About The Company - Motorola Solutions

FINANCIALHIGHLIGHTS(In millions, except as noted)Motorola, Inc. and Consolidated SubsidiariesYears ended December 31 1992 1991Net salesEarnings before income taxes and cumulative effect of change in accounting principle% to salesNet earnings before cumulative effect of change in accounting principle% to salesNet earnings% to salesNet earnings per share before cumulative effect of change in accounting principle (in dollars) 3Net earnings per share (in dollars) 3Research and development expendituresFixed asset expenditures 1Working capitalCurrent ratioReturn on average invested capital before cumulative effect of change in accounting principle 4Return on average invested capital 4% of net debt to net debt plus equity 2Book value per common share (in dollars) 3Year-end employment (in thousands)'Includes expenditures related to capitalized leases.'Includes short-term investments categorized as cash and cash equivalents.includes adjustment for the two for one stock split.'Average invested capital is defined as stockholders' equity plus long and short-term debt less short-term investments(includes short-term investments categorized as cash and cash equivalents).$13,3038006.0%5764.3%4533.4%2.161.701,3061,3871,8831.569.4%7.5%15.2%19.07107$11,3416135.4%4544.0%4544.0%1.721.721,1331,3171,4241.467.8%7.8%22.5%17.52102Net SalesEarnings BeforeIncome Taxes*Net Earningsper ShareReturn on AverageInvested Capitalfin billions)14.8(In millions)(In dollars;(In percentages)6759.03.72253.0'And cumulative effect ofchange in accounting principleBefore cumulative effect ofchange in accounting principle• Before cumulative effect ofchange in accounting principleONE

Detailed operating and financial results of our various businesses in 1992 appear on pages 17-21.Stock Split, Dividend Increase Earnings per share reflect a 2-for-1 stock split in the form of a 100% stock dividend,which was distributed Jan. 15, 1993 to stockholders of record Dec. 15, 1992. The quarterly dividend on the pre-splitshares was raised to 22 cents a share from 19 cents, an increase of approximately 16%.Board of Director Lawrence Howe and Stephen L. Levy did not stand for reelection to the Board of Directors in 1992.We acknowledge with appreciation their many contributions to Motorola. Samuel C. Scott III, corporate vice presidentof CPC International, Inc. and president of Corn Products, was elected to the board in February 1993.Financial Objectives We are guided by the belief that continuous investment in timely, leadership products willenable us to improve return on shareholder investment through appropriate sales growth and improving profitability.We have financial performance objectives for each of our major business segments and for the corporation as awhole. Our sales objective is a compound average growth rate over the next five years of 13% to 16% a year. This is anambitious target, given the steep learning curve pricing and short product life cycles in our businesses. But we are inbusinesses that we believe should outperform the general economy, with technologies well suited to emerging marketeconomies as well as existing markets.We are striving to improve our after-tax profit margins and asset utilization to a point where we will be able toachieve improving returns on equity, as well as fund our growth and maintain a strong balance sheet. As we grow, wewill continue to focus on effective asset and cost management as an integral part of achieving our objective of fundingour growth. Our financial performance is discussed further in the Financial Review on pages 22 and 23.The Future The worldwide demand for Motorola's products and services has continued to grow, and underscores ourconfidence for the future. While economic conditions remain uncertain in Europe and Japan, robust growth should continuein Asia-Pacific markets. We expect North America to continue the modest recovery from the 1990-91 recession.We plan to build on our leadership position in some of the most exciting parts of the electronics industry. Our productsand technologies serve an increasingly mobile workforce and society.We appreciate the spirit and hard work of our people in their efforts to serve our customers. Our focus on high quality,short cycle times and low costs is designed to achieve total customer satisfaction and improved financial performance.George Fisher Gary L. Tooker Christopher B. GalvinChairman of the Board and President and Senior Executive Vice President andChief Executive Officer Chief Operating Officer Assistant Chief Operating OfficerTHREE

MOTOROLA AT A GLANCEiemiconductorLand MobileDesigns and produces a broadline of discrete semiconductorsand integrated circuits, includingmicroprocessors, microcomputersand memoriesDesigns, manufactures anddistributes two-way radiosand other forms of electroniccommunications systemsDesigns and manufacturescomputer-based cellular radiotelephonesand systems, personalcommunications systems, computers,microcomputer boards,and information processing andhandling equipmentAutomotive, communications,computer, consumer, industrialand federal/militaryAgriculture, commercial, construction,education, state, localand federal government, healthcare, industrial, mining, petroleumand transportation companiesand utilitiesConsumer, computer, automotive,industrial, government andtelecommunicationsMicroprocessorMultichip ModuleDiscrete DeviceAstro Portable 2-Way RadioMTS2000 Flashport Portable2-Way RadioMotorola MultiPersonal ComputerGSM Cellular Base StationMicroTAC® UltraLite PersonalCellular TelephoneAsia-PacificSemiconductor GroupCommunications, Power andSignal Technologies GroupEuropean Semiconductor GroupLogic and AnalogTechnologies GroupMicroprocessor and MemoryTechnologies GroupSemiconductor ProductsDivision, NMLWorldwide TrunkedSystems GroupWorldwide Radio Products GroupWorldwide NetworkServices GroupCommunications andElectronics GroupCustomer Service GroupEuropean GroupCommunicationsInternational GroupCellular Infrastructure GroupCellular Subscriber GroupComputer GroupPersonal Communications SystemsFOUR

Paging and Government Automotive and IndustrialDesigns, manufactures and distributesproducts for paging andwireless data systemsSpecializes in research, developmentand production of electronicsystems and equipment for theU.S. Department of Defense andother government agenciesCombines the capabilities ofCodex Corporation and UniversalData Systems, Inc., to provide allthe elements for distributed dataand voice networks, from basicDesigns and manufactures avariety of electronic components,modules and integrated electronicsystemsmodems to network managementsystemsConsumer, industrial, computerand telecommunicationsU.S. Department of Defense,NASA, government agencies,Computer, consumer, automotive,industrial, federal government/Automotive, industrial, agriculture,transportation and navigationcommercial users and interna-military and telecommunicationstional customersInfoTAC Radio Packet ModemConfidant 1 " pagerDAMAUHF SatelliteCommunications SystemCodex 9800 NetworkManagement SystemPolybent Electronic PackagingElectronic BallastUDSV.32 ModemRemote Keyless Entry SystemPaging Products GroupAmericas PagingProducts DivisionCommunications DivisionStrategic Electronics DivisionTactical Electronics DivisionCodex CorporationUniversal Data Systems, Inc.Automotive Powertrain andChassis Electronics DivisionElectronic Systems andInternational PagingComponents DivisionProducts DivisionMotorola Lighting, Inc.Components DivisionWireless Data LAN DivisionMobile Data DivisionInternational Networks DivisionIn addition to these sectors and groups, the Corporate Venturesorganization manages Motorola's entry into strategically relevant,emerging, high-growth and high-technology business arenas.FIVE

Quality is our No. 1 operational initiative. Empowered people are making it happen. The team shown here, from Penang,Malaysia, is one of more than 4,000 Total Customer Satisfaction teams from throughout the world.in manufacturing automation systems. They enable Motorola-and our customers-to improve productivity and quality.

The MicroTAC® Ultra Lite personal cellular telephone is one of the latest products of a revolution in the design and productionprocess to improve quality. Weighing just 5.9 ounces, it has helped Motorola remain the world leader in the cellular industry.The globe is the Dataquest Semiconductor Supplier of the Year award. We again ranked first in a survey of 250European, Japanese and U.S. electronics companies that ranked all suppliers on quality, delivery, price, technical support andii§iservice. We have won the award four consecutive years.

135.0r112.567.5»,mm* 45.0-22.5% \ ••mmtm8990key element in achieving customer satisfaction is time, whether it's responding to opportunities quickly or developing newproducts ahead of the competition. We measure cycle time in all functions, including manufacturing, as shown in the above chart.Components at the upper left will be part of an "active addressing" liquid crystal display being developed by Motif Inc.,a joint venture of Motorola and In Focus Systems, Inc. Our goal is to transform this breakthrough technology quickly intoflat-panel displays for wireless data products.

Rapid cycle time drives down costs and opens up whole new markets. Our 68000 microprocessor, used only in the mostsophisticated applications a few years ago, has become so inexpensive that today, it can be embedded in consumer productslike the Sega Genesis video game system.Our focus on time benefits our customers. The Advisor® and Bravo Express pagers shown here are products of a shortcycleproduction system. They help our customers use their time more efficiently.

Investment in the future is essential for long-term, profitable growth. First and foremost, we invest in people, our mostimportant asset. Through Motorola University, our employees continuously upgrade their skills. We invested more than$100 million in training throughout the world in 1992.We invest in the most modern factories and equipment. Oui urfl^S-'flfabriAion Ant inMustiif 1Texas is the world'sfirst commercial semiconductor facility to manufacture eight-inch wafers such as the one shown here

We invest in research and development, such as the work illustrated by this image from an atomic force microscope.R&D spending exceeded $1.3 billion in 1992, and by quickly moving discoveries from the laboratory to the customer, we wereable to introduce an average of about four new products per business day._velop technology that transforms the global marketplace. The cellular phone at the right is used in the pan-Europeandigital cellular system, which started commercial service in several countries during 1992.

kj *C^/l£*at Motorola, we achieve leadership in technology by leveraging our strengths in software, microelectronics, radiofrequency communications and manufacturing.A new generation of compact portable two-way radios incorporates Flashport, a new software capability that usesflash memory technology. This enables users to upgrade features by loading softvfB-e into a radio in much the samesoftware is loaded into a computer.TWELVE

'{000"The increasing use of radio to transmit data is ushering in a new era of personal communications. The new InfoTACradiopacket modem can receive, store and respond to messages, and can be connected to laptop, notebook or pen-based computers.Motorola quickly and dHciently transforms the dreams of the designer into products of the highest quality that fit theleeds of the customer. One way we do this is by developing the world's most advanced automated manufacturingsystems. The robotic assembly at the right is a component of such a system.THIRTEEN

i\\.yU e leverage our investments and enter exciting growth markets by nurturing a spirit of partnership-with our customers,with other companies, and with various internal partnerships among Motorola businesses.• 'fa.phone system. New systems began operating in several Asian and European countries, and are being tested in North America.nr JKPW u mThe schematic of one of IBM's PowerPC family of RISC microprocessors came out of Somerset, the joint design centerWorking with telephone companies, we supplied equipment for CT2, or Telepoint, the second-generation cordless telejFOURTEEN

„••?. o:in Austin, Texas. It is part of our alliance with Apple Computer and IBM.An 8-bit microcontroller jointly developed with Thomson Consumer Electronics is used for closed-captioned television.to help the hearing impaired. It can also help children and adults improve reading and language skills.The Traxar GPS Navigator combines technologies developed in our Automotive and Industrial Electronics Group andour Government Electronics Group. The handheld navigation device provides outdoor enthusiasts with location information.FIFTEEN

