 |  |  |  |  |  |  |  |  |
|
Motorola Announces Third-Quarter Financial Results
- Third-quarter sales of $7.5 billion - Positive operating cash flow of $180 million; total cash position of $7.6 billion - Separation of the businesses targeted beyond 2009 - Implementing further cost reductions with an estimated annual savings of $800 million in 2009 - Mobile Devices sales of $3.1 billion; shipped 25.4 million handsets - Home and Networks Mobility sales of $2.4 billion; operating earnings increased to $263 million, an increase of 65 percent compared to the third quarter of last year - Enterprise Mobility Solutions sales of $2.0 billion; operating earnings increased to $403 million, an increase of 23 percent compared to the third quarter of last year SCHAUMBURG, Ill., Oct. 30 /PRNewswire-FirstCall/ -- Motorola, Inc. (NYSE: MOT) today reported sales of $7.5 billion in the third quarter of 2008. The GAAP net loss from continuing operations in the third quarter of 2008 was $397 million, or a loss of $0.18 per share. This included net charges of $0.23 per share from highlighted items, which are outlined in the table at the end of this press release. Greg Brown, Motorola's co-chief executive officer and CEO of Broadband Mobility Solutions, said, "The company had positive operating cash flow of $180 million and ended the quarter with a total cash* position of $7.6 billion. Our balance sheet and liquidity position give us agility and flexibility in today's weakened global economy and turbulent financial markets. In addition, we benefit from a global customer base and a broad portfolio of products and solutions that meet the needs of our customers." Brown added, "In the third quarter, we continued to expand operating margins in our Home and Networks Mobility and Enterprise Mobility Solutions segments. While we will continue to prioritize investments on opportunities for growth, we are also improving our cost structure across the company by implementing further cost reductions. The initiatives announced today, together with prior actions, will result in total estimated annual savings of $800 million in 2009." Sanjay Jha, Motorola's co-chief executive officer and CEO of Mobile Devices, said, "While our strategic intent to separate the company remains intact, we are no longer targeting the third quarter of 2009, primarily due to the macro-economic environment, stresses in the financial markets and the changes underway in Mobile Devices. We have made progress on various elements of the separation plan and will continue to prepare for a potential transaction at the appropriate timeframe that serves the best interests of the company and its shareholders." Jha added, "As part of our plan to rebuild Mobile Devices, we have announced significant actions to accelerate the consolidation of our product platforms and refocus our investment and market priorities. These efforts will result in a leaner organization with a more competitive and cost-effective product portfolio." Operating results Mobile Devices segment sales were $3.1 billion, down 31 percent compared to the year-ago quarter. The segment reported an operating loss of $840 million, compared to an operating loss of $248 million in the year-ago quarter. The loss this quarter includes significant charges, primarily related to decisions and plans to consolidate silicon and software platforms and simplify the product portfolio. Mobile Devices highlights:
Home and Networks Mobility segment sales were $2.4 billion, down 1 percent compared to the year-ago quarter. Operating earnings increased to $263 million, which represents an increase of 65 percent compared to operating earnings of $159 million in the year-ago quarter. Home and Networks Mobility highlights:
Enterprise Mobility Solutions segment sales were $2.0 billion, up 4 percent compared to the year-ago quarter. Operating earnings increased to $403 million, which represents an increase of 23 percent compared to operating earnings of $328 million in the year-ago quarter. Enterprise Mobility Solutions highlights:
Fourth-quarter and full-year 2008 outlook The company expects to report earnings from continuing operations in the range of $0.02 to $0.04 per share in the fourth quarter of 2008 and full-year earnings per share in the range of $0.05 to $0.07. This outlook excludes any reorganization of business charges associated with the company's operating expense reduction initiatives, as well as any other items of the variety highlighted by the company in its quarterly earnings releases. Consolidated GAAP results A comparison of results from operations is as follows:
Third Quarter
-------------
(In millions, except per share amounts) 2008 2007
---------------------------------------------------------------------
Net sales $7,480 $8,811
