<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended: December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______ to _______
Commission file number: 001-12925
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
(FORMERLY, GENERAL INSTRUMENT (PUERTO RICO), INC. SAVINGS PLAN)
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
GENERAL INSTRUMENT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-4134221
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Tournament Drive, Horsham, Pennsylvania 19044
(Address of principal executive offices)
(Zip Code)
(215) 323-1000
(Registrant's telephone number, including area code)
<PAGE> 2
NEXTLEVEL SYSTEMS
(PUERTO RICO), INC. SAVINGS
PLAN
Financial Statements for the
Years Ended December 31, 1997 and 1996,
Supplemental Schedules for the
Year Ended December 31, 1997 and
Independent Auditors' Report
<PAGE> 3
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 1997 and 1996, with Supplemental Fund Information 2 - 3
Statements of Changes in Net Assets Available for Benefits for the
Years Ended December 31, 1997 and 1996, with
Supplemental Fund Information 4 - 5
Notes to Financial Statements 6 - 12
SUPPLEMENTAL SCHEDULES:
Item 27(a) - Schedule of Assets Held for Investment Purposes
as of December 31, 1997 13
Item 27(d) - Schedule of Reportable Transactions for the
Year Ended December 31, 1997 14
Note: Supplemental Schedules are included for filing with the Annual Return on
Form 5500. Supplemental Schedules not included herein are omitted due to
the absence of conditions under which they would be required.
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
Administrative Committee
NextLevel Systems (Puerto Rico), Inc. Savings Plan
We have audited the accompanying statements of net assets available for benefits
of NextLevel Systems (Puerto Rico), Inc. Savings Plan (formerly the General
Instrument (Puerto Rico), Inc. Savings Plan) (the "Plan") as of December 31,
1997 and 1996, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's Administrative Committee. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1997 and 1996, and the changes in net assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental information by fund in the statements of net assets
available for benefits and the statements of changes in net assets available for
benefits as of and for the years ended December 31, 1997 and 1996, is presented
for the purpose of additional analysis of the basic financial statements rather
than to present the net assets available for benefits and changes in net assets
available for benefits of the individual funds. The supplemental schedules and
fund information are the responsibility of the Plan's Administrative Committee.
Such supplemental schedules and supplemental information by fund have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
/s/ DELOITTE & TOUCHE LLP
- -------------------------------
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 12, 1998
<PAGE> 5
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH SUPPLEMENTAL FUND
INFORMATION DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GENERAL
INSTRUMENT
CORPORATION GENERAL
(THE FORMER SEMICONDUCTOR, INC.
NEXTLEVEL (THE DISTRIBUTING COMMSCOPE VANGUARD VANGUARD VANGUARD
SYSTEMS, INC.) COMPANY) INC. RETIREMENT VANGUARD/ INDEX MONEY
COMMON COMMON COMMON SAVINGS WELLINGTON TRUST - 500 MARKET
STOCK FUND STOCK FUND STOCK FUND TRUST FUND PORTFOLIO RESERVES
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Company common stock $ 371,678 $ -- $ -- $ -- $ -- $ -- $ --
Other common stock -- 37,159 57,978 -- -- -- --
Common/collective trust -- -- -- 161,718 -- -- --
Shares of registered
investment company -- -- -- -- 420,063 333,694 68,900
Participant loans -- -- -- -- -- -- --
Loans receivable 288 -- -- 975 2,582 1,521 397
Contributions receivable:
Employee 1,794 -- -- 4,344 10,513 6,864 1,986
Employer 17,365 -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 391,125 $ 37,159 $ 57,978 $ 167,037 $ 433,158 $ 342,079 $ 71,283
========== ========== ========== ========== ========== ========== ==========
<CAPTION>
VANGUARD VANGUARD VANGUARD
FIXED INCOME VANGUARD U.S. INTERNATIONAL
SECURITIES STAR GROWTH GROWTH LOAN
FUND PORTFOLIO PORTFOLIO PORTFOLIO FUND TOTAL
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Company common stock $ -- $ -- $ -- $ -- $ -- $ 371,678
Other common stock -- -- -- -- -- 95,137
Common/collective trust -- -- -- -- -- 161,718
Shares of registered
investment company 81,624 118,694 71,323 54,731 -- 1,149,029
Participant loans -- -- -- -- 161,130 161,130
Loans receivable 634 899 447 579 -- 8,322
Contributions receivable:
Employee 2,491 3,608 1,886 1,847 -- 35,333
Employer -- -- -- -- -- 17,365
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 84,749 $ 123,201 $ 73,656 $ 57,157 $ 161,130 $1,999,712