OUR COMMUNITY AND WORLDMotorola's commitment to quality and continuous improvement extends to the stewardship of our environment and thecommunities in which we live. It begins with training. A new course on environmental awareness is being offered toMotorola employees throughout the world. In addition, engineers will receive training on how to incorporate environmentalconsiderations into product design, development, manufacturing, procurement and disposal through recycling.Motorola has eliminated emissions of chlorofluorocarbons (CFCs) in all facilities worldwide except one, which isscheduled to be CFC-free in April 1993. We are within reach of eliminating all Class I ozone-depleting substances bymid-1993. In partnership with the U.S. Environmental Protection Agency (EPA) and the World Bank, we plan to sponsor aCFC elimination program for Malaysia.We endorse the International Chamber of Commerce's Business Charter on Sustainable Development and the 16principles for worldwide environmental management. With two U.S. national laboratories in New Mexico, we are workingon new technologies to reduce waste and hazardous materials in electronics manufacturing.As part of the EPA's 33/50 Industrial Toxins program, we made a commitment to reduce emissions of 17 targetedchemicals by 33% by 1993 and 50% by 1995. We have already exceeded those goals by achieving a reduction of morethan 50% by the end of 1992. In energy conservation, we are committed to installing energy-efficient lighting products andsystems in all U.S. facilities by the end of 1996. An ally of theEPA's Operation Green Lights program, Motorola manufacturesenergy-saving electronic ballasts for fluorescent lamps.We believe that environmental leadership is in the bestinterests of our stockholders. Throughout Motorola, we provideour customers with new products and technologies thatpromote economic progress without environmental damage.1992 VolunteerismAward WinnersCEO Award for Volunteerism Motorola employees devotetime and energy to improve their communities. In 1992, we recognized these efforts by creating the CEO Award forVolunteerism. Achievements range from founding a shelter for homeless families to establishing a Teen Court in whichjuvenile referrals are sentenced by their peers. The award winners are (front row, left to right): Joy Wilson, Mount Pleasant,Iowa; Joe Power, Scottsdale, Ariz.; Rose Wheeler, Austin, Texas; Marge Stock, Schaumburg, III.; and Cheryl Lee Cimini,Mansfield, Mass. Back row: Steve Wilson, Mount Pleasant, Iowa; Jim Cason, Atlanta, Ga.; Darwin Kell, New Cumberland,Pa.; Jeff Allen, Huntsville, Ala.; Don Kauts, Boynton Beach, Fla.; Jess Diaz, Mesa, Ariz.; and Steven Kohn, Northbrook, III.SIXTEEN

REVIEW OF OPERATIONSSemiconductorProducts SectorMotorola's spectrum of leadership products and technologieshelped our worldwide customers succeed. The sectorposted record sales, orders and operating profits as itimproved its market share.Sales increased 22% to $4.48 billion, and orders grew31%. Operating profits rose to $464 million from $356million. We began 1992 with the sector's first billion dollarsales quarter and ended it with the 16th consecutivequarter of sales growth.Double-digit order growth was recorded in the Asia-Pacific,European and North American regions. Orders were slightlylower in Japan, which went through a recession. Our salesgrowth enabled us to gain market share in each region.Most market segments posted double-digit growth,paced by exceptional order strength in personal computer/workstation and communications. The automotive, consumerand industrial segments were strong and mainframe computerwas somewhat higher. Only the federal/militarysegment was lower. Distributor orders were substantiallyahead of 1991.Higher demand was spread across the sector's broadproduct portfolio, with all major product categories exceptmilitary ICs and military discretes posting double-digitgrowth. Strongest order gains were seen in memories,microcontrollers and microprocessors, mixed-signal, analog,MOS gate arrays and communications modules/components.Most of these products feature custom, proprietaryor application/customer-specific functionality.Our range of product technologies and ability to createon-chip system solutions produced a number of new orexpanded customer partnerships across market segmentsand regions.Our technology alliance with Apple Computer and IBMresulted in initial production of the first PowerPC 1 " reducedinstruction set microprocessor. Called the PowerPC 601,it contains 2.8 million transistors and was designed andfabricated jointly with IBM in just 12 months. The "601" isthe first in a family of four powerful RISC microprocessorsspanning applications from portables to high-end servers.Bull and Thomson-CSF announced their choice of the"PowerPC" for future systems designs.*New technology partnerships with key computer customersincluded a major ASIC (application-specific integratedcircuit) agreement with Cray Computer to support productintroductions into the next century.We introduced a number of new products to support ourcomputer customers, including a 33 MHz version of ourMC68040 microprocessor, a family of BiCMOS fast staticMotorola, Inc. and Consolidated SubsidariesRAMs tailored to high-performance systems, and ourALExIS line of advanced bus interface circuits. A customcolor monitor chip, developed for Apple Computer by ourAsia-Pacific design center in Hong Kong, went into volumeproduction.In the communications arena, we developed advancedproducts for Motorola's cellular, paging and two-wayradio businesses. With BT (formerly British Telecom), weannounced an expanded partnership to improve the qualityand reduce the cost of videoconferencing technology. Wewill integrate BT's standards-based video coding technologyin a personal computer multimedia chip set capableof simultaneously processing video, still images and data.Important communications products introduced includeda line of gallium arsenide RF power modules for use inportable cellular phones, and a family of UHF power modulesfor portable and mobile phones built for the GSMdigital cellular system in Europe.We expanded our support of customers in the consumerelectronics market. In a partnership agreement with PhilipsElectronics, we established a joint chip design center inEindhoven, the Netherlands, to accelerate the developmentof integrated circuits for CD-I (compact disc-interactive)and other multimedia products. The two companies alsoagreed to establish a 50/50 joint venture company inSeremban, Malaysia to assemble small signal surfacemounttransistors and diodes, with production targetedin late 1993.We agreed to develop integrated circuits for the GeneralInstruments/MIT digital HDTV (high-definition TV) systemand to support this technology as the U.S. standard. OurC-Quam AM stereo chip was designed-in by many leadingJapanese customers.We introduced a closed-captioned TV 8-bit microcontrollerjointly developed with Thomson Consumer Electronics, aleading television set manufacturer. Providing both decodingand display functions for closed-captioned TV transmissions,the chip affords an easy and cost-effective wayfor TV manufacturers to provide closed-captioned serviceto millions of consumers.A new, highly integrated phase-locked loop (PLL) wasdeveloped with Alps Electric in Europe for use in Alps'television tuner modules. Designed and manufactured bythe sector's European Semiconductor Group, the new chipwill be used by Alps' production facilities in the UnitedKingdom and Japan."Power PC is a trademark of IBM.SEVENTEEN

Motorola, Inc. and Consolidated SubsidariesAs the world's leading semiconductor supplier to theautomotive market, we continued to expand our support ofautomotive customers worldwide. We debuted our innovative"High-G" micromachined silicon accelerometer for usein future air bag, suspension and vibration control systems.Chrysler Corp. awarded us the microcontroller design forits next-generation powertrain controller.Key automotive introductions included our 24-bitSymphony 1 " digital signal processor for audio applications.The Symphony also is targeted to a variety of consumeraudio applications. We introduced a line of ultra-highdensityHDTMOS" power MOSFETs for automotive use,and began general sampling of the industry's first 32-bitmicrocontroller with on-board flash EEPROM, which wedeveloped in partnership with BMW.In the industrial arena, we introduced the Neuron Chip®,the heart of Echelon's LonWorks intelligent distributedcontrol technology. More than 300 development systemswere in use by customers worldwide to develop theselow-cost local operating networks.Underscoring our leadership in 8-bit microcontrollers, wedelivered our 100-millionth 68HC11 microcontroller duringthe third quarter. We continued to expand our families ofstandard and customer-specified 8-bit microcontrollers,fuzzy logic controllers and software, 16-bit offerings, and32-bit specialized embedded controllers. We announcedour entry into the programmable logic market under alicensing agreement with Pilkington Microelectronics Ltd.to co-develop a fourth-generation field-programmable gatearray (FPGA) family. We also introduced a line of multichipmodules that combine various integrated circuits into standardplastic Quad Flat Pack configurations.We won several customer awards and our fourth consecutiveDataquest "Semiconductor Supplier of the Year"award. It is based upon a survey of 250 European, Japaneseand U.S. electronics companies that ranked all supplierson quality, delivery, price, technical support and customerservice. Our MOS 11 wafer fab in Austin, Texas, the world'sfirst 8-inch commercial line, was named "Fab of the Year"by Semiconductor International magazine. We expandedproduction of advanced fast static RAMs and MC68040products in that facility.We began production of integrated circuits and discretedevices in a leased facility in Tianjin, China, and continuedconstruction of a permanent facility in that city for occupancyplanned in late 1993. We also upgraded many ofour existing facilities during the year. Our Asia-PacificSemiconductor Division was elevated to Group status inrecognition of its strong growth and future importance toMotorola's semiconductor business.CommunicationsSegmentSales in the communications segment businesses, cornposedof the Land Mobile Products Sector (LMPS) and thePaging and Wireless Data Group, rose 14% to $4.14 billionand orders rose 24%. Operating profits were $237 million,up from $191 million in 1991.Several wireless voice and data telephone businesseswere realigned during the year. Beginning in 1993, financialreporting will reflect the realignment. The TelepointSystems Division's results will be included with the GeneralSystems Sector rather than the communications segmentbusinesses, and the results of the former Wireless Enterpriseswill be included with the Paging and Wireless DataGroup rather than the "Other Products" segment.Land Mobile Products orders for the year increased inall major regions of the world, paced by Asia. The growthwas driven by demand for trunked and secure voice radiosystems. Demand also increased for Radius® two-wayradios, sold through distributors and dealers.A new generation of portable two-way radios was introduced,featuring compact designs, programmable powerlevels, and new noise-cancelling audio technology. Thenew family includes models for conventional systems, forprivate trunked and secure systems, and for shared trunkedsystems. Portables for shared systems are 25% smallerthan the radios they replace yet offer features such asprogrammable channel scanning.The MTS 2000°" radio is Motorola's smallest secure voicetrunked portable and the first portable to operate on ourSmartzone wide-area trunked systems. The Flashportsoftware capability described on page 12 is also offeredin the new Saber® SI advanced systems portable.Our first FM two-way radio for outdoor enthusiasts willbe distributed through specialty retailers.LMPS received the largest international award in its history,an $81 million contract from the Royal Malaysia Policefor a nationwide two-way radio system with voice encryption.We also received our first award for a trunked radiosystem in Korea. Other major orders for trunking systemswere received in Israel, China, Hong Kong, and Australia.In Japan, we received a major award for a Smartnettrunking system for the Kansai International Airport currentlyunder construction near Osaka. This system willprovide communications for airline operations includingground and service support personnel. Our Japan SpecializedMobile Radio (JSMR) business continues to grow, with morethan 100 systems in operation and more than 100,000 subscriberunits in service.EIGHTEEN

