-- Second-quarter sales of $5.5 billion -- Second-quarter GAAP earnings from continuing operations of $0.01 per share, including net income of $0.02 per share from highlighted items -- Total cash of $6.5 billion, a sequential increase of $360 million -- Increased cost reduction plan by $100 million; now expect total cost savings of $1.8 billion for 2009 -- Home and Networks Mobility sales of $2.0 billion; operating earnings of $153 million -- Mobile Devices sales of $1.8 billion; shipped 14.8 million handsets; operating loss of $253 million, improved by 50 percent sequentially -- Enterprise Mobility Solutions sales of $1.7 billion; operating earnings of $227 million
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Motorola, Inc. (NYSE: MOT) today reported sales of $5.5 billion in the second quarter of 2009. The GAAP earnings from continuing operations in the second quarter of 2009 were $26 million, or $0.01 per share. The GAAP earnings from continuing operations includes net income of $0.02 per share from highlighted items, which are outlined in the table at the end of the press release.
Total cash* at the end of the second quarter was $6.5 billion, an increase of $360 million compared to the end of the first quarter. The Company generated $150 million of positive operating cash flow during the quarter and expects to continue to generate positive cash flow in the second half of the year.
Greg Brown, co-CEO of Motorola and CEO of Broadband Mobility Solutions, said, "In Broadband Mobility Solutions, we continued to lead in our key markets and delivered solid results in a very challenging economic environment. We further reduced our cost structure, improved our operating margins and decreased inventory on a sequential basis. We also continued to focus our R&D efforts on innovation in areas such as next-generation public safety, enterprise mobile computing, enhanced broadband video and 4G wireless."
Sanjay Jha, co-CEO of Motorola and CEO of Mobile Devices, added, "We have agreements in place with carriers and remain on track to bring our new smartphone devices to market for the holiday selling season. We are also excited about our 2010 portfolio and are pleased with the customer feedback. In Mobile Devices, we improved the operating loss, reflecting a lower cost structure, and substantially reduced cash consumption as compared to the first quarter."
Operating Results
Mobile Devices segment sales were $1.8 billion, down 45 percent compared to the year-ago quarter. The GAAP operating loss was $253 million, compared to an operating loss of $346 million in the year-ago quarter. The segment reduced its operating loss by 50 percent sequentially from $509 million in the first quarter of 2009.
Mobile Devices highlights:
-- Shipped 14.8 million handsets; estimated global handset market share of 5.5 percent -- Continued progress on differentiated smartphone devices targeted to launch in the fourth quarter of 2009 -- Launched the CDMA Rival(TM) A455, a side-slider with one-touch messaging access and QWERTY keyboard; and the 3G Karma(TM) QA1, a slide-out QWERTY with one-click access to Facebook and MySpace -- Launched the iDEN Clutch(TM) i465, Motorola's first device that combines the power of push-to-talk and the convenience of a QWERTY keyboard
Home and Networks Mobility segment sales were $2.0 billion, down 27 percent compared to the year-ago quarter. GAAP operating earnings were $153 million, compared to operating earnings of $245 million in the year-ago quarter.
Home and Networks Mobility highlights:
-- Shipped 3.7 million digital entertainment devices -- Launched the world's first retail DOCSIS(R) 3.0 cable modem -- Surpassed cumulative WiMAX CPE shipments of 650,000 units -- Announced an all-fiber enterprise passive optical LAN solution designed to reduce network cost and complexity
Enterprise Mobility Solutions segment sales were $1.7 billion, down 17 percent compared to the year-ago quarter. GAAP operating earnings were $227 million, compared to operating earnings of $377 million in the year-ago quarter.
Enterprise Mobility Solutions highlights:
-- Shipped APX(TM) 7000, a new portable radio platform for the public safety market, which provides multi-band functionality for system interoperability and unmatched volume and audio clarity for extreme environments -- Released Capacity Plus software for MOTOTRBO(TM), a digital trunked radio solution for enterprise users, greatly increasing single-site capacity for critical voice and data communication -- Released the world's first TETRA base station supporting TETRA Enhanced Data Services with IP-over-Ethernet connectivity -- Secured public safety awards from the State of Missouri, German Ministry of Interior (Berlin), City of Hamilton in Ontario Canada, and West Australian Police
Third-Quarter 2009 Outlook
The Company's outlook for third-quarter earnings from continuing operations is $(0.01) to $0.01 per share. This outlook excludes charges associated with the Company's operating expense reduction initiatives, as well as any other items of the variety typically highlighted by the Company in its quarterly earnings releases.
