<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, 1998
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)
101 Tournament Drive, Horsham, Pennsylvania 19044
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
<PAGE> 2
NEXTLEVEL SYSTEMS
(PUERTO RICO), INC.
SAVINGS PLAN
Financial Statements for the
Years Ended December 31, 1998 and 1997,
Supplemental Schedules for the
Year Ended December 31, 1998 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, 1998 and 1997, with Supplemental Fund Information 2-3
Statements of Changes in Net Assets Available for Benefits for
the Years Ended December 31, 1998 and 1997, 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, 1998 13
Item 27(d) - Schedule of Reportable Transactions for the
Year Ended December 31, 1998 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,
1998 and 1997, 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,
1998 and 1997, and the changes in net assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Plan's Administrative
Committee has decided to terminate the Plan.
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, 1998 and 1997, 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 15, 1999
<PAGE> 5
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH SUPPLEMENTAL FUND
INFORMATION DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GENERAL
INSTRUMENT GENERAL
CORPORATION SEMICONDUCTOR,
(THE FORMER INC. (THE VANGUARD
NEXTLEVEL DISTRIBUTING COMMSCOPE, VANGUARD FEDERAL
SYSTEMS, INC.) COMPANY) INC. RETIREMENT VANGUARD/ VANGUARD MONEY VANGUARD
COMMON COMMON COMMON SAVINGS WELLINGTON 500 INDEX MARKET GNMA
STOCK FUND STOCK FUND STOCK FUND TRUST FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Company common stock $131,660 $ -- $ -- $ -- $ -- $ -- $ -- $ --
Other common stock -- 4,518 12,930 -- -- -- -- --
Common/collective trust -- -- -- 32,097 -- -- -- --
Shares of registered
investment company -- -- -- -- 161,923 67,753 14,024 23,113
Participant loans -- -- -- -- -- -- -- --
-------- ------ ------- ------- -------- ------- ------- -------
NET ASSETS AVAILABLE
FOR BENEFITS $131,660 $4,518 $12,930 $32,097 $161,923 $67,753 $14,024 $23,113
======== ====== ======= ======= ======== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
VANGUARD VANGUARD
VANGUARD U.S. INTERNATIONAL
STAR GROWTH GROWTH LOAN
FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Company common stock $ -- $ -- $ -- $ -- $131,660
Other common stock -- -- -- -- 17,448
Common/collective trust -- -- -- -- 32,097
Shares of registered
investment company 13,015 12,004 13,664 -- 305,496
Participant loans -- -- -- 6,720 6,720
------- ------- ------- ------ --------
NET ASSETS AVAILABLE
FOR BENEFITS $13,015 $12,004 $13,664 $6,720 $493,421
======= ======= ======= ====== ========
</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, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GENERAL
INSTRUMENT GENERAL
CORPORATION SEMICONDUCTOR,
(THE FORMER INC. (THE VANGUARD
NEXTLEVEL DISTRIBUTING COMMSCOPE, VANGUARD FEDERAL
SYSTEMS, INC.) COMPANY) INC. RETIREMENT VANGUARD/ VANGUARD MONEY VANGUARD
COMMON COMMON COMMON SAVINGS WELLINGTON 500 INDEX MARKET GNMA
STOCK FUND STOCK FUND STOCK FUND TRUST FUND FUND FUND FUND
<S> <C> <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 81,624
Participant loans -- -- -- -- -- -- -- --
Loans receivable 288 -- -- 975 2,582 1,521 397 634
Contributions receivable:
Employee 1,794 -- -- 4,344 10,513 6,864 1,986 2,491
Employer 17,365 -- -- -- -- -- -- --
-------- ------- ------- -------- -------- -------- ------- -------
NET ASSETS AVAILABLE
FOR BENEFITS $391,125 $37,159 $57,978 $167,037 $433,158 $342,079 $71,283 $84,749
======== ======= ======= ======== ======== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
VANGUARD VANGUARD
VANGUARD U.S. INTERNATIONAL
STAR GROWTH GROWTH LOAN
FUND FUND FUND FUND TOTAL
<S> <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 118,694 71,323 54,731 -- 1,149,029
Participant loans -- -- -- 161,130 161,130
Loans receivable 899 447 579 -- 8,322
Contributions receivable:
Employee 3,608 1,886 1,847 -- 35,333
Employer -- -- -- -- 17,365
-------- ------- ------- -------- ----------
NET ASSETS AVAILABLE
FOR BENEFITS $123,201 $73,656 $57,157 $161,130 $1,999,712
======== ======= ======= ======== ==========
</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, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GENERAL