========== ========== ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
-2-
<PAGE> 6
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH SUPPLEMENTAL FUND
INFORMATION DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE FORMER
GENERAL
INSTRUMENT
CORPORATION VANGUARD VANGUARD VANGUARD VANGUARD
COMMON RETIREMENT VANGUARD/ INDEX MONEY FIXED INCOME VANGUARD
STOCK FUND SAVINGS WELLINGTON TRUST - 500 MARKET SECURITIES STAR
(SEE NOTE 1) TRUST FUND PORTFOLIO RESERVES FUND PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Company common stock $ 363,651 $ -- $ -- $ -- $ -- $ -- $ --
Common/collective trust -- 118,225 -- -- -- -- --
Shares of registered
investment company -- -- 319,448 233,453 64,875 84,666 98,424
Participant loans -- -- -- -- -- -- --
Loans receivable 157 1,608 2,119 1,793 270 711 549
Contributions receivable:
Employee 2,474 6,005 12,368 9,223 2,302 3,741 4,180
Employer 22,082 -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 388,364 $ 125,838 $ 333,935 $ 244,469 $ 67,447 $ 89,118 $ 103,153
========== ========== ========== ========== ========== ========== ==========
<CAPTION>
VANGUARD VANGUARD
U.S. INTERNATIONAL
GROWTH GROWTH LOAN
PORTFOLIO PORTFOLIO FUND UNALLOCATED TOTAL
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Company common stock $ -- $ -- $ -- $ -- $ 363,651
Common/collective trust -- -- -- -- 118,225
Shares of registered
investment company 58,801 60,393 -- -- 920,060
Participant loans -- -- 118,289 -- 118,289
Loans receivable 260 322 -- -- 7,789
Contributions receivable:
Employee 2,273 2,199 -- -- 44,765
Employer -- -- -- 9,456 31,538
---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE
FOR BENEFITS $ 61,334 $ 62,914 $ 118,289 $ 9,456 $1,604,317
========== ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
-3-
<PAGE> 7
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH SUPPLEMENTAL
FUND INFORMATION YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GENERAL
INSTRUMENT GENERAL
CORPORATION SEMICONDUCTOR,
(THE FORMER INC. (THE
NEXTLEVEL DISTRIBUTING COMMSCOPE VANGUARD VANGUARD VANGUARD
SYSTEMS, INC.) COMPANY) INC. RETIREMENT VANGUARD/ INDEX MONEY
COMMON COMMON COMMON SAVINGS WELLINGTON TRUST - 500 MARKET
STOCK FUND STOCK FUND STOCK FUND TRUST FUND PORTFOLIO RESERVES
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Employee $ 8,302 $ 8,156 $ -- $ 45,685 $ 98,957 $ 74,942 $ 17,554
Employer 88,937 85,084 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net contributions 97,239 93,240 -- 45,685 98,957 74,942 17,554
---------- ---------- ---------- ---------- ---------- ---------- ----------
Investment income:
Interest and dividends -- -- -- 8,213 35,265 7,137 3,645
Net gain (loss) on investments (14,187) 86,837 (11,152) -- 41,752 78,158 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) (14,187) 86,837 (11,152) 8,213 77,017 85,295 3,645
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total additions 83,052 180,077 (11,152) 53,898 175,974 160,237 21,199
---------- ---------- ---------- ---------- ---------- ---------- ----------
DEDUCTIONS:
Distributions 43,351 42,659 10,203 15,893 75,261 88,946 12,664
Administrative expenses 952 1,575 219 1,173 2,131 1,483 8,937
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total deductions 44,303 44,234 10,422 17,066 77,392 90,429 21,601
---------- ---------- ---------- ---------- ---------- ---------- ----------
TRANSFERS
To (from) other funds (18,777) (16,451) (19,892) 4,367 641 27,802 4,238
Effect of spin-off transaction 371,153 (470,597) 99,444 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
352,376 (487,048) 79,552 4,367 641 27,802 4,238
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) 391,125 (351,205) 57,978 41,199 99,223 97,610 3,836
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR -- 388,364 -- 125,838 333,935 244,469 67,447
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 391,125 $ 37,159 $ 57,978 $ 167,037 $ 433,158 $ 342,079 $ 71,283
========== ========== ========== ========== ========== ========== ==========
<CAPTION>
VANGUARD VANGUARD VANGUARD
FIXED INCOME VANGUARD U.S. INTERNATIONAL
SECURITIES STAR GROWTH GROWTH LOAN
FUND PORTFOLIO PORTFOLIO PORTFOLIO FUND UNALLOCATED TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Employee $ 28,536 $ 32,579 $ 20,603 $ 17,640 $ -- $ -- $ 352,954
Employer -- -- -- -- -- -- 174,021
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net contributions 28,536 32,579 20,603 17,640 -- -- 526,975
---------- ---------- ---------- ---------- ---------- ---------- ----------
Investment income:
Interest and dividends 5,848 11,265 2,823 2,348 11,666 -- 88,210
Net gain (loss) on investments 1,834 9,831 12,123 127 -- -- 205,323
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) 7,682 21,096 14,946 2,475 11,666 -- 293,533