Gross margin 1,803 2,505
Operating loss (452) (10)
Earnings (loss) from continuing
operations (397) 40
Net earnings (loss) (397) 60
Diluted earnings (loss) per common share:
Continuing operations $(0.18) $0.02
Discontinued operations - 0.01
--------------------
$(0.18) $0.03
--------------------
Weighted average diluted common
shares outstanding 2,265.9 2,318.4
---------------------------------------------------------------------
Highlighted Items
EPS Impact
Exp/(Inc)
-------------------------------------------------------------------
Software and silicon platform consolidation
charge $(0.11)
Settlement of Freescale purchase commitment (0.04)
Impairment of Sigma Fund investments (0.05)
Asset impairments (0.04)
Reorganization of business charges (0.01)
Separation-related transaction costs (0.01)
Reversal of tax-related interest accruals 0.01
Gain on the sale of PP&E 0.01
Tax-related benefits 0.01
---------
$(0.23)
------------------------------------------------------------------
Conference call and webcast Motorola will host its quarterly conference call beginning at 8 a.m., Eastern Time (USA) on Thursday, October 30, 2008. The conference call will be webcast live with audio and slides at www.motorola.com/investor. Definitions * Total cash equals Cash and cash equivalents plus Sigma fund (current and non-current) plus Short-term investments 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: 1) cost savings from cost reduction actions; 2) the timeframe for our plans to separate the Company; and 3) Motorola's financial outlook for the fourth quarter and full year of 2008. Motorola cautions the reader that the risk factors below, as well as those on pages 18 through 27 in Item 1A of Motorola's 2007 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, particularly in light of anticipated slowing demand in the global handset market; (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 ongoing global financial crisis and severe 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 Company's debt and equity investments could differ significantly from the fair values currently assigned to them, including as a result of additional impairments in the Company's Sigma Fund; (v) counterparty failures negatively impacting the Company's financial position; and (vi) increased cost to the Company to obtain financing; (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. About Motorola Motorola is known around the world for innovation in communications. The company develops technologies, products and services that make mobile experiences possible. Our portfolio includes communications infrastructure, enterprise mobility solutions, digital set-tops, cable modems, mobile devices and Bluetooth accessories. Motorola is committed to delivering next generation communication solutions to people, businesses and governments. A Fortune 100 company with global presence and impact, Motorola had sales of US $36.6 billion in 2007. For more information about our company, our people and our innovations, please visit www.motorola.com.
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
Three Months Ended
------------------
September 27, June 28, September 29,
2008 2008 2007
------------- --------- -------------
Net sales $7,480 $8,082 $8,811
Costs of sales 5,677 5,757 6,306
----- ----- -----
Gross margin 1,803 2,325 2,505
----- ----- -----
Selling, general
and
administrative
expenses 1,044 1,115 1,210
Research and
development
expenditures 999 1,048 1,100
Separation-related
transaction costs 21 20 -
Other charges 111 56 115
Intangibles
amortization and
IPR&D 80 81 90
----- ----- -----
Operating earnings
(loss) (452) 5 (10)
----- ----- -----
Other income
(expense):
Interest income
(expense), net 18 (10) 7
Gains on sales of
investments and
businesses, net 7 39 5
Other (173) (85) 6
----- ----- -----
Total other income
(expense) (148) (56) 18
----- ----- -----
Earnings (loss) from
continuing operations
before income taxes (600) (51) 8
Income tax benefit (203) (55) (32)
----- ----- -----
Earnings (loss) from
continuing operations (397) 4 40
Earnings from
discontinued
operations, net of
tax - - 20
Net earnings (loss) $(397) $4 $60
----- ----- -----
Earnings (loss) per
common share
-------------------
Basic:
Continuing
operations $(0.18) $0.00 $0.02
Discontinued
operations - - 0.01
----- ----- -----
$(0.18) $0.00 $0.03
====== ===== =====
Diluted:
Continuing
operations $(0.18) $0.00 $0.02
Discontinued
operations - - 0.01
----- ----- ----
$(0.18) $0.00 $0.03
====== ===== =====
Weighted average
common shares
outstanding
----------------
Basic 2,265.9 2,262.6 2,290.2
Diluted 2,265.9 2,269.5 2,318.4
Dividends paid per
share $0.05 $0.05 $0.05
----- ----- -----
Percentage of Net Sales*
------------------------
Net sales 100% 100% 100%
Costs of sales 75.9% 71.2% 71.6%