Consolidated GAAP Results
A comparison of results from operations is as follows:
Second Quarter -------------- (In millions, except per share amounts) 2009 2008 -------------------------------------- ---- ---- Net sales $5,497 $8,082 --------- ------ ------ Gross margin 1,710 2,325 ------------ ----- ----- Operating earnings 10 5 ------------------ -- --- Earnings from continuing operations** 26 4 ------------------------------------ -- --- Net earnings** 26 4 ------------- -- --- Diluted earnings per common share: ---------------------------------- Continuing operations $0.01 $0.00 --------------------- ----- ----- Weighted average diluted common shares outstanding 2,306.4 2,269.5 ------------------ ------- -------
Highlighted Items
The table of highlighted items for the second quarter of 2009 is as follows:
EPS Impact Exp/(Inc) ------------ Gain on Sigma Fund investments $(0.02) ------------------------------ ------ Legal settlement (0.02) ---------------- ----- Adjustment to software/silicon platform consolidation reserves (0.01) --------------------------------------- ----- Reorganization of business and similar charges 0.02 ---------------------------------------------- ---- Facility impairment 0.02 ------------------- ---- Tax-related benefit (0.01) ------------------- ----- $(0.02) ------
Conference Call and Webcast
Motorola will host its quarterly conference call beginning at 8:00 a.m. Eastern Time (USA) on Thursday, July 30, 2009. The conference call will be webcast live with audio and slides at www.motorola.com/investor.
Business Risks
This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements about: cost savings and financial impact from cost-reduction actions, levels of cash generation and consumption in 2009, the timing and impact of the launch of new products and Motorola's financial outlook for the third quarter of 2009. Motorola cautions the reader that the risk factors below, as well as those on pages 18 through 30 in Item 1A of Motorola's 2008 Annual Report on Form 10-K and in its other SEC filings, could cause Motorola's actual results to differ materially from those estimated or predicted in the forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to: (1) the Company's ability to improve financial performance and increase market share in its Mobile Devices business; (2) the level of demand for the Company's products, particularly in light of global economic conditions which may lead consumers, businesses and governments to defer purchases in response to tighter credit and negative financial news; (3) the Company's ability to introduce new products and technologies in a timely manner; (4) the possible negative effects on the Company's business operations, financial performance or assets as a result of its plan to create two independent, publicly traded companies; (5) unexpected negative consequences from the Company's ongoing restructuring and cost reduction activities, including as a result of significant restructuring at the Mobile Devices business; (6) negative impact on the Company's business from the global financial crisis and tightening in the credit markets, which may include: (i) the inability of customers to obtain financing for purchases of the Company's products; (ii) the viability of the Company's suppliers that may no longer have access to necessary financing; (iii) reduced value of investments held by the Company's pension plan and other defined benefit plans; (iv) fair and/or actual value of the Company's debt and equity investments differing significantly from the fair values currently assigned to them; (v) counterparty failures negatively impacting the Company's financial position; (vi) difficulties or increased costs for the Company in obtaining financing; and (vii) the inability of the Company to sell accounts receivable and long-term receivables in volumes and on terms comparable to historical practices; (7) the economic outlook for the telecommunications and broadband industries; (8) the Company's ability to purchase sufficient materials, parts and components to meet customer demand, particularly in light of global economic conditions; (9) risks related to dependence on certain key suppliers; (10) the impact on the Company's performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (11) risks related to the Company's high volume of manufacturing and sales in Asia; (12) the creditworthiness of the Company's customers and distributors, particularly purchasers of large infrastructure systems; (13) variability in income received from licensing the Company's intellectual property to others, as well as expenses incurred when the Company licenses intellectual property from others; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings; (15) the impact of foreign currency fluctuations, including the negative impact of the strengthening U.S. dollar on the Company when competing for business in foreign markets; (16) the impact on the Company from continuing hostilities in countries where the Company does business; (17) the impact on the Company from ongoing consolidation in the telecommunications and broadband industries; (18) the impact of changes in governmental policies, laws or regulations; (19) the outcome of currently ongoing and future tax matters; and (20) negative consequences from the Company's outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.