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total additions 36,218 53,675 35,549 20,115 11,666 -- 820,508
---------- ---------- ---------- ---------- ---------- ---------- ----------
DEDUCTIONS:
Distributions 27,986 22,527 21,804 17,262 25,872 -- 404,428
Administrative expenses 476 791 342 362 -- 2,244 20,685
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total deductions 28,462 23,318 22,146 17,624 25,872 2,244 425,113
---------- ---------- ---------- ---------- ---------- ---------- ----------
TRANSFERS
To (from) other funds (12,125) (10,309) (1,081) (8,248) 57,047 (7,212) --
Effect of spin-off transaction -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
(12,125) (10,309) (1,081) (8,248) 57,047 (7,212) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) (4,369) 20,048 12,322 (5,757) 42,841 (9,456) 395,395
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 89,118 103,153 61,334 62,914 118,289 9,456 1,604,317
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 84,749 $ 123,201 $ 73,656 $ 57,157 $ 161,130 $ -- $1,999,712
========== ========== ========== ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
-4-
<PAGE> 8
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH SUPPLEMENTAL
FUND INFORMATION YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE FORMER
GENERAL
INSTRUMENT
CORPORATION VANGUARD VANGUARD VANGUARD VANGUARD
COMMON STOCK RETIREMENT VANGUARD/ INDEX MONEY FIXED INCOME
FUND SAVINGS WELLINGTON TRUST - 500 MARKET SECURITIES
(SEE NOTE 1) TRUST FUND PORTFOLIO RESERVES FUND
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Employee $ 20,659 $ 51,564 $ 107,112 $ 83,336 $ 27,894 $ 36,687
Employer 183,936 -- -- -- -- --
Other 896 -- 1,792 -- 5,376 --
---------- ---------- ---------- ---------- ---------- ----------
Net contributions 205,491 51,564 108,904 83,336 33,270 36,687
---------- ---------- ---------- ---------- ---------- ----------
Investment income:
Interest and dividends -- 6,203 23,663 4,929 2,777 4,932
Net gain (loss) on investments (44,968) -- 16,729 36,060 -- (1,117)
---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) (44,968) 6,203 40,392 40,989 2,777 3,815
---------- ---------- ---------- ---------- ---------- ----------
Total additions 160,523 57,767 149,296 124,325 36,047 40,502
---------- ---------- ---------- ---------- ---------- ----------
DEDUCTIONS:
Distributions 45,409 8,930 17,143 25,334 1,757 3,486
Administrative expenses 2,465 348 1,243 792 9,238 91
---------- ---------- ---------- ---------- ---------- ----------
Total deductions 47,874 9,278 18,386 26,126 10,995 3,577
TRANSFER FROM (TO) OTHER FUNDS 5,531 (15,911) (21,240) (15,601) (5,181) (11,137)
---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) 118,180 32,578 109,670 82,598 19,871 25,788
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 270,184 93,260 224,265 161,871 47,576 63,330
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 388,364 $ 125,838 $ 333,935 $ 244,469 $ 67,447 $ 89,118
========== ========== ========== ========== ========== ==========
<CAPTION>
VANGUARD VANGUARD
VANGUARD U.S. INTERNATIONAL
STAR GROWTH GROWTH LOAN
PORTFOLIO PORTFOLIO PORTFOLIO FUND UNALLOCATED TOTAL
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Employee $ 35,108 $ 19,034 $ 19,372 $ -- $ -- $ 400,766
Employer -- -- -- -- -- 183,936
Other -- -- 896 -- -- 8,960
---------- ---------- ---------- ---------- ---------- ----------
Net contributions 35,108 19,034 20,268 -- -- 593,662
---------- ---------- ---------- ---------- ---------- ----------
Investment income:
Interest and dividends 8,530 4,218 2,525 5,479 -- 63,256
Net gain (loss) on investments 3,587 7,197 4,341 -- -- 21,829
---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) 12,117 11,415 6,866 5,479 -- 85,085
---------- ---------- ---------- ---------- ---------- ----------
Total additions 47,225 30,449 27,134 5,479 -- 678,747
---------- ---------- ---------- ---------- ---------- ----------
DEDUCTIONS:
Distributions 4,306 8,226 4,054 5,212 -- 123,857
Administrative expenses 253 (132) (71) -- -- 14,227
---------- ---------- ---------- ---------- ---------- ----------
Total deductions 4,559 8,094 3,983 5,212 -- 138,084
TRANSFER FROM (TO) OTHER FUNDS (3,293) (1,491) (3,706) 81,548 (9,519) --
---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) 39,373 20,864 19,445 81,815 (9,519) 540,663
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 63,780 40,470 43,469 36,474 18,975 1,063,654
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 103,153 $ 61,334 $ 62,914 $ 118,289 $ 9,456 $1,604,317
========== ========== ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
-5-
<PAGE> 9
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the NextLevel Systems (Puerto Rico), Inc.