Motorola, Inc. and Consolidated SubsidariesWe established joint ventures in Brazil, Venezuela andthe Czech Republic to install and operate shared trunkingsystems in the major cities in those countries.In Denmark we received a major order for the first phase ofa turnkey countrywide secure voice radio system with mobiledata capabilities covering all major cities for the Danishpolice. Other key orders received in Europe were awards fortwo-way radio systems from the German and Spanish policeforces and the national government in Poland.We received several large orders for private wide-areatrunking systems that allow a two-way radio user to roamthroughout the communication area by automaticallyswitching the user's radio from one site to the next. Thefirst U.S. SmartZone system was shipped to South CarolinaElectric & Gas during the year. The first system forthe international marketplace was shipped to China Light& Power Co. Ltd., Hong Kong.The city of Cleveland awarded Motorola a major orderfor a citywide system for use by a variety of agencies. Thecity plans to integrate our Astro 1 " digital technology into thissystem. Astro mobile and portable radios also will be usedin a regional network in the Seattle, Wash., area. Wereceived orders from Southern California Edison and OrangeCounty, Florida for systems that will use both simulcastand SmartZone technology for densely populated areas.Astro and SmartZone technology will also be incorporatedin a major wide-area system ordered by Hydro-Quebec ofMontreal, Canada.A new manufacturing facility in Swords, Ireland was officiallydedicated during the year. This 100,000 square footfacility is producing two-way radios and paging products.In the Paging and Wireless Data Group, sales of pagingproducts grew rapidly, especially in the Asia-Pacificregion. We opened a new manufacturing facility in China,the third-largest paging market in the world, and receivedmajor awards from the three largest paging operators inChina. In Taiwan, we won a major contract for a countrywidepaging system.In Europe, we introduced a digital pager for public safetymarkets in Germany, France and the UK. The Bravo® Expressnumeric display pager was introduced throughout Europe.In Latin America, we formed two paging joint venturesin Brazil and Argentina.New paging products include the Confidant numericpager, which is the size of a credit card. The NewsStream""one-way wireless data receiver enables portable computerusers to receive electronic mail and other information byradio. The NewsCard receiver, a one-way wireless datareceiver in card format, was announced for users of handheldcomputers. Our EMBARC (Electronic Mail Broadcastto A Roaming Computer) messaging service began operatingduring the year.New packet radio products include the InfoTAC modem,which can receive, store and respond to messages, andalso can be connected to laptop, notebook or pen-basedcomputers. The PDT220 handheld data terminal with radiocommunication also was introduced. It can be programmedto meet the needs of applications such as work order processingor inventory tracking.We announced an open protocol standard of datatransmission for public packet data networks. The new19.2-kilobit protocol is being deployed on the ARDISnationwide radio data network. ARDIS is a joint ventureof IBM and Motorola.We also won an award from United Parcel Service toprovide modems and telecommunications equipment fora nationwide mobile data network. The circuit-switcheddata network provides UPS with tracking capability for airand ground package movements.Motorola's Altair® wireless local-area network productwas enhanced to provide higher capacity and networkmanagement support. A new version can link networksbetween buildings.Motorola and In Focus Systems, Inc. of Tualatin, Ore.,formed a joint venture called Motif, Inc. to manufactureliquid crystal displays. In Focus' proprietary active addressingtechnology will enable significant price/performanceimprovement in LCD displays, and will be applied to abroad range of portable computing and communicationsdisplay products.General SystemsSectorGeneral Systems Sector sales advanced 26% to $3.59billion and orders rose 38%. Operating profits rose to$457 million from $372 million in 1991.Motorola's cellular infrastructure presence grew throughoutthe world, in both analog and digital systems. In China,for example, contract awards for systems increased morethan five-fold from 1991. About half of these new systemswere on-line by the end of 1992.In Japan, our narrow-band TACS systems are supportinghundreds of thousands of subscribers nationwide. Wereceived letters of intent from TU-KA Cellular Tokyo and TU-KA Cellular Tokai for Japan digital cellular systems at 1.5GHz.We also recorded strong growth in Thailand, thePhilippines, Indonesia, South Korea and Hong Kong. InAfrica and the Middle East, we received system awardsfrom six countries. In Latin America, our systems expandedin Argentina, Venezuela, Uruguay, Chile and Bolivia.NINETEEN

Motorola, Inc. and Consolidated SubsidariesThe pan-European digital cellular system (GSM) startedcommercial service in several countries. Motorola wonGSM awards in Germany, Norway and Portugal, and ourGSM system for Comvik in Sweden went into service inSeptember. Our analog systems grew significantly inAustria and Spain.We advanced our open architecture strategy by certifyingthe interface between Motorola base stations and majorswitch suppliers. We have reached licensing agreementswith Ericsson, Philips, Siemens and Alcatel. Current GSMsystem awards use Siemens switches, and Japan digitalawards use NEC switches.Motorola was the first manufacturer to ship both mobileand portable type-approved GSM telephones.We have developed a Wireless Local Loop (WiLL) productto provide basic telephone service to areas with pooror nonexistent wireline systems. We have deployed trialsystems in a rural area of Sri Lanka and the port city ofVyorg, near St. Petersburg, Russia.Our Narrowband AMPS technology was made an industrystandard for analog cellular in the U.S. Like NTACS inJapan, it significantly increases subscriber capacity. Ourfirst NAMPS system was commercially deployed in CentelCellular's Las Vegas market. US West NewVector Groupawarded Motorola three regions, Seattle, Denver andMinneapolis, for NAMPS conversion, and Bell AtlanticMetro Mobile chose NAMPS for the Phoenix area. NAMPSalso has received customer commitments in Venezuela,Argentina, Thailand and Israel.Motorola and Northern Telecom formed Motorola NortelCommunications Co., a joint venture to sell and servicecellular telephone networks in North, Central and SouthAmerica and the Caribbean.US West NewVector Group signed an agreement withMotorola Nortel to purchase the world's first Code DivisionMultiple Access (CDMA) digital cellular system for theSeattle area.We began our first Personal Phone Service (PPS®800)market trial with Bell Atlantic Mobile Systems in Pittsburgh.PPS-800 blends wireline and wireless technology to givecustomers a single phone number for use at home, at workand while traveling.We introduced the world's lightest cellular phone, theMicroTAC® Ultra Lite telephone. It weighs 5.9 ouncesand offers an option that enables a user to receive a callin a silent vibration mode instead of the usual ring. It wasnamed "Best New Product of 1992" by Time magazine.We also announced plans to ship nickel metal hydridebatteries for personal and portable cellular telephones.The batteries provide up to 30% higher capacity comparedwith nickel cadmium batteries.Early in 1993, questions arose in the mass media regardingthe safety of cellular telephones. We have assured ourcustomers and the public that all of our products are safe.They meet all applicable national and international safetystandards on user exposure to radio frequency energy. Formore than 40 years, we at Motorola and other scientistsaround the world have been researching the biologicaleffects of radio frequency energy. Those many years ofscientific inquiry support the safety of cellular telephones.The standard recently approved by the American NationalStandards Institute resulted from seven years of work bymore than 100 scientists, physicians and engineers fromacademia and governmental agencies, as well as about12 scientists from industry.Motorola supported the launch of seven commercial CT-2(telepoint) systems with both infrastructure and subscriberequipment. In Asia, systems include Singapore, Hong Kong,Thailand, Malaysia and the Shenzen Economic Zone in China.European systems are in the Netherlands and Finland.Canada awarded four telepoint licenses.Countries that account for 75% of the world's telephoneexchange access lines outside of the U.S. adopted theCT2/CAI open standard.S.^In the United States, Motorola continued tests of variouspersonal communications services with Ameritech,American Personal Communications, Nynex and Pactel.We announced a new Silverlink" 2002 handset with anintegrated numeric pager. We began shipping a dedicatedtwo-line telepoint base station.The Computer Group announced two new board-levelproducts for a variety of industrial applications. TheMVME 162 uses an embedded Motorola 68040 microprocessor,while the MVME 197 is based on the 88110 RISCmicroprocessor. We presented our one-millionth VMEbusmodule to 3M Medical Imaging Systems.We began shipping Series 8000 Macintosh servers.They are sold directly through Motorola as well as majorresellers. We signed a contract with Paging Network Inc.to replace its central batch computer systems with a distributedcomputing network built around the Series 8000.It is being installed in more than 40 offices nationwide.TWENTY

GovernmentElectronics Group(GEG)Sales decreased 8% to $650 million and orders were down2%. The group recorded an operating loss of $7 million,compared with an operating profit of $33 million in 1991.The loss was attributable to increased investments associatedwith the proposed fridium global communicationssystem, which are now included in the group's results.Prior to reclassification, they were included in the "OtherProducts" segment.GEG is expanding into nonmilitary markets to augmentits traditional defense businesses. For example, it receiveda major contract from the Federal Aviation Administrationto begin replacing rackmount transmitters and receiversat air traffic control centers throughout the United States.We introduced several Global Positioning Systems (GPS)products that cover applications ranging from handheldunits to precision location systems. Our Secure Telecommunicationsbusiness produced a video docking unitthrough which both audio and video signals are encrypted.We also introduced a multimedia terminal that can interfacewith existing phone lines and can be adapted to operatewith Integrated Services Digital Network technology.Motorola, Inc. and Consolidated SubsidariesWe announced a new GPS receiver/processor productfor satellites. It is to be used by Orbital Sciences Corp.as part of the SeaStar program. An earlier version of theproduct was launched on NASA's Extreme UltravioletExplorer Satellite.GEG purchased a 25% interest in ACTC TechnologiesInc., a Canadian software engineering firm.The proposed Iridium network moved forward whenthe World Administrative Radio Conference allocatedspectrum for low earth orbit (LEO) satellites. Motorolareceived an experimental license from the FederalCommunications Commission to launch and orbitLEO satellites.By January 1993, 21 potential investors in Iridium,Inc. had signed nonbinding subscription agreementsor letters of intent in connection with the initial roundof financing, representing an investment level of morethan $800 million. Iridium, Inc. is the planned consortiumto own and operate the system. The number of investorsand the investment level may change before closing.InformationSystems GroupAutomotiveand IndustrialElectronics Group(AIEG)Sales rose 7% to $625 million and orders were 7% higher.The group had an operating profit of $41 million, comparedwith a loss of $13 million in 1991.New analog and digital transmission and networkingproducts helped Codex post higher sales. Codex was thefirst company to announce a commitment to the V.faststandard by introducing the 326XFAST modem. It operatesat 24 kilobits per second and can be upgraded to 28.8Kbps.Codex and Proteon formed a strategic alliance thatenables customers to create a single network view whileallowing interoperability of local- and wide-area networks.In the packet switching market segment, Codex introducedthe 6500Plus communications processor, a platformdesigned to simplify branch office data networking.Sales were up 24% and orders rose 26%. Operatingprofits were higher. The results reflect growth in electronicapplications as well as a slight upturn in U.S. automotiveproduction.The group is providing a wide array of products for 1993model year vehicles, including electronic engine controls,solid-state relays, vehicle wiper controls, keyless entrysystems, vehicle maintenance monitors, thick-film ignitionproducts and antilock braking system control modules forU.S. and European auto manufacturers. During 1992, thegroup shipped its 10-millionth electronic powertrain controlto Ford Motor Company.Codex product development remains focused on networkaccess and feeder products and next-generation backbonenetworking.Universal Data Systems recorded higher sales, paced bygrowth in the V.32 modem market.UDS continued developing products designed for telephonecompany central offices with the GlobalViewproduct for use in dial-up management. UDS increasedits minority ownership in XcelleNet Inc., a software companyspecializing in information delivery systems for businessmanagement applications.International expansion continued, with new UDS officesin Japan, Hong Kong, the United Kingdom, Belgium, Braziland Mexico. UDS received a major contract in Japan forLanFasf modem servers.AIEG entered the Global Positioning System (GPS) consumerproducts arena with the Traxar GPS Navigator, asix-channel handheld receiver. This electronic navigationdevice provides boaters, hikers, fishermen, bikers and otheroutdoor enthusiasts with position, navigation, velocity andtime information. The first production units of a GPS corereceiver also were shipped during the year. It is specificallydesigned for embedded applications including automotive,aviation and marine navigation.In 1992, AIEG assumed managerial responsibility forMotorola Lighting, Inc., a subsidiary that manufactureselectronic ballasts for fluorescent lamps.The group's results are included in the "Other Products"segment.TWENTY-ONE

