Balance Sheet

Cash and cash equivalents and short-term investments (including Sigma Fund) were approximately $8,894.0 million in 3Q10 versus $8,231.0 million in 2Q10. Accounts receivable amounted to $3,236.0 million in 3Q10 versus $3,465.0 million in 2Q10. Inventory was $1,354.0 million in 3Q10 versus $1,299.0 million in 2Q10. Long-term debt amounted to $2,864.0 million in 3Q10 versus $2,907.0 million in 2Q10.

Cash Flow

Cash flow from operations was $502.0 million in 3Q10 versus $242.0 million in 2Q10. Capital expenditure amounted to $64.0 million in 3Q10 versus $76.0 million in 2Q10.

Share Repurchases and Dividend

Motorola did not repurchase shares during 3Q10.

MOT will not declare any quarterly cash dividends on the Company’s common stock, in order to strengthen its balance sheet and enhance its financial flexibility.

Structural and Strategic Realignment of Businesses

On February 11, 2010, MOT announced that it plans to split into two halves in early 2011, with one half containing its consumer-focused mobile phone and television set-top box products, and the other holding divisions that target business customers. The split will give current shareholders a share in each new company, which will be roughly the same size in terms of annual revenue at $11.0 billion. Both halves will be publicly traded. The current separation is planned for 1Q11. The move is a change from plans that the Company announced in late 2008 to spin off only its handset unit by 3Q09.

Dr. Sanjay Jha, Co-chief Executive Officer of Motorola, Inc., will serve as Chief Executive Officer of Motorola's Mobile Devices and Home businesses, effective immediately. This business will offer a comprehensive portfolio of mobile converged devices, digital entertainment devices at home, and end-to-end video, voice and data solutions. Working with network operator partners, the Company will also enable more advanced personalized services that will leverage the capability of expanding wireless and wireline broadband availability.

Greg Brown, Co-chief Executive Officer of Motorola, Inc., will serve as Chief Executive Officer of Motorola's Enterprise Mobility Solutions and Networks businesses, effective immediately. This business will offer a comprehensive end-to-end portfolio of products and solutions, including rugged two-way radios, mobile computers, secure public safety systems, scanning, RFID, and wireless network infrastructure.

Motorola intends to effect the separation through a tax-free stock dividend of shares in the new company to Motorola shareholders. Following the separation, both businesses will be well-capitalized so that the companies can execute their respective business plans and be able to address future opportunities. Motorola expects, post-separation, the Enterprise Mobility and Networks business to be capitalized in a manner that will achieve an investment grade rating and will be the entity responsible for Motorola's existing public market debt at the time of separation.

Following the separation event, both entities will use the Motorola brand. The Mobile Devices and Home business is expected to own the Motorola brand and license its royalty free to the Enterprise Mobility Solutions and Networks business.

The proposed tax-free spin-off is expected to be accomplished through a pro rata distribution to Motorola shareholders. Completion of the spin-off is subject to a number of conditions, including, among others, confirmation of the tax-free nature of the transaction, as well as effectiveness of a Form 10 Registration Statement to be filed with the U.S. Securities and Exchange Commission (SEC). Motorola will distribute an information statement to shareholders following the completion of the SEC's review of the Form 10.

Previously, in March 2008, MOT announced that its Board of Directors commenced a process to create two independent, publicly-traded companies. The decision follows the Company’s January 31, 2008 announcement for evaluation of the structural and strategic realignment of its businesses, and represents affirmative steps to position its Mobile Devices and Broadband & Mobility Solutions businesses for success, while creating value for all Motorola shareholders.

On November 30, 2010, MOT announced that its Board of Directors has approved the separation of Motorola Mobility Holdings, Inc. (“Motorola Mobility”) from Motorola, Inc. through a tax-free dividend involving the distribution of all Motorola Mobility common stock held by Motorola to Motorola stockholders and has also approved a reverse stock split of shares of Motorola common stock following the distribution. As a result, the following will occur:
• The distribution will be made prior to the market opening on Jan. 4, 2011 to Motorola, Inc. stockholders of record as of the close of business on Dec. 21, 2010.
• Motorola, Inc. stockholders of record will receive 1 share of Motorola Mobility common stock for every 8 shares of Motorola common stock they hold.
• Immediately following the distribution of Motorola Mobility common stock to Motorola stockholders, Motorola will effect a 1-for-7 reverse stock split of Motorola common stock, which will become effective prior to the market open on Jan. 4, 2011.