Savings Plan provides only general information. Participants should
refer to the Plan document for a more complete description of the
Plan's provisions. The Plan Sponsor is NextLevel Systems (Puerto Rico),
Inc., a wholly-owned subsidiary of General Instrument Corporation (the
former NextLevel Systems, Inc.) (the "Company").
a. GENERAL - The Company was formerly the Communications Business of
the former General Instrument Corporation (the "Distributing
Company"). In a transaction that was consummated on July 28, 1997,
the Distributing Company (i) transferred all the assets and
liabilities relating to the manufacture and sale of broadband
communications products used in the cable television, satellite and
telecommunications industries to the Company (then a wholly-owned
subsidiary of the Distributing Company) and all the assets and
liabilities relating to the manufacture and sale of coaxial, fiber
optic and other electrical cable used in the cable television,
satellite and other industries to its wholly-owned subsidiary,
CommScope, Inc. ("CommScope") and (ii) distributed all of its
outstanding shares of capital stock of each of the Company and
CommScope to its stockholders on a pro rata basis as a dividend.
Approximately 147.3 million shares of the Company's Common Stock,
based on a ratio of one for one, were distributed to the
Distributing Company's stockholders of record on July 25, 1997 (the
"Communications Distribution"). On July 28, 1997, approximately 49.1
million shares of CommScope Common Stock, based on a ratio of one
for three, were distributed to the Company's stockholders of record
on that date (the "CommScope Distribution"). On July 28, 1997, the
Company and CommScope began operating as independent entities with
publicly traded common stock, and the Distributing Company retained
no ownership interest in either the Company or CommScope.
Additionally, immediately following the Communications Distribution,
the Distributing Company was renamed General Semiconductor, Inc.
("General Semiconductor") and effected a one for four reverse stock
split.
The NextLevel Systems (Puerto Rico), Inc. Savings Plan (formerly the
General Instrument (Puerto Rico), Inc. Savings Plan) (the "Plan")
was established and effective March 1, 1994, and is a defined
contribution plan to encourage long-term savings by eligible
employees of NextLevel Systems (Puerto Rico), Inc. through a
systematic program of salary deductions. All Matching Employer
Contributions have been made in the form of the Company's common
stock. For the period from January 1, 1997 through July 27, 1997 and
the year ended December 31, 1996, the Matching Employer Contribution
was made with the Common Stock of the Distributing Company. For the
period July 28, 1997 through December 31, 1997, the Matching
Employer Contribution was made with the Common Stock of the Company.
b. CONTRIBUTIONS - Each eligible employee may elect to have
compensation reduced by, and authorize the Company to contribute to
the Plan on his or her behalf, a Matched Participant Contribution of
1% to 6% of compensation for each payroll period. Compensation
represents the participant's base salary or wages, without reduction
for his or her Matched or Unmatched Participant Contributions
-6-
<PAGE> 10
to the Plan and Section 165(e) of the Puerto Rico Income Tax Act of
1954 ("PRITA"), as amended, and excluding any other form of
additional compensation such as overtime pay, commissions, bonuses
or incentive compensation. Each Plan year, the Company will
contribute to the Plan, on behalf of the employee, a Matching
Employer Contribution equal to 50% of the employee's Matched
Participant Contribution. In addition, an employee who has elected a
Matched Participant Contribution rate of 6% may elect to further
reduce compensation, and authorize the Company to contribute to the
Plan on his or her behalf, an Unmatched Participant Contribution of
1% to 4% of the employee's compensation for each payroll period. The
annual contribution limitation for employee Matched and Unmatched
Participant Contributions is $7,500 less any elective contributions
under another defined benefit plan or defined contribution plan
excluded from the participant's gross income.