Definitions
*"Total cash" equals Cash and cash equivalents plus Sigma fund (current and non-current) plus Short-term investments.
**Amounts attributable to Motorola, Inc. common shareholders
About Motorola
Motorola is known around the world for innovation in communications and is focused on advancing the way the world connects. From broadband communications infrastructure, enterprise mobility and public safety solutions to high-definition video and mobile devices, Motorola is leading the next wave of innovations that enable people, enterprises and governments to be more connected and more mobile. Motorola (NYSE: MOT) had sales of $30.1 billion in 2008. For more information, please visit www.motorola.com.
Media contact: Jennifer Erickson Motorola, Inc. +1 847-435-5320 Jennifer.erickson@motorola.com Investor contact: Dean Lindroth Motorola, Inc. +1 847-576-6899 dean.lindroth@motorola.com
Motorola, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In millions, except per share amounts) Three Months Ended ------------------ July 4, April 4, June 28, 2009 2009 2008 ------- -------- -------- Net sales $5,497 $5,371 $8,082 Costs of sales 3,787 3,875 5,757 ----- ----- ----- Gross margin 1,710 1,496 2,325 ----- ----- ----- Selling, general and administrative expenses 822 869 1,115 Research and development expenditures 775 847 1,048 Separation-related transaction costs - - 20 Other charges 33 158 56 Intangibles amortization and IPR&D 70 71 81 --- --- --- Operating earnings (loss) 10 (449) 5 --- ---- --- Other income (expense): Interest expense, net (30) (35) (10) Gain (loss) on sales of investments and businesses, net 30 (20) 39 Other 23 70 (92) --- --- --- Total other income (expense) 23 15 (63) --- --- --- Earnings (loss) from continuing operations before income taxes 33 (434) (58) Income tax benefit (2) (146) (55) --- ---- --- Earnings (loss) from continuing operations 35 (288) (3) Earnings from discontinued operations, net of tax - 60 - --- --- --- Net earnings (loss) 35 (228) (3) Less: Earnings (loss) attributable to the noncontrolling interest 9 3 (7) --- --- --- Net earnings (loss) attributable to Motorola, Inc. $26 $(231) $4 === ===== == Amounts attributable to Motorola, Inc. common shareholders Earnings (loss) from continuing operations, net of tax $26 $(291) $4 Earnings from discontinued operations, net of tax - 60 - --- --- --- Net earnings (loss) $26 $(231) $4 === ===== === Earnings (loss) per common share -------------------------------- Basic: Continuing operations $0.01 $(0.13) $0.00 Discontinued operations - 0.03 - --- ---- --- $0.01 $(0.10) $0.00 ===== ====== ===== Diluted: Continuing operations $0.01 $(0.13) $0.00 Discontinued operations - 0.03 - --- ---- --- $0.01 $(0.10) $0.00 ===== ====== ===== Weighted average common shares outstanding ------------------------------------------ Basic 2,293.9 2,280.5 2,262.6 Diluted 2,306.4 2,280.5 2,269.5 Dividends paid per share $- $0.05 $0.05 --- ----- ----- Percentage of Net Sales* ------------------------ Net sales 100% 100% 100% Costs of sales 68.9% 72.1% 71.2% ---- ---- ---- Gross margin 31.1% 27.9% 28.8% ---- ---- ---- Selling, general and administrative expenses 15.0% 16.2% 13.8% Research and development expenditures 14.1% 15.8% 13.0% Separation-related transaction costs 0.0% 0.0% 0.2% Other charges 0.6% 2.9% 0.7% Intangibles amortization and IPR&D 1.3% 1.3% 1.0% --- --- --- Operating earnings (loss) 0.2% -8.4% 0.1% --- ---- --- Other income (expense): Interest expense, net -0.5% -0.7% -0.1% Gain (loss) on sales of investments and businesses, net 0.5% -0.4% 0.5% Other 0.4% 1.3% -1.1% --- --- ---- Total other income (expense) 0.4% 0.3% -0.8% --- --- ---- Earnings (loss) from continuing operations before income taxes 0.6% -8.1% -0.7% Income