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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
----------------------______________
FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December[ ] FOR THE FISCAL YEAR ENDED DECEMBER 31, 19971998

[_]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to______________to ________________

COMMISSION FILE NUMBER 1-7221

MOTOROLA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)(Exact name of registrant as specified in its charter)

DELAWARE 36-1115800
(State of Incorporation) (I.R.S. Employer Identification No.)

1303 East Algonquin Road, Schaumburg, IllinoisEAST ALGONQUIN ROAD, SCHAUMBURG, ILLINOIS 60196
(Address of principal executive offices)

Registrant's(847) 576-5000
(Registrant's telephone number (847) 576-5000

Securities registered pursuant to Section 12(b) of the Act:

Name of Each Exchange on
Title of Each Class Which Registered)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
Common Stock, $3 Par Value per Share New York Stock Exchange
Chicago Stock Exchange
Liquid Yield Option Notes due 2009 New York Stock Exchange
Liquid Yield Option Notes due 2013 New York Stock Exchange
Rights to Purchase Junior Participating New York Stock Exchange
Preferred Stock, Series A
Chicago Stock Exchange

Rights to Purchase Junior Participating New York Stock Exchange
Preferred Stock, Series B Chicago Stock Exchange
Liquid Yield Option Notes due 2009 New York Stock Exchange
Liquid Yield Option Notes due 2013 New York Stock Exchange
6.68% Trust Originated Preferred Securities registered pursuant to Section 12(g) of the Act:New York Stock Exchange
(issued by Motorola Capital Trust I and
guaranteed by Motorola, Inc.)

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No ----- -----___
-

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]

The aggregate market value of voting and non-voting common equity held by
non-affiliates of the registrant as of January 31, 19981999 was approximately $34.4$42.3
billion (based on closing sale price of $59.5625$72.38 per share as reported for the New
York Stock Exchange-Composite Transactions).

The number of shares of the registrant's Common Stock, $3 par value per
share, outstanding as of January 31, 19981999 was 597,503,874.601,948,574.

DOCUMENTS INCORPORATED BY REFERENCE

Document Location in FormLOCATION IN FORM 10-K
-------- --------------------------------------------

Portions of Registrant's Proxy Statement for 1998 Annual Meeting of Stockholders Including Parts I, II, III and IV
Including
Management's Discussion and Analysis and Consolidated Financial Statements

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TABLE OF CONTENTS

Page
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PART I.......................................................................................... 1
Item 1. Business............................................................................... 1
General....................................................................................... 1
Business Segments............................................................................. 1
Cellular Products.......................................................................... 1
Land Mobile Products....................................................................... 2
Messaging, Information and Media Products.................................................. 4
Semiconductor Products..................................................................... 5
Other Products............................................................................. 6
Integrated Electronic Systems Sector..................................................... 6
Space and Systems Technology Group....................................................... 7
Creation of the Communications Enterprise.................................................. 9
Financial Information About Segments.......................................................... 9
Customers..................................................................................... 9
Backlog....................................................................................... 9
Research and Development...................................................................... 9
Patents and Trademarks........................................................................ 10
Environmental Quality......................................................................... 10
Miscellaneous................................................................................. 10
Business Risk Factors......................................................................... 10
Financial Information About Foreign and Domestic Operations and Export Sales.................. 13
Item 2. Properties............................................................................. 13
Item 3. Legal Proceedings...................................................................... 13
Item 4. Submission of Matters to a Vote of Security Holders.................................... 15
Executive Officers of the Registrant............................................................ 15
PART II......................................................................................... 16
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.................. 16
Sales of Unregistered Securities.............................................................. 16
Market Information for Securities............................................................. 17
Item 6. Selected Financial Data................................................................ 17
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 17
Item 8. Financial Statements and Supplementary Data............................................ 17
Item 9. Changes in and Disagreements With accountants on Accounting and Financial Disclosure... 17
PART III........................................................................................ 17
Item 10. Directors and Executive Officers of the Registrant.................................... 17
Item 11. Executive Compensation................................................................ 17
Item 12. Security Ownership of Certain Beneficial Owners and Management........................ 18
Item 13. Certain Relationships and Related Transactions........................................ 18
PART IV......................................................................................... 18
Item 14. Exhibits, financial Statement Schedules and Reports on Form 8-K....................... 18
14(a)(1) Financial Statements................................................................ 18
14(a)(2) Financial Statement Schedule and Auditors' Report................................... 18
14(a)(3) Exhibits............................................................................ 18

PART I

ItemThroughout this 10-K report we "incorporate by reference" certain information
in parts of other documents filed with the Securities and Exchange Commission
(the "SEC"). The SEC allows us to disclose important information by referring to
it in that manner. Please refer to such information.

"Motorola" (which may be referred to as "we", "us" or "our") means Motorola,
Inc. or Motorola, Inc. and its subsidiaries, as the context requires. "Motorola"
is a registered trademark of Motorola, Inc.

ITEM 1: Business

(a)BUSINESS

General

development of business.

Motorola Inc.is a global leader in providing integrated communications solutions
and embedded electronic solutions. These include:

. Software-enhanced wireless telephone, two-way radio, messaging and
satellite communications products and systems, as well as networking and
Internet-access products, for consumers, network operators, and commercial,
government and industrial customers.

. Embedded semiconductor solutions for customers in the consumer, networking
and computing, transportation, and wireless communications markets.

. Embedded electronic systems for automotive, communications, imaging,
manufacturing systems, computer and consumer markets.

Motorola is a corporation organized under the laws of the State of Delaware as
the successor to an Illinois corporation organized in 1928. Motorola's principal
executive offices are located at 1303 East Algonquin Road, Schaumburg, Illinois
60196 (telephone number: 847-576-5000).

Motorola is one of the world's leading providers of wireless communications,
semiconductors and advanced electronic systems, components and services. Major
equipment businesses include cellular telephone, two-way radio, paging and data
communications, personal communications, automotive, defense and space
electronics and computers. Motorola semiconductors power communication devices,
computers and millions of other products.

The term "Motorola" as used hereinafter means Motorola, Inc. or Motorola, Inc.
and its subsidiaries, as the context requires. "Motorola" is a registered
trademark of Motorola, Inc.

(b) Financial information about industry segments.

The response to this section of Item 1 incorporates by reference Note 8,
"Information by Industry Segment and Geographic Region," of the Notes to the
Consolidated Financial Statements contained in the attachment to Motorola's
Proxy Statement for the 1998 annual meeting of stockholders.

Cellular ProductsBusiness Segments

CELLULAR PRODUCTS

The Cellular Subscriber Sector ("CSS") primarily designs, manufactures, distributes, marketssells
and services subscriber radio-telephone equipment for cellular, personal and
personalsatellite communications networks. In addition, CSS resells cellular line
service in the U.S., Germany, France, Belgium,United States and the U.K.
markets.France. CSS's products include mobile, personalcellular and
wearable cellularsatellite telephones and related accessories. Products are marketed worldwide
through carriers, distributors, dealers, retailers, and, in certain markets,
through a direct sales force. Products are also distributed through licensees in China
and Latin America.force or licensees.

The Cellular Infrastructure Group ("CIG") (part of the Cellular Networks and
Space Sector) primarily designs, manufactures,
distributes,sells, installs, markets and services cellularwireless infrastructure equipment. CIG's products
include electronic exchanges (i.e., telephone switches), base site controllers
and radio base stations for Code Division Multiple Access ("CDMA")(CDMA), Personal
Communication Systems ("PCS")(PCS), Personal Digital Cellular ("PDC")(PDC), Global System for
Mobile Communications ("GSM")(GSM), wireless local loop and analog technologies.
Products are marketed worldwide through a direct sales force.force or licensees.

The segment also is a joint venture partnerNetwork Management Group holds and manages investments in cellularwireless
operating systems in a number of international jurisdictions and is an investor in IRIDIUM(R) gateway
companies.companies for the Iridium(R) satellite communications network.

Radio frequencies are required to provide cellular services. The allocation of
frequencies is regulated in the United States and other countries throughout the
world and limited spectrum space is allocated to cellularwireless services. The growth
of the cellularwireless and personal communications industry may be affected if adequate
frequencies are not allocated or, alternatively, if new technologies are not
developed to better utilize the frequencies currently allocated for such use.
Such occurrences might have an effect on the segment's results.

The segment hasThere are a few customers that, collectively, the loss of, or a significant
reduction in purchases by, could have a material adverse effect on the results of the segment.

1
segment's
results.

CSS carries reasonable product inventories in distribution centers to meet
customer delivery requirements. As a general rule, CSS does not permit customers
to return merchandise and does not grant extended payment terms, although
exceptions may be made if necessary to meet unique market conditions.

In1

For CIG, payment terms are particular to individual contracts, a majoritysome of which
provide for the hold backholdback of certain residual payments to Motorola until system
acceptance by the customer. In certain circumstances, CIG permits customer
returns in accordance with specific contract terms. For qualifyingIncreasingly, as a result of
the financial demands of major network deployments, network operators are
requiring suppliers, like CIG, to provide or arrange for long-term financing in
connection with equipment purchases. Financing may cover all or a portion of the
purchase price, as well as working capital, and can be sizeable. CIG may also
assist customers in obtaining financing from banks or other sources. CIG finances equipment
purchases under various arrangements.

Participation inexpects
that the need to provide this financing or arrange financing for its customers
will continue, and could increase.

The wireless telephone market has experienced an ongoing technology shift from
analog products, where CSS has a very competitive industry, with constant changes in
technology, requires continuing and extensive investment in research and
development programs. Management believes, looking forward, that Motorola's
commitmenthigher relative market share, to research and development programsdigital
products, where CSS has a lower relative market share. As a result, during 1998
CSS experienced under-utilization of certain of its analog telephone production
facilities. CSS addressed these capacity issues by converting a significant
portion of its analog facilities to improve existing products and
services andprovide for the production of its expanding
portfolio of digital telephones. This conversion of manufacturing capacity from
analog to develop new products and services, together with its utilization
of state-of-the-art technology, should allow the segmentdigital is expected to remain competitive.be completed during 1999.

The segment experiences intense competition in world-wideworldwide markets from numerous
competitors ranging in size from some of the world's largest companies to small,
specialized firms. In particular, the segment has experienced significant
competition in the market for digital products. Competitive factors in the
market for the segment's products are price, service, delivery, quality, availability,
warranty, product features, company image, time-to-market andinclude: technology offered; price; product
and system performance.performance, features, quality, delivery, availability and warranty;
the quality and availability of service; company image; relationship with key
customers and time-to-market. As described above, an additional factor for CIG
is the availability of vendor financing, as customers continue to look to
equipment vendors as an additional source of financing.

The segment's backlog amounted to $2.23 billion at December 31, 1998 and $2.19
billion at December 31, 1997. For 1998 versus 1997, backlog was up significantly
for CSS and $1.94
billion at December 31, 1996.down for CIG. The 19971998 order backlog is believed to be generally
firm and 100% of that amount is expected to be shipped in 1998.1999. The forward-lookingforward-
looking estimates of the firmness of such orders is subject to future events
which may cause the percentage of the 19971998 backlog actually shipped to change.

Materials used in the segment's operations are generally second-sourced to
ensure a continuity of supply. Occasional shortages in purchased components do
occur. Energy necessary for the segment's manufacturing facilities consists of
electricity, natural gas and gasoline, all of which are currently in generally
adequate supply. The segment's facilities are highly automated and, therefore,
require a reliable source of electrical power. Labor is generally available in
reasonable proximity to the segment's manufacturing facilities. Difficulties in
obtaining any of the aforementioned items could affect the segment's results.

Patent protection is extremely important to the segment's operations. The
segment has an extensive portfolio of patents relating to its products, systems,
technologies and manufacturing processes. Motorola is also licensed to use
certain patents owned by others. The protection of these licenses is also
important to the segment's operations. Reference is made to the material under
the heading "General" for information relating to patents and trademarks,
research and development activities and the seasonality and volatility of
business with respect to this segment.

CSS's headquarters are located in Libertyville, Illinois. CSS operates
manufacturing facilities in Libertyville and Harvard, Illinois; Easter Inch,
Scotland; Flensburg, Germany; Tianjin, China; Singapore; and Campinas, Brazil. CSS alsoJaguariuna, Brazil
and has a manufacturing licenseeslicensee in China and Latin America.China.

CIG's headquarters are located in Arlington Heights, Illinois. CIG operates
manufacturing facilities in Arlington Heights and McHenry, Illinois; Fort Worth,
Texas; Jaguariuna, Brazil; Hangzhou, China; and Swindon, England.

Semiconductor Products

Semiconductors controlGroundwell, England and amplify electrical signals and are usedhas a
manufacturing licensee in a broad
range of electronic products, including consumer electronic products, computers,
communications equipment, solid-state ignition systems and other automotive
electronic products, major home appliances, industrial controls, robotics,
aircraft, space vehicles, calculators and automatic controls.

The semiconductor products manufactured by Motorola's Semiconductor Products
Sector ("SPS") include integrated circuit devices (metal-oxide semiconductor,
gallium arsenide and bipolar) such as high-performance microprocessors,
microcontrollers and peripherals; digital signal processors; flash, electrically
erasable

programmable read-only, and proprietary fast static random access memories;
custom and proprietary bipolar and MOS digital-analog components; emitter-
coupled logic; programmable logic devices; deep submicron CMOS gate array, cell-
based and customizable standard products; rectifiers; zener and tuning diodes;
power and small signal transistors; RF and microwave devices, thyristors,
optoelectronics and sensors.

SPS sells its products worldwide to original equipment manufacturers and a
network of industrial distributors through its own sales force, agents and
distributors. Products manufactured by SPS are also supplied to other operating
units of Motorola. Other businesses of Motorola collectively constitute the
segment's largest customer, and the loss of, or a significant reduction in
purchases by, them has and could continue to affect SPS's results. Customers
are allowed to return merchandise for the longer of, (i) the product warranty
period of the distributor or (ii) three years. The segment and its results are
affected by the cyclical nature of the semiconductor industry. Available
capacity, cyclical customer demands, new product introductions and aggressive
pricing has and could continue to impact its business and results.