An employee may also contribute to the Plan a Rollover Amount
provided the Administrative Committee of the Plan is satisfied that
the amount to be rolled over to the Plan constitutes a Rollover
Amount under PRITA. Such contributions are classified as "other" in
the statement of changes in net assets available for benefits.
PRITA requires that the Plan provisions do not discriminate in favor
of highly compensated employees. In order to determine whether the
Plan discriminates in such a manner, contribution levels are
reviewed using the Actual Deferral Percentage ("ADP") test. To
comply with such 1996 requirements, the Company has elected to fund
a Qualified Non-Elective Contribution to the Plan which is estimated
to be $ 9,456. Such amount has been recorded as an unallocated
contribution receivable at December 31, 1996, and the actual
contribution was made by the Company during 1997. No contribution
was required to be made for the year ending December 31, 1997.
c. ELIGIBILITY - All persons employed by NextLevel Systems (Puerto
Rico), Inc. (including officers and directors who are employees and
excluding independent contractors) became eligible to participate
in the Plan as of March 1, 1994 without satisfying any minimum
period of qualifying employment. All persons hired by NextLevel
Systems (Puerto Rico), Inc. after March 1, 1994 and prior to
August 1, 1995 became eligible to participate in the Plan on the
date of hire. All persons hired by NextLevel Systems (Puerto
Rico), Inc. after August 1, 1995 became eligible to participate in
the Plan upon completion of 90 days of service.
d. VESTING - A participant's interest in his or her participant
Contributions Account and any Rollover Contribution Account
(including all earnings on contributions to such accounts) are
immediately and fully vested at all times and not subject to
forfeiture. A participant's interest in his or her Employer
Contributions Account (including all earnings on such account) will
be 50% vested upon commencing employment, 75% vested upon completing
one year of employment, and 100% vested upon completing two years of
employment. Such years of employment need not be consecutive.
Notwithstanding the foregoing, a participant becomes fully vested in
his or her Employer Contributions Account upon the earlier of the
following:
- obtaining normal retirement age
- total disability
- termination of employment by way of death.
A participant will also be fully vested in the event of a
liquidation or dissolution of the Company, or upon termination of
the Plan.
-7-
<PAGE> 11
e. CONDITIONS OF DISTRIBUTION AND WITHDRAWAL - Distributions under the
Plan may be made upon a participant's death, total disability,
retirement or other termination of employment.
Prior to termination of employment, the participant may make
withdrawals from his or her accounts pursuant to the following:
(i) All or any portion of the balance in the Rollover Contribution
Account including investment income thereon.
(ii) All or any portion of the Matched Contribution Account, the
Unmatched Contribution Account, the Rollover Contribution
Account, and the vested portion of the Employer Contribution
Account, upon attaining age 59-1/2.
(iii) All or any portion of the Employer Contribution Account, the
Matched Contribution Account excluding any income or gain
thereon, and the Unmatched Contribution Account excluding any
income or gain thereon, for reasons of hardship subject to
certain restrictions as defined in the Plan document.
Withdrawals prior to termination of employment are subject to the
following conditions: (i) no more than one request for a withdrawal
may be made during any six-month period, except in the case of a
financial hardship withdrawal; (ii) a participant may not make a
withdrawal until he or she has been a participant for six
consecutive months; and (iii) the amount withdrawn shall not be less
than $200 or the amount of the participant's vested accrued benefit.
Upon withdrawal from the Plan or after termination of employment,
the nonvested portion of a participant's account will be forfeited.
The forfeiture may be used to reduce future employer contributions.
Forfeited nonvested accounts totaled approximately $206 and $898 as
of December 31, 1997 and 1996, respectively.
f. LOANS - A participant is eligible to receive loans under the Plan
without a required period of prior participation in the Plan. A
participant may not have more than one loan from the Plan
outstanding at any one time. A separate loan fund has been
established to account for loans made from each specified fund. As
periodic principal and interest payments become due, they are
reallocated back to the specific funds from which the loan was
borrowed.
The amount of a loan may not exceed the following amount:
(i) The lesser of 50% of the vested value of the participant's
accounts or $50,000.
(ii) Notwithstanding anything in (i) to the contrary, no loan shall
be made in a principal amount of less than $1,000 and the
principal amount must be in increments of $100.