INSTRUMENT GENERAL
CORPORATION SEMICONDUCTOR,
(THE FORMER INC. (THE VANGUARD
NEXTLEVEL DISTRIBUTING COMMSCOPE, VANGUARD FEDERAL
SYSTEMS, INC.) COMPANY) INC. RETIREMENT VANGUARD/ VANGUARD MONEY
COMMON COMMON COMMON SAVINGS WELLINGTON 500 INDEX MARKET
STOCK FUND STOCK FUND STOCK FUND TRUST FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Employee $ 425 $ -- $ -- $ 2,972 $ 8,142 $ 4,309 $ 433
Employer 12,620 -- -- -- -- -- --
--------- -------- -------- --------- --------- --------- --------
Net contributions 13,045 -- -- 2,972 8,142 4,309 433
--------- -------- -------- --------- --------- --------- --------
Investment income:
Interest and dividends -- -- -- 3,554 20,253 1,796 1,280
Net gain on investments 99,194 265 2,481 -- 7,729 33,468 --
--------- -------- -------- --------- --------- --------- --------
Net investment income 99,194 265 2,481 3,554 27,982 35,264 1,280
--------- -------- -------- --------- --------- --------- --------
Total additions 112,239 265 2,481 6,526 36,124 39,573 1,713
--------- -------- -------- --------- --------- --------- --------
DEDUCTIONS:
Distributions 371,566 32,887 47,495 116,699 331,712 321,243 54,655
Administrative expenses 259 19 34 69 258 181 4,483
--------- -------- -------- --------- --------- --------- --------
Total deductions 371,825 32,906 47,529 116,768 331,970 321,424 59,138
--------- -------- -------- --------- --------- --------- --------
TRANSFERS
(To) from other funds 121 -- -- (24,698) 24,611 7,525 166
--------- -------- -------- --------- --------- --------- --------
NET DECREASE (259,465) (32,641) (45,048) (134,940) (271,235) (274,326) (57,259)
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 391,125 37,159 57,978 167,037 433,158 342,079 71,283
--------- -------- -------- --------- --------- --------- --------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 131,660 $ 4,518 $ 12,930 $ 32,097 $ 161,923 $ 67,753 $ 14,024
========= ======== ======== ========= ========= ========= ========
</TABLE>
<TABLE>
<CAPTION>
VANGUARD VANGUARD
VANGUARD VANGUARD U.S. INTERNATIONAL
GNMA STAR GROWTH GROWTH LOAN
FUND FUND FUND FUND FUND TOTAL
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Employee $ 3,139 $ 2,716 $ 1,605 $ 1,499 $ -- $ 25,240
Employer -- -- -- -- -- 12,620
-------- --------- -------- -------- --------- -----------
Net contributions 3,139 2,716 1,605 1,499 -- 37,860
-------- --------- -------- -------- --------- -----------
Investment income:
Interest and dividends 2,415 1,056 814 303 698 32,169
Net gain on investments 118 5,369 9,226 5,063 -- 162,913
-------- --------- -------- -------- --------- -----------
Net investment income 2,533 6,425 10,040 5,366 698 195,082
-------- --------- -------- -------- --------- -----------
Total additions 5,672 9,141 11,645 6,865 698 232,942
-------- --------- -------- -------- --------- -----------
DEDUCTIONS:
Distributions 67,810 119,759 73,424 52,004 144,446 1,733,700
Administrative expenses 63 71 46 50 -- 5,533
-------- --------- -------- -------- --------- -----------
Total deductions 67,873 119,830 73,470 52,054 144,446 1,739,233
-------- --------- -------- -------- --------- -----------
TRANSFERS
(To) from other funds 565 503 173 1,696 (10,662) --
-------- --------- -------- -------- --------- -----------
NET DECREASE (61,636) (110,186) (61,652) (43,493) (154,410) (1,506,291)
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 84,749 123,201 73,656 57,157 161,130 1,999,712
-------- --------- -------- -------- --------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 23,113 $ 13,015 $ 12,004 $ 13,664 $ 6,720 $ 493,421
======== ========= ======== ======== ========= ===========
</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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GENERAL
INSTRUMENT GENERAL
CORPORATION SEMICONDUCTOR,
(THE FORMER INC. (THE VANGUARD
NEXTLEVEL DISTRIBUTING COMMSCOPE, VANGUARD FEDERAL
SYSTEMS, INC.) COMPANY) INC. RETIREMENT VANGUARD/ VANGUARD MONEY
COMMON COMMON COMMON SAVINGS WELLINGTON 500 INDEX MARKET
STOCK FUND STOCK FUND STOCK FUND TRUST FUND FUND FUND
<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
========= ========= ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
VANGUARD VANGUARD
VANGUARD VANGUARD U.S. INTERNATIONAL
GNMA 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.