In 1997, the segment experienced underutilization of certain of its production
facilities due to reduced market demand. The segment's capacity for certain
other products is being increased to meet current market demand. In addition,
the segment supplements its internal manufacturing capacity with joint venture
manufacturing facilities and purchases of products from outside vendors.

The semiconductor industry is subject to rapid changes in technology, and
requires a high level of capital spending and an extensive research, development
and design program to maintain state-of-the-art technology. Accordingly, SPS
maintains an extensive research and development program in advanced
semiconductor technology and a significant portion of Motorola's capital
expenditures have historically been, and are expected to continue to be, for
semiconductor facilities.

The segment's backlog amounted to $1.77 billion at December 31, 1997 and $2.32
billion at December 31, 1996. Although the segment experienced a gradual
sequential quarterly increase in orders throughout the year, the backlog
declined due to a change in financial backlog reporting that recognizes,
financially, only those orders scheduled by Motorola for delivery within the
next quarter. Orders may be and are placed by customers for delivery up to 12
months in the future but for purposes of calculating backlog only the next 13
weeks requirements are reported. On a consistent basis, after accounting for
the change in reporting, backlog was up slightly for the year. In the
semiconductor industry, backlog quantities and shipment schedules under
outstanding purchase orders are frequently revised to reflect changes in
customer needs. Binding agreements calling for the sale of specific quantities
at specific prices are, typically, contractually subject to price or quantity
revisions and are, as a matter of industry practice, rarely formally enforced.
Therefore, the segment believes that most of its order backlog is cancellable.
For these reasons, the amount of backlog as of any particular date may not be an
accurate indicator of future results.

SPS experiences intense competition from numerous competitors ranging from
large companies offering a full range of products to small companies
specializing in certain segments of the market. The competitive environment
also is changing as a result of increased alliances between competitors. The
segment competes in many semiconductor markets, including the
telecommunications, personal computer/work station, industrial, transportation,
consumer, computer, and distributor markets. Due to the multitude of
competitors, price, service, technology, warranty, availability, time-to-market,
product features, company image and product quality are important factors in
competition. The ability to develop new products to meet customer requirements
and to meet customer delivery schedules also are competitive factors.
Management believes, looking forward, that Motorola's commitment to research and
development programs to improve existing products and to develop new products,
together with its utilization of state-of-the-art technology, should allow the
segment to remain competitive.

The segment is not currently experiencing any shortages in obtaining raw
materials. A significant portion of certain materials and parts used by SPS is
supplied from a single country. With respect to other materials, the segment is
seeking additional sources of supply to minimize the risk of obtaining materials
from only a few sources. Electricity, oil and natural gas are used extensively
in the segment's operations. All of these energy sources are available in
adequate quantities for current needs. Electricity and oil are the primary
energy sources for the segment's foreign operations, and presently, there are no
shortages of these sources although the reliability of

electrical power has been a problem from time to time. Difficulties in obtaining
any of the aforementioned items could affect SPS's results.

Reference is made to the material under the heading "General" for information
relating to patents and trademarks and seasonality of business with respect to
this industry segment.

The Semiconductor Products segment's headquarters are in Austin, Texas. Its
major facilities are located in Austin, Texas; Chandler, Mesa, Phoenix and
Tempe, Arizona; Irvine, California; Research Triangle Park, North Carolina;
Tianjin, China; Toulouse, France; Munich, Germany; Kwai Chung and Tai Po, Hong
Kong; Aizu, Sendai and Tokyo, Japan; Paju, Korea; Geneva, Switzerland; Tel Aviv,
Israel; Kuala Lumpur and Seremban, Malaysia; Guadalajara, Mexico; Carmona and
Manila, the Philippines; Singapore; Chung-Li, Taiwan; and East Kilbride and
South Queensferry, Scotland. In addition, a new site in West Creek, Virginia is
expected to begin construction in 1998.

Land Mobile ProductsChina.

LAND MOBILE PRODUCTS

The Land Mobile Products Sector ("LMPS") primarily designs, manufactures,
sells, installs and sellsservices analog and digital two-way radio voice and data
products and systems for a variety of
worldwide applications.

As a principal supplier of mobile and portable FM two-way radio products and
systems, LMPS provides equipment and systems to meet the communications needs of
individuals and many different types of business, institutionalcommercial, governmental and governmental
organizations. Products ofindustrial
customers worldwide. LMPS products provide voice and data communications between
vehicles, persons and base stations. Also, LMPS provides network services for
two-way radio subscribers in international markets through joint ventures.

The principal customers for two-way radio products and systems include public
safety agencies, such as police, fire, highway maintenance departments and
forestry services; petroleum companies; gas, electric and water utilities;
telephone companies; diverse industrial companies; mining companies;
transportation companies such as railroads, airlines, taxicab operations and
trucking firms; institutions, such as schools and hospitals; and companies in
the construction, vending machine and service businesses. Also, there is an
emerging consumer two-way radio market using the products for personal and
family communication needs. These products are
also sold and leased to various federal agencies for many uses. In addition,
there is a growing consumer two-way radio market using the products for personal
and family communication needs.

LMPS also manufactures and sells signaling and control systems and
communication control centers used in two-way radio operations. Additionally,
LMPS unveiled its M-Smart(TM) family of platforms for smart card products, which
allow organizations to quickly deploy and build value-added applications,
including cards, card operating systems, readers and application development
workbenches.

Sales of iDEN(R) equipment to Nextel Communications, Inc., an entity in which
Motorola holds a minority ownership position, represent a material part of the
business of LMPS. The impact of losing this customer could have a material
adverse effect on the performance of the segment. In addition, LMPS hasthere are a few
customers that, collectively, the loss of, or a significant reduction in
purchases by, could behave a material to its business.adverse effect on LMPS's results.

Users of two-way radios are regulated by a variety of governmental and other
regulatory agencies throughout the world. In the United States, users of two-
waytwo-way
radios are licensed by the Federal Communication Commission ("FCC") which has
broad authority to make rules and regulations and prescribe restrictions and
conditions to carry out the provisions of the Communications Act of 1934. The
FCC has authorized two services and specific channels for consumer applications;
the General Mobile Radio Service requires a license for consumers while the
Family Radio Service does not require a license. The
FCC's authority includes, among other things, the power to classify radio
stations, prescribe the nature of the service to be rendered by each class of
station, assign frequencies to the various classes of stations and regulate the
kinds of equipment which may be used. Regulatory agencies in other countries
have similar types of authority. Consequently, the business and results of this
segment could be affected by the rules and regulations adopted by the FCC or
regulatory agencies in other countries from time to time. Motorola has developed
products using trunking and data communications technologies to enhance spectral
efficiencies. The growth and results of the two-way radio communications
industry may be affected, however, by the regulations of the FCC or other
regulatory agencies relating to the allocation of frequencies for land mobile
communications users, especially in urban areas where such frequencies are
heavily used.

LMPS also manufactures and sells signaling and control systems and
communication control centers used in two-way radio operations. Additionally,
in 1997 LMPS announced a solutions portfolio of smart card products and

systems ranging from combination contacted/contactless cards, readers and
terminals, network infrastructure and system integration services that support
multiple smart card applications for customers worldwide.

This segment carries on an extensive product development program. Its
products make substantial use of solid-state semiconductor components, including
integrated circuits. Management believes, looking forward, that Motorola's
commitment to research and development programs for improving existing products
and services and developing new products and services, together with its
utilization of state-of-the-art technology, should allow this segment to remain
competitive.

The products manufactured and marketed by LMPS are sold directly through its
own distribution force, or through independent authorized distributors and
dealers, commercial mobile radio service operators, retailers and independent
commission sales representatives. The direct distribution force also provides
system engineering and installation and other technical services to meet the
customer's particular needs. The customer may choose to install and maintain the
equipment with its own employees, or may obtain installation, service and parts
from a network of Motorola authorized service stations (most of whom are also
authorized dealers) or from other non-Motorola service stations. Subscriber
units are sold directly and through indirect distribution channels.

Leasing and conditional sale arrangements are also made available to
customers. The majority of the leases and conditional sale contracts entered
into by LMPS are sold to several unaffiliated finance companies andor banks on
terms, which, in somemost instances, provide recourse to Motorola with certain
limitations. In addition, a significant number of leases and conditional sale
contracts are sold to a Motorola finance subsidiary. Subscriber units are sold
directly and through indirect distribution channels. In certain circumstances,
LMPS permits customers to return products in accordance with industry practices.
LMPS providesLMPS's business includes providing custom products based on assembling basic
units into a large variety of models or combinations. This requires the stocking
of inventories and large varieties of piece parts and replacement parts, as well
as a variety of basic level assemblies in order to meet short delivery
requirements.

This segment's backlog amounted to $1.49 billion at December 31, 1998 and
$1.37 billion at December 31, 1997 and
$1.18 billion at December 31, 1996.1997. The 19971998 backlog amount is believed to be
generally firm, and approximately 93%81% of that amount is expected to be shipped
during 1998.1999. This forward-looking estimate of the firmness of such orders is
subject to future events, which may cause the percentage of the 19971998 backlog
actually shipped to change.

This segment experiences widespread, intense competition from numerous
competitors ranging from some of the world's largest, diversified companies to
foreign state-owned telecommunications companies to many small, specialized
firms. In addition, LMPS faces competition from numerous companies whose
principal manufacturing operations are located outside the United States, which
may serve to reduce their manufacturing costs and enhance

their brand recognition in their locale. Competitive factors for LMPS include:
price,price; technology offered; product performance, product quality, delivery and
availability; and the quality and availability of service and quality and
availability of systems
engineering, with no one factor being dominant. An additional factor is the
availability of vendor financing, becauseas infrastructure customers continue lookingto look
to equipment vendors as onean additional source of funding.financing.

Availability of the materials and components required by this segmentLMPS is relatively
dependable and certain, but normal fluctuations in market demand and supply
could cause temporary, selective shortages and affect results. Direct sourcing
of materials and components from foreign suppliers is becoming more extensive.
LMPS operates certain offshore subassembly plants, the loss of one or more of
which could constrain its production capabilities and affect results. Natural
gas, electricity and, to a lesser extent, oil are the primary sources of energy.
Current supplies of these forms of energy are generally considered to be
adequate for this segment's United StatesU.S. and foreign operations. However, difficulties
in obtaining any of the aforementioned items could affect the segment's results.

Patent protection is very important to the segment's business. Reference is
made to the material under the heading "General" for information relating to
patents and trademarks, research and development activities and volatility with
respect to this segment.

This segment's headquarters are located in Schaumburg, Illinois, with major
manufacturing facilities in Schaumburg, Illinois; Plantation, Florida; Mount
Pleasant, Iowa; Swords, Ireland; Arad, Israel; Penang, Malaysia; Berlin,
Germany; and Tianjian,Tianjin, China.

Messaging, Information and Media ProductsMESSAGING, INFORMATION AND MEDIA PRODUCTS

Motorola's Messaging, Information and Media Sector ("MIMS") primarily designs,
manufactures, distributessells, installs and sellsservices paging subscriber, paging
infrastructure and related products, such as paging software and accessories.
MIMS also provides network services for paging and wireless data and gateway
communication subscribers through wholly ownedwholly-owned and operated businesses as well
as domestic and international joint ventures. It also manufactures and sells modems,
analog and digital transmission devices and other data communication devices.devices, as
well as wireline networking products like routers for carrying converged voice
and data traffic. In addition, MIMS manufactures equipment that enables voice
video and high-speed data communications over cable networks. It alsonetworks and offers handwriting
and speech recognition software for various applications. MIMS providessells equipment
and systems to meet the communication needs of many different types ofconsumers and business, institutional and governmental
organizations. Also, there is a growing base of
paging and modem customers using the products for personal and family
communication needs. A majority of MIMS manufacturing, distribution and sales occurs
outside of the United States.

Radio frequencies are required to provide paging and wireless data information
services. The allocation of frequencies is regulated in the United States and
other countries throughout the world, and limited spectrum space is allocated for theseto
wireless services. The growth of the paging and wireless data information
industry and this segment's results could be affected if adequate frequencies
are not allocated for its use, or alternatively, if new technology is not
developed to increase capacity on presently allocated frequencies.

MIMS products are sold worldwide through both domestic and international sales
organizations, which sell through direct and indirect channels such as
distributors, retailers and value-added resellers. Consistent with general
practices in the industry, under certain limited circumstances, the MIMS businesses allowallows
customer returns. Payment terms are set based upon industry and regional
practices for each product channel and extended payment terms are granted temporarily only in
raresome cases. MIMS carries reasonable product inventories to meet customer
delivery requirements.

MIMS hasThere are a few customers that, collectively, the loss of, or a significant
reduction in purchases by, could have a material adverse effect on the results
of the segment.

This segment experiences widespread, intense competition from numerous
competitors ranging from some of the world's largest, diversified companies to
foreign state-owned telecommunications companies to many small, specialized
firms. The principal manufacturing operations of many competitors are located
outside of the United States, which may serve to reduce their manufacturing
costs and enhance their brand recognition in their locale. The paging business
is experiencing increasing competition from low cost and prepaid digital
wireless telephone services around the world, as customers continue to look more
favorably at wireless phones as options for messaging needs. Competitive factors
for MIMS include, but are not limitedinclude: price; technology offered; product performance, features,
quality, availability and warranty; the quality and availability of service;
time-to-market; and company image. An additional factor for

the infrastructure business is the availability of vendor financing, as
customers continue to price, quality, time-to-market,
technology, company image, service, warranty, product features and availability.look to equipment vendors as an additional source of
financing.

The segment's backlog amounted to $410 million at December 31, 1998 and $428
million at December 31, 1997 and $775
million at December 31, 1996.1997. The 19971998 backlog is believed to be generally firm,
and approximately 100% of that amount is expected to be shipped during 1998.1999.
This forward-looking estimate of the firmness of such orders is subject to
future events, which may cause the percentage of the 19971998 backlog actually
shipped to change.