Interest is paid on the outstanding principal amount of each loan at
a fixed per annum rate equal to the prime lending rate as published
in the Wall Street Journal on the last business day of each month
plus 1-1/2%. This rate applies during the full term of the loan and
is not modified. Interest paid by a participant is credited to his
or her applicable account.
The term of the loan is fixed by the Administrative Committee at the
time the loan is made and may not be extended. All loans are for a
minimum term of one year and are in one-year increments. Any loan
which is to be used to acquire a dwelling unit which is to be used
as the principal residence of the borrowing participant within a
reasonable time (a "residence loan") must be repaid within the
earlier of fifteen years or disposition of such principal residence.
Any other loan will be treated as a "nonresidence loan" and must be
repaid within a maximum of five years.
-8-
<PAGE> 12
Regardless of its original maturity, the outstanding principal
amount of any loan and accrued interest thereon becomes immediately
due and payable sixty days following the date a participant's
employment with the Company terminates for any reason whatsoever.
A loan, including interest thereon, is repaid by payroll deductions
under a fixed schedule which provides for interest and amortization
of principal in substantially level payments over the term of the
loan. A participant may repay all (but not part) of any loan at any
time without penalty by payment of the outstanding principal amount
thereof, plus unpaid accrued interest to the date of repayment. As
collateral for repayment of each loan made to a participant, such
participant pledges the assets of his or her Plan accounts.
g. INVESTMENT FUNDS - Banco Santander is the trustee of the Plan.
Vanguard Fiduciary Trust Company ("Vanguard") is the investment
manager and recordkeeper of the Plan.
A participant may elect to invest all Participant Contributions or
Rollover Amounts in one or any combination of the funds described
below (except as noted), in whole multiples of 5% of the aggregate
amount of such contributions. A participant may elect to transfer
once each day, all or any part of the aggregate value in his or her
account or his or her interest in one or more investment fund or
funds subject to rules restricting transfers related to the Vanguard
Retirement Savings Trust. The descriptions of the investments have
been obtained from the various fund prospectuses.
General Instrument Corporation (the former NextLevel Systems,
Inc.) Common Stock Fund - Consists principally of General
Instrument Corporation (the former NextLevel Systems, Inc.)
common stock and temporary cash investments. All matching
employer contributions and earnings thereon, subsequent to
July 28, 1997, are invested in this fund. This fund is also an
investment option for participants.
General Semiconductor Inc. (the Distributing Company) Common
Stock Fund - Consists principally of General Semiconductor
Inc. common stock and temporary cash investments. All matching
employer contributions and earnings thereon prior to July 28,
1997 were invested in this fund. This fund is not a current
investment option for participants. The common stock is held
as a result of the Distributions.
CommScope Inc. Common Stock Fund - Consists principally of
CommScope, Inc. common stock and temporary cash investments.
This fund is not a current investment option for participants.
The common stock is held as a result of the Distributions.
Vanguard Retirement Savings Trust (Common/Collective Trust) -
Consisting of one or more guaranteed investment contracts
issued by insurance companies and banks.
Vanguard/Wellington Fund (Registered Investment Company) -
Consisting of a portfolio of approximately 65% in common
stocks and 35% in fixed income securities (including corporate
and government bonds and money market instruments).
Vanguard Index Trust - 500 Portfolio (Registered Investment
Company) - Consisting of a portfolio of the five-hundred
stocks in the Standard & Poor's 500 Composite Stock Price
Index, each individual stock being weighted relative to its
total market value and parallel to its representation in the
Index.
-9-
<PAGE> 13
Vanguard Money Market Reserves (Registered Investment Company)
- Consisting of a portfolio of securities issued by the U.S.
Treasury and agencies of the U.S. Government with maturities
of one year or less.
Vanguard Fixed Income Securities Fund (Registered Investment
Company) - Consisting of a portfolio of fixed income
securities guaranteed by the U.S. Government and approximately
80% of which is normally invested in Government National
Mortgage Association ("GNMA") certificates, the balance being
invested in temporary cash investments.
Vanguard STAR Portfolio (Registered Investment Company) -
Comprised of a portfolio investing 60-70% of its assets in
seven Vanguard equity funds and approximately 30-40% in three
Vanguard fixed income funds.
Vanguard U.S. Growth Portfolio (Registered Investment Company)
- Consisting of a portfolio investing primarily in common
stock of United States corporations with above average growth
potential.