tax benefit 0.0% -2.7% -0.7% --- ---- ---- Earnings (loss) from continuing operations 0.6% -5.4% 0.0% Earnings from discontinued operations, net of tax 0.0% 1.1% 0.0% --- --- --- Net earnings (loss) 0.6% -4.2% 0.0% Less: Earnings (loss) attributable to the noncontrolling interest 0.2% 0.1% -0.1% --- --- ---- Net earnings (loss) attributable to Motorola, Inc. 0.5% -4.3% 0.0% === ==== === * Percents may not add up due to rounding Motorola, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In millions, except per share amounts) Six Months Ended ---------------- July 4, June 28, 2009 2008 ------- -------- Net sales $10,868 $15,530 Costs of sales 7,662 11,060 ----- ------ Gross margin 3,206 4,470 ----- ----- Selling, general and administrative expenses 1,691 2,298 Research and development expenditures 1,622 2,102 Separation-related transaction costs - 20 Other charges 191 150 Intangibles amortization and IPR&D 141 164 --- --- Operating loss (439) (264) ---- ---- Other income (expense): Interest expense, net (65) (12) Gain on sales of investments and businesses, net 10 58 Other 93 (97) -- --- Total other income (expense) 38 (51) -- --- Loss from continuing operations before income taxes (401) (315) Income tax benefit (148) (122) ---- ---- Loss from continuing operations (253) (193) Earnings from discontinued operations, net of tax 60 - --- --- Net loss (193) (193) Less: Earnings (loss) attributable to the noncontrolling interest 12 (3) --- --- Net loss attributable to Motorola, Inc. $(205) $(190) ===== ===== Amounts attributable to Motorola, Inc. common shareholders Loss from continuing operations, net of tax $(265) $(190) Earnings from discontinued operations, net of tax 60 - -- --- Net loss $(205) $(190) ===== ===== Earnings (loss) per common share -------------------------------- Basic: Continuing operations $(0.12) $(0.08) Discontinued operations 0.03 - ---- --- $(0.09) $(0.08) ====== ====== Diluted: Continuing operations $(0.12) $(0.08) Discontinued operations 0.03 - ---- --- $(0.09) $(0.08) ====== ====== Weighted average common shares outstanding ------------------------------------------ Basic 2,286.5 2,260.5 Diluted 2,286.5 2,260.5 Dividends paid per share $0.05 $0.10 ----- ----- Percentage of Net Sales* ------------- Net sales 100% 100% Costs of sales 70.5% 71.2% ---- ---- Gross margin 29.5% 28.8% ---- ---- Selling, general and administrative expenses 15.6% 14.8% Research and development expenditures 14.9% 13.5% Separation-related transaction costs 0.0% 0.1% Other charges 1.8% 1.0% Intangibles amortization and IPR&D 1.3% 1.1% --- --- Operating loss -4.0% -1.7% ---- ---- Other income (expense): Interest expense, net -0.6% -0.1% Gain on sales of investments and businesses, net 0.1% 0.4% Other 0.9% -0.6% --- ---- Total other income (expense) 0.3% -0.3% --- ---- Loss from continuing operations before income taxes -3.7% -2.0% Income tax benefit -1.4% -0.8% ---- ---- Loss from continuing operations -2.3% -1.2% Earnings from discontinued operations, net of tax 0.6% 0.0% --- --- Net loss -1.8% -1.2% Less: Earnings (loss) attributable to the noncontrolling interest 0.1% 0.0% --- --- Net loss attributable to Motorola, Inc. -1.9% -1.2% ==== ==== * Percents may not add up due to rounding Motorola, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In millions) July 4, April 4, June 28, 2009 2009 2008 ---- ---- ---- Assets Cash and cash equivalents $2,881 $3,265 $2,757 Sigma Fund 3,489 2,587 3,856 Short-term investments 45 19 595 Accounts receivable, net 3,689 3,689 4,495 Inventories, net 1,660 2,071 2,758 Deferred income taxes 1,320 1,161 1,882 Other current assets 2,630 2,919 3,876 ----- ----- ----- Total current assets 15,714 15,711 20,219 ------ ------ ------ Property, plant