Materials and components required by this segment are relatively dependable
and certain, but normal fluctuations in market demand and supply could cause
temporary, selective shortages. Occasionally, shortages or extended delivery
periods have occurred in various component parts, the effects of which have
generally been industry-wide and short in duration. Natural gas, electricity and
oil are the primary sources of energy necessary for the segment's operations.
These types of energy are currently readily available, but difficulties in
obtaining any of the aforementioned items could affect the segment's results.

6
Patent protection is very important to the segment's business. Reference is
made to the material under the heading "General" for information relating to
patents and trademarks, research and development activities and seasonality of
business with respect to this segment.

This segment's headquarters are located in Schaumburg, Illinois, with
manufacturing facilities in Huntsville, Alabama;in; Boynton Beach, Florida; Lake
Zurich, Illinois; Mansfield, Massachusetts;
Ft. Worth, Texas; Tianjin, China; Bangalore, India; Dublin, Ireland; Seoul, Korea; Chihuahua,
Mexico; Vega Baja,
Puerto Rico; and Singapore; additionally, software development and administration
offices are located in Palo Alto, California; Alpharetta, Georgia; Arlington
Heights, Illinois; Bothell, Washington; Mississuaga, Canada and Richmond,
Canada.

SEMICONDUCTOR PRODUCTS

Semiconductors control and amplify electrical signals and are used in a broad
range of electronic products, including consumer electronic products, computers,
communications equipment, solid-state ignition systems and other automotive
electronic products, major home appliances, industrial controls, robotics,
aircraft, space vehicles, calculators and automatic controls.

The Semiconductor Products Sector ("SPS") produces embedded processors. SPS
designs, produces and sells integrated semiconductor solutions for customers
serving the networking and computing, transportation and wireless communication
markets and for consumer applications in imaging and entertainment. SPS also
provides high-volume, standard discrete, analog and digital semiconductors used
in virtually every type of electronic equipment.

SPS sells its products worldwide to original equipment manufacturers ("OEMs")
and a network of industrial distributors through its own sales force, agents and
distributors. Products manufactured by SPS are also supplied to other operating
units of Motorola. Other businesses of Motorola collectively constitute the
segment's largest customer and the volume of purchases by these businesses has
affected, and could continue to affect, SPS's results.

Customers are allowed to return merchandise for the longer of (i) the product
warranty period of the distributor or (ii) three years. The segment and its
results are affected by the cyclical nature of the semiconductor industry.
Available capacity, cyclical customer demands, new product introductions and
aggressive pricing has and could continue to impact its business and results.

In 1998, the segment experienced under-utilization of certain of its
production facilities due to reduced market demand. The segment's capacity for
certain other products is being increased to meet current market demand. In
addition, the segment supplements its internal manufacturing capacity with joint
venture manufacturing facilities and purchases of products from outside vendors.
SPS has announced a goal to increase the use of foundry manufacturing for older
and specialized technologies.

The segment's backlog amounted to $1.66 billion at December 31, 1998 and $1.77
billion at December 31, 1997. Orders may be and are placed by customers for
delivery up to 12 months in the future but for purposes of calculating backlog
only the next 13 weeks requirements are reported. In the semiconductor industry,
backlog quantities and shipment schedules under outstanding purchase orders are
frequently revised to reflect changes in customer needs. Binding agreements
calling for the sale of specific quantities at specific prices are, typically,
contractually subject to price or quantity revisions and are, as a matter of
industry practice, rarely formally enforced. Therefore, the segment believes
that most of its order backlog is cancelable. For these reasons, the amount of
backlog as of any particular date may not be an accurate indicator of future
results.

SPS experiences intense competition from numerous competitors ranging from
large companies offering a full range of products to small companies
specializing in certain segments of the market. The competitive environment also
is changing as a result of increased alliances between competitors. The segment
competes in many semiconductor markets, including the telecommunications,
personal computer/work station, industrial, transportation, consumer, computer,
and distributor markets. Important factors in competition are: price; technology
offered; product features, quality, availability and warranty; the quality and
availability of service; time-to-market; and company image. The ability to
develop new products to meet customer requirements and to meet customer delivery
schedules also are competitive factors.

The segment is not currently experiencing any shortages in obtaining raw
materials. A significant portion of certain materials and parts used by SPS is
supplied from a single country. With respect to these and other materials, the
segment is constantly evaluating additional sources of supply to minimize the
risk of obtaining materials from only a few sources. Electricity, oil and
natural gas are used extensively in the segment's operations. All of these
energy sources are available in adequate quantities for current needs.
Electricity and oil are the primary energy sources for the segment's foreign
operations, and presently, there are no shortages of these sources although the
reliability of electrical power has been a problem from time to time at certain
facilities outside of the U.S. Difficulties in obtaining any of the
aforementioned items could affect SPS's results.

Patent protection is very important to SPS's operations. In addition, Motorola
is licensed to use certain patents owned by others. The protection of these
licenses is also important to SPS's operations. Reference is made to the
material under the heading "General" for information relating to patents and
trademarks, research and development activities and seasonality of business with
respect to this industry segment.

The Semiconductor Products segment's headquarters are in Austin, Texas. Its
major facilities are located in Austin, Texas; Chandler, Mesa, Phoenix and
Tempe, Arizona; Tianjin, China; Toulouse, France; Munich, Germany; Kwai Chung
and Tai Po, Hong Kong; Aizu, Sendai and Tokyo, Japan; Paju, South Korea; Geneva,
Switzerland; Tel Aviv, Israel; Kuala Lumpur and Seremban, Malaysia; Guadalajara,
Mexico; Carmona, the Philippines; Singapore; Chung-Li, Taiwan; and East Kilbride
and South Queensferry, Scotland. In February 1999, SPS announced its intention
to sell its Chung-Li, Taiwan and Paju, South Korea facilities, each of which
provide manufacturing and assembly and test capabilities for SPS. The sale of
these facilities is expected to close by the end of 1999, although there can be
no assurance that the pending transactions will be completed. In addition,
during 1998 SPS began converting a significant portion of its major
manufacturing facilities located at 52nd Street in Phoenix, Arizona from
manufacturing to non-manufacturing utilization. This conversion is expected to
be completed in 1999. SPS is consolidating its production network into fewer
integrated "anchor" sites for economics of scale and improved efficiency

OTHER PRODUCTS

Integrated Electronic Systems Sector

The Integrated Electronic Systems Sector ("IESS") (formerly the Automotive,
Component, Computer and Energy Sector

The Automotive, Component, Computer and Energy Sector ("ACCES") (formerly the
Automotive, Energy and Components Sector) designs, manufactures and sells
products in
four major categories: automotive and industrial electronics;electronics products, energy storage products and
systems; printed circuit boards, ceramic and quartz electronic
components, andsystems, electronic fluorescent ballasts;ballasts and multi-function embedded board and
computer system products. AsThe Sector serves a wide range of January 19, 1998, ACCES now includes
the Motorola Computer Group ("MCG"), which develops, manufactures, sells and
services multi-function computermarkets, including
automotive, lighting, telecommunications, manufacturing systems and board level products, together with
operating systems and system enablers basedimaging. In
1998, the Telematics Communications Group ("TCG") was formed to focus corporate-
wide efforts on the Motorola 68000, 88000,
PowerPC/TM/ series microprocessors, and Intel Pentium/TM/ microprocessors.growing worldwide opportunity in the emerging automotive
communications industry. In addition, ACCES established aIESS oversees the research and development
efforts of the Flat Panel Display Division, to developwhich is developing the next
generation of flat panel displaysdisplays.

The Automotive and is involved in several joint ventures.

ACCESIndustrial Electronics Group ("AIEG") sells its automotiveelectronic
components, modules and industrial electronics productssystems to original equipment manufacturers ("OEMs"),
including foreign and domestic automobile manufacturers, heavy vehicle
manufacturers, farm equipment manufacturers and industrial customers. The
energy storageMotorola Computer Group ("MCG"), which became part of IESS in early 1998, sells
its products businessto OEMs and industrial distributors worldwide, some of whom produce
computer products that compete with MCG. The Energy Systems Group ("ESG") sells
primarily to the ceramicwireless communications industry and quartz products business sell primarilyhas also been expanding
into the portable computer market. A significant portion of ESG's sales are to
other industry segments within Motorola, principallyprimarily the Land Mobile Products, Messaging, Informationcellular telephone and
Media
Products and Cellular Products segments.paging business. A largesignificant part of the Sector's business is dependent upon
the business of these other Motorola industry segments, collectively, and two
other external customers. The loss of any of these three customers could have a
material adverse effect on the business of ACCES.

MCG's products are sold worldwide to a variety of customers, some of whom
produce computer products which compete with MCG. MCG's products are marketed
to original equipment manufacturers and industrial distributors throughout the
world.IESS.

Demand for ACCES's automotivethe products of AIEG and industrial electronics productsTCG is linked to automobile sales in the
United States and other countries where ACCES sells its
products.countries. Demand for MCG's products is linked to
automation equipment
manufacturing systems, imaging, and telecommunications in the United States and
other countries where MCG sells its
products.countries. The Sector (including MCG) experiences competition from numerous global
competitors, including automobile manufacturers.manufacturer's internal control suppliers.
Competitive factors in the sale of ACCES'sIESS's products (including MCG's products) include price,price; product
quality, performance and performance,delivery; supply integrity, delivery,integrity; quality reputation,
experience, responsivenessreputation;
responsiveness; and design and manufacturing technology. An additional factor
for MCG's products is the availability of software. In certain circumstances,
IESS permits customers to return products in accordance with industry practices.

The Sector's backlog (including MCG) amounted to $315 million at December 31, 1998 and $309
million at December 31, 1997 and $330 million at December 31, 1996.1997. The 19971998 backlog for the Sector
(including MCG) is believed to be
generally firm, and approximately 100% of that amount is expected to be shipped
during 1998.1999. This forward-looking estimate of the firmness of such orders is
subject to future events whichthat may cause the percentage of the 19971998 backlog
actually shipped to change.

All materials used by ACCESIESS in its operations have good availability at this
time. The Sector uses electricity and gas in its operations, which are currently
adequate in supply. However, difficulties in obtaining any of the aforementioned
items could affect ACCES'sIESS's results.

Patent protection is important to the Sector's business and, in particular, is
very important to the business of the Flat Panel Display Division. Reference is
made to the material under the heading "General" for information relating to
patents and trademarks and research and development activities with respect to
this Sector.

The Sector's headquarters are located in Northbrook, Illinois. It also has
manufacturing operations located in Scottsdale and Tempe, Arizona; Atlanta,
Georgia; Buffalo Grove,Harvard, Lake Zurich and Schaumburg, and Vernon Hills, Illinois; Albuquerque, New
Mexico; Elma, New York;
Carlisle, Pennsylvania; Seguin, Texas; Tianjin, China; San Jose, Costa Rica;
Stotfold, England; Angers, France; Dublin, Ireland; and Penang, Malaysia; Singapore;Malaysia. The
business has announced plans to close its component manufacturing facilities in
San Jose, Costa Rica and Chung-Li, Taiwan.

Space and Systems Technology GroupCarlisle, Pennsylvania during 1999.

SPACE AND SYSTEMS TECHNOLOGY GROUP

The Space and Systems Technology Group ("SSTG") (part of the Cellular Networks
and Space Sector) is engaged in the design,
developmentproduction and productionintegration of advanced electronic communication systems and
products for a hostvariety of international and domestic commercial and government
users. The emphasis of SSTG is to be a premier systems developer and integrator.
SSTG provides electronic and communications equipment products that have various
applications based upon customer requirements of the Group'sSSTG's business segments,
including government and satellite communications.

The satellite communications business, Satellite Communications Group ("SCG"),
markets, designs, builds, and operates and maintains space-based
telecommunications systems. On November 1, 1998, SCG successfully completed the
terms of the Space System Contract with Iridium Operating LLC, an entity in
whose parent company Motorola holds a minority ownership interest (together with
such parent company, referred to collectively as "Iridium"), to build and deploy
the Iridium(R) satellite communications network. On that same date, SCG began
fulfilling the terms of the five-year Operations and Maintenance Contract to
operate and continue to manufacture and deploy satellites for the maintenance of
the Iridium system. The Iridium system is designed to provide global digital
service to handheld telephones and related equipment.

Iridium is the first low-earth orbit, worldwide satellite-based communications
network in existence for general public use. A few similar systems are planned
by competitors. Currently, the primary competing systems are expected to be the
proposed Globalstar(TM) communications system and the proposed ICO(R)
communications system.

Competition for these systems is generally on the basis of first-to-market,
available geographical coverage, price and quality and reliability of service.

The contracts Motorola has executed with Iridium for the construction,
deployment, operation and maintenance of the global communications system
provide for payments to Motorola over a ten-year period, which began in 1993.
Motorola has in turn entered into significant subcontracts for portions of the
system, for which it will remain contractually and financially obligated even if
Iridium is unable to satisfy the terms of the contracts with Motorola. During
the last five years, these Iridium contracts have become a significant portion
of SSTG's business and revenue from the satellite-based business is expected to
remain a major contributor to SSTG's sales for the next several years. For a
more detailed discussion of Motorola's relationship with Iridium, see Note 8,
"Commitments and Contingencies," of the Notes to Consolidated Financial
Statements in the appendix to Motorola's Proxy Statement for the 1999 annual
meeting of stockholders

SCG has been designated by Teledesic LLC, an entity in which Motorola has a
minority ownership interest, as the prime contractor for the Teledesic(R)
system. The Teledesic system is conceived as a global, broadband "Internet-in-
the-Sky" satellite communications system. The network is planned to provide high
speed data connections to businesses, institutions and individuals worldwide.
The system would be composed of a constellation of low-Earth-orbit satellites,
designed to provide affordable, worldwide, "fiber-like" access to
telecommunications services, including broadband Internet access, video
conferencing, high quality voice and other digital data needs, to fixed
locations.

SSTG's government business operations primarily perform research, development
and production work under contracts with governmental agencies, but also conduct
independent research and development programs. They produce diversified military
electronic equipment, including military communications equipment, data links,
display systems, missile guidance equipment, electronic ordnance devices and
drone electronic systems.