----- ----- -----
Gross margin 24.1% 28.8% 28.4%
----- ----- -----
Selling, general
and
administrative
expenses 14.0% 13.8% 13.7%
Research and
development
expenditures 13.4% 13.0% 12.5%
Separation-related
transaction costs 0.3% 0.2% 0.0%
Other charges 1.5% 0.7% 1.3%
Intangibles
amortization and
IPR&D 1.1% 1.0% 1.0%
----- ----- -----
Operating earnings
(loss) -6.0% 0.1% -0.1%
----- ----- -----
Other income
(expense):
Interest income
(expense), net 0.2% -0.1% 0.1%
Gains on sales of
investments and
businesses, net 0.1% 0.5% 0.1%
Other -2.3% -1.1% 0.1%
----- ----- -----
Total other income
(expense) -2.0% -0.7% 0.2%
----- ----- -----
Earnings (loss) from
continuing operations
before income taxes -8.0% -0.6% 0.1%
Income tax benefit -2.7% -0.7% -0.4%
----- ----- -----
Earnings (loss) from
continuing operations -5.3% 0.0% 0.5%
Earnings from
discontinued
operations, net of
tax 0.0% 0.0% 0.2%
Net earnings (loss) -5.3% 0.0% 0.7%
----- ----- -----
* Percents may not add up due to rounding
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
Nine Months Ended
-----------------
September 27, 2008 September 29, 2007
------------------ ------------------
Net sales $23,010 $26,976
Costs of sales 16,737 19,564
------ ------
Gross margin 6,273 7,412
----- -----
Selling, general and
administrative expenses 3,342 3,819
Research and development
expenditures 3,101 3,332
Separation-related
transaction costs 41 -
Other charges 261 418
Intangibles amortization
and IPR&D 244 377
----- -----
Operating loss (716) (534)
----- -----
Other income (expense):
Interest income, net 6 80
Gains on sales of
investments and
businesses, net 65 9
Other (267) 22
----- -----
Total other income (expense) (196) 111
----- -----
Loss from continuing
operations before income
taxes (912) (423)
Income tax benefit (325) (207)
----- -----
Loss from continuing
operations (587) (216)
Earnings from discontinued
operations, net of tax - 67
Net loss $(587) $(149)
----- -----
Earnings (loss) per common
share
--------------------------
Basic:
Continuing operations $(0.26) $(0.09)
Discontinued operations - 0.03
----- -----
$(0.26) $(0.06)
====== ======
Diluted:
Continuing operations $(0.26) $(0.09)
Discontinued operations - 0.03
----- -----
$(0.26) $(0.06)
====== ======
Weighted average common
shares outstanding
-----------------------
Basic 2,262.1 2,322.7
Diluted 2,262.1 2,322.7
Dividends paid per share $0.15 $0.15
----- -----
Percentage of Net Sales*
------------------------
Net sales 100% 100%
Costs of sales 72.7% 72.5%
----- -----
Gross margin 27.3% 27.5%
----- -----
Selling, general and
administrative expenses 14.5% 14.2%
Research and development
expenditures 13.5% 12.4%
Separation-related
transaction costs 0.2% 0.0%
Other charges 1.1% 1.5%
Intangibles amortization
and IPR&D 1.1% 1.4%
----- -----
Operating loss -3.1% -2.0%
----- -----
Other income (expense):
Interest income, net 0.0% 0.3%
Gains on sales of
investments and
businesses, net 0.3% 0.0%
Other -1.2% 0.1%
----- -----
Total other income (expense) -0.9% 0.4%
----- -----
Loss from continuing
operations before income
taxes -4.0% -1.6%
Income tax benefit -1.4% -0.8%
----- -----
Loss from continuing
operations -2.6% -0.8%
Earnings from discontinued
operations, net of tax 0.0% 0.2%
Net loss -2.6% -0.6%
----- -----
* Percents may not add up due to rounding
Motorola, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
September 27, June 28, September 29,
2008 2008 2007
----- ----- -----
Assets
Cash and cash equivalents $2,974 $2,757 $2,315
Sigma Fund 3,427 3,856 5,021
Short-term investments 735 595 1,063
Accounts receivable, net 4,330 4,495 5,165
Inventories, net 2,649 2,758 2,995
Deferred income taxes 1,954 1,882 1,873
Other current assets 3,799 3,876 3,233
----- ----- -----
Total current assets 19,868 20,219 21,665
------ ------ ------
Property, plant and
equipment, net 2,505 2,575 2,536
Sigma Fund 483 555 -
Investments 715 746 951
Deferred income taxes 3,060 3,074 2,472
Goodwill 4,351 4,358 4,676
Other assets 2,137 2,212 2,469
----- ----- -----
Total assets $33,119 $33,739 $34,769
======= ======= =======
Liabilities and Stockholders'
Equity
Notes payable and current
portion of long-term debt $189 $145 $1,523
Accounts payable 3,834 3,806 3,671
Accrued liabilities 7,850 7,623 7,707
----- ----- -----
Total current liabilities 11,873 11,574 12,901
------ ------ ------
Long-term debt 3,988 3,971 2,628
Other liabilities 2,599 2,990 4,196
Stockholders' equity 14,659 15,204 15,044
------ ------ ------
Total liabilities and
stockholders' equity $33,119 $33,739 $34,769
------- ------- -------
Financial Ratios*:
Days Sales Outstanding
(including net Long-term
receivables) 53 50 53
Cash Conversion Cycle(1) 38 34 43
ROIC 3% 3% 7%
Net Cash $3,442 $3,647 $4,248
(1)Excludes the excess inventory charge in the Mobile Devices segment.
