<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission file number 1-5442
General Instrument Corporation
(Exact name of registrant as specified in its charter)
Delaware 13-3575653
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
181 West Madison Street, Chicago, Illinois 60602
(Address of principal executive offices)
(Zip Code)
(312) 541-5000
(Registrant's telephone number, including area code)
The undersigned registrant hereby amends its Form 10-Q for the
quarterly period ended March 31, 1995 on the pages attached hereto
to correct its previous electronic submission of Exhibit 11.
<PAGE>
<TABLE>
PART I
FINANCIAL INFORMATION
GENERAL INSTRUMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
ASSETS
<CAPTION>
(Unaudited)
March 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $9,025 $5,128
Accounts receivable, less allowance
for doubtful accounts of $13,707 and
$7,582, respectively 350,947 306,754
Inventories 220,282 214,180
Prepaid expenses and other current
assets 23,358 22,256
Deferred income taxes 121,561 93,446
---------- --------
Total current assets 725,173 641,764
Property, plant and equipment - net 356,152 343,868
Intangibles, less accumulated
amortization of $82,491 and $78,460,
respectively 157,379 161,410
Excess of cost over fair value of net
assets acquired, less accumulated
amortization of $117,128 and
$110,952, respectively 874,911 904,184
Investments and other assets 17,124 10,113
Deferred income taxes, net of valuation
allowance 29,218 29,238
Deferred financing costs, less
accumulated amortization of $24,315
and $22,980, respectively 17,039 18,374
---------- --------
TOTAL ASSETS $2,176,996 $2,108,951
========== ==========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL INSTRUMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
(Unaudited)
March 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $166,685 $162,529
Accrued interest payable 9,663 2,737
Income taxes payable 57,064 52,670
Accrued liabilities 210,627 208,383
Current portion of long-term debt 2,155 2,155
--------- ----------
Total current liabilities 446,194 428,474
--------- ----------
Deferred income taxes 32,747 21,990
--------- ----------
Long-term debt 759,494 794,694
--------- ----------
Other non-current liabilities 199,199 186,615
--------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $.01 par value;
20,000,000 shares authorized; no
shares issued - -
Common Stock, $.01 par value;
400,000,000 shares authorized;
122,474,298 and 122,231,348 issued at
March 31, 1995 and December 31, 1994,
respectively 1,225 1,222
Additional paid-in capital 548,731 543,728
Retained earnings 189,690 132,634
---------- ----------
739,646 677,584
Less - Treasury stock, at cost,
11,259 shares of Common Stock (17) (17)
Unearned compensation (267) (389)
---------- ----------
Total stockholders' equity 739,362 677,178
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,176,996 $2,108,951
========== ==========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL INSTRUMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - In Thousands, Except Net Income Per Share)
<CAPTION>
Three Months Ended
March 31,
---------------------
1995 1994
--------- ---------
<S> <C> <C>
NET SALES $608,717 $432,521
-------- --------
OPERATING COSTS AND EXPENSES:
Cost of sales 417,885 283,369
Selling, general and administrative 64,032 39,124
Research and development 33,659 26,015
Amortization of excess of cost over fair value
of net assets acquired 6,176 6,421
--------- ---------
Total operating costs and expenses 521,752 354,929
--------- ---------
OPERATING INCOME 86,965 77,592
Other expense, net (74) (1,065)
Interest expense, net (13,028) (12,894)
--------- ---------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLE 73,863 63,633
Provision for income taxes (16,807) (10,732)
--------- ---------
INCOME BEFORE CUMULATIVE EFFECT
OF A CHANGE IN ACCOUNTING PRINCIPLE 57,056 52,901
Cumulative effect of a change in accounting
principle - (1,917)
--------- ---------
NET INCOME $57,056 $50,984
========= =========
Weighted Average Shares Outstanding 123,282 122,964
Net Income per share
Primary:
Income before cumulative effect of a
change in accounting principle $.46 $.43
Cumulative effect of a change in accounting
principle - (.02)
--------- ---------
Net income $.46 $.41