The government business operations have been predominantly dependent on the
United StatesU.S. Government as the main customer, acting as either a prime contractor or a
subcontractor to other prime contractors. The total loss of this business could
have a material adverse effect on SSTG. Contracts are secured from United StatesU.S.
Government agencies and their suppliers by negotiation and competitive bids. The
government acquisition environment is highly regulated and continues to beis increasingly more
competitive. Competition has increased substantially in all aspects of the
government business due to a reduction and slowdown in acquisition resulting
from a lower defense budget. Competitors include large and small technically
competent firms. Some competitors from whom the government business operations
procured subcontract work in the past are becoming more vertically integrated
and are performing the work previously subcontracted. The government business
operations expect to continue to meet competitionremain competitive based on the basis of price, andtechnology offered,
quality of product performance.performance and warranty. Additionally, they are lookingthe business is
beginning to leverage growth by applying theirits core technologies to commercial
opportunities.

The satellite communications business, Satellite Communications Group ("SCG"),
designs, builds, and markets space-based telecommunications systems. Currently,
SCG is fulfilling the terms of a contract with Iridium LLC, an entity of which
Motorola owns approximately 20%, to build and deploy a satellite communications
network, known as IRIDIUM(R), as well as undertaking research and development on
other communications systems. The IRIDIUM system is being designed to provide
global digital service to handheld telephones and related equipment. The
IRIDIUM system involves four components: (1) a constellation of low earth orbit
satellites, (2) centralized system control centers, (3) approximately ten
gateways located throughout the world; and (4) individual subscriber units for
voice, data, facsimile and paging. SCG is the prime contractor under contracts
with Iridium LLC to provide and launch the satellites, construct the centralized
system control centers and gateways; maintain the performance of the
constellation and provide certain computer systems and software for the system.

No low-earth orbit, worldwide satellite-based communications network currently
exists for general public use, although a few are planned by competitors.
Competition for these systems is generally on the basis of first-to-market,
available geographical coverage and quality and reliability of service. As of
December 31, 1997, Motorola had successfully manufactured and deployed 46
satellites for the 66 satellite constellation for the IRIDIUM system. Of the 46
satellites in orbit, 44 were operational.

Motorola has executed three contracts with Iridium LLC for the construction
and operation of the global communications system, providing for payments to
Motorola over a ten-year period which began in 1993. Motorola has in turn
entered into significant subcontracts for portions of the system, for which it
will remain contractually and

financially obligated even if Iridium LLC is unable to satisfy the terms of the
contracts with Motorola, including funding. During the last five years, these
contracts for IRIDIUM development effort have become a significant portion of
SSTG's business and are expected to remain a major contributor to SSTG's sales
for the next several years. Iridium LLC's failure to make payments under these
contracts or the loss of this business could have a material adverse effect on
SSTG.

Total sales for SSTG include sales made to a number of governments and
corporations. Products of SSTG are marketed outside the United States by a few distributors, by
independent representatives and by SSTG's own sales force. In
1997, a small percentage (approximately 4%) of SSTG's business was conducted
internationally, primarily through the government business operations. These
sales generally relate to the development and deployment of defense, security,
and commercial air traffic management systems with selected countries,
concentrated in the Asia-Pacific region, Europe and Canada. SSTG customer
returns, when allowed, provide for only repair or replacement of products under
warranty. The U.S. Government requests warranty coverage for essential
performance requirements along with design and manufacturing requirements on
those systems used to carry out combat and support missions. SSTG does not carry
significant amounts of inventory to meet delivery requirements of customers
because it has not experienced serious source supply issues.

SSTG's backlog amounted to $1.05 billion at December 31, 1998 and $1.48
billion at December 31, 1997 and $1.02
billion at December 31, 1996.1997. The 19971998 backlog is believed to be generally firm
and 86%91% of that amount is expected to be shipped during 1998.1999. All contracts with
the United StatesU.S. Government are subject to cancellation at the convenience of the
Government, and the contracts with Iridium LLC may be terminated by Iridium LLC pursuant
to the terms set forth in the contracts. The forward-
lookingforward-looking estimate of the
firmness of the 19971998 backlog as discussed above is subject to future events,
which may cause the percentage of the 19971998 backlog actually shipped to change.

Materials used by SSTG in its operations are generally available. Natural gas
and electricity are the principle types of energy used, and availability of both
to SSTG is currently adequate. Difficulties in obtaining any of the
aforementioned items could affect SSTG's results.

8
Patents continue to become more important to SSTG as competition increases in
a declining United StatesU.S. Government market and as SSTG expands commercial opportunities.
Reference is made to the material under the heading "General" for information
related to patents and trademarks.trademarks and research and development activities with
respect to SSTG.

The Group has its headquarters in Scottsdale, Arizona, with manufacturing
facilities in Scottsdale and Chandler, Arizona and an administrative office in
Tempe, Arizona.

GeneralCREATION OF THE COMMUNICATIONS ENTERPRISE

In July 1998, Motorola began realigning its communications-related businesses
into one organization called the Motorola Communications Enterprise. The new
structure is intended to enable integrated solutions and improved responsiveness
to the needs of distinct customer segments. Business segments in the Motorola
Communications Enterprise include cellular, space, land mobile, and messaging,
information and media, which together accounted for about three-fourths of
Motorola's $29.4 billion in sales in 1998. For this year-end reporting, Motorola
continues to use the previous segments because management continued to make
operating decisions and assess performance based on these segments. For a
description of Motorola's 1999 segment realignment, see the information included
under the "1999 Segment Realignment" section of "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
appendix to Motorola's Proxy Statement for the 1999 annual meeting of
stockholders.

Financial Information About Segments. The response to this section of Item 1
incorporates by reference Note 9, "Information by Segment and Geographic
Region," of the Notes to Consolidated Financial Statements contained in the
appendix to Motorola's Proxy Statement for the 1999 annual meeting of
stockholders.

Customers. Motorola is not dependent for a material part of its overall
business upon a single or a very few customers. Approximately 2.8%2.5% of Motorola's
total sales and revenues in 19971998 were received from various branches and
agencies, including the armed services, of the United StatesU.S. Government. All contracts
with the United StatesU.S. Government are subject to cancellation at the convenience of the
Government.

Government contractors, including Motorola, are routinely subjected to
numerous audits and investigations, which may be either civil or criminal in
nature. The consequences of these audits and investigations may include
administrative action to suspend business dealings with the contractor and to
exclude it from receiving new business. In addition, Motorola, like other
contractors, is internally reviewing aspects of its government contracting
operations, and, where appropriate, taking corrective actions and making
voluntary disclosures to the Government. These audits and investigations could
adversely affect Motorola and its results.

9
Backlog. Motorola's aggregate backlog position, including the backlog position
of subsidiaries through which some of its business units operate, as of the end
of the last two fiscal years, was approximately as follows:

December 31, 1997................................$7.551998.............................. $7.16 billion
December 31, 1996................................$7.571997.............................. $7.55 billion

Except as previously discussed in this Item 1(c), the orders supporting the
19971998 backlog amounts shown in the foregoing table are believed to be generally
firm, and approximately 96%95% of orders on hand at December 31, 19971998 are expected
to be shipped during 1998.1999. However, this is a forward-looking estimate of the
amount expected to be shipped, and future events may cause the percentage
actually shipped to change.

The Semiconductor Products segment's backlog position declined due to the
change in financial backlog reporting described previously in Item 1(c). In
addition, the aggregate backlog position for 1996 has been revised to reflect
the change in financial backlog reporting methodology implemented by certain
business units in 1997.

Motorola uses the percentage-of-completion method to recognize revenues and
costs associated with most long-term contracts. For contracts involving certain
technologies, revenues and profits, or parts thereof, are deferred until
technological feasibility is established and customer acceptance is obtained.
For other product sales, revenue is recognized at the time of shipment, and
reserves are established for price protection and cooperative marketing programs
with distributors.

Research and Development. Motorola's business segments participate in very
competitive industries with constant changes in technology. Throughout its
history, Motorola has relied, and continues to rely, primarily on its research
and development programs for the development of new products and its production
engineering capabilities for the improvement of existing products. Technical
data and product application ideas are exchanged among Motorola's industrybusiness
segments on a regular basis. Management believes, looking forward, that
Motorola's

commitment to research and development programs, both to improve existing
products and services and to develop new products and services, together with
its utilization of state-of-the-art technology, should allow each of its
segments to remain competitive.

Research and development expenditures relating to new product development or
product improvement, other than customer-sponsored contracts, were approximately
$2,748
million$2.89 billion in 1998, $2.75 billion in 1997 $2,394 millionand $2.39 billion in 1996 and $2,197 million in 1995.1996. In
addition, research funded under customer-sponsored contracts amounted to
approximately $433 million in 1998, $616 million in 1997 and $758 million in
1996 and $546 million in
1995.1996.

Approximately 16,70018,300 professional employees were engaged in such research
activities (including customer-sponsored contracts) during 1997.1998.

Patents and Trademarks. As of December 31, 1998, Motorola owns 9,252owned approximately
10,307 utility and design patents in the United States and 9,87010,882 patents in
foreign countries. These foreign patents are mostly counterparts of Motorola's
U.S. patents, but an increasing number result from research conducted outside
the United States patents.and are originally filed in the country of origin. During
1997,1998, Motorola was granted 1,208
United States1,596 U.S. utility and design patents. Many of the
patents owned by Motorola are used in its operations or licensed for use by
others, and Motorola is licensed to use certain patents owned by others. In some
instances, certain of the patents licensed by Motorola to others have generated
significant amounts of revenue to Motorola.

Motorola considers its trademarkhas obtained registration of the "MOTOROLA" and "M Symbol Logo"
trademarks throughout the "M Symbol" logoworld for many products and services. Worldwide
recognition of these marks has resulted in their categorization as "famous"
marks. These marks are considered to be valuable corporate assets. These are protected through trademark registrations. OtherCertain other
trademarks and service marks of Motorola are protected and registered in relevant markets.
Awareness of brand value and resulting brand development during 1998 resulted in
the relevant markets, but
are used only on limitedintroduction of two major new brands that span multiple product lines.categories:
DIGITAL DNA and MOTOROLA WINGS. Worldwide registration of these new brands is
underway.

Environmental Quality. Motorola operations are from time to time the subjects
of investigations, conferences, discussions and negotiations with various
federal, state and local environmental agencies with respect to the discharge or
cleanup of hazardous waste and compliance by those operations with environmental
laws and regulations. The balance of the response to this section of Item 1
incorporates by reference the information contained under the caption
"Environmental and Legal" in Note 7,8, "Commitments and Contingencies," of the
Notes to the Consolidated Financial Statements under the
caption "Environmental and Legal" contained in the attachmentappendix to
Motorola's Proxy Statement for the 19981999 annual meeting of stockholders.

10
Miscellaneous. At December 31, 1997,1998, there were approximately 150,000133,000
employees of Motorola and its subsidiaries. The business of Motorola and its
industry segments has certain seasonal characteristics: the Semiconductor
Products segment has tended to have stronger, seasonally-adjusted sales in the
first half of the year; and sales of products, such as cellular telephones and
pagers, in consumer markets tend to increase in the fourth quarter. An increase
or decrease in large system orders in the Cellular Infrastructure Group and the
Land Mobile Products segmentCIG, LMPS or SSTG could cause volatility
in orders, revenues and profits recognized in any particular period.

Business Risk Factors. Except for historical matters, the matters discussed in
this Form 10-K are forward-looking statements that involve risks and
uncertainties. Forward-looking statements include, but are not limited to,
statements under the following headings; (i) "Cellular Products," about the
allocation and regulation of frequencies, development of technologies, expected shipments during 1998,1999, the
impact from the loss of materialkey customers, competitiveness through
research and development and utilizationthe need to provide or arrange for
financing in connection with equipment sales, the completion of technologythe conversion
of manufacturing capacity from digital to analog, and the availability of
supplies; (ii) "Land Mobile Products," about the impact from the loss of key
customers, the allocation and regulation of frequencies, expected shipments
during 1999, and the availability of supplies; (iii) "Messaging, Information and
Media Products," about the allocation of frequencies or development of new
technologies, expected shipments during 1999, the impact from the loss of key
customers, and the availability of supplies; (iv) "Semiconductor Products,"
about the impact from the loss of or reduction in
purchases bykey customers, the impact of available
capacity, cyclical customer demands, new product introductions and aggressive
pricing, expected shipments during 1998,1999, capital expenditures, backlog, the
availability of supplies and the completion of pending transactions, and the
conversion of existing manufacturing facilities; (v) "Integrated Electronic
Systems Sector," about the impact from the loss of key customers, expected
shipments during 1999, the availability of supplies, the completion of plans to
close and exit existing facilities; (vi) "Space and Systems Technology Group,"
about the impact from the loss of key customers, competitiveness, the impact
from various actions by Iridium, expected shipments during 1999, and the

availability of supplies; (vii) "General," about expected shipments during 1999,
seasonality of business, large system orders and competitiveness through
research and development and utilization of technology, the availability of supplies and the construction of
new facilities; (iii) "Land Mobile Products,technology; (viii) "Item 2:
Properties," about the losscompletion of material
customers, the allocationfacilities currently being constructed and
regulation of frequencies, expected shipments
during 1998, competitiveness through researchplans to sell or shut down currently operating facilities; and development and utilization of
technology and the availability of supplies; (iv) "Messaging, Information and
Media Products,(ix) "Item 3:
Legal Proceedings," about the allocationultimate disposition of frequencies, development of
technologies, competitiveness through research and development and utilization
of technology, expected shipments during 1998, the loss of material customers
and the availability of supplies; (v) "Automotive, Component, Computer and
Energy Sector," about the loss of material customers, expected shipments during
1998 and the availability of supplies; (vi) "Space and Systems Technology
Group," about the loss of material customers, competitiveness, the impact of
Motorola's investment in Iridium LLC, expected shipments during 1998 and the
availability of supplies; and (vii) "General," about expected shipments during
1998, seasonality, and large system orders.pending legal matters.