FINANCIALREVIEWMotorola, Inc. and Consolidated SubsidariesMotorola Management's Discussion and Analysis of FinancialCondition and Results of Operations includes the FinancialResults section of the Letter to Stockholders on pages 2-3and the Review of Operations on pages 17-21, in addition tothe following commentary. This commentary should be readin conjunction with the consolidated financial statements andnotes, presented on pages 25-36, for a full understanding ofMotorola's financial position and results of operations.Results ofOperationsSales increased 17% to $13.3 billion from $11.34 billion in1991. Sales in 1990 were $10.88 billion. The SemiconductorProducts segment continues to be the largest business segment,reporting 32% of total sales in 1992, up from 31% in1991. The General Systems Products segment also continuedits growth, representing 26% of total sales in 1992 comparedwith 24% a year ago. International market sales, as measuredby the locale of the end customer, represented 52% of totalsales in 1992, compared with 48% a year ago. The growth wasprimarily due to stronger markets in the Asia-Pacific region.Operating profits were $1.14 billion. The SemiconductorProducts segment again showed the most profit improvementin 1992, reflecting a very strong second half in theAsia-Pacific and North American regions. The GeneralSystems Products segment maintained its position as oneof the Company's most profitable segments in 1992. TheCompany's profitability was affected by continued robustgrowth in the Asia-Pacific region and by uncertain economicconditions in Europe and Japan. The Company continuedinvesting in new technologies across business segments.On November 3,1992, a two for one stock split wasdeclared in the form of a 100% stock dividend, to be distributedon January 15, 1993, to stockholders of record onDecember 15,1992. All references to earnings per shareand shares outstanding have been adjusted to reflect thestock split on a retroactive basis.Net earnings in 1992, before the cumulative effect ofchange in accounting principle, were $576 million or $2.16per share compared with $454 million, or $1.72 per share,a year earlier. In 1990, earnings were $499 million or$1.90 per share. Net margin on sales, before the cumulativeeffect of change in accounting principle, was 4.3%,compared with 4.0% a year ago.During 1992, the Company adopted Statement of FinancialAccounting Standards (SFAS) No. 106, "Employers' Accountingfor Postretirement Benefits Other Than Pensions." SFASNo. 106 requires that the cost of postretirement benefitsbe accrued during the years that the employees render service,instead of on a pay-as-you-go basis. The Companychose to implement SFAS No. 106 by recognizing the transitionobligation immediately. The net plan obligation reducedthe Company's net earnings by $123 million, or 46 cents pershare, to $453 million, or $1.70 per share for 1992.Sales in the fourth quarter were $3.71 billion, up 22%from $3.04 billion in the fourth quarter of 1991. Earningswere $181 million, or 67 cents per share, compared with$126 million, or 48 cents per share, a year ago.Income faxes: The effective tax rate for 1992 of 28% is upfrom the 1991 rate of 26% and 1990 rate of 25%, principallydue to continued growth in countries with higher tax rates.During 1992, the Company adopted SFAS No. 109, "Accountingfor Income Taxes," which prescribes an asset and liabilitymethod of accounting for income taxes, instead of thedeferred method. The impact of this accounting changewas not material to the Company's financial position.1992 Net Sales byBusiness SegmentInternationalMarket Sales1992 Market Salesby RegionProfit Margins(In percentages)(In billions)(In percentages)(In percentages)Semiconductor 32%Communications 29%U.S. Region 48%General Systems 26%Europe Region 21%Government Electronics 5%Asia-Pacific Region 15%Information Systems 4%Japan Region 7%Other 4%ft Rest of World 9%90 91 9290 91 92I Net•I Net before cumulative effectof change in accounting principleTWENTY-TWOOperating

Motorola, Inc. and Consolidated SubsidariesStrategic Investment: The Company continued its strategicinvestment in the proposed Indium'" global communicationssystem, discussed on page 21. The Company intends to bea minority investor in the consortium and the prime contractorfor the system. If the initial financing is successful,the Company will have rights and obligations under substantialcontracts for equipment and services.Research and Development: Expenditures increased to$1.31 billion in 1992, up from $1.13 billion in 1991 and$1.03 billion in 1990. As a percent of sales, the Companycontinues to invest slightly less than 10% of every salesdollar in product development and technological advances.Environmental Matters: Regulating agencies are proposingregulations and interpreting legislation in a manner thatallows retroactive imposition of remedial requirements.The Company is engaged in a number of remedial efforts,some of which have been identified as Superfund sitesunder the Federal Comprehensive Environmental Response,Compensation and Liability Act of 1980, or similar statelaws. Management does not believe such efforts will havea material adverse effect on the Company's consolidatedfinancial position.Foreign Currencies:Jbe Company operates using many currencies,with the U.S. dollar being the functional currencyfor financial reporting purposes. Fluctuations in foreigncurrencies are generally hedged to minimize the impact onearnings. The impact on operations has not been materialto the Company's consolidated financial position.Liquidity andCapital ResourcesNet cash provided by operations reached a record $1.94billion in 1992 compared with $1.36 billion in 1991 and$1.31 billion in 1990.Accounts receivable levels grew at a slower pace thansales. The number of weeks that accounts receivable wereoutstanding was reduced to 7.1 for 1992 from 8.0 for 1991.While inventory levels grew slightly, the inventory turns,based upon the more stringent cost of goods sold definitionused internally, improved to 5.1 in 1992 from 4.3 in 1991.The Company's ratio of net debt to net debt plus equitywas 15.2% for 1992 compared with 22.5% in 1991.In January 1992, the Company issued $300 million of15-year notes with a coupon rate of 7.6%, under a $500million debt registration. The proceeds of this issue wereused to reduce short-term corporate indebtedness and forother general corporate purposes.As of December 31,1992, the Company had domesticand international credit facilities totaling $1.77 billion, ofwhich $1.33 billion remain unused. Cash generated fromoperations and available credit facilities provides supportfor near-term funding requirements.Fixed Assets: Capital expenditures required to supportcurrent and long-term growth increased to $1.39 billionfrom $1.32 billion in 1991. The 1990 expenditures totaled$1.26 billion. The Company's expenditure level in relationto sales was approximately 10% in 1992 versus 12% in1991 and 1990.The Semiconductor Products segment continues to comprisethe largest portion of fixed asset expenditures, with48% of all such investments.Sales perEmployeeResearch andDevelopmentExpendituresNet Cash Providedby OperationsFixed AssetExpenditures(In thousands)(In millions)1440(In millions)15001575112575036052590 91 92 90 91 92 90 91 92TWENTY-THREE

MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTSMotorola, Inc. and Consolidated SubsidariesManagement is responsible for the preparation, integrityand objectivity of the consolidated financial statementsand other financial information presented in this report.The accompanying consolidated financial statementswere prepared in accordance with generally acceptedaccounting principles, applying certain estimates andjudgments as required.Motorola's internal controls are designed to provide reasonableassurance as to the integrity and reliability of thefinancial statements and to adequately safeguard, verifyand maintain accountability of assets. Such controls arebased on established written policies and procedures, areimplemented by trained, skilled personnel with an appropriatesegregation of duties, and are monitored through acomprehensive internal audit program. These policies andprocedures prescribe that the Company and all employeesare to maintain the highest ethical standards and that itsbusiness practices throughout the world are to be conductedin a manner which is above reproach.KPMG Peat Marwick, independent auditors, are retainedto audit Motorola's financial statements. Their accompanyingreport is based on an audit conducted in accordancewith generally accepted auditing standards, which includesthe consideration of the Company's internal controls toestablish a basis for reliance thereon in determining thenature, timing, and extent of audit tests to be applied.The Board of Directors exercises its responsibility forthese financial statements through its Audit Committee,which consists entirely of independent non-managementBoard members. The Audit Committee meets periodicallywith the independent auditors and with the Company'sinternal auditors, both privately and with managementpresent, to review accounting, auditing, internal controlsand financial reporting matters.George FisherCarl F. KoenemannChairman of the Board Executive Vice Presidentand Chief Executive Officer and Chief Financial OfficerINDEPENDENT AUDITORS' REPORTThe Board of Directors and Stockholders of Motorola, Inc.:We have audited the accompanying consolidated balancesheets of Motorola, Inc. and consolidated subsidiaries asof December 31,1992 and 1991, and the related statementsof consolidated earnings, stockholders' equity and cashflows for each of the years in the three-year period endedDecember 31,1992. These consolidated financial statementsare the responsibility of the Company's management. Ourresponsibility is to express an opinion on these consolidatedfinancial statements based on our audits.We conducted our audits in accordance with generallyaccepted auditing standards. Those standards require thatwe plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free ofmaterial misstatement. An audit includes examining, ona test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includesassessing the accounting principles used and significantestimates made by management, as well as evaluatingthe overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion.In our opinion, the consolidated financial statementsreferred to above present fairly, in all material respects, thefinancial position of Motorola, Inc. and consolidated subsidiariesat December 31, 1992 and 1991, and the resultsof their operations and their cash flows for each of theyears in the three-year period ended December 31,1992in conformity with generally accepted accounting principles.As discussed in notes 1, 2 and 5 to the consolidatedfinancial statements, the Company adopted the provisionsof the Financial Accounting Standards Board'sStatement of Financial Accounting Standards (SFAS) No.106, "Employers' Accounting for Postretirement BenefitsOther Than Pensions," and SFAS No. 109, "Accountingfor Income Taxes," in 1992.KPMG Peat MarwickChicago, IllinoisJanuary 13, 1993TWENTY-FOUR

STATEMENTS OF CONSOLIDATED EARNINGS(In millions, except per share amounts)Motorola, Inc. and Consolidated SubsidiariesYears ended December 31 1992 1991 1990Net sales $13,303$11,341 $10,885Costs and expensesManufacturing and other costs of sales8,5087,2456,882Selling, general and administrative expenses2,8382,4682,414Depreciation expense1,000886790Interest expense, net157129133Total costs and expenses12,50310,72810,219Earnings before income taxes and cumulativeeffect of change in accounting principle800613666Income taxes provided on earnings224159167Net earnings before cumulative effect ofchange in accounting principle$ 576$ 454$ 499Cumulative effect of change inaccounting principle, net of tax123--Net earnings$ 453$ 454$ 499Net earnings per share before cumulativeeffect of change in accounting principle$ 2.16$ 1.72$ 1.90Cumulative effect of change in accountingprinciple per share0.46--Net earnings per share$ 1.70$ 1.72$ 1.90Average shares outstanding 267.0263.9 262.5See accompanying notes to consolidated financial statements.S T A T E M E N T S OF C O N S O L I D A T E D S T O C K H O L D E R S ' E Q U I T Y(In millions, except per share amounts)Common Stock andAdditional Paid-in CapitalRetained EarningsYears ended December 31 1992 1991 1990 1992 1991 1990Balances at January 1$1,343 $1,324 $1,269$3,287 $2,933$2,534Net earnings453 454499Stock options and other167 19 55Dividends declared ($.395 per sharein 1992, and $.380 per share in1991 and 1990)(106) (100)(100)Balances at December 31 $1,510 $1,343 $1,324$3,634 $3,287 $2,933Stock split: An amount equal to the par value of the additional shares issued has been transferred from additional paid-in capital to common stock due to the two for onestock split in the form of a 100 percent stock dividend. All references to shares outstanding and per share amounts have been adjusted on a retroactive basis.See accompanying notes to consolidated financial statements.TWENTY-FIVE