-5-
<PAGE> 9
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
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
Delaware corporation and 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, at the
Distributing Company's historical cost, 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"), at the Distributing
Company's historical cost, 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, the Matching Employer Contribution was
made with the Common Stock of the Distributing Company. For the period
July 28, 1997 through March 31, 1998, at which time contributions to
the Plan were suspended, the Matching Employer Contribution was made
with the Common Stock of the Company.
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
-6-
<PAGE> 10
Board of Directors of NextLevel Systems (Puerto Rico), Inc. has passed
a resolution, effective April 30, 1998, to terminate the Plan. It is
anticipated that participant account balances will be distributed by
the end of 1999. Participants' employer matching contributions became
fully vested upon termination of the Plan. The accompanying financial
statements are presented on the liquidation basis of accounting. As
all assets included in the Plan are already stated at fair value, the
decision to terminate has no effect on these financial statements.
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 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, NextLevel Systems (Puerto Rico), Inc. 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 NextLevel Systems (Puerto Rico), Inc. 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. Such
contributions are subject to certain limitations.
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.
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. No contribution was
required to be made for the years ending December 31, 1998 and 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.
-7-
<PAGE> 11
Notwithstanding the foregoing, an active 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.
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 in the following sequence:
(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 and (ii) 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 $0 and $206 for the
years ended December 31, 1998 and 1997, 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.
-8-
<PAGE> 12
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.
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
the result of the spin-off transaction described in Note 1a.
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 the result of the spin-off transaction.
-9-
<PAGE> 13
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 500 Index Fund (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.
Vanguard Federal Money Market Fund (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 GNMA 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 Fund (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 Fund (Registered Investment Company) -
Consisting of a portfolio investing primarily in common stock of
United States corporations with above average growth potential.
Vanguard International Growth Fund (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.
-10-
<PAGE> 14
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, 1998 and 1997, the Company elected to pay $83,014
and $29,011, 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.
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, 1998 and 1997
were $70,064 and $934,525, respectively.