and equipment, net 2,280 2,322 2,575 Sigma Fund 72 257 555 Investments 446 498 746 Deferred income taxes 2,094 2,445 3,074 Goodwill 2,822 2,822 4,358 Other assets 1,676 1,708 2,212 ----- ----- ----- Total assets $25,104 $25,763 $33,739 ======= ======= ======= Liabilities and Stockholders' Equity Notes payable and current portion of long-term debt $40 $63 $145 Accounts payable 2,188 2,265 3,806 Accrued liabilities 5,956 6,728 7,623 ----- ----- ----- Total current liabilities 8,184 9,056 11,574 ----- ----- ------ Long-term debt 3,899 3,878 3,971 Other liabilities 3,398 3,463 2,886 Total Motorola, Inc. stockholders' equity 9,523 9,275 15,204 ----- ----- ------ Noncontrolling interest 100 91 104 --- --- --- Total liabilities and stockholders' equity $25,104 $25,763 $33,739 ------- ------- ------- Financial Ratios: Total cash* $6,487 $6,128 $7,763 *Total cash = Cash and cash equivalents + Sigma Fund (current and non-current) + Short-term investments Motorola, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In millions) Three Months Ended ------------------ July 4, April 4, June 28, 2009 2009 2008 ------- -------- -------- Operating Net earnings (loss) attributable to Motorola, Inc. $26 $(231) $4 Less: Earnings (loss) attributable to the noncontrolling interest 9 3 (7) - --- -- Net earnings (loss) 35 (228) (3) Earnings from discontinued operations, net of tax - 60 - --- -- --- Earnings (loss) from continuing operations 35 (288) (3) Adjustments to reconcile loss from continuing operations to net cash provided by (used for) operating activities: Depreciation and amortization 192 190 212 Non-cash other charges (income) (9) 4 117 Share-based compensation expense 74 76 88 Loss (gain) on sales of investments and businesses, net (30) 20 (39) Gain from the extinguishment of long-term debt - (67) - Deferred income taxes 162 (197) (192) Changes in assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable 1 (204) 246 Inventories 408 582 183 Other current assets 290 217 (104) Accounts payable and accrued liabilities (848) (1,355) (159) Other assets and liabilities (125) 8 (145) ---- --- ---- Net cash provided by (used for) operating activities 150 (1,014) 204 --- ------ --- Investing Acquisitions and investments, net (6) (15) (34) Proceeds from sales of investments and businesses, net 89 137 51 Distributions from investments - - 81 Capital expenditures (66) (71) (120) Proceeds from sales of property, plant and equipment 3 3 - Proceeds from sales (purchases) of Sigma Fund investments, net (649) 1,319 156 Proceeds from sales (purchases) of short- term investments, net (26) 206 (130) --- --- ---- Net cash provided by (used for) investing activities (655) 1,579 4 ---- ----- --- Financing Repayment of commercial paper and short- term borrowings, net (23) (31) (27) Repayment of debt - (129) - Issuance of common stock - 56 76 Payment of dividends - (114) (113) Other, net 6 - (6) --- --- --- Net cash used for financing activities (17) (218) (70) --- ---- --- Effect of exchange rate changes on cash and cash equivalents 138 (146) (74) --- ---- --- Net increase (decrease) in cash and cash equivalents (384) 201 64 Cash and cash equivalents, beginning of period 3,265 3,064 2,693 ----- ----- ----- Cash and cash equivalents, end of period $2,881 $3,265 $2,757 ------ ------ ------ Motorola, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In millions) Six Months Ended ---------------- July 4, June 28, 2009 2008 ------- -------- Operating Net loss attributable to Motorola, Inc. $(205) $(190) Less: Earnings (loss) attributable to the noncontrolling interest 12 (3) --- --- Net loss (193) (193) Earnings from discontinued operations, net of tax 60 - -- --- Loss from continuing operations (253) (193) Adjustments