Vanguard International Growth Portfolio (Registered Investment
Company) - Consisting of a portfolio of equity securities of
corporations located outside the United States.
Loan Fund - A separate loan fund has been established to
account for loans made from each specified fund. As periodic
principal and interest payments become due, they are
reallocated to the specific funds from which the loan
originated.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
b. INVESTMENTS - Investments are stated at fair or market values. The
market values of General Instrument Corporation (the former
NextLevel Systems, Inc.), CommScope, Inc. and General Semiconductor
Inc. (the Distributing Company) common stocks are based on the
closing prices as quoted on the New York Stock Exchange. The
investments in shares of the Vanguard funds are valued at the
redemption prices established by Vanguard, based upon its
determination of the market value of the underlying investments.
c. ADMINISTRATIVE EXPENSES - The Plan document provides that all
expenses shall be paid by the Plan unless the Company, at its sole
discretion, elects to pay such expenses without reimbursement.
During the years ended December 31, 1997 and 1996, the Company
elected to pay $29,011 and $22,365, respectively, of Plan expenses
without reimbursement.
d. OTHER - All security transactions are recorded on the trade date.
Net gains and losses on the disposal of investments in each fund are
computed using the average cost method based on the beginning market
value as carried forward from the end of the prior plan year.
Dividend income is recorded on the ex-dividend date. Income from
other investments is recorded as earned on an accrual basis.
-10-
<PAGE> 14
e. BENEFIT PAYABLE - As prescribed by the American Institute of
Certified Public Accountant's Audit and Accounting Guide, "Audits of
Employee Benefit Plans," benefit payments are recognized as
reductions of Plan assets upon disbursement. Benefits payable to
terminated employees who had elected to withdraw from the Plan as of
December 31, 1997 and 1996 were $934,525 and $12,876, respectively.
3. INVESTMENTS
Investments held by Banco Santander and Vanguard at December 31, 1997 were
as follows:
<TABLE>
<CAPTION>
NAME OF NUMBER FAIR
ISSUER AND OF HISTORICAL FAIR VALUE
TITLE OF ISSUES UNITS COST VALUE PER UNIT
<S> <C> <C> <C> <C>
General Instrument Corporation
(the former NextLevel Systems Inc.)
Common Stock Fund 39,165 $369,172 $371,678 $ 9.49
General Semiconductor Inc.
(the Distributing Company)
Common Stock Fund 4,795 46,834 37,159 7.75
CommScope, Inc. Common
Stock Fund 6,611 63,931 57,978 8.77
Vanguard:
Retirement Savings Trust 161,718 161,718 161,718 1.00
Wellington Fund 14,264 359,889 420,063 29.45
Index Trust - 500 Portfolio 3,705 243,794 333,694 90.07
Money Market Reserves 68,900 68,900 68,900 1.00
Fixed Income Securities Fund 7,826 79,410 81,624 10.43
STAR Portfolio 6,829 108,025 118,694 17.38
U.S. Growth Portfolio 2,485 56,656 71,323 28.70
International Growth Portfolio 3,339 52,736 54,731 16.39
</TABLE>
Investments held by Banco Santander and Vanguard at December 31, 1996 were
as follows:
<TABLE>
<CAPTION>
NAME OF NUMBER FAIR
ISSUER AND OF HISTORICAL FAIR VALUE
TITLE OF ISSUES UNITS COST VALUE PER UNIT
<S> <C> <C> <C> <C>
General Semiconductor Inc.
(the Distributing Company)
Common Stock Fund 13,355 $468,784 $363,651 $27.23
Vanguard:
Retirement Savings Trust 118,225 118,225 118,225 1.00
Wellington Fund 12,216 283,558 319,448 26.15
Index Trust 3,376 184,472 233,453 69.16
Money Market Reserves 64,875 64,875 64,875 1.00
Fixed Income Securities Fund 8,284 83,322 84,666 10.22
STAR Portfolio 6,206 91,910 98,424 15.86
U.S. Growth Portfolio 2,477 48,616 58,801 23.74
International Growth Portfolio 3,669 54,825 60,393 16.46
</TABLE>
-11-
<PAGE> 15
4. TAX STATUS
The Plan has been established and operated to comply with Section 3165,
Subchapter 9, Title 13 of the Laws of the Commonwealth of Puerto Rico and
the regulations thereunder and to be exempt from tax under Section 165 of
PRITA. The Plan obtained its latest determination letter dated May 23,
1996 in which the Treasury Department of Puerto Rico stated that the Plan,
as designed, was in compliance with the applicable requirements of the
Commonwealth of Puerto Rico. The Plan administrator and the Plan's tax
counsel believe that the Plan is designed and is currently being operated
in compliance with the applicable requirements of PRITA. Therefore, no
provision for income taxes is included in the Plan's financial statements.