Motorola wishes to caution readers that in addition to the important factors
described elsewhere in this Form 10-K, the following important factors, among
others, sometimes have affected, and in the future could affect, Motorola's
actual results and could cause Motorola's actual consolidated results during
1998,1999, and beyond, to differ materially from those expressed in any forwardforward-
looking statements made by, or on behalf of, Motorola:

Changes in Laws Affecting Frequency

. Motorola's actionsThe effects of, and changes in, connection with continuedlaws and increasing priceregulations and product competition in many product areas,other activities
of governments, agencies and similar organizations, including, but not
limited to, semiconductorthose affecting frequency, use and availability of spectrum
authorizations and licensing.

Risks From Large Systems Contracts

. Risks related to the loss of material customers of one or more of
Motorola's businesses, including the unexpected loss of sales and market
perception, particularly because of the continuing trend towards
increasingly large system contracts for CIG, LMPS and SSTG infrastructure
equipment and the resulting reliance on large customers.

Demand for Customer Financing

. Increasing demand for customer financing of equipment sales, particularly
infrastructure equipment sold by CIG, LMPS, SSTG and the paging
infrastructure business, and the ability of these businesses to provide
financing on competitive terms with other companies.

Transition From Analog to Digital

. The ability of Motorola's cellular businesses to continue their transition
to digital technologies and successfully compete in those businesses and
retain or gain market share. Motorola faces intense competition in these
markets from established companies and new entrants. Product life cycles
can be short and new products are expensive to both develop and bring to
market.

Year 2000 Issues

. Motorola's ability to manufacture and deliver products and the level of
purchases made by customers may be affected by an unanticipated adverse
impact from Year 2000 issues, particularly the failure of products and
services from major suppliers to function properly in the Year 2000.

Euro Conversion

. Risks related to the introduction of the euro currency in Europe, including
the ability of Motorola to successfully compete in Europe.

Development of New Products

. The risks related to Motorola's significant investment in developing and
introducing new products such as digital cellular subscriber products and cellular
infrastructure equipment, paging and messaging products and infrastructure
and the impact on sales margins for those items;

. Difficulties or delays in the development, production, testing and
marketing of products, including, but not limited to, a failure to ship new
products and technologies when anticipated, such astelephones, two-way and
voice paging, CDMA for cellular and PCS systems and third-generation
wireless, wireless local loop products, flat panel display products,
products for transmission of telephony and high-speed data over hybrid
fiber coaxial cable systems, integrated digital radios, smart cards and other semiconductor
products. These risks include: difficulties and delays in the development,
production, testing and marketing of products; the failurecustomer acceptance of
customers to accept these products, or technologies when planned, particularly as Motorola's focus on the consumer market
increases; any
defects in products; Motorola's inability to differentiate its products;
and a failurethe significant amount of manufacturing economies to develop when planned;

. Risks relatedresources Motorola must devote to the
trend towards increasingly large system contracts for
CIG, LMPS and SSTG infrastructure equipment and the resulting reliance on
large customers; the technological risksdevelopment of such contracts, especially when
the contracts involve new technology such as CDMA; and financial risks to
Motorola under these contracts, including the difficulty of projecting
costs associated with large contracts;

. The ability of Motorola's cellular businesses to continue their transition
to digital technologies and successfully compete in those businesses and
retain or gain market share;

. The outcome of various efforts to stabilize economic conditions in Asia;
China's actions with respect to the valuation of its currency; the
potential that the weak economic conditions in Southeast Asia could spread
to other countries where Motorola does a sizable amount of business,
including China and Japan;

. Because more than half of Motorola's sales are outside the U.S., Motorola's
results could be significantly affected by weak economic conditions in
countries in which it does sizable business and emerging markets in which
there tend to be significant growth and by changes in foreign currency
exchange rates affecting those countries;

. Increasing demand for vendor financing of equipment sales, particularly for
infrastructure equipment sold by CIG, LMPS and the Messaging Systems
Products Group ("MSPG"),technology; and the ability of these businessesMotorola to provide
financing on competitive termsdifferentiate
its products and compete with other vendors;companies in the same market.

Demand for Wireless Communications Equipment

. The abilityneed for continued significant demand for wireless communications
equipment, including equipment of the type Motorola manufactures or is
developing.

Ability to recruit and retain engineers and other highly-
skilled personnel;Compete in Semiconductor Market

. The ability of Motorola's semiconductor business to compete in the highly
competitive semiconductor market. Factors that could adversely affect
Motorola's ability to compete are production inefficiencies and higher
costs related to underutilized facilities, including both wholly-owned and
joint venture facilities; shortage of manufacturing capacity; start-up expenses,
inefficiencies and delays and increased depreciation costs in connection
with the capital investments in 1998capacity for facilities in Arizona, Virginia,
Brazil, China and Germany;some
products; competitive factors, such as rival chip architectures, mix of
products, acceptance of new products and price pressures; risk of inventory
obsolescence due to shifts in market demand; the continued growth of
embedded technologies and systems and Motorola's ability to compete in that
market; and the effect of orders from Motorola's equipment businesses such as CSS,
CIG, LMPS and MSPG;.

Increased Use of Foundry Manufacturing Capacity

. The risks relatedability of Motorola's semiconductor business to increase its
utilization of foundry manufacturing capacity and the impact of such
efforts on capital expenditures, production costs and the ability to
satisfy delivery requirements.

Exit, Conversion, Sale or Closure of Existing Facilities

. Unexpected delays in the conversion of certain semiconductor manufacturing
facilities from manufacturing to non-manufacturing utilization and the
impact of such conversion on operating results, production costs and the
ability to satisfy delivery requirements.

. Unexpected changes in circumstances that delay or frustrate Motorola's
plans to sell or close certain operating facilities and the impact of such
sales or closures on operating results, production costs and the ability to
satisfy delivery requirements.

Risks Related to the IRIDIUM(R)Iridium(R) System

. Factors relating to the success of the Iridium project and its impact on
Motorola, including: the ability of Iridium LLC and its gateway investors to timely obtain licenses and sign agreements for, andoperators
to market the Iridium service, to timely receive and, as appropriate,
operate and sell telecommunications equipment, including phones and pagers
made by Motorola, and to otherwise timely finance and operate a successful
telecommunications business; the successfulbusiness and timely
orbiting of the project's low-earth orbit satellites and the successful and
timely operation of such satellites and related ground equipment;generate income; the ability of Iridium LLC
to meet its financing needs during at least the next few years to continue
to make contractual payments to Motorola and to make debt payments and
otherwise operate; the risks associated with the large IRIDIUM systems contractsIridium system
operations and maintenance contract with Motorola and the financial risk to
Motorola under those
contracts,that contract, including the difficulty in projecting costs
associated with those contracts;that contract and Motorola's obligations to subcontractors
related to that contract; the market acceptance (both on its own and when
compared to possible competitors) of what is expected to be the first
worldwide global satellite-based communicationscommunication service and of the related
equipment; and the significant technological and other risks associated
with the development and commercial operation of the project, including any
software and support systems-related risks;

. Unanticipated impactrisks.

Outcome of Year 2000 issues, particularly the failure of
products from major suppliers to function properly in the Year 2000;Litigation

. The effectsoutcome of pending and changes in, lawsfuture litigation and regulations, other activitiesthe protection and
validity of governments, agencies and similar organizations, including, but not limited
to, those affecting frequency, use and availability of spectrum
authorizations and licensing; and

. The costspatents and other effects of legalintellectual property rights. Patent and
administrative cases and
proceedings (whether civil, such as environmental and product-related, or
criminal), settlements and investigations, claims, and changes in those
items, and developments or assertions by or against Motorola relating toother intellectual property rights of Motorola are important competitive
tools and intellectual property licenses.many generate income under license agreements. There can be
assurances that these rights will not be challenged, invalidated or
circumvented in one or more countries.

Additional Risk Factors Included In Proxy Statement

Certain portions of Motorola's Proxy Statement for the 19981999 annual meeting of
stockholders with Management's Discussion and Analysis and Consolidated
Financial Statements are incorporated by reference into this Form 10-K. There
are additional important factors included therein, including those on pages F-8
and F-9F-15
through F-18 of the attachmentappendix to

12
Motorola's Proxy Statement for the 19981999 annual
meeting of stockholders, that sometimes have affected, and in the future could
affect, Motorola's actual results and could cause Motorola's actual consolidated

12
results during 1998,1999, and beyond, to differ materially from those expressed in
any forward-looking statements made by, or on behalf of, Motorola.

(d) Financial information about foreignInformation About Foreign and domestic operationsDomestic Operations and export
sales.Export Sales.

Domestic export sales to third parties were $3.06 billion in 1998, $3.98
billion in 1997 and $3.74 billion in 1996 and $3.59 billion in 1995.1996. Domestic export sales to affiliates
were $4.96 billion in 1998, $6.86 billion in 1997 and $6.31 billion in 1996 and $6.64 billion in 1995.1996.

The remainder of the response to this section of Item 1 incorporates by
reference Note 7,8, "Commitments and Contingencies," of the Notes to the
Consolidated
Financial Statements and the "1998 Compared to 1997" and "1997 Compared Withto 1996" and "1996
Compared With 1995"
sections of Management's"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in the attachmentappendix to Motorola's Proxy Statement
for the 19981999 annual meeting of stockholders.

IRIDIUM(R)(R) Reg. U.S. Patent & Trademark Office.

Iridium(R) is a registered trademark and service mark of Iridium LLC.

PowerPC(TM)Globalstar(TM) is a trademark of IBM Corporation, used under license.

ItemGlobalstar Limited Partnership.

ICO(R) is a registered trademark and service mark of I-CO Global
Communications (Holdings) Limited.

Teledesic(R) is a registered service mark of Teledesic LLC.

ITEM 2: PropertiesPROPERTIES

Motorola's principal executive offices are located at 1303 East Algonquin
Road, Schaumburg, Illinois 60196. Its other major facilities in the United
States are located in Arlington Heights, Buffalo Grove, Harvard, Lake Zurich, Libertyville,
McHenry, Northbrook Schaumburg and Vernon Hills,Schaumburg, Illinois; Elma, New York; Phoenix, Chandler,
Scottsdale, Mesa and Tempe, Arizona; Boynton Beach and Plantation, Florida;
Lawrenceville, Georgia; Austin, Ft. Worth and Seguin, Texas; Mount Pleasant,
Iowa; Mansfield, Massachusetts; Huntsville, Alabama;
Research Triangle Park, North Carolina; Albuquerque, New Mexico; Carlisle,
Pennsylvania; and Irvine and San Jose, California. Motorola also
operates manufacturing facilities or sales offices in 5842 other countries. (See
"Narrative Description of Business"Item 1 for information regarding the location of the principal manufacturing
facilities for each industry segment.) Motorola owns 126130 facilities
(manufacturing, sales, service and office), 6575 of which are located in North
America and 6155 of which are located in other countries. Motorola leases 756594
such facilities, 385303 of which are located in North America and 371291 of which are
located in other countries.

Motorola generally considers the productive capacity of the plants operated by
each of its industry segments adequate and suitable for the requirements of each
business group. New semiconductor product manufacturing facilities are under
construction in Richmond, Virginia and Xi-Qing, China and an expansion of the semiconductor product
manufacturing facilitiesfacility in Chandler, Arizona is currently underway.
A new manufacturing facility for cellular subscriber products is being
constructed in Flensburg, Germany and a new manufacturing facility for cellular
infrastructure products is being built in Swindon, U.K. A new
manufacturing facility that is expected to be shared by a number of Motorola
business units within the Communications Enterprise is being constructed in
Jaguariuna, Brazil and the iDEN(R) manufacturingBrazil. This new facility
in Plantation, Florida is being expanded. A new semiconductor product
manufacturing facility in West Creek, Virginia is expected to begin constructionbe fully operational in
1998.early 1999.

As part of Motorola's overall strategy to reduce operating costs and improve
the financial performance of the corporation, a number of non-profitable
businesses and facilities were either sold during 1998 or are currently up for
sale. Major facilities that ceased operations during 1998 that are currently up
for sale are located in Huntsville, Alabama; Irvine, California; and Research
Triangle Park, North Carolina. Motorola is also in the process of selling two
start-up facilities in Jaguariuna, Brazil. In addition, Motorola has announced
its intention to sell or shut down currently operating major facilities located
in San Jose, Costa Rica; Carlisle, Pennsylvania; Paju, South Korea; and Chung-
Li, Taiwan.

The extent of utilization of such manufacturing facilities varies from plant to
plant and from time to time during the year.

ItemITEM 3: Legal ProceedingsLEGAL PROCEEDINGS

Motorola is currently a named defendant in seven cases arising out of alleged
groundwater, soil and air pollution in Phoenix and Scottsdale, Arizona.
McIntire et al. v. Motorola remains pending in the U.S. District Court for the
District of Arizona, while Baker et al. v. Motorola et al., Lofgren et al. v.
Motorola et al., Bentancourt et al. v. Motorola et al., Ford et al. v. Motorola
et al., Wilkins et al. v. Motorola et al and Dawson et al. v. Motorola, et al.
are pending in the Arizona Superior Court, Maricopa County. The McIntire
lawsuit, filed on December 20, 1991, 13
involves approximately 920 plaintiffs who
allege that the operations of Motorola at several facilities in Phoenix and
Scottsdale, Arizona have caused property damage and health problems by
contaminating the soil, groundwater and

air in the area surrounding those facilities. The Baker lawsuit, filed on
February 11, 1992, is a class action, involving six representative individual
named plaintiffs, alleging that Motorola and 27 other defendants contaminated
the soil, air and groundwater in the Phoenix/Scottsdale area, diminishing
property values and exposing members of the class to possible adverse health
effects. On August 24, 1994, the Baker court certified two classes, a property
damage class consisting of all persons who since 1987 were residents, property
owners or lessees of property which overlies, or is adjacent to, the alleged
groundwater pollution, and a medical monitoring class consisting of all persons
who resided in Phoenix and/or Scottsdale for more than one year continuously
during the years between 1955 and 1989, and who received potable drinking water
containing trichloroethylene at a level equal to or exceeding 2.0 parts per
billion, on average. The Lofgren, Bentancourt, Ford, Wilkins and Dawson
lawsuits, filed on April 6, 1993, July 16, 1993, June 10, 1994, July 19, 1995
and August 7, 1997, respectively, have been consolidated. The consolidated cases
involve more than 200 plaintiffs, alleging that Motorola and about 25 other
defendants contaminated the soil, air and groundwater in the Phoenix/Scottsdale
area, causing health problems. A portionOn June 1, 1998, the Lofgren court ruled
inadmissible proffered testimony from each of the consolidated Lofgren cases is set to
begin trialplaintiffs' medical causation
experts and granted summary judgment on June 2, 1998. The June trial will involve 18 plaintiffs with
directthose personal injury claims in favor of
Motorola and 19 plaintiffs whose claims are derivative of
the direct injury claims (e.g. loss of consortium claims).other remaining defendants. An appeal is expected.