* Defined in the Financial Ratios Definitions table
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
Three Months Ended
------------------
September 27, June 28, September 29,
2008 2008 2007
-------------- --------- --------------
Operating
Net earnings (loss) $(397) $4 $60
Less: Earnings
from
discontinued
operations - - 20
----- ----- -----
Earnings (loss) from
continuing operations (397) 4 40
Adjustments to
reconcile earnings
(loss) from
continuing operations
to net cash provided
by operating
activities:
Depreciation and
amortization 208 212 236
Non-cash other charges 480 117 27
Share based
compensation expense 54 88 80
Gains on sales of
investments and
businesses, net (7) (39) (5)
Deferred income taxes (27) (192) (177)
Changes in
assets and
liabilities,
net of effects
of acquisitions
and
dispositions:
Accounts receivable 171 246 338
Inventories (183) 183 25
Other current assets 76 (104) (557)
Accounts payable and
accrued liabilities 271 (159) 305
Other assets and
liabilities (466) (152) 30
----- ----- -----
Net cash provided by
operating activities
from continuing
operations 180 204 342
----- ----- -----
Investing
Acquisitions and
investments, net (6) (34) (246)
Proceeds from sales of
investments and
businesses 12 51 14
Distributions from
investments 30 81 -
Capital expenditures (156) (120) (123)
Proceeds from sales of
property, plant and
equipment 116 - 50
Proceeds from
sales (purchases)
of Sigma Fund
investments, net 335 156 (192)
Purchases of short-term
investments, net (140) (130) -
----- ----- -----
Net cash provided by
(used for) investing
activities from
continuing operations 191 4 (497)
----- ----- -----
Financing
Net proceeds from
(repayment of)
commercial paper and
short-term borrowings 44 (27) (259)
Repayment of debt - - 5
Issuance of
common stock 4 76 77
Purchase of
common stock - - (118)
Payment of dividends (113) (113) (115)
Distribution to
discontinued
operations (16) (6) -
Other, net (2) - 8
----- ----- -----
Net cash used for
financing
activities from
continuing
operations (83) (70) (402)
----- ----- -----
Effect of exchange
rate changes on
cash and cash
equivalents from
continuing
operations (71) (74) 102
----- ----- -----
Net increase (decrease)
in cash and cash
equivalents 217 64 (455)
Cash and cash
equivalents,
beginning of
period 2,757 2,693 2,770
----- ----- -----
Cash and cash
equivalents, end
of period $2,974 $2,757 $2,315
------ ------ ------
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
Nine Months Ended
-----------------
September 27, September 29,
2008 2007
-------------- --------------
Operating
Net loss $(587) $(149)
Less: Earnings from discontinued
operations - 67
----- -----
Loss from continuing operations (587) (216)
Adjustments to reconcile loss from
continuing operations to net cash
provided by operating activities:`
Depreciation and amortization 624 682
Non-cash other charges 596 159
Share based compensation expense 220 237
Gains on sales of investments and
businesses, net (65) (9)
Deferred income taxes (497) (552)
Changes in assets and
liabilities, net of
effects of acquisitions
and dispositions:
Accounts receivable 1,044 2,754
Inventories (46) 456
Other current assets (194) (367)
Accounts payable and accrued
liabilities (524) (3,108)
Other assets and liabilities (530) 279
----- -----
Net cash provided by operating
activities from continuing
operations 41 315
----- -----
Investing
Acquisitions and investments, net (180) (4,483)
Proceeds from sales of
investments and businesses 83 75
Distributions from investments 112 -
Capital expenditures (387) (393)
Proceeds from sales of property,
plant and equipment 121 123
Proceeds from sales of Sigma Fund
investments, net 1,122 7,154
Purchases of short-term
investments, net (123) (443)
----- -----
Net cash provided by investing
activities from continuing
operations 748 2,033
----- -----
Financing
Repayment of commercial paper and
short-term borrowings (37) (162)
Repayment of debt (114) (167)
Issuance of common stock 86 289
Purchase of common stock (138) (2,478)
Payment of dividends (340) (354)
Distribution to discontinued
operations (26) (62)
Other, net 1 25
----- -----
Net cash used for financing
activities from continuing
operations (568) (2,909)
----- ------
Effect of exchange rate changes
on cash and cash equivalents
from continuing operations 1 60
----- -----
Net increase (decrease) in
cash and cash equivalents 222 (501)
Cash and cash equivalents,
beginning of period 2,752 2,816
----- -----
Cash and cash equivalents, end
of period $2,974 $2,315
------ ------
Motorola, Inc. and Subsidiaries
Segment Information
(In millions)
Summarized below are the Company's Net sales by reportable business
segment for the three and nine months ended September 27, 2008 and
September 29, 2007.