CONSOLIDATED BALANCE SHEETS(In millions, except per share amounts)Motorola, Inc. and Consolidated SubsidiariesDecember 31 1992 1991AssetsCurrent assetsCash and cash equivalentsShort-term investments (at lower of cost or market)$ 677253$ 302231Accounts receivable, less allowance for doubtful accounts(1992, $69; 1991, $79)2.0361,953Inventories1,3211,242Future income tax benefits522417Other current assets409342Total current assets5.2184,487Property, plant and equipment, net4,5764,194Other assets835694Total assets$10,6299,375Liabilities andStockholders'EquityCurrent liabilitiesNotes payable and current portion of long-term debtAccounts payable$ 4371,1275 852897Accrued liabilities1,7711,314Total current liabilities3.3353,063Long-term debt1.258954Deferred income taxes230196Other liabilities662532Stockholders' equityCommon stock, $3 par valueAuthorized shares: 1992 and 1991, 300.0Outstanding shares: 1992, 269.7; 1991, 264.3'809398Preferred stock, $100 par value issuable in seriesAuthorized shares: 0.5 (none issued)Additional paid-in capital701945Retained earnings3,6343,287Total stockholders' equity5,1444,630Total liabilities and stockholders' equity$10,629$9,375'Outstanding shares have been adjusted for the two for one stock split on a retroactive basis.See accompanying notes to consolidated financial statements.TWENTY-SIX

STATEMENTS OF CONSOLIDATED CASH FLOWS(In millions)Motorola, Inc. and Consolidated SubsidiariesYears ended December 31199219911990OperatingNet earnings$ 453$ 454$ 499Add (deduct) non-cash itemsCumulative effect of change in accounting principle123--Depreciation1.000886790Net change in deferred income taxes(23)(5)(62)Amortization of debt discount292726Change in assets and liabilities, net of effectsof acquisitions and dispositionsAccounts receivable, net(82)(96)(173)Inventories(77)3(74)Other current assets(67)12(65)Accounts payable and accrued liabilities675154187Gain on disposition of investments in affiliated companies(12)(22)-Other assets(35)(145)28Other liabilities(42)90151Net cash provided by operations1,9421,3581,307InvestingAcquisitions and advances to affiliated companies(117)(52)(117)Disposition of investments in affiliated companies28402Payments for property, plant and equipment(1.386)(1,317)(1,256)Other changes to property, plant and equipment, net31638(Increase) decrease in short-term investments(22)81(110)Net cash used for investing activities(1,494)(1,232)(1,443)FinancingIncrease (decrease) in notes payable and current portionof long-term debt(415)(143)208Increase in long-term debt2751357Issuance of common stock1671955Payment of dividends to stockholders(100)(100)(100)Net cash provided by (used for) financing activities(73)(89)170Increase inCash and CashEquivalents$ 375$ 37$ 34See accompanying notes to consolidated financial statements.TWENTY-SEVEN

NOTES TO C O N S O L I D A T E D FINANCIAL S T A T E M E N T S(In millions, except as noted)1. Summary Consolidation:!^ consolidated financial statements includeof Significant the accounts of the Company and all majority-owned sub-Accountingsidiaries. All significant intercompany accounts and trans-Policiesactions are eliminated in consolidation.Cash Equivalents: The Company considers all highly liquidinvestments purchased with an original maturity of threemonths or less to be cash equivalents.Inventories: Inventories are valued at the lower of averagecost (which approximates computation on a first-in, first-outbasis) or market (i.e., net realizable value or replacementcost), less progress payments on long-term contracts.Property, Plant and Equipment: Property, plant and equipmentis stated at cost less accumulated depreciation.Depreciation is recorded principally using the decliningbalancemethod, based on the estimated useful lives ofthe assets (buildings and building equipment, 5-50 years;machinery and equipment, 2-12 years).Foreign Currency Translation:Jhe Company uses the U.S.dollar as the functional currency for financial reporting.Gains and losses from remeasurement to U.S. dollars areincluded in net earnings. The Company enters into foreignexchange contracts to hedge its investments in foreignsubsidiaries. Gains and losses on these hedges are alsoincluded in net earnings.Motorola, Inc. and Consolidated SubsidiariesThe Company periodically enters into foreign exchangecontracts to hedge identifiable transactions. Gains andlosses from these contracts are classified in earnings inthe same category and accounting period as the underlyingtransaction.Income Taxes: Effective January 1,1992, the Companyadopted Statement of Financial Accounting Standards(SFAS) No. 109, "Accounting for Income Taxes." SFASNo. 109 requires a change from the deferred method ofaccounting for income taxes of APB Opinion 11 to theasset and liability method of accounting for income taxes.Postretirement Benefits Other Than Pensions: EffectiveJanuary 1,1992, the Company adopted Statement ofFinancial Accounting Standards No. 106, "Employers'Accounting for Postretirement Benefits Other Than Pensions."SFAS No. 106 requires that the cost of postretirementbenefits be accrued during the years that employees renderservice. The Company implemented SFAS No. 106 byrecognizing the transition obligation immediately.Heclassifications: Certain amounts in the 1991 and 1990financial statements and related notes have been reclassifiedto conform to the 1992 presentation.2. IncomeTaxesThe Company adopted, in 1992, Statement of FinancialAccounting Standards No. 109, "Accounting for IncomeTaxes." The impact of this accounting change is not material.Prior years' financial statements have not beenrestated to apply the provisions of SFAS No. 109.Components of earnings before income taxes andcumulative effect of change in accounting principleUnited StatesOther nationsTotal1992 1991 1990$146654$166$800 $613Components of income taxes provided on earningsCurrent:United StatesOther nationsState income taxes (U.S.)DeferredIncome taxes before cumulative effectof change in accounting principle447 2851992 1991 1990$ 751477229(5)$224$ 541046164(5)$159$1475131229(62)$167Income tax payments were $132 million in 1992, $150million in 1991 and $236 million in 1990.Income taxes are not provided on cumulative undistributedearnings of certain non-U.S. subsidiaries amounting to $1.7billion and $1.4 billion at December 31,1992 and 1991, respectively.It is intended that these earnings will be permanentlyreinvested in operations outside the U.S. Should theseearnings be distributed, foreign tax credits would reducethe additional U.S. income tax which would be payable.At December 31,1992, certain non-U.S. subsidiaries hadloss carryforwards for income tax reporting purposes of$82 million, with expiration dates starting in 1993.Differences between income tax expense computed at theU.S. federal statutory tax rate of 34% and income taxesprovided on earningsIncome tax expense at statutory rateTaxes on non-U.S. earningsState income taxesForeign Sales CorporationTax creditsOtherIncome taxes before cumulative effectof change in accounting principle1992 1991 1990$272(31)7(18)(2)(4)$224$208(24)5(22)(7)(D$159$226(37)20(23)(4)(15)$167TWENTY-EIGHT

