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March 2006
Fellow Stockholders,
Last year, I told you that 2004 had been ""A Year of Progress'' and I made a commitment that
2005 would be ""A Year to Win.'' Thanks to the hard work of the Motorola team, I'm proud to tell
you that Motorola and its stockholders did win in 2005.
‚ We continued to deliver on our commitments to proÑtably grow market share and increase
customer satisfaction.
‚ Our key Ñnancial metrics Ó including revenue growth, the ratio of operating earnings to sales,
revenue per employee, operating cash Öow and inventory turns Ó continued to improve year
over year.
‚ We're partnering on many new engagements with our customers and partners worldwide
around our vision of Seamless Mobility.
2005 Ì Extraordinary Financial Strength
In 2005 we made great progress on a number of fronts. We achieved record sales of
$36.8 billion, up 18% from 2004. That's $5.5 billion of incremental revenue in ONE year. We
shipped 146 million handsets in 2005, up 40% from 2004 Ó the largest percentage increase in
the industry Ó and solidiÑed our position in the wireless handset industry with an estimated 18%
global market share.
Motorola is now in a position of strength. Operating margin increased to 12.7% in 2005 Ó up from
10.0% in 2004. Earnings from continuing operations increased 110% in 2005 as compared to
2004, and we generated operating cash Öow of $4.6 billion. Our balance sheet, with more than
$10.5 billion in net cash, is the best in Motorola's history.
With this extraordinary Ñnancial strength, Motorola's Board of Directors authorized a 36-month,
$4.0 billion stock repurchase program Ó the Ñrst in Motorola's history. This decision underscores
our Ñnancial and operational success, the Board's conÑdence in Motorola's long-term prospects
and our aggressive focus on enhancing shareholder value.
The most signiÑcant impact of all these numbers can be boiled down to this: Motorola's publicly-
traded common stock increased in value by more than 30% in 2005.
2006 and Beyond Ì Owning Seamless Mobility
Motorola's vision for Seamless Mobility means people have easy, uninterrupted access to
information, entertainment, communication, monitoring and control. We're capitalizing on creating
industry-leading technology to drive this paradigm shift. Our investments over the past two years
demonstrate our view of the future:
‚ Mobile Internet (802.16e, 4G Ó all-IP networks)
‚ Broadband to the home (IPTV, video, FTTX, VoIP)
continued Ó