to reconcile loss from continuing operations to net cash used for operating activities: Depreciation and amortization 382 416 Non-cash other charges (income) (5) 116 Share-based compensation expense 150 166 Gain on sales of investments and businesses, net (10) (58) Gain from the extinguishment of long-term debt (67) - Deferred income taxes, including change in valuation allowance (35) (470) Changes in assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable (203) 873 Inventories 990 137 Other current assets 507 (270) Accounts payable and accrued liabilities (2,203) (795) Other assets and liabilities (117) (61) ---- --- Net cash used for operating activities (864) (139) ---- ---- Investing Acquisitions and investments, net (21) (174) Proceeds from sales of investments and businesses, net 226 71 Distributions from investments - 82 Capital expenditures (137) (231) Proceeds from sales of property, plant and equipment 6 5 Proceeds from sales of Sigma Fund investments, net 670 787 Proceeds from sales of short-term investments, net 180 17 --- --- Net cash provided by investing activities 924 557 --- --- Financing Repayment of commercial paper and short-term borrowings, net (54) (81) Repayment of debt (129) (114) Issuance of common stock 56 82 Purchase of common stock - (138) Payment of dividends (114) (227) Other, net 6 (7) --- --- Net cash used for financing activities (235) (485) ---- ---- Effect of exchange rate changes on cash and cash equivalents (8) 72 --- --- Net increase (decrease) in cash and cash equivalents (183) 5 Cash and cash equivalents, beginning of period 3,064 2,752 ----- ----- Cash and cash equivalents, end of period $2,881 $2,757 ------ ------ Motorola, Inc. and Subsidiaries Segment Information (In millions) Summarized below are the Company's Net sales by reportable segment for the three and six months ended July 4, 2009 and June 28, 2008. Net Sales --------- Three Months Ended Three Months Ended % Change July 4, June 28, from 2009 2008 2008 ------------------- ------------------- --------- Mobile Devices $1,829 $3,334 -45% Home and Networks Mobility 2,001 2,738 -27% Enterprise Mobility Solutions 1,685 2,042 -17% ----- ----- --- Segment Totals 5,515 8,114 -32% Other and Eliminations (18) (32) -44% --- --- --- Company Totals $5,497 $8,082 -32% ------ ------ --- Net Sales --------- Six Months Ended Six Months Ended % Change July 4, June 28, from 2009 2008 2008 ----------------- ----------------- --------- Mobile Devices $3,630 $6,633 -45% Home and Networks Mobility 3,992 5,121 -22% Enterprise Mobility Solutions 3,284 3,848 -15% ----- ----- --- Segment Totals 10,906 15,602 -30% Other and Eliminations (38) (72) -47% --- --- --- Company Totals $10,868 $15,530 -30% ------- ------- --- Motorola, Inc. and Subsidiaries Segment Information (In millions) Summarized below are the Company's Operating earnings (loss) by reportable segment for the three and six months ended July 4, 2009 and June 28, 2008. Operating Earnings (Loss) ------------------------- Three Months Ended Three Months Ended July 4, June 28, 2009 2008 ------------------- ------------------- Mobile Devices $(253) $(346) Home and Networks Mobility 153 245 Enterprise Mobility Solutions 227 377 --- --- Segment Totals 127 276 Other and Eliminations (117) (271) ---- ---- Company Totals $10 $5 --- -- Operating Earnings (Loss) ------------------------- Six Months Ended Six Months Ended July 4, June 28, 2009 2008 ----------------- ----------------- Mobile Devices $(762) $(764) Home and Networks Mobility 268 398 Enterprise Mobility Solutions 383 627 --- --- Segment Totals (111) 261 Other and Eliminations (328) (525) ---- ---- Company Totals $(439) $(264) ----- -----
SOURCE Motorola, Inc.
Web site: http://www.motorola.com/