All seven pending lawsuits described above seek compensatory and punitive
damages. The McIntire complaint includes personal injury and property damage
claims and seeks injunctive relief. The Baker complaint seeks damages for
medical monitoring and alleges claims for property, business and economic loss
and seeks declaratory and injunctive relief. The consolidated Lofgren and Dawsoncases
involve claims for personal injury.

A class action, In Re Nextel Communications Securities Litigation, against
Nextel Communications, Inc., certain of its officers and directors and Motorola
for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and SEC Rule 10b-5, is pending in the United States District Court
for the District of New Jersey. The pending complaint, a consolidation of cases
previously filed against Nextel, was filed on July 11, 1995 and maintains that
the defendants artificially inflated the price of Nextel common stock through a
series of alleged misrepresentations and omissions. Plaintiffs propose a class
period of July 22, 1993 through January 10, 1995 and seek an unspecified amount
of monetary damages.

Motorola and several of its directors and officers are named defendants in a
consolidated class action for alleged violations of Sections 10(b) and 20(a) of
the Securities Exchange Act and SEC Rule 10b-5, Kaufman, et. al. v Motorola,
Inc., et. al., which was filed on May 19, 1995 and is pending in the U.S.
District Court for the Northern District of Illinois. Plaintiffs claim that
Motorola and the individual defendants inflated the price of Motorola stock by
failing to timely disclose a buildup of cellular phone inventory with its
distributors. The district court has certified a class consisting of purchasers
of Motorola common stock during the period of November 4, 1994 through February
17, 1995. Plaintiffs seek an unspecified amount of damages.

Motorola has been a defendant in several cases arising out of Motorola'sits manufacture
and sale of portable cellular telephones. Schiffner v. Motorola, Inc., filed on
March 3, 1995 in the Circuit Court of Cook County, Illinois, is an economic lossa purported
class action by purchasers of portable cellular phones. Onphones alleging economic losses.
In January 1999, having exhausted all other appeals, plaintiffs filed a petition
for writ of certiorari with the United States Supreme Court to review the June
16, 1997 Schiffner was dismissed,Illinois State Court decision to dismiss the case, with prejudice, by the Cook
County, Illinois Circuit Court. Plaintiff's appeal of that dismissal is
pending.prejudice. Jerald
P. Busse, et al. v. Motorola, Inc. et al., filed on October 26, 1995 in the
Circuit Court of Cook County, Illinois, Chancery Division, is a purported class
action alleging that defendants have failed to adequately warn consumers of the
alleged dangers of cellular telephones and challenging ongoing safety studies as
invasions of privacy. All claims except the invasion of
privacy claims have been dismissed on defendants' motion.
Rittmann, et al. v.
Motorola, Inc., et al., a case in the 151st District Court of Harris County,
Texas, alleging that brain cancer was caused by or aggravated by the use of a
cellular telephone was dismissed, without prejudice, on November 18, 1997.Plaintiffs may appeal. Kane, et al., v. Motorola, Inc., et al., filed on
December 13, 1993 in the Circuit Court of Cook County, Illinois, alleges that
plaintiffs' brain cancer was caused by or aggravated by a prototype
communication device.

On October 16, 1998, the plaintiffs in Pennsylvania Bancshares, Inc. et al. v.
Motorola, Inc., et al., a purported class action filed on October 10, 1995 in
the Court of Common Pleas, Montgomery County, Pennsylvania, isfiled a purported class action wherein it isnotice of
voluntary dismissal with prejudice as to all claims for monetary relief and
without prejudice as to all claims for equitable relief. Plaintiffs alleged
that Motorola Inc.

14
systematically engages in deceptive trade practices, including
without limitation, intentionally misrepresenting the quality of certain types
of cellular telephones. The dismissal is currently before the court for
decision. Silber, et.et al. v. Motorola, Inc., et al., filed on August 1, 1995 in
the Supreme Court of The State of New York, County of Suffolk, which was
transferred from the County of New York, is an action wherein it is alleged that
a traffic accident was caused by the use of a cellular phone.

14
The information contained under the caption "Environmental and Legal" in Note
7,8, "Commitments and Contingencies," of the Notes to the Consolidated Financial
Statements under the caption "Environmental
and Legal" contained in the attachmentappendix to Motorola's Proxy Statement for the 19981999
annual meeting of stockholders is incorporated herein by reference.

Motorola is a defendant in various other suits, claims and investigations
which arise in the normal course of business. In the opinion of management, the
ultimate disposition of these matters, including those matters described above
in this Item 3, will not have a material adverse effect on the consolidated
financial position, liquidity or results of operations of Motorola.

ItemITEM 4: Submission of Matters to a Vote of Security HoldersSUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

Executive Officers of the RegistrantEXECUTIVE OFFICERS OF THE REGISTRANT

Following are the persons who were the executive officers of Motorola as of
December 31, 1997,January 1, 1999, their ages as of December 31, 1997,January 1, 1999, their current titles and
positions held during the last five years:

Gary L. Tooker; age 58;59; Chairman of the Board since January 1997; Vice Chairman
of the Board and Chief Executive Officer from December 1993 to January 1997; President and Acting Chief Executive Officer from October 1993 to December
1993; and President and Chief Operating Officer from January 1990 to October
1993.1997.

Christopher B. Galvin; age 47;48; Chief Executive Officer since January 1997;
President and Chief Operating Officer from December 1993 to January 1997; and
Senior Executive Vice President and Assistant Chief Operating Officer from
January 1990 to December 1993.1997.

Robert W. Galvin; age 75;76; Chairman of the Executive Committee of the Board of
Directors since January 1990.

Robert L. Growney; age 56; President and Chief Operating Officer since January
1997; Executive Vice President and President and General Manager, Messaging,
Information and Media Sector from January 1994 to January 1997.

Keith J. Bane; age 58;59; Executive Vice President and President, Americas Region
since March 1997; Executive Vice President and Chief Corporate Staff Officer
from February 1995 to March 1997; Senior Vice President and Chief Corporate
Staff Officer from August 1994 to February 1995; Senior Vice President and
Motorola Director of Strategy, Technology and External Relations from October
1993 to August 1994; and Senior Vice President and Motorola Director of Strategy
from November 1988 to October 1993.1994.

Robert L. Barnett; age 57;58; Executive Vice President and President, Commercial,
Government and Industrial Solutions Sector, Communications Enterprise since July
1998; Executive Vice President and President, Land Mobile Products Sector sincefrom
March 1997;1997 to July 1998; Senior Vice President and President and General
Manager, Land Mobile Products Sector from March 1996 to March 1997; Corporate
Vice President and General Manager, iDEN Group, Land Mobile Products Sector from
May 1995 to March 1996.1996; independent consultant to the telecommunications
industry from 1992 to May 1995.

Arnold S. Brenner; age 60;61; Executive Vice President and President, Global
Government Relations and Standards since 1997; Acting President, Motorola
Europe, Middle East and Africa, from April 1998 to January 1999; Executive Vice
President and General Manager, Japan Group from November 1988 to 1997.

Glenn A. Gienko; age 45;46; Executive Vice President and Motorola Director of Human
Resources since May 1996; Senior Vice President and Director of Human Resources
from June 1995 to May 1996; Corporate Vice President - Human Resources, General
Systems Sector from February 1994 to June 1995; and Vice
President - Human Resources, General Systems Sector from June 1990 to February
1994.

15
1995.

Merle L. Gilmore; age 49;50; Executive Vice President and President, Communications
Enterprise since July 1998; Executive Vice President and Deputy to the Chief
Executive Office for the Enterprise-Wide Communications Business Plan from April
1998 to July 1998; Executive Vice President and President, Motorola Europe,
Middle East and Africa sincefrom March 1997;1997 to April 1998; Executive Vice President
and President and General Manager, Land Mobile Products Sector ("LMPS"), from
July 1994 to March 1997; Senior Vice President and President and General
Manager, LMPS, from June 1994 to July 1994; and Senior Vice President and Assistant
General Manager, LMPS, from July 1992 to June 1994.

Robert L. Growney;Joseph M. Guglielmi; age 55; President and Chief Operating Officer since January
1997; Executive Vice President, President and General Manager, Messaging,
Information and Media Sector from January 1994 to January 1997; and57; Executive Vice President and President, Integrated
Electronic Systems Sector ("IESS") since December 1998; Senior Vice President
and President, IESS from October 1998 to December 1998; Senior Vice President
and Office of the President, IESS from August 1998 to October 1998; Corporate
Vice President and Office of the President, IESS from July 1998 to August 1998;
Corporate Vice President and General

15
Manager, Paging and Wireless DataMotorola Computer Group from September 1995 to July 1998; Chairman and
Chief Executive Officer of Taligent, Inc., a software development company, from
March 1992 to JanuaryAugust 1995.

Bo Hedfors; age 54; Executive Vice President and President, Network Solutions
Sector, Communications Enterprise ("NSS") since February 1999; Senior Vice
President and President, NSS from December 1998 to February 1999; Corporate Vice
President and President, NSS from September 1998 to December 1998; President and
Chief Executive Officer of Ericsson Inc., the U.S. subsidiary of Telefon AB LM
Ericsson, from 1994 to August 1998; Chief Technical Officer of Telefon AB LM
Ericsson, a supplier of equipment for telecommunications systems, from 1990 to
1994.

Carl F. Koenemann; age 59;60; Executive Vice President and Chief Financial Officer
since December 1991.

Ferdinand C. Kuznik; age 56;57; Executive Vice President and President, Personal
Communications Sector, Communications Enterprise since July 1998; Executive Vice
President and President, Cellular Subscriber Sector sincefrom August 1997;1997 to July
1998; Senior Vice President and General Manager, Communications & ElectronicsRadio Network Solutions Group,
Land Mobile Products Sector from 19931994 to August 1997.

A. Peter Lawson; age 51;52; Executive Vice President, General Counsel and Secretary
since May, 1998; Senior Vice President, General Counsel and Secretary sincefrom
November 1996;1996 to May 1998; Senior Vice President and General Counsel from March
1996 to November 1996; Senior Vice President and Assistant General Counsel from
November 1994 to March 1996; Corporate Vice President and Assistant General
Counsel from November 1987 to November 1994.

James A. Norling; age 55;56; Executive Vice President, Deputy to the Chief
Executive Office and President, Motorola Europe, Middle East and Africa since
January 1999; Executive Vice President and Deputy to the Chief Executive Office
and President, Global Telecom Solutions Group from July 1998 to January 1999;
Executive Vice President and President, Messaging, Information and Media Sector
sincefrom January 1997;1997 to July 1998; Executive Vice President and President, Motorola
Europe, Middle East and Africa from April 1993 to December
1996; and Executive Vice President, President and General Manager, Semiconductor
Products Sector from December 1989 to April 1993.January 1997.

Hector Ruiz; age 52;53; Executive Vice President and President, Semiconductor
Products Sector ("SPS") since May 1997; Executive Vice President and Office of
the President, SPS from February 1997 to May 1997; Executive Vice President and
General Manager, Messaging Systems Products Group, Messaging Information and
Media Sector from April 1996 to February 1997; Executive Vice President and
General Manager, Paging Products Group, Messaging Information and Media Sector
from January 1994 to April 1996; and Senior Vice President and General Manager, Paging
Products Group, Paging and Telepoint Systems Group from 1991 to 1994.

Jack Scanlon;1996.

C. D. Tam; age 55; Executive Vice President and President, Cellular
Networks and Space Sector since January 1997; Executive Vice President and
General Manager, Cellular Infrastructure Group, General Systems Sector from
February 1995 to January 1997; Senior Vice President and General Manager,
Cellular Infrastructure Group, General Systems Sector from August 1992 to
February 1995.

Frederick T. Tucker; age 57; Executive Vice President and President,
Automotive, Component, Computer and Energy Sector since September 1992.

Richard W. Younts; age 58;54; Executive Vice President and President, Asia Pacific Region
since 1997;January 1, 1999; Senior Vice President and General Manager of the
Transportation Systems Group, Semiconductor Products Sector from January 1997 to
December 1998; Senior Vice President and General Manager, Asia Pacific
Semiconductor Group, Semiconductor Products Sector from January 1991 to December
1996.

Frederick T. Tucker; age 58; Executive Vice President and Deputy to the Chief
Executive Office since October 1998; Executive Vice President and Office of the
President, Integrated Electronic Systems Sector ("IESS") from July 1998 to
October 1998; Executive Vice President and President, IESS from September 1992
to July 1998.

Richard W. Younts; age 59; Executive Vice President and Senior Advisor on Asian
Affairs since December 1998; Executive Vice President and President, Asia
Pacific Region from 1997 to December 1998; Executive Vice President and
Corporate Executive Director International-Asia and Americas from December 1993
to 1997; and Senior
Vice President and Corporate Executive Director, International-Asia and Americas
from July 1991 to December 1993.1997.

The above executive officers will serve as officers of Motorola until the
regular meeting of the Board of Directors in May 19981999 or until their respective
successors shall have been elected except as noted above.elected. Christopher B. Galvin is a son of Robert W.
Galvin. There is no family relationship between any of the other executive
officers listed above.

PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Sales of Unregistered Securities

In November 1998, Motorola's Board of Directors voted to permit current non-
employee directors who were entitled to benefits under the retirement plan for
non-employee directors to convert their accrued benefits under the

PART IIretirement plan into shares of common stock of Motorola, which shares would be
subject to certain transfer restrictions. In December 1998, six non-employee
directors elected to receive an aggregate of 4,593 shares of restricted common
stock (valued in the aggregate at $264,715) in lieu of their aggregate accrued
benefits under the retirement plan. Motorola issued these shares to the non-
employee directors in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, as amended. The response to this
Item 5:incorporates by reference the information regarding the retirement plan
under the caption "Director Compensation" on page 6 of Motorola's Proxy
Statement for the 1999 annual meeting of stockholders.