3. INVESTMENTS
Investments held by Banco Santander and Vanguard at December 31, 1998 were
as follows:
<TABLE>
<CAPTION>
NAME OF NUMBER
ISSUER AND OF FAIR
TITLE OF ISSUES UNITS VALUE
<S> <C> <C>
General Instrument Corporation (the former NextLevel
Systems Inc.) Common Stock Fund 7,401 $ 131,660
General Semiconductor, Inc. (the Distributing Company)
Common Stock Fund 834 4,518
CommScope, Inc. Common Stock Fund 1,139 12,930
Vanguard:
Retirement Savings Trust 32,097 32,097
Wellington Fund 5,517 161,923
500 Index Fund 595 67,753
Federal Money Market Fund 14,024 14,024
GNMA Fund 2,212 23,113
STAR Fund 725 13,015
U.S. Growth Fund 320 12,004
International Growth Fund 728 13,664
</TABLE>
-11-
<PAGE> 15
Investments held by Banco Santander and Vanguard at December 31, 1997 were
as follows:
<TABLE>
<CAPTION>
NAME OF NUMBER
ISSUER AND OF FAIR
TITLE OF ISSUES UNITS VALUE
<S> <C> <C>
General Instrument Corporation (the former NextLevel
Systems Inc.) Common Stock Fund 39,165 $371,678
General Semiconductor, Inc. (the Distributing Company)
Common Stock Fund 4,795 37,159
CommScope, Inc. Common Stock Fund 6,611 57,978
Vanguard:
Retirement Savings Trust 161,718 161,718
Wellington Fund 14,264 420,063
500 Index Fund 3,705 333,694
Federal Money Market Fund 68,900 68,900
GNMA Fund 7,826 81,624
STAR Fund 6,829 118,694
U.S. Growth Fund 2,485 71,323
International Growth Fund 3,339 54,731
</TABLE>
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 believes that the Plan
is currently designed and being operated in compliance with the applicable
requirements of PRITA. Therefore, no provision for income taxes is included
in the Plan's 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, 1998
- --------------------------------------------------------------------------------
<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 7,401 $ 70,388 $ 131,660
General Semiconductor, Inc. Common Stock and
(the Distributing Company) Temporary Cash
Common Stock Fund Investments 834 8,152 4,518
CommScope, Inc. Common Stock and
Common Stock Fund Temporary Cash
Investments 1,139 11,029 12,930
Vanguard:
Retirement Savings Trust Common/Collective
Trust 32,097 32,097 32,097
Wellington Fund Shares of Registered
Investment Company 5,517 145,009 161,923
500 Index Fund Shares of Registered
Investment Company 595 41,523 67,753
Federal Money Market Fund Shares of Registered
Investment Company 14,024 14,024 14,024
GNMA Securities Fund Shares of Registered
Investment Company 2,212 22,495 23,113
STAR Fund Shares of Registered
Investment Company 725 11,769 13,015
U.S. Growth Fund Shares of Registered
Investment Company 320 7,326 12,004
International Growth Fund Shares of Registered
Investment Company 728 11,538 13,664
DESCRIPTION
DESCRIPTION OF MATURITY
Plan participant loans other than Through 12/31/01
mortgages, at various rates of 9.75%-10.25%
interest 6,720 6,720
---------- ---------
TOTAL ASSETS HELD FOR
INVESTMENT PURPOSES $ 382,070 $ 493,421
========== =========
</TABLE>
* Party-in-interest
-13-
<PAGE> 18
NEXTLEVEL SYSTEMS (PUERTO RICO), INC. SAVINGS PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SERIES OF TRANSACTIONS
<TABLE>
<CAPTION>
NUMBER PURCHASE NUMBER
OF PRICE OR OF SELLING REALIZED
INVESTMENT PURCHASES CONTRIBUTION SALES PRICE GAIN
<S> <C> <C> <C> <C> <C>
General Instrument Corporation
(the former NextLevel Systems,
Inc.) Common Stock Fund -- $331,619 22 $371,825 $40,206
Vanguard:
Retirement Savings Trust -- 142,031 15 142,031 --
Wellington Fund -- 280,980 20 331,971 50,991
STAR Fund -- 105,038 15 119,829 14,791
</TABLE>
SINGLE TRANSACTIONS
<TABLE>
<CAPTION>
TYPE
OF PRICE OR SELLING REALIZED
TRANSACTIONS COST PRICE GAIN
<S> <C> <C> <C> <C>
General Instrument Corporation
(the former NextLevel Systems,
Inc.) Common Stock Fund Sale $ 173,615 $ 175,787 $ 2,172
Sale 77,361 105,220 27,859
Vanguard:
Wellington Fund Sale 131,829 152,563 20,734
500 Index Fund Sale 104,820 141,854 37,034
</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 28, 1999 /s/ Scott A. Crum
------------- --------------------------------------------------
Scott A. Crum
Chairman 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 15, 1999 appearing in this Annual Report on Form 11-K of
NextLevel Systems (Puerto Rico), Inc. Savings Plan for the year ended December
31, 1998.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 28, 1999