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions, except as noted)Motorola, Inc. and Consolidated SubsidiariesSignificant deferred tax assets (liabilities)1992 1991DepreciationInventory reservesEmployee benefitsCapitalized itemsDeferred interestEquipment leasesOperation restructuringOther deferred incomeTotal deferred income taxes$(139)164102725617812$292$(149)14164674121630$221The deferred tax assets are considered realizable consideringpast income and evidence of future income. Theseinclude, but are not limited to, carrybacks, earnings trends,and tax planning strategies.The Internal Revenue Service has examined the federalincome tax returns for Motorola, Inc. through 1985 andthe returns have been settled through 1983. In connectionwith the audits for the years 1984 and 1985, the IRS hasproposed adjustments to the Company's income and taxcredits for those years which would result in substantialadditional tax. The Company disagrees with most of theproposed adjustments and is contesting them. In the opinionof the Company's management, the final disposition ofthese matters, and proposed adjustments from other taxauthorities, will not have a material adverse effect on theconsolidated business or financial position of the Company.3. Debtand CreditFacilitiesLong-term debtDecember 31 1992 199112% Eurodollar notes due 199411.5% Eurodollar notes due 1997(callable prior to stated maturity)7.6% notes due 20078% sinking fund debentures due 2007(callable at 103.1% reducing to 100%of the principal amount)5.75% industrial revenue bonds due 2014Zero coupon notes due 20098.4% debentures due 2031(redeemable at the holders' option in 2001)8.625% ECU notes due 1992Other long-term debtLess current maturitiesLong-term debtShort-term debtDecember 31Commercial paperNotes to banksOther short-term debtAdd current maturitiesNotes payable and currentportion of long-term debt$ 689330058204892000391,2679$1,2581992$32589144289$437$ 68930622046520066591,03379$ 9541991$703561477379$852The zero coupon notes due 2009, referred to as LiquidYield Option Notes (LYON), have a face value of $1.32 billion.The LYONs are subordinated notes, have no periodicinterest payments, and were priced to yield 6% to maturity.The LYONs are convertible into 9.134 shares of Motorolacommon stock, after adjustment for the stock split, foreach $1,000 note. The notes may be redeemed by theholders in specified circumstances prior to the statedmaturity date.Aggregate maturities and sinking fund requirements forlong-term debt, in millions, during the next five years are asfollows: 1993, $9; 1994, $72; 1995, $4; 1996, $4; 1997, $96.The industrial revenue bonds' interest rate was reset at5.75% on January 1,1992, for the bonds' remaining life.The Company has domestic and international credit facilitiesfor short-term borrowings with banks and other externalsources. It pays commitment fees of approximately 1/10%on its domestic credit facilities and generally no fees on itsforeign credit facilities. Short-term credit facilities totaled$1.77 billion at December 31, 1992, of which $1.33 billionremain unused. Domestic credit facilities primarily supportthe issuance of commercial paper, while foreign credit facilitiesgenerally support working capital requirements.The Company's finance subsidiary entered into, during1991, fixed to floating interest rate swaps covering $100million of the commercial paper. These instrumentsmature beginning in 1993 through 1996.Outstanding letters of credit aggregated approximately$172 million at December 31,1992.TWENTY-NINE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions, except as noted)4. OtherFinancialDataIncome statement informationResearch and developmentMaintenance and repairsForeign currency gains (losses)Interest expense, net:Interest expenseInterest incomeAmount capitalizedInterest expense, net1992 1991 1990$1,306236(34)196(38)(1)$1,13320416176(43)(4)$1,030207(27)180(7)$ 157 $ 129 $ 133The Company's cash payments for interest expense (net ofamounts capitalized) were $121 million in 1992, $122 millionin 1991 and $113 million in 1990.Balance sheet informationInventories:Finished goodsW.I.P. and production materialsTotalProperty, Plant and Equipment:LandBuildingsMachineryEquipment leased to othersLess accumulated depreciationTotalAccrued liabilities:CompensationTaxes other than incomeIncome taxes payableContribution to employees'profit sharing fundsDividends payableOtherTotal1992 1991$ 413908443799$1,321 $1,242$ 1152,1855,4764038,1793,603$ 1171,9934,8644157,3893,195$4,576 4,194S 3261496259311,144233116564525839$1,771 $1,314Financial Data of Consolidated Finance SubsidiaryTotal revenueNet earningsTotal assetsTotal liabilitiesStockholder's investmentsand advances1992 1991 1990$ 2912295(248)$ 208238(203)$ 155120(84)$ 47 35 36Motorola, Inc. and Consolidated SubsidiariesFinance subsidiary interest income of $29 million in 1992,$20 million in 1991 and $15 million in 1990 is included innet sales. Interest expense of $11 million in 1992 and$8 million in 1991 and 1990 is included in manufacturingand other costs of sales. In addition, long-term financereceivables of $228 million in 1992 and $186 million in1991 are included in other assets.Fair Value of Financial InstrumentsSFAS No. 107, "Disclosures About Fair Value of FinancialInstruments," effective for years ending after December15,1992, requires disclosure about the fair values offinancial instruments, whether or not recognized in thebalance sheet. The Company's financial instrumentsinclude short-term investments, long-term receivables,notes payable, long-term debt, foreign currency contracts,and other financing commitments. The fair values ofsuch financial instruments have been determined basedon quoted market prices and market interest rates, asof December 31,1992.The fair value of the convertible zero coupon notes was$633 million compared to the carrying value of $489 million.Such notes, however, are callable by the Companyat the carrying value. The fair values of all other financialinstruments were not materially different from their carrying(or contract) values.LeasesThe Company owns most of its major facilities but doeslease certain office, factory and warehouse space, land,and data processing and other equipment under principallynoncancellable operating leases. In addition, equipment isleased to others under noncancellable operating leases.Rental expense, net of sublease income, was $149 millionin 1992, $142 million in 1991 and $132 million in 1990.At December 31,1992, future minimum lease revenuesunder noncancellable leases and lease obligations, net ofminimum sublease rentals, were as follows:19931994199519961997BeyondLeaseRevenues$392210420LeaseObligations$1118056382799The Company's finance subsidiary purchases customerobligations under long-term contracts from the Companyat net carrying value.THIRTY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions, except as noted)5. Employee Pension BenefitsBenefit andThe Company's noncontributory pension plan covers mostIncentiveU.S. employees after one year of service. The benefit for-Plansmula is dependent upon employee earnings and years ofservice. The Company's policy is to fund the accrued pensioncost or the amount allowable based on the full fundinglimitations of the Internal Revenue Code, if less.The Company has a noncontributory supplemental retirementbenefit plan for its elected officers. The plan containsprovisions for funding the participants' expected retirementbenefits when the participants meet the minimum age andyears of service requirements.Certain non-U.S. subsidiaries have varying types of retirementplans providing benefits for substantially all of theiremployees. Amounts charged to earnings for all non-U.S.plans were $33 million in 1992, $32 million in 1991 and$25 million in 1990.The Company uses a three-year, market-related assetvalue method of amortizing asset-related gains and losses.Net transition amounts and prior service costs are beingamortized over periods ranging from 10 to 15 years.Motorola, Inc. and Consolidated SubsidiariesBenefits under all U.S. pension plans are valued basedupon the projected unit credit cost method. The assumptionsused to develop the projected benefit obligations forthe plans for 1992 and 1991 were as follows:Discount rate for obligationsFuture compensation increase rateInvestment return assumptionComponents of net U.S. pension expense for the regularpension planService costsInterest cost on projected obligationActual return on plan assetsNet amortization and deferralNet pension expense8.5%5.5%9.25%1992 1991 1990$ 8455(53)(25)$ 61$ 6943(154)89$ 47The net U.S. expense for the elected officers' supplementalretirement benefit plan was $17 million in 1992and 1991, and $14 million in 1990.$ 6334(11)(47)$ 39U.S. funded pension plansDecember 31Actuarial present value of:Regular1992 1991ElectedOfficersRegularElectedOfficersVested benefit obligation $(511) $(34) $(426) $(31)Accumulated benefit obligationProjected benefit obligation for service rendered to datePlan assets at fair value, primarily listed stocks, bonds and cash equivalentsPlan assets in excess of (less than) projected benefit obligationUnrecognized net (gain) loss from past experience different from assumptionsUnrecognized prior service costUnrecognized net transition (asset) liabilityPension asset (liability) recognized in balance sheet $(89) $ 28 $(76) $ 34(558)(774)84975(97)1(68)(57)(67)44(23)17259(460)(641)761120(117)1(80)(54)(63)41(22)163010THIRTY-ONE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions, except as noted)Motorola, Inc. and Consolidated SubsidiariesPostretirement Health Care BenefitsIn addition to providing pension benefits, the Companyprovides certain health care benefits to its retired employees.The majority of its domestic employees may becomeeligible for these benefits if they reach normal retirementage while working for the Company. During 1992, SFASNo. 106, "Employers' Accounting for Postretirement BenefitsOther Than Pensions," was adopted. SFAS No. 106 requiresthat the cost of postretirement benefits be accrued duringthe years that the employees render service. Prior to 1992,costs of retiree health care were recognized as expensewhen claims were paid. The Company chose to implementSFAS No. 106 by recognizing as expense in 1992 the entireaccumulated postretirement benefit obligation as of January1,1992 ($171 million). The Company's policy is tofund the maximum amount allowable based on fundinglimitations of the Internal Revenue Code.The assumptions used to develop the accumulated postretirementbenefit obligation for the retiree health careplan for 1992 were as follows:Discount rate for obligationsInvestment return assumptionComponents of the expense recognized in 1992 for theretiree health care plan were as follows:Service costsInterest cost on projected obligationNet retiree health care expenseU.S. funded retiree health care planDecember 31,19928.5%9.25%t 714$21Actuarial present value of accumulatedpostretirement benefit obligation $183Plan assets at fair value, primarily listed stocks,bonds and cash equivalents 4Retiree health care liability recognized in balance sheet $179The health care trend rate used to determine the accumulatedpostretirement benefit obligation was 10% for 1992,decreasing to 6% by the year 2000 and beyond. Increasingthe health care trend rate by one percentage pointwould increase the accumulated postretirement benefitobligation by $29 million and would increase the 1992net retiree health care expense by $3 million. There areno significant postretirement health care benefit plansoutside of the United States.Other BenefitsProfit Sharing Plans:Jbe Company and certain subsidiarieshave profit sharing plans, principally contributory, in whichall eligible employees participate. The Company makescontributions to profit sharing funds in the United Statesand other nations which are generally based upon percentagesof pretax earnings, as defined, from those operations.Company contributions to all profit sharing plans totaled$59 million, $45 million and $51 million in 1992,1991 and1990, respectively.Management Incentive: The Company may provide up to7% of its annual consolidated pretax earnings, as definedin the Motorola Executive Incentive Plan, for the paymentof cash incentive awards to key employees. During 1992,$29 million was provided for incentive awards, as comparedto $16 million and $23 million in 1991 and 1990,respectively.Stock Options: Under the Company's employee stock optionplans, shares of common stock have been made availablefor grant to key employees. The exercise price of eachoption granted is 100% of market value on the date ofthe grant.Options exercised during 1992 were at per share pricesranging from $11.39 to $40.28. Options outstanding atDecember 31,1992, were at per share prices ranging from$15.57 to $52.07.All share amounts and prices have been adjusted toreflect the two for one stock split.Shares subject to options(In thousands of shares)1992 1991Options outstanding at January 114,990 12,990Additional options granted3,348 3,126Options exercised(5,250) (952)Options terminated, cancelled or expired(79) (174)Options outstanding at December 3113,009 14,990Shares reserved for future option grants 10,334 13,604Total shares reserved23,343 28,594Total options exercisable 9,672 11,866THIRTY-TWO

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions, except as noted)6. Commitmentsand ContingenciesThe Company had $636 million of forward foreign exchangecontracts outstanding as of December 31,1992. Managementbelieves that these forward contracts should notsubject the Company to undue risk due to foreign exchangemovements because gains and losses on these contractsshould offset losses and gains on the assets, liabilities andtransactions being hedged.Off balance sheet commitments to extend or guaranteefinancing and recourse obligations under receivable salearrangements aggregated $515 million as of December 31,1992. Commitments to extend or guarantee financing includecommitments for customer financing and for the financingof non-consolidated affiliates. Customer financing commitmentsrequire the customer to meet certain conditionsMotorola, Inc. and Consolidated Subsidiariesestablished in the financing arrangements. Commitmentsrepresent the maximum amounts available under thesearrangements and may not be completely utilized.As of December 31,1992, the Company had no significantconcentrations of credit risk.The Company accrues costs associated with environmentalmatters when they become probable and reasonablyestimable. The amount of such charges to earnings was$17 million in 1992 and $18 million in 1991.The Company is a defendant in various suits and is subjectto various claims which arise in the normal course ofbusiness. In the opinion of management, the ultimate dispositionof these matters will not have a material adverseeffect on the consolidated business or financial positionof the Company.7. InformationIndustry segment informationby IndustrySegment andGeographicRegionYears ended December 31Semiconductor ProductsCommunications Products1992$ 4,4754,138Net Sales1991$ 3,6793,6291990$ 3,4333,560$ 464237199210.4%5.7%Operating Profit1991$3561919.7%5.3%$32023019909.3%6.5%General Systems Products3,5862,8472,64845712.7%37213.1%38814.6%Government Electronics ProductsInformation Systems ProductsOther ProductsAdjustments and eliminationsIndustry segment totals650625509(680)$13,303704587392(497)$11,341766599355(476)$10,885(7)41(46)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(In millions, except as noted)Geographic area information*Motorola, Inc. and Consolidated SubsidiariesNet SalesOperating ProfitYears ended December 31 1992 1991 1990 1992 1991 1990United States$10,232 $ 8,802 $ 8,759 $ 624 6.1% $452 5.1% $697 7.8Other nations8,017 6,340 5,896706 8.8% 501 7.9% 308 5.2Adjustments and eliminations(4,946) (3,801) (3,770) (188)(63)(39) -Geographic totals$13,303 $11,341 $10,885 1,142 8.6% 890 7.8% 966 8.9General corporate expensesInterest expense, net(185)(157)(148)(129)(167)(133)Earnings before income taxesand cumulative effect of changein accounting principle$ 800 6.0% $613 5.4% $666 6.1December 31United StatesOther nationsAdjustments and eliminationsGeographic totalsGeneral corporate assetsConsolidated totals'As measured by the locale of the revenue-producing operations8. Stockholder Each outstanding share of the Company's common stockRights Plancarries with it one-half of a preferred share purchaseright. Each right becomes exercisable for one-thousandthof a share of the Company's junior participating preferredstock, series A, at an exercise price of $150 per onethousandthof a share (subject to adjustment) if a personor group acquires 20% or more of the Company's commonstock or announces a tender or exchange offer for 30% ormore of the Company's common stock. If a person or groupacquires 20% or more of the Company's common stock andin certain other circumstances, each right (except, in some1992$ 6,2973,668(208)9,757872Assets1991 1990$5,6563,164(168)8,652723$5,0413,084(122)8,003739$10,629 $9,375 $8,742The Company operates predominantly in the electronicequipment, systems and components industry. Operationsinvolve the design, manufacture and sale of a diversifiedline of products, which include, but are not limited to,two-way radios, pagers, cellular telephones and systems;semiconductors, including integrated circuits and microprocessorunits; data communication and distributive dataprocessing equipment and systems; and electronic equipmentand industrial electronics products. Manufacturingand distribution operations in any one country, other thanthe U.S., do not account for more than 10% of consolidatednet sales or total assets.Operating profit (revenues less operating expenses)excludes general corporate expenses, net interest andincome taxes. Intersegment sales, principally semiconductorcomponents, amounted to $694 million for 1992, $510 millionfor 1991 and $489 million for 1990. Intersegment andintergeographic transfers are accounted for on an arm'slength pricing basis.Identifiable assets (excluding intersegment receivables)are the Company's assets that are identified with classes ofsimilar products or operations in each geographical area.Corporate assets are primarily administrative headquarters,cash and marketable securities.Sales to United States Federal Government agenciesaggregated $902 million for 1992, $1.03 billion for 1991and $1.08 billion for 1990. In 1992, no single customer orgroup under common control represented 10% or more ofthe Company's sales.The equity in net assets of non-U.S. subsidiaries amountedto $2.51 billion at December 31,1992 and $2.15 billion atDecember 31,1991.instances, those held by an acquiror) becomes exercisablefor an amount of the Company's common stock (or that ofan acquiror) having a market value of twice the exerciseprice. In some cases, the Board of Directors may exchangeone exercisable right for two shares (subject to adjustment)of the Company's common stock (or the equivalent) andmay suspend the exercisability of the rights. The rightshave no voting power, expire on November 20,1998,and may be redeemed for $.05 per right prior to a publicannouncement that 20% or more of the Company's shareshave been accumulated by a person or group.THIRTY-FOUR