Net Sales
---------
Three Months Ended Three Months Ended % Change from
September 27, 2008 September 29, 2007 2007
------------------- ------------------- -------------
Mobile Devices $3,116 $4,496 -31%
Home and Networks
Mobility 2,369 2,389 -1%
Enterprise Mobility
Solutions 2,030 1,954 4%
----- ----- -----
Segment Totals 7,515 8,839 -15%
Other and
Eliminations (35) (28) 25%
----- ----- -----
Company Totals $7,480 $8,811 -15%
------ ------ -----
Net Sales
---------
Nine Months Ended Nine Months Ended % Change from
September 27, 2008 September 29, 2007 2007
------------------ ------------------ -------------
Mobile Devices $9,749 $14,177 -31%
Home and
Networks Mobility 7,490 7,290 3%
Enterprise
Mobility Solutions 5,878 5,591 5%
----- ----- -----
Segment Totals 23,117 27,058 -15%
Other and
Eliminations (107) (82) 30%
----- ----- -----
Company Totals $23,010 $26,976 -15%
------- ------- -----
Motorola, Inc. and Subsidiaries
Segment Information
(In millions)
Summarized below are the Company's Operating earnings (loss) by
reportable business segment for the three and nine months ended
September 27, 2008 and September 29, 2007.
Operating Earnings (Loss)
-------------------------
Three Months Ended Three Months Ended
September 27, 2008 September 29, 2007
------------------- -------------------
Mobile Devices $(840) $(248)
Home and Networks Mobility 263 159
Enterprise Mobility Solutions 403 328
----- -----
Segment Totals (174) 239
Other and Eliminations (278) (249)
----- -----
Company Totals $(452) $(10)
----- -----
Operating Earnings (Loss)
-------------------------
Nine Months Ended Nine Months Ended
September 27, 2008 September 29, 2007
------------------ ------------------
Mobile Devices $(1,604) $(813)
Home and Networks Mobility 661 517
Enterprise Mobility Solutions 1,030 762
----- -----
Segment Totals 87 466
Other and Eliminations (803) (1,000)
----- -----
Company Totals $(716) $(534)
----- -----
Motorola, Inc. and Subsidiaries
Financial Ratios Definitions
Net Cash
--------
Net Cash = Total cash* - Total debt**
* Total cash = Cash and cash equivalents + Sigma Fund
(current and non-current) + Short-term investments
** Total debt = Note payable and current portion of long-term
debt + Long-term Debt
Cash Conversion Cycle
---------------------
Cash Conversion Cycle = DSO + DIO - DPO
Days sales outstanding (DSO) = (Accounts receivable + Long-term
receivables) / (Three months of Net sales / 90)
Days sales in inventory (DSI) = Inventory / (Three months of Cost
of sales / 90)
Days payable outstanding (DPO) = Accounts payable / (Three months
of Cost of sales / 90)
Return on Invested Capital (ROIC)
--------------------------------
Rolling ROIC = (12 mth rolling Operating earnings (loss) excluding
highlighted items and including Foreign currency
gain/(loss)) tax affected
---------------------------------------------------
4 quarter average of (Stockholders' equity + Total debt*
- Excess cash**)
* Total debt = Note payable and current portion of long-term
debt + Long-term Debt
** Excess cash = Rolling 4 quarter average of (Cash and cash
equivalents + Sigma Fund (current and non-current) + Short-term
investments) - 5% of rolling Net sales
Website: http://www.motorola.com/ |
Issuers of news releases and not PR Newswire are solely responsible for the accuracy of the content.
Terms and conditions, including restrictions on
redistribution, apply.
Copyright © 1996-2008 PR Newswire Association LLC.
All Rights Reserved.
A United Business Media company.