Market Information for Registrant's Common Equity and Related Stockholder MattersSecurities

Motorola's Common Stockcommon stock is listed on the New York, Chicago, London and Tokyo
Stock Exchanges. The remainder of the response to this Item incorporates by
reference the information under the caption "Quarterly and Other Financial Data"
of Motorola's Consolidated Financial Statements contained in the attachmentappendix to
Motorola's Proxy Statement for the 19981999 annual meeting of stockholders.

ItemITEM 6: Selected Financial DataSELECTED FINANCIAL DATA

The response to this Item incorporates by reference the information under the
caption "Five-Year"Five Year Financial Summary" of Motorola's Consolidated Financial
Statements contained in the attachmentappendix to Motorola's
Proxy Statement for the 19981999 annual meeting of stockholders.

ItemITEM 7: Management's Discussion and Analysis of Financial Condition and
Results of OperationsMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The response to this Item incorporates by reference the information under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations" contained in the attachmentappendix to Motorola's Proxy Statement for the
19981999 annual meeting of stockholders.

ItemITEM 8: Financial Statements and Supplementary DataFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this Item incorporates by reference the information under the
captions "Management's Responsibility For Financial Statements," "Independent
Auditors' Report," "Consolidated Statements of Earnings,Operations," "Consolidated
Balance Sheets," "Consolidated Statements of Stockholders' Equity,"
"Consolidated Balance Sheets,"
"Consolidated Statements of Cash Flows," "Supplemental Cash Flow Information," "Notes to Consolidated Financial
Statements," "Five-Year Financial Summary" and "Quarterly and Other Financial
Data" of Motorola's Consolidated Financial Statements contained in the attachmentappendix
to Motorola's Proxy Statement for the 19981999 annual meeting of stockholders.

ItemITEM 9: Changes in and Disagreements With Accountants on Accounting and
Financial DisclosureCHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ItemITEM 10: Directors and Executive Officers of the RegistrantDIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The response to this Item required by Item 401 of Regulation S-K, with respect
to directors, incorporates by reference the information under the caption
"Nominees" on pages 12 through 54 of Motorola's Proxy Statement for the 19981999
annual meeting of stockholders and with respect to executive officers, is
contained in Part I hereof under the caption "Executive Officers of the
Registrant". The response to this Item required by Item 405 of Regulation S-K
incorporates by reference the information under the caption "Section 16(a)
Beneficial Ownership Reporting Compliance" on page 2317 of Motorola's Proxy
Statement for the 19981999 annual meeting of stockholders.

ItemITEM 11: Executive CompensationEXECUTIVE COMPENSATION

The response to this Item incorporates by reference the information under the
caption "Director Compensation" on pages 65 and 76 of Motorola's Proxy Statement
for the 19981999 annual meeting of stockholders and "Summary Compensation Table,"
"Stock Option Grants in 1997,1998," "Aggregated Option Exercises in 19971998 and 19971998
Year-End Option Values," "Long-Term Incentive Plans - Awards in 1997,1998,"
"Pension
and Supplementary Retirement"Retirement Plans," and "Termination of Employment and Change in Control
Arrangements" on pages 9 -through 13 of Motorola's Proxy Statement for the 19981999
annual meeting of stockholders.

ItemITEM 12: Security Ownership of Certain Beneficial Owners and ManagementSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The response to this Item incorporates by reference the information under the
caption "Security Ownership"Ownership of Management of the Company"Securities" on pagepages 8 and 9 of Motorola's Proxy Statement
for the 19981999 annual meeting of stockholders.

ItemITEM 13: Certain Relationships and Related TransactionsCERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The response to this Item incorporates by reference the relevant information
under the caption "Director Compensation" on page 7pages 5 and 6 of Motorola's Proxy
Statement for the 19981999 annual meeting of stockholders.

PART IV

ItemITEM 14: Exhibits, Financial Statement Schedules and Reports on FormEXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements

See Part II, Item 8 hereof.

2. Financial Statement Schedule and Auditors' Report

Title Schedule
----- --------

Valuation and Qualifying Accounts.............................Accounts II

All schedules omitted are inapplicable or the information required is
shown in the Consolidated Financial Statements or notes thereto. The
auditors' report of KPMG Peat Marwick LLP with respect to the Financial Statement
Schedule is located at page 20.19.

3. Exhibits

Exhibits required to be attached by Item 601 of Regulation S-K are listed
in the Exhibit Index attached hereto, which is incorporated herein by this
reference. Following is a list of management contracts and compensatory
plans and arrangements required to be filed as exhibits to this form by
Item 14(c) hereof:

Motorola Executive Incentive Plan ("MEIP")
Motorola Long Range Incentive Plan of 1994
Share Option Plan of 1982
Share Option Plan of 1991
Share Option Plan of 1996
Motorola Elected Officers Supplementary Retirement Plan
Executive Health Plan
Accidental Death and Dismemberment Insurance for MEIP Participants
Arrangement for Directors' Fees
Retirement Plan for Non- EmployeeNon-Employee Directors
Deferred Fee Plan for Outside Directors
Motorola Non-Employee Directors Stock Plan
Officers' Group Life Insurance Policy
Consultant Agreement with John F. Mitchell
Form of Termination Agreement
Policy Protecting Salary and Medical Benefits
Insurance Policy for Non-Employee Directors
18
Motorola Incentive Plan of 1998

(b) Reports on Form 8-K.

Motorola filed no reports on Form 8-K during the last quarter of 1997.1998.

See Item 14(a)3 above.

1918

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
of Motorola, Inc.:

Under date of January 12, 1998,13, 1999, except as to Note 8, which is as of March 1,
1999, we reported on the consolidated balance sheets of Motorola, Inc. and
subsidiaries as of December 31, 19971998 and 1996,1997, and the related consolidated
statements of earnings,operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1997,1998, as contained in the 1998
proxy statement to stockholders. These consolidated financial statements and
our report thereon are incorporated by reference in the annual report on Form
10-K for the year 1997.ended December 31, 1998. In connection with our audits of the
aforementioned consolidated financial statements, we also have audited the
related financial statement schedule as listed in Part IV, Item 14(a)2. The
financial statement schedule is the responsibility of Motorola's management.
Our responsibility is to express an opinion on the financial statement schedule
based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presentpresents
fairly, in all material respects, the information set forth therein.therein

/s/ KPMG Peat Marwick LLP

January 12, 1998

Chicago, Illinois
20January 13, 1999, except as to Note 8,
which is as of March 1, 1999

SCHEDULE II
MOTOROLA, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
Three Years Ended DecemberTHREE YEARS ENDED DECEMBER 31, 1997
(In millions)1998
(IN MILLIONS)

ColumnCOLUMN A ColumnCOLUMN B ColumnCOLUMN C ColumnCOLUMN D ColumnCOLUMN E
-------- -------- -------- -------- --------
Additions
----------------------
Balance at Charged to Charged to Balance at
beginning costs-------------- -------------- -------------- ------------ ------------
ADDITIONS
-----------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS & other end of
period expenses accounts Deductions period
---------- ---------- ---------- ---------- ----------OTHER END OF
PERIOD EXPENSES ACCOUNTS (5) DEDUCTIONS PERIOD
-----------------------------------------------------------------------------

19971998
Restructuring and other charges............ $ 159 $1,980 ($22) $1,451 (1) $ 666
Allowance for doubtful accounts............... $137 $75accounts............ $ 173 $ 138 --- $39 (1) $173$ 91 (2) $ 220
Product and service warranties................ $314 $218warranties............. $ 337 $ 226 --- $195$ 230 (3) $ 333
Contract reserves.......................... $1,160 $ 507 --- $ 610 (4) $1,057

1997
Restructuring and other charges............ $ 0 $ 327 ($9) $ 159 (1) $ 159
Allowance for doubtful accounts............ $ 137 $ 75 --- $ 39 (2) $337
Customer reserves............................. $816$ 173
Product and service warranties............. $ 314 $ 218 --- $ 195 (3) $ 337
Contract reserves.......................... $ 816 $1,187 --- $843 (3)$ 843 (4) $1,160

1996
Allowance for doubtful accounts............... $123 $42accounts............ $ 123 $ 42 --- $28 (1) $137$ 28 (2) $ 137
Product and service warranties................ $309 $160warranties............. $ 309 $ 160 --- $155$ 155 (3) $ 314
Contract reserves.......................... $ 648 $ 656 --- $ 488 (4) $ 816
- --------------------------------------------------------------------------------------------------------------------------

(1) Restructuring and other accrual usage

(2) $314
Customer reserves (4)......................... $648 $656 --- $488 (3) $816
1995
Allowance for doubtful accounts............... $118 $45 --- $40 (1) $123
Product and service warranties................ $283 $122 --- $96 (2) $309
Customer reserves (4)......................... $266 $944 --- $562 (3) $648

- ---------

(1) Uncollectible accounts written off

(2)(3) Warranty claims paid

(3)(4) Customer claims paid/reductions in reserves

(4) Amounts for prior years have been reclassified to conform to the(5) Reversals into income of 1997 presentation.accrual

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors of
Motorola, Inc.:

We consent to incorporation by reference in the registration statements on
Form S-8 (Nos. 33-59285, 333-03681, 333-03731333-12817, 333-51847 and 333-12817) and Form S-3 (Nos. 33-62911
and 333-11433)333-65941) of
Motorola, Inc. and subsidiaries of our reports dated January 12, 1998,13, 1999, except as to Note 8, which
is as of March 1, 1999, relating to the consolidated balance sheets of Motorola,
Inc. and subsidiaries as of December 31, 19971998 and 1996,1997, and the related
consolidated statements of earnings,operations, stockholders' equity, and cash flows and
related financial statement schedule for each of the years in the three-year
period ended December 31, 1997,1998, which reports appear in or are incorporated by
reference in the annual report on Form 10-K of Motorola, Inc. for the year ended
December 31, 1997.1998.

/s/ KPMG Peat Marwick LLP

March 19, 1998

Chicago, Illinois
22March 18, 1999

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Motorola, Inc. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

MOTOROLA, INC.

By: /s/ CHRISTOPHER B. GALVIN
-----------------------------------------------------
Christopher B. Galvin
Chief Executive Officer

March 16, 1998

Pursuant to the requirements of the Securities Exchange Act of19, 1999

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, this
report has been signed below by the following persons on behalf of Motorola,
Inc. and in the capacities and on the dates indicated.THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF MOTOROLA,
INC. AND IN THE CAPACITIES AND ON THE DATES INDICATED.

SignatureSIGNATURE Title Date
--------- ----- ----

/s/ CHRISTOPHER B. GALVIN Director and Principal Executive Officer 3/3/984/99
- --------------------------------------------------------------------------------
Christopher B. Galvin

/s/ CARL F. KOENEMANN Principal Financial Officer 3/3/984/99
- ---------------------------------------------------------------------------------
Carl F. Koenemann

/s/ KENNETH J. JOHNSONANTHONY M. KNAPP Principal Accounting Officer 3/3/989/99
- -----------------------------------------------
Kenneth J. Johnson----------------------------------
Anthony M. Knapp

/s/ RONNIE C. CHAN Director 3/2/989/99
- ---------------------------------------------------------------------------------
Ronnie C. Chan

/s/ H. LAURANCE FULLER Director 3/9/984/99
- ---------------------------------------------------------------------------------
H. Laurance Fuller

/s/ ROBERT W. GALVIN Director 3/2/983/99
- ---------------------------------------------------------------------------------
Robert W. Galvin

/s/ ROBERT L. GROWNEY Director 3/2/984/99
- ---------------------------------------------------------------------------------
Robert L. Growney

/s/ ANNE P. JONES Director 3/3/989/99
- ----------------------------------------------------------------------------------
Anne P. Jones

Signature Title Date

/s/ DONALD R. JONES Director 3/2/984/99
- -----------------------------------------------------------------------------------
Donald R. Jones

SIGNATURE Title Date
--------- ----- ----

/s/ JUDY C. LEWENT Director 3/3/9899
- -----------------------------------------------------------------------------------
Judy C. Lewent

/s/ WALTER E. MASSEY Director 3/8/983/99
- -----------------------------------------------------------------------------------
Dr. Walter E. Massey

/s/ JOHN F. MITCHELL Director 3/16/98
- ------------------------------------------------
John F. Mitchell

/s/ THOMAS J. MURRIN Director 3/1/986/99
- -----------------------------------------------------------------------------------
Thomas J. Murrin

/s/ NICHOLAS NEGROPONTE Director 3/5/984/99
- -----------------------------------------------------------------------------------
Nicholas Negroponte

/s/ JOHN E. PEPPER, JR. Director 3/2/983/99
- -----------------------------------------------------------------------------------
John E. Pepper, Jr.

/s/ SAMUEL C. SCOTT III Director 3/5/983/99
- -----------------------------------------------------------------------------------
Samuel C. Scott III

/s/ GARY L. TOOKER Director 3/2/9899
- -----------------------------------------------------------------------------------
Gary L. Tooker

/s/ B. KENNETH WEST Director 3/4/983/99
- -----------------------------------------------------------------------------------
B. Kenneth West

/s/ JOHN A. WHITE Director 3/3/982/99
- -----------------------------------------------------------------------------------
Dr. John A. White

2423

EXHIBIT INDEX

Exhibit No. Exhibit
- ----------- -------

1 Underwriting Agreement dated October 7, 1997 by and among
Motorola, Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co. and Morgan Stanley & Co.
Incorporated (incorporated by reference to Exhibit 1 to Motorola's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 27, 1997).

3(i) Restated Certificate of Incorporation of Motorola, Inc., as
amended, including Certificate of Designation, Preferences and
Rights for Junior Participating Preferred Stock, Series A
(incorporated by reference to Exhibit 3(i)(b) to Motorola's
Quarterly Report on Form 10-Q for the fiscal quarter ended April
2, 1994).