FIVE YEAR FINANCIAL SUMMARY(In millions, except as noted)Motorola, Inc. and Consolidated SubsidiariesYears ended December 3119921991199019891988OperatingResultsNet salesManufacturing and other costs of sales$13,3038.508$11,3417,245$10,8856,882$9,6205,905$8,2505,040Selling, general and administrative expenses2,8382,4682,4142,2891,957Depreciation expense1,000886790650543Interest expense, net15712913313098Total costs and expenses12,50310,72810,2198,9747,638Earnings before income taxes and cumulative effectof change in accounting principle800613666646612Income taxes provided on earnings224159167148167Net earnings before cumulative effect of changein accounting principle$ 576$ 454$ 499$ 498$ 445Net earnings$ 453$ 454$ 499$ 498$ 445Net earnings before cumulative effect of changein accounting principle as a percent of sales4.3%4.0%4.6%5.2%5.4%Net earnings as a percent of sales3.4%4.0%4.6%5.2%5.4%Per ShareData (In dollars)Net earnings before cumulative effect of changein accounting principle$ 2.16$ 1.72$ 1.90$ 1.91$ 1.72Net earnings$ 1.70$ 1.72$ 1.90$ 1.91$ 1.72Dividends declared0.3950.3800.3800.3800.335BalanceSheetTotal assetsWorking capital$10,6291,883$ 9,3751,424$ 8,7421,404$7,6861,261$6,710758Long-term debt1,258954792755343Total debt1,6951,8061,7871,5421,381Total stockholders' equity$ 5,144$ 4,630$ 4,257$3,803$3,375Other DataCurrent ratio1.561.461.461.481.29Return on average invested capital before cumulativeeffect of change in accounting principle9.4%7.8%9.4%10.3%11.0%Return on average invested capital7.5%7.8%9.4%10.3%11.0%Return on average stockholders' equity before cumulativeeffect of change in accounting principle11.7%10.2%12.3%13.9%13.9%Return on average stockholders' equity9.4%10.2%12.3%13.9%13.9%Year-end employment (in thousands)107102105104102Average shares outstanding267.0263.9262.5259.9259.1All earnings per share, dividend, and outstanding shares data has been restated to reflect the two for one stock split.THIRTY-FIVE

QUARTERLY AND OTHER FINANCIAL DATA(In millions, except per share amounts; unaudited) 1992 1991Quarterly 1st 2nd 1 3rd 1 4th 1st 2nd 3rd 4thNet salesGross profitNet earnings 2Net earnings per share 2Net earnings as a percent of sales 2Net earningsNet earnings per shareNet earnings as a percent of salesDividends declaredDividends paidStock prices:HighLow$3,055 $3,141 $3,396 $3,7111,108 1,132 1,211 1,344125 143 127 1810.47 0.54 0.48 0.674.1% 4.6% 3.7% 4.9%2 143 127 1810.01 0.54 0.48 0.670.1% 4.6% 3.7% 4.9%0.095 0.095 0.095 0.1100.095 0.095 0.095 0.09540.82 41.32 45.22 52.7232.44 37.10 37.91 42.57$2,743 $2,814 $2,745 $3,0391,011 1,025 955 1,105116 119 93 1260.44 0.45 0.35 0.484.2% 4.2% 3.4% 4.1%116 119 93 1260.44 0.45 0.35 0.484.2% 4.2% 3.4% 4.1%0.095 0.095 0.095 0.0950.095 0.095 0.095 0.09532.41 35.16 34.44 32.5323.41 28.35 30.44 27.50The number of holders of record of Motorola Common Stock on January 31,1993 was 19,312.All earnings per share, dividend, and stock price data has been restated to reflect the two for one stock split.'The 1st, 2nd and 3rd quarter 1992 net earnings, net earnings per share, and net earnings as a percent of sales have been restated toreflect the adoption of SFAS No. 106 as of January 1,1992. The adoption of SFAS No. 109 did not have a material effect on any quarters.'Before cumulative effect of change in accounting principle.MOTOROLA WORLDWIDEFacilitiesMotorola maintains sales andservice offices worldwide, withmajor facilities in:AustraliaMelbourneCanadaRichmond, British Columbia;Mississauga and North York, OntarioChinaTianjinCosta RicaGuadalupeDenmarkCopenhagenFranceAngers, Bordeaux, ToulouseGermanyFlensburg, Munich, TaunussteinHong KongKowloon, Tai PoIrelandCork, SwordsIsraelArad, Tel AvivJapanAizu Wakamatsu, Sendai, TokyoKoreaSeoulMalaysiaKuala Lumpur, Penang, SerembanMexicoGuadalajara, Leon, Mexico CityPhilippinesManilaSingaporeSwitzerlandGenevaTaiwanChung-LiUnited KingdomBasingstoke, East Kilbride,Stotfold, Easter Inch, SwindonUnited StatesHuntsville, Ala.; Chandler, Mesa,Phoenix, Scottsdale and Tempe, Ariz.;Torrance, Calif.; Boynton Beachand Plantation, Fla.; ArlingtonHeights, Libertyville, Northbrookand Schaumburg, III.; MountPleasant, Iowa; Mansfield, Mass.;Albuquerque, N.M.; Elma, N.Y.;Austin, Farmers Branch and Seguin,Texas; Bothell, Wash.Puerto RicoVega BajaTHIRTY-SIX

ELECTED OFFICERS OF MOTOROLA, INC.As ofJanuary 1,1993AgeYears ofServiceCorporateGeorge M.C. FisherChairman of the Board andChief Executive Officer52 16Gary I. looker 53 30President and Chief Operating OfficerChristopher B. Galvin 42 20Senior Executive Vice President andAssistant Chief Operating OfficerRobert W. Galvin 70 52Chairman of the Executive Committeeof the BoardJohn F. Mitchell 64 39Vice Chairman of the Board andOfficer of the BoardFinanceCarl F. Koenemann 54 22Executive Vice President andChief Financial Officer'Garth L. Milne 50 13Senior Vice President and TreasurerKenneth J. Johnson 57 21Corporate Vice President,Controller and Director of AuditBenny L. Smothermon 53 16Corporate Vice President and Director,International FinanceLawRichard H. Weise 57 24Senior Vice President, GeneralCounsel and SecretaryRobert F. Falkner 52 13Corporate Vice President andAssistant General CounselJoseph R. Haack 57 19Corporate Vice President andAssistant General CounselA. Peter Lawson 46 12Corporate Vice President andAssistant General CounselEuropeDavid K. Bartram 56 32Senior Vice President and ExecutiveDirector, Motorola-EuropeParviz Mokhtari 51 10Corporate Vice President andDirector, Eastern EuropeInternational-Asia and Americas'Dave Wooldridge 61 18Richard W. Younts 53 25 Corporate Vice President and Director,Senior Vice President andCorporate Executive Director,International-Asia and AmericasRichard W. Heimlich 51 10Partnership CenterExecutive Vice President andCorporate StaffDavid W. Hickie 59 30Corporate Vice President andChief Corporate Staff OfficerDirector, International StrategyKeith J. Bane 53 19Chi-Sun Lai 56 22 Senior Vice President andCorporate Vice President and GeneralMotorola Director, StrategyManager, Motorola China LimitedWilliam V. Braun 57 34Senior Vice President and MotorolaJapan GroupDirector, Research and DevelopmentArnold S. Brenner 55 33Executive Vice President andGeneral Manager, Japan GroupRichard BuetowSenior Vice President and61 34Toshiaki Irie 59 8Motorola Director, QualitySenior Vice President and Chairman,Nippon Motorola Limited'John £ MajorSenior Vice President and MotorolaDirector, Spectrum, Standards, and47 14Nippon Motorola LimitedIsamu Kuru 53 2Corporate Vice President and President,Software ManagementJames D. BurgeCorporate Vice President and58 34Corporate VenturesMotorola Director, Government'Gordon Comerford 56 18 Affairs/Human ResourcesSenior Vice President and Director,Business Model* James W.GillmanCorporate Vice President, Patents,59 19'Bernard R. Smedley 56 16 Trademarks and LicensingSenior Vice President and Director,Advanced Radio NetworksVeronica A. HaggartCorporate Vice President and MotorolaDirector, Government Relations43 8Human ResourcesJames Donnelly 53 23 Les Shroyer 48 8Executive Vice President andMotorola Director, Human ResourcesCorporate Vice President and MotorolaDirector, Management InformationSystems and TelecommunicationsJoseph F. Mi rag Ha 56 14Senior Vice President and AssistantMotorola Director, Human Resources'Eugene L. SimpsonCorporate Vice President and MotorolaDirector, PMP and Cycle Time64 23Theodore Saltzberg 65 36Senior Vice President andDirector, Software Programs,Motorola UniversityMauro J. WalkerCorporate Vice President andMotorola Director, Manufacturing57 21Carlton Braun 63 42Semiconductor Products SectorCorporate Vice President and Director,James A. Norling 50 27Educational Institutes and Labs,Motorola University'Robert M.PIacko 42 18President and General Manager,Semiconductor Products Sector andExecutive Vice President, Motorola, Inc.Corporate Vice President and Director,Strategic Human Resources Management'Thomas D. GeorgeExecutive Vice President and52 13A. William Wiggenhorn 48 12 Assistant General Manager,President, Motorola Universityand Corporate Vice President,Training and EducationSemiconductor Products SectorTHIRTY-SEVEN