5. SUBSEQUENT EVENTS
NextLevel Systems, Inc. changed its name to General Instrument Corporation
in February 1998.
In April 1998, General Instrument Corporation completed a restructuring
and closed its Puerto Rican operations. Employees of NextLevel Systems
(Puerto Rico), Inc. were terminated. The Board of Directors of NextLevel
Systems (Puerto Rico), Inc. passed a resolution to terminate the Plan
effective April 30, 1998. It is anticipated that participant account
balances will be distributed by the end of 1998. Participants' employer
matching contributions became fully vested upon termination of the Plan.
As all assets included in the Plan are stated at fair value, the decision
to terminate has no effect on these financial statements.
******
-12-
<PAGE> 16
SUPPLEMENTAL SCHEDULES
<PAGE> 17
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION
NAME OF ISSUER OF NUMBER OF CURRENT
AND TITLE OF ISSUE INVESTMENT UNITS COST VALUE
<S> <C> <C> <C> <C>
* General Instrument Corporation Common Stock and
(the former NextLevel Systems, Inc.) Temporary Cash
Common Stock Fund Investments 39,165 $ 369,172 $ 371,678
General Semiconductor, Inc. Common Stock and
(the Distributing Company) Temporary Cash
Common Stock Fund Investments 4,795 46,834 37,159
CommScope Corporation Common Stock and
Common Stock Fund Temporary Cash
Investments 6,611 63,931 57,978
Vanguard:
Retirement Savings Trust Common/Collective
Trust 161,718 161,718 161,718
Wellington Fund Shares of Registered
Investment Company 14,264 359,889 420,063
Index Trust - 500 Portfolio Shares of Registered
Investment Company 3,705 243,794 333,694
Money Market Reserves Shares of Registered
Investment Company 68,900 68,900 68,900
Fixed Income Securities Fund Shares of Registered
Investment Company 7,286 79,410 81,624
STAR Portfolio Shares of Registered
Investment Company 6,829 108,025 118,694
U.S. Growth Portfolio Shares of Registered
Investment Company 2,485 56,656 71,323
International Growth Portfolio Shares of Registered
Investment Company 3,339 52,736 54,731
<CAPTION>
DESCRIPTION
DESCRIPTION OF MATURITY
<S> <C> <C> <C> <C>
Plan participant loans other than Through 12/31/00
mortgages, at various rates of 10.00%-10.25% 161,130 161,130
interest
----------- -----------
TOTAL ASSETS HELD FOR
INVESTMENT PURPOSES $ 1,772,195 $ 1,938,692
=========== ===========
</TABLE>
* Party-in-interest
-13-
<PAGE> 18
NEXT LEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER PURCHASE NUMBER
OF PRICE OR OF SELLING REALIZED
INVESTMENT PURCHASES CONTRIBUTION SALES PRICE GAIN/(LOSS)
<S> <C> <C> <C> <C> <C>
General Semiconductor, Inc.
(the Distributing Company)
Common Stock Fund 15 $ 192,997 -- -- --
-- 143,926 52 $ 135,729 $ (8,197)
General Instrument Corporation
(the former NextLevel Systems,
Inc.) Common Stock Fund 12 80,754 -- -- --
Vanguard:
Retirement Savings Trust 60 101,745 -- -- --
Wellington Fund 37 189,353 -- -- --
-- 113,021 63 130,490 17,469
Index Trust - 500 Portfolio 47 160,616 -- -- --
-- 101,560 44 138,533 36,973
</TABLE>
-14-
<PAGE> 19
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed by the undersigned hereunto duly
authorized.
NextLevel Systems (Puerto Rico), Inc. Savings Plan
--------------------------------------------------
Date June 24, 1998 /s/ Scott A. Crum
- ------------------ --------------------------------------
Scott A. Crum
Member of the General Instrument Corporation
Employee Benefits Administrative Committee
<PAGE> 20
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
23 Independent Auditors' Consent
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-29719 and 333-33399 of General Instrument Corporation on Forms S-8 of our
report dated June 12, 1998 appearing in this Annual Report on Form 11-K of
NextLevel Systems (Puerto Rico), Inc. Savings Plan for the year ended December
31, 1997.
/s/ DELOITTE & TOUCHE LLP
- -----------------------------
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 24, 1998