3(ii) By-Laws of Motorola, Inc., revised as of November 14, 1996
(incorporated by reference to Exhibit 3(ii)EXHIBIT INDEX

EXHIBIT NO. EXHIBIT
- ----------- -------

3.1 Restated Certificate of Incorporation of Motorola, Inc., as amended
(incorporated by reference to Exhibit 3(i)(b) to Motorola's Quarterly
Report on Form 10-Q for the fiscal quarter ended April 2, 1994).

3.2 Certificate of Designations, Preferences and Rights of Junior
Participating Preferred Stock, Series B (incorporated by reference to
Exhibit 3.3 to Motorola's Registration Statement on Form S-3 dated
January 20, 1999 (Registration No. 333-70827)).

* 3.3 By-Laws of Motorola, Inc., revised as of February 17, 1999.

4.1 Rights Agreement dated November 5, 1998 between Motorola, Inc., and
Harris Trust and Savings Bank, as Rights Agent (incorporated by
reference to Exhibit 1.1 to Amendment No. 1 to Motorola's Registration
Statement on Form 8-A/A dated March 16, 1999).

4.2 LYONs Indenture dated as of September 1, 1989 between Motorola, Inc.
and the First National Bank of Chicago, as Trustee (incorporated by
reference to Exhibit 4(a) to Motorola's Registration Statement on Form
S-3 dated August 23, 1989 (Registration No. 33-30662).

4.3 Indenture dated as of March 15, 1985 between Motorola, Inc. and Harris
Trust and Savings Bank, as Trustee (incorporated by reference to
Exhibit 4(C) to Motorola's Current Report on Form 8-K dated August 12,
1991).

4.4 Specimen of 8.40% Debentures due August 15, 2031 (incorporated by
reference to Exhibit 4(B) to Motorola's Current Report on Form 8-K
dated August 12, 1991).

4.5 Indenture dated as of October 1, 1991 between Motorola, Inc. and
Harris Trust and Savings Bank, as Trustee (incorporated by reference
to Exhibit 4.5 to Motorola's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996).

4.1 Rights Agreement dated November 9, 1988 (incorporated by reference
to Exhibit (1) to Motorola's Registration Statement on Form 8-A
dated November 15, 1988).

4.2 Amendment to Rights Agreement dated August 7, 1990 (incorporated
by reference to Exhibit 2 to Motorola's Form 8 dated August 9,
1990 amending Motorola's Registration Statement on Form 8-A dated
November 15, 1988).

4.3 Amendment No. 2 on Form 8 dated December 2, 1992 amending
Motorola's Registration Statement on Form 8-A dated November 15,
1988 (incorporated by reference to Motorola's Form 8 dated
December 2, 1992).

4.3(a) Amendment No. 3 on Form 8-A/A dated February 28, 1994 amending
Motorola's Registration Statement on Form 8-A dated November
15,1988 (incorporated by reference to Motorola's Amendment No. 3
on Form 8-A/A dated February 28, 1994).

4.4 LYONs Indenture dated September 1, 1989 (incorporated by reference
to Exhibit 4(a) to Motorola's Registration Statement on Form S-3,
Registration No. 33-30662).

4.5 Indenture dated as of March 15, 1985 between Motorola, Inc. and
Harris Trust and Savings Bank, as Trustee, and specimen of 8.40%
Debentures due August 15, 2031 under the Indenture (incorporated
by reference to Exhibits 4(C) and 4(B), respectively, to
Motorola's Current Report on Form 8-K dated August 12, 1991).

4.6 Indenture dated as of October 1, 1991 between Motorola, Inc. and
Harris Trust and Savings Bank, as Trustee (incorporated by
reference to Exhibit 4.5 to Motorola's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991).

4.7 Specimen of 7.60% Notes due January 1, 2007 (incorporated by reference
to Exhibit 4.6 to Motorola's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991).

4.7 Specimen of 6 1/2% Notes due March 1, 2008 (incorporated by reference
to Exhibit 4(B) to Motorola's Current Report on Form 8-K dated March
1, 1993).

4.8 Specimen of 6 1/2% Notes due March 1, 2008 (incorporated by
reference to Exhibit 4(B) to Motorola's Current Report on Form 8-K
dated March 1, 1993).

4.9 LYONs Indenture dated as of September 1, 1993 between Motorola, Inc.
and the First National Bank of Chicago, as Trustee (incorporated by
reference to Exhibit 4(v) to Motorola's Quarterly Report on Form 10-Q
for the fiscal quarter ended October 2, 1993).

4.9 Indenture dated as of May 1, 1995 between Motorola, Inc. and Harris
Trust and Savings Bank, as Trustee (incorporated by reference to
Exhibit 4(d) to Motorola's Registration Statement on Form S-3 dated
September 25, 1995 (Registration No. 33-56055)).

4.10 Specimen of 7 1/2% Debentures due May 15, 2025 (incorporated by
reference to Exhibit 4(B) to Motorola's Current Report on Form 8-K
dated May 15, 1995).

4.11 Specimen of 6 1/2% Debentures due September 1, 2025 (incorporated by
reference to Exhibit 4.12 to Motorola's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995).

4.12 Specimen of 5.22% Debentures due October 1, 2097 (incorporated by
reference to Exhibit 4 to Motorola's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 27, 1997).

4.13 Specimen of 5.80% Notes due October 15, 2008 (incorporated by
reference to Exhibit 4 to Motorola's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 26, 1998).

4.14 Specimen of 6 1/2% Debentures due November 15, 2028 (incorporated by
reference to Exhibit 4.9 to Motorola's Registration Statement on Form
S-3 dated January 20, 1999 (Registration No. 333-70827)).

Exhibit No. Exhibit
- ----------- -------

4.10 Indenture dated as of May 1, 1995 between Motorola, Inc. and
Harris Trust and Savings Bank, as Trustee (incorporated by
reference to Exhibit 4(d) to Motorola's Registration Statement on
Form S-3, Registration No. 33-56055).

4.11 Specimen of 7 1/2% Debentures due May 15, 2025 (incorporated by
reference to Exhibit 4(B) to Motorola's Current Report on Form 8-K
dated May 15, 1995).

4.12 Specimen of 6 1/2% Debentures due September 1, 2025 (incorporated
by reference to Exhibit 4.12 to Motorola's Annual Report on Form
10-K for the fiscal year ended December 31, 1995).

4.13 Specimen of 5.22% Debentures due October 1, 2097 (incorporated by
reference to Exhibit 4 to Motorola's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 27, 1997).

10.1 Motorola Executive Incentive Plan, as amended through November 23,
1993, including the Long Range Incentive Program (incorporated by
reference to Exhibit 10.1 to Motorola's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993).

10.2 Motorola Long Range Incentive Plan of 1994 (incorporated by
reference to Exhibit 10.2 to Motorola's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993)4.15 Certificate of Trust of Motorola Capital Trust I dated January 19,
1999 (incorporated by reference to Exhibit 4.1 to Motorola's
Registration Statement on Form S-3 dated January 20, 1999
(Registration No. 333-70827)).

* 4.16 Amended and Restated Declaration of Trust dated as of February 3, 1999
among Motorola, Inc., Harris Trust and Savings Bank, as Property
Trustee, First Union Trust Co. N.A., as Delaware Trustee, and the
Regular Trustees named therein.

* 4.17 Preferred Securities Guarantee Agreement dated February 3, 1999
between Motorola, Inc. and Harris Trust and Savings Bank, as Preferred
Securities Guarantee Trustee.

* 4.18 Specimen of 6.68% Trust Originated Preferred Securities SM issued by
Motorola Capital Trust I.

* 4.19 Specimen of 6.68% Deferrable Interest Junior Subordinated Debentures
due March 31, 2039.

* 4.20 Indenture dated as of February 3, 1999 between Motorola, Inc. and
Harris Trust and Savings Bank, as Indenture Trustee.

* 4.21 First Supplemental Indenture dated as of February 3, 1999 between
Motorola, Inc. and Harris Trust and Savings Bank, as Indenture
Trustee.

10.1 Motorola Executive Incentive Plan as amended through February 4, 1998,
(incorporated by reference to Exhibit 10.1 to Motorola's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 27, 1998).

10.2 Motorola Long Range Incentive Plan of 1994, as amended through
February 4, 1998 (incorporated by reference to Exhibit 10.2 to
Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 27, 1998).

10.3 Share Option Plan of 1982, as amended through March 24, 1992
(incorporated by reference to Exhibit 10.3 to Motorola's Annual Report
on Form 10-K for the fiscal year ended December 31, 1990, Exhibit
10.2(a) to Motorola's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991 and Exhibit 10.3 to Motorola's Annual Report
on Form 10-K for the fiscal year ended December 31, 1992).

10.4 Share Option Plan of 1991, as amended through August 7, 1995
(incorporated by reference to Exhibit 10.4 to Motorola's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 and Exhibit
10.4 to Motorola's Report on Form 10-K for the fiscal year ended
December 31, 1995).

10.5 Resolutions Amending Sections 8 and 10(2) of the Share Option Plan of
1982, and Resolutions Amending Sections 7 and 9(b) of the Share Option
Plan of 1991, effective August 15, 1996 (incorporated by reference to
Exhibit 10.5 to Motorola's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996).

10.6 Share Option Plan of 1996, as amended through May 7, 1997
(incorporated by reference to Exhibit 10 to Motorola's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 28, 1997).

10.7 Motorola Elected Officers Supplementary Retirement Plan, as
amended through February 6, 1995 (incorporated by reference to
Exhibit 10.5 to Motorola's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994).

10.8 Executive Health Plan (incorporated by reference to Exhibit 10.8
to Motorola's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).

10.9 Accidental death and dismemberment insurance for MEIP participants
(incorporated by reference to Exhibit 10.7 to Motorola's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990).

10.10 Arrangement for directors' fees and retirement plan for non-
employee directors (description incorporated by reference from
pages 6 and 7 of Motorola's Proxy Statement for the 1997
(incorporated by reference to Exhibit 10 to Motorola's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 28, 1997).

10.7 Motorola Elected Officers Supplementary Retirement Plan, as amended
through February 6, 1995 (incorporated by reference to Exhibit 10.5 to
Motorola's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).

10.8 Executive Health Plan (incorporated by reference to Exhibit 10.8 to
Motorola's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).

10.9 Accidental death and dismemberment insurance for MEIP participants
(incorporated by reference to Exhibit 10.7 to Motorola's Annual Report
on Form 10-K for the fiscal year ended December 31, 1990).

10.10 Arrangement for directors' fees and retirement plan for non-employee
directors (description incorporated by reference from pages 5 and 6 of
Motorola's Proxy Statement for the 1999 annual meeting of
stockholders).

10.11 Deferred Fee Plan for Outside Directors, as amended February 6, 1996
(incorporated by reference to Exhibit 10.9 to Motorola's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995).

2625

Exhibit No. Exhibit
- ----------- -------

10.12 Motorola Non-Employee Directors Stock Plan, as amended August 15,
1996 (incorporated by reference to Exhibit 10.12 to Motorola's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996)10.12 Motorola Non-Employee Directors Stock Plan, as amended and restated on
February 4, 1998 (incorporated by reference to Exhibit 10.12 to
Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 27, 1998).

10.13 Officers' Group Life Insurance Policy (incorporated by reference to
Exhibit 10.10 to Motorola's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990).

10.14 Consultant Agreement dated May 1, 1996 between Motorola, Inc. and
John F. Mitchell (incorporated by reference to Exhibit 99 to
Motorola's Quarterly Report on Form 10-Q for the quarter ended
March 30, 1996).

10.15 Form of Termination Agreement in respect of a change in control
(incorporated by reference to Exhibit 10.15 to Motorola's Annual Report
on Form 10-K for the fiscal year ended December 31, 1989).

10.15 Policy protecting salary and medical benefits of employees in the event
of an unsolicited change in control (incorporated by reference to
Exhibit 10.16 to Motorola's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990).

10.16 Policy protecting salary and medical benefits of employees in the
event of an unsolicited change in control (incorporated by
reference to Exhibit 10.16 to Motorola's Annual Report on Form 10-
K for the fiscal year ended December 31, 1990).

10.17 Insurance policy covering non-employee Directors (incorporated by
reference to the description on page 6 of Motorola's Proxy Statement for
the 1999 annual meeting of stockholders and to Exhibit 10.16 to
Motorola's Annual Report on Form 10-K for the fiscal year ended December
31, 1989).

10.17 Iridium Space System Contract between Motorola, Inc. and Iridium, Inc.,
as amended to date, and Iridium Communications Systems Operations and
Maintenance Contract between Motorola, Inc. and Iridium, Inc., as
amended to date (incorporated by reference to Exhibits 99.2 and 99.3,
respectively, to Motorola's Current Report on Form 8-K dated August 2,
1993 and Exhibits 99(a) and 99(b), respectively, to Motorola's Quarterly
Report on Form 10-Q for the quarter ended October 1, 1994).

10.18 Motorola Incentive Plan of 1998 (incorporated by reference to Exhibit 10
to Motorola's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 28, 1998).

* 21 Subsidiaries of Motorola.

23 Consent of KPMG LLP. See page 6 of Motorola's Proxy
Statement for the 1997 annual meeting of stockholders and to
Exhibit 10.16 to Motorola's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989).

10.18 Iridium Space System Contract between Motorola, Inc. and Iridium,
Inc., as amended to date, and Iridium Communications Systems
Operations and Maintenance Contract between Motorola, Inc. and
Iridium, Inc., as amended to date (incorporated by reference to
Exhibits 99.2 and 99.3, respectively, to Motorola's Current Report
on Form 8-K dated August 2, 1993 and Exhibits 99(a) and 99(b),
respectively, to Motorola's Quarterly Report on Form 10-Q for the
quarter ended October 1, 1994).

11 Motorola, Inc. and Subsidiaries Basic and Diluted Earnings Per
Common Share. 21 Subsidiaries of Motorola.

23 Consent of KPMG Peat Marwick LLP. See page 22 of the Annual Report on Form 10-K of
which this Exhibit Index is a part.

* 27 Financial Data Schedule (filed only electronically with SEC).

27____________________

* Filed herewith