Andre Borrel 56 25Senior Vice President and GeneralManager, Communications, Powerand Signal Technologies GroupLarry L Gartin 49 25Senior Vice President andDirector, Sector FinanceMurray A. Goldman 55 23Senior Vice President and GeneralManager, Microprocessor andMemory Technologies GroupGary M. Johnson 48 25Senior Vice President andGeneral Manager, Logic andAnalog Technologies GroupGeno Ori 55 30Senior Vice President andDirector, Environmental AffairsDavid L. Pulatie 50 27Senior Vice President andDirector, Sector Human ResourcesPaulJ.Shimp 53 28Senior Vice President and Director,Sector Quality and Support Operations*C. D. Jam 48 24Senior Vice President andGeneral Manager, Asia/PacificSemiconductor Products GroupCharles £ Thompson 63 23Senior Vice President and Director,Sector World Marketing and SalesBarryWaite 44 10Senior Vice President andGeneral Manager, EuropeanSemiconductor Group''Thomas A. Beaver 50 28Corporate Vice President and Director,Marketing and Sales, WorkstationComputer Segment"George Bennett 53 13Corporate Vice President andGeneral Manager, MOS Memoryand Microprocessor Division,European Semiconductor GroupPeter M.Bingham 49 14Corporate Vice President andGeneral Manager, MOS Digital-Analog IC DivisionR. Gary Daniels 55 26Corporate Vice President and AssistantGeneral Manager, Microprocessor andMemory Technologies GroupWeldon D. Douglas 55 32Corporate Vice President and Director,Sales and Marketing, Federal"Carlos Genardini 46 23Corporate Vice President andGeneral Manager, Bipolar AnalogIntegrated Circuits DivisionJim George 50 16Corporate Vice President andGeneral Manager, MOS MemoryProducts DivisionThomas G. Gunter 45 20Corporate Vice President andGeneral Manager, High-PerformanceMicroprocessor DivisionSteve P. Hanson 44Corporate Vice President and GeneralManager, CommunicationsSemiconductor Products DivisionBrian O. Hilton 50 25Corporate Vice President and Director,Worldwide Distribution"Thomas W. Lorig 50Corporate Vice President andSector Controller"L.J. Reed 48 24Corporate Vice President andGeneral Manager, ASIC Division"William J. Seiferth 52Corporate Vice President and GeneralManager, Power Products DivisionFredShlapak 49 22Corporate Vice President andAssistant General Manager,European Semiconductor Group"Scott L Shumway 55 32Corporate Vice President and Director,Sector QualityLand Mobile Products SectorMorton L Topfer 56 21President and General Manager,Land Mobile Products Sector andExecutive Vice President, Motorola, Inc."Merle L. Gilmore 44 22Senior Vice President andAssistant General Manager,Land Mobile Products Sector"Robert W. Bigony 51 26Senior Vice President and GeneralManager, Communications andElectronics GroupStanley A. DeCosmo 47 24Senior Vice President andAssistant General Manager,Communications and Electronics GroupRonald E. Greenwell 54 30Senior Vice President andGeneral Manager, CommunicationsInternational GroupKenneth R. Hessler 59 35Senior Vice President andDirector, Sector Quality andTotal Customer Satisfaction"Ferdinand C. Kuznik 51 2Senior Vice President and GeneralManager, European Group21 "William V. Beaulieu 55 24Corporate Vice President and GeneralManager, Japan-Pacific DivisionRichard G. Day 48 26Corporate Vice President and GeneralManager, Southeast Division"Paul Fowler 49 2219 Corporate Vice President andGeneral Manager, WorldwideTrunked Systems GroupRobert]/. Jane 50 16Corporate Vice President and Director,Sector Research31 "Terrence W. Jaron 51 20Corporate Vice President and GeneralManager, Western Division"Wayne H. Leland 49 27Corporate Vice President and Director,Spectrum and StandardsHarry M. Mankodi 52 24Corporate Vice President and GeneralManager, Customer Service GroupDale J. Misczynski 50 26Corporate Vice President andGeneral Manager, WorldwideNetwork Services Group"Perry A. Noakes 41 22Corporate Vice President andGeneral Manager, WorldwideRadio Products Group'Dennis J. Sester 50 24Corporate Vice President and GeneralManager, Worldwide Federal DivisionRichard D. Severns 47 21Corporate Vice President and Director,Sector FinanceTHIRTY-EIGHT

'Larry D. Shockley 54 28Corporate Vice President and GeneralManager, European Distribution Group'Bruce M. Stone 45 22Corporate Vice President and GeneralManager, European Product Group"James P. Widick 45 26Corporate Vice President and Director,Finance, Communications andElectronics Group"Michael K. Worthington 47 21Corporate Vice President and GeneralManager, Americas DivisionGeneral Systems SectorEdward F. Staiano 56 19President and General Manager,General Systems Sector and ExecutiveVice President, Motorola, Inc."John W. Battin 56 28Senior Vice President,Personal Communications"John P. Salcius 49 26Senior Vice President andAssistant General Manager,Cellular Subscriber Group"John M. Scanlon 50 2Senior Vice President and GeneralManager, Cellular Infrastructure Group"Robert N. Weisshappel 48 22Senior Vice President and GeneralManager, Cellular Subscriber GroupJames A. Bernhart 60 33Corporate Vice President and AssistantGeneral Manager, U.S. Markets DivisionDon Burns 50 20Corporate Vice President andGeneral Manager, EuropeanCellular Subscriber Division"Richard D. Chandler 54 32Corporate Vice President and GeneralManager, Cellular Products Division,Cellular Infrastructure Group"Larry F. Conlee 45 21Corporate Vice President andAssistant General Manager,European Cellular Subscriber DivisionWilliam D. Connor 62 23Corporate Vice President and Director,Sector Information TechnologyStephen P. Earhart 44 14Corporate Vice President and Director,Sector Finance"Jerry Giacomino 51 24Corporate Vice President and GeneralManager, Telepoint Systems DivisionH. Anthony Hennen 53 21Corporate Vice President and GeneralManager, RF and Cellsite Development"David Hughes 50 13Corporate Vice President and GeneralManager, GSM Product DivisionWolfPavlok 46 23Corporate Vice President and GeneralManager, U.S. Markets Division"Daniel C. Przybylski 49 24Corporate Vice President and Director,Latin American Operations"Wayne Sennett 49 8Corporate Vice President and Director,Worldwide Sales Operations,Motorola Computer GroupPaging and Wireless Data Group"Robert L. Growney 50 26Executive Vice President andGeneral Manager, Paging andWireless Data GroupHector Ruiz 47 14Senior Vice President and GeneralManager, Paging Products GroupS. Michael Corrigan 49 14Corporate Vice President and Director,Group Human ResourcesWalter L Davis 52 27Corporate Vice President andDirector, Applied Research"Jerome C. LeonardCorporate Vice President and GeneralManager, Strategic Programs"Frank LloydCorporate Vice President andGeneral Manager, AmericasPaging Products DivisionJames G. RoselandCorporate Vice President and Director,Group Finance"James A. Wagner 47 26Corporate Vice President and GeneralManager, Wireless Data LAN Division"Francis T. Wapole 48 26Corporate Vice President andPresident, ARDISGovernment Electronics GroupDavid G. Wolfe 57 28Executive Vice President and GeneralManager, Government Electronics Group"James R. Baum 62 35Senior Vice President andAssistant General Manager,Government Electronics GroupDurrell W. Hillis 52 29Corporate Vice President and GeneralManager, Satellite CommunicationsStrategic Business UnitW. Frank Langford 48 14Corporate Vice President and Director,Group FinanceDavid M.Neuer 51 30Corporate Vice President and Director,International OperationsInformation Systems GroupJohn A. Lockitt 50 15Senior Vice President, InformationSystems Group and President, Codex"Rudolph DeMichele Jr. 58 15Corporate Vice President and Directorof Operations, CodexGeorge R. Grumbles 59 14Corporate Vice President, InformationSystems Group and President, UDSGerald Murray 57 14Corporate Vice President and GeneralManager, Worldwide Distribution, CodexAutomotive and IndustrialElectronics Group55 31 "Frederick T. Tucker 52 27Executive Vice President andGeneral Manager, Automotive and4949igIndustrial Electronics Group"Gerald Brunning 52 28Corporate Vice President and GeneralManager, Components Division24 John J. Pelland 49 19Corporate Vice President and GeneralManager, Automotive Powertrain andChassis Electronics Division"David Melka 53 23Corporate Vice President and GeneralManager, Electronic Systems andComponents Division"Assumed new title or advanced in ranksince previous annual report.THIRTY-NINE

Directors ofGeorge FisherJohn T. HickeySamuel C. Scott IIIMotorola, Inc.Gary L. TookerRetired; formerly ExecutiveCorporate Vice President,Christopher B. GalvinVice President and Chief FinancialCPC International, Inc. andRobert W. GalvinOfficer, Motorola, Inc.President of Corn ProductsJohn F. MitchellAnne P. JonesGardiner L. TuckerWilliam J. WeiszPartner, Sutherland, Asbill &Retired; formerly Vice PresidentVice Chairman of the Board;Brennan law firmfor Science and Technology,formerly Officer of the Boardand CEO, Motorola, Inc.Donald R.JonesRetired; formerly ExecutiveInternational Paper CompanyB. Kenneth WestErich BlochVice President and Chief FinancialChairman of the Board andDistinguished Fellow at theOfficer, Motorola, Inc.Chief Executive Officer,Council on Competitiveness;formerly Director of the NationalScience FoundationThomas J. MurrinDean of Duquesne University'sSchool of Business AdministrationHarris Bankcorp, Inc.Director EmeritusDavid R. ClareRetired; formerly President,Johnson & JohnsonWilliam G.SalatichRetired; formerly President, GilletteNorth America, and Vice ChairmanElmer H. WaveringFormerly Vice Chairman and ChiefOperating Officer, Motorola, Inc.Wallace C. Doudof the Board, Gillette CompanyRetired; formerly Vice President,International Business MachinesCorporationCEO QualityThe Chief Executive Office QualityGovernment Electronics GroupPaging & Wireless Data GroupAwardsAward is Motorola's highest awardQuality Parts andBattery Chargersfor quality performance. WinnersAnalysis DepartmentPortatiles de Puerto Ricoin 1992 were:Scottsdale, ArizonaVega Baja, Puerto RicoAutomotive and IndustrialElectronics GroupAI EG, El ma FacilityElma, New YorkMotorola Lighting, Inc.Buffalo Grove, IllinoisGeneral Systems SectorInternational CellularSubscriber DivisionFlensburg, Germany(Two awards)Sectel ShippingTroubleshooting TeamSeguin, TexasSupply Management FunctionScottsdale, ArizonaStrategic Electronics DivisionGPS ASIC Design TeamChandler, ArizonaLand Mobile Products SectorLiterature Distribution CenterSchaumburg, IllinoisTelcaro National Parts DivisionMotorola PagingShipping DepartmentBoynton Beach, FloridaTuas Printed Circuit BoardSingaporeSemiconductor Products SectorBipolar IV Wafer FabToulouse, FranceToulouse Power Planar TeamToulouse, FranceVega Baja, Puerto RicoDan Noble FellowsThe Dan Noble Fellow is the highestFellows chosen in 1992 were:Hugh Malonehonorary award that can be madeGerald LabedzGovernment Electronics Groupto a technologist within Motorola.General Systems SectorScottsdale, ArizonaIt recognizes outstanding technicalcreativity, innovative ability and productiveachievements. It is namedfor Dan Noble, a visionary technologicalpioneer, former Vice ChairmanArlington Heights, IllinoisStephen LevineCorporate Research & DevelopmentSchaumburg, IllinoisDavid MothersoleSemiconductor Products SectorAustin, Texasof Motorola and Chairman of itsScience Advisory Board.FORTY

STOCKHOLDER REFERENCE INFORMATIONTransfer Agent,Registrar, DividendDisbursing Agentand DividendReinvestment AgentHarris Trust and Savings BankCorporate Trust Operations DivisionP.O. Box 755111 West Monroe Street11th FloorChicago, IL 60690(312)461-2339Investor RelationsSecurity analysts, investmentprofessionals and shareholdersshould direct their business-relatedinquiries to:Investor Relations, Motorola, Inc.Corporate Offices1303 East Algonquin RoadSchaumburg, IL 60196Or call: (708) 576-4973Common StockMotorola common stock is listed onthe New York, Midwest, London andTokyo Stock Exchanges.Annual Meetingof StockholdersThe annual meeting will be held onMay 4,1993. A notice of the meeting,together with a form of proxy and aproxy statement, will be mailed tostockholders on or about March 23,1993, at which time proxies will besolicited by the Board of Directors.Form 10KAfter the close of each fiscal year,Motorola submits a report on Form10-K to the Securities and ExchangeCommission containing certain additionalinformation concerning itsbusiness. A copy of this report maybe obtained without chargeby addressing your request to:Secretary, Motorola, Inc.Corporate Offices1303 East Algonquin RoadSchaumburg, IL 60196AuditorsKPMG Peat Marwick303 East Wacker DriveChicago, IL 60601This entire report haa.been printed on recycled paper.