 15%
Semiconductor
Products Segment (850) (515) (335) - (335) -30%
Integrated Electronic
Systems Segment (107) (75) (32) - (32) -6%
Other Products
Segment (126) (54) (72) - (72) -60%
Adjustments &
Eliminations 74 - 74 - 74 -13%
-------- ------------------- -----------------
Segment Totals (1,333) (1,290) (43) - (43) -1%
General Corporate (520) (430) (90) - (90)
-------- ------------------- -----------------
Loss Before
Income Taxes $(1,853) $(1,720) $(133) $- $(133) -2%
======== =================== =========================

19


-------------------------------------------------------
-------------------------------------------------------
Ongoing
Operations
-------- ------------------- -------------------------
Personal
Communications
Segment $(375) $(458) $83 $- $83 2%
Global Telecom
Solutions Segment 172 (21) 193 - 193 9%
Commercial, Govt,
and Industrial
Systems Segment 127 (66) 193 22 171 15%
Broadband
Communications
Segment 279 116 163 - 163 15%
Semiconductor
Products Segment 27 (144) 171 - 171 9%
Systems Segment 53 (17) 70 - 70 9%
Other Products Segment 41 191 (150) (4) (146) -65%
Adjustments &
Eliminations (66) - (66) - (66) 8%
-------- ------------------- -----------------
Segment Totals 258 (399) 657 18 639 7%
General Corporate 155 286 (131) - (131)
-------- ------------------- -----------------
Earnings (Loss)
Before Income
Taxes $413 $(113) $526 $18 $508 5%
======== =================== =========================

20

Segment Information
(In millions)

Summarized below are the Company's segment net sales by reportable segment

for the years ended December 31, 2001 and December 31, 2000.

-----------------------------------------
Segment Net Sales
-----------------------------------------
Exited
GAAP Businesses Ongoing % Change
Results Inc/(Exp) Operations from 2000
-----------------------------------------
Personal Communications Segment $10,448 $- $10,448 -21%
Global Telecom Solutions Segment 6,548 - 6,548 -16%
Systems Segment 4,318 456 3,862 -4%
Broadband Communications Segment 2,855 - 2,855 -16%
Semiconductor Products Segment 4,936 - 4,936 -37%
Integrated Electronic Systems
Segment 2,239 - 2,239 -22%
Other Products Segment 755 97 658 -20%
Adjustments & Eliminations (2,095) - (2,095) 36%
-----------------------------
Segment Totals $30,004 $553 $29,451 -20%
=========================================
-----------------------------------------
Segment Net Sales
-----------------------------------------
Exited
GAAP Businesses Ongoing
Results Inc/(Exp) Operations
-----------------------------------------
Personal Communications Segment $13,267 $- $13,267
Global Telecom Solutions Segment 7,791 - 7,791
Systems Segment 4,580 572 4,008
Broadband Communications Segment 3,416 - 3,416
Semiconductor Products Segment 7,876 - 7,876
Integrated Electronic Systems Segment 2,869 16 2,853
Other Products Segment 1,057 237 820
Adjustments & Eliminations (3,276) - (3,276)
-----------------------------------------
Segment Totals $37,580 $825 $36,755
=========================================

21

Segment Information
(In millions)

Summarized below are the Company's segment operating earnings (loss)

before taxes by reportable segment for the years ended December 31, 2001

and December 31, 2000.

-------------------------------------------------------
-------------------------------------------------------
Ongoing
Operations
-------- ------------------- -------------------------
Personal
Communications
Segment $(1,797) $(1,362) $(435) $- $(435) -4%
Global Telecom
Solutions
Segment (1,413) (1,402) (11) - (11) 0%
Commercial, Govt,
and Industrial
Systems Segment 508 151 357 39 318 8%
Broadband
Communications
Segment (436) (916) 480 - 480 17%
Semiconductor
Products Segment (2,142) (934) (1,208) - (1,208) -24%
Integrated
Electronic
Systems Segment (211) (179) (32) - (32) -1%
Other Products
Segment 551 815 (264) (16) (248) -38%
Adjustments &
Eliminations 236 - 236 - 236 -11%
-------- ------------------- ----------------
Segment Totals (4,704) (3,827) (877) 23 (900) -3%
General Corporate (807) (656) (151) - (151)
-------- ------------------- ----------------
Earnings (Loss)
Before Income
Taxes $(5,511) $(4,483) $(1,028) $23 $(1,051) -4%
======== =================== =========================

22

-------------------------------------------------------
-------------------------------------------------------
Ongoing
Operations
-------- ------------------- -------------------------
Personal
Communications
Segment $(328) $(789) $461 $- $461 3%
Global Telecom
Solutions Segment 846 (133) 979 - 979 13%
Commercial, Govt,
and Industrial
Systems Segment 434 (92) 526 34 492 12%
Broadband
Communications
Segment 1,251 692 559 - 559 16%
Semiconductor
Products Segment 163 (514) 677 - 677 9%
Systems Segment 184 (25) 209 - 209 7%
Other Products
Segment (338) 30 (368) (26) (342) -42%
Adjustments &
Eliminations (66) - (66) - (66) 2%
-------- ------------------- ----------------
Segment Totals 2,146 (831) 2,977 8 2,969 8%
General Corporate 85 180 (95) - (95)
-------- ------------------- ----------------
Earnings (Loss)
Before Income
Taxes $2,231 $(651) $2,882 $8 $2,874 8%
======== =================== =========================

23

Q4 2001 Earnings Release

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