========= =========
Fully Diluted:
Income before cumulative effect of a change
in accounting principle $.42 $.41
Cumulative effect of a change in accounting
principle - (.01)
--------- ---------
Net income $.42 $.40
========= =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL INSTRUMENT
CORPORATION
CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
(Unaudited - In Thousands)
<CAPTION>
Addit- Total
Common Stock ional Common Unearned Stock-
-------------- Paid-In Retained Stock in Compens- holders'
Shares Amount Capital Earnings Treasury ation Equity
------ ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 122,231 $1,222 $543,728 $132,634 $(17) $(389) $677,178
Net income for the three
months ended March 31, 1995 57,056 57,056
Exercise of stock options 243 3 3,114 3,117
Tax benefit from exercise
of stock options 1,889 1,889
Amortization of unearned
compensation 122 122
------- ------ -------- -------- ----- ------ ---------
BALANCE, MARCH 31, 1995 122,474 $1,225 $548,731 $189,690 $(17) $(267) $ 739,362
======= ====== ======== ======== ===== ====== =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL INSTRUMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - In Thousands)
<CAPTION>
Three Months Ended
March 31,
------------------
1995 1994
------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $57,056 $50,984
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 26,010 22,386
Accounts receivable (44,194) (20,608)
Inventories (6,102) (33,117)
Prepaid expenses and other current assets (1,101) (484)
Deferred income taxes (4,301) (137)
Accounts payable, income taxes payable
and other accrued liabilities 42,603 29,367
Other non-current liabilities 7 3,509
Other (270) 2,408
------- -------
Net cash provided by operating activities 69,708 54,308
------- -------
INVESTMENT ACTIVITIES:
Additions to fixed assets - net (26,864) (20,124)
Investments in other assets (6,506) -
------- -------
Net cash used in investment activities (33,370) (20,124)
------- -------
FINANCING ACTIVITIES:
Costs associated with the sale of (358) (137)
Common Stock
Proceeds from the issuance of Flexible
Term Notes 10,800 -
Repayments of debt - (8,260)
Net repayments of revolving credit
facilities (46,000) (14,000)
Proceeds from stock options 3,117 2,068
------- -------
Net cash used in financing activities (32,441) (20,329)
------- -------
Increase in cash and cash equivalents 3,897 13,855
Cash and cash equivalents, beginning of
the period 5,128 5,584
------- -------
Cash and cash equivalents, end of the period $9,025 $19,439
======= =======
See notes to consolidated financial statements.
</TABLE>
<PAGE>
GENERAL INSTRUMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In Thousands, Unless Otherwise Noted)
1. BASIS OF PRESENTATION
The consolidated balance sheet as of March 31, 1995, the
consolidated statements of income for the three months ended
March 31, 1995 and 1994, the consolidated statements of cash
flows for the three months ended March 31, 1995 and 1994 and the
consolidated statement of stockholders' equity for the three
months ended March 31, 1995 of General Instrument Corporation
(the "Company") are unaudited and reflect all adjustments of a
normal recurring nature which are, in the opinion of management,
necessary for a fair presentation of the interim period financial
statements. There were no adjustments of a non-recurring nature
recorded during the three months ended March 31, 1995 and 1994,
except for an adjustment in March 1995 to reflect the settlement
of certain tax matters (See Note 4) and a cumulative effect
adjustment to reflect the adoption, as of January 1, 1994, of
Financial Accounting Standards Board Statement No. 112 ("SFAS
112"), Employers' Accounting for Postemployment Benefits. These
consolidated financial statements should be read in conjunction
with the Company's December 31, 1994 consolidated financial
statements and notes thereto.
Certain reclassifications have been made to the comparative prior
period financial statements to conform to the current period
presentation.
2. INVENTORIES
Inventories consists of:
March 31, 1995 December 31, 1994
-------------- -----------------
Raw Materials $ 78,514 $ 81,987
Work in Process 33,091 25,822
Finished Goods 108,677 106,371
-------- --------
Inventories $220,282 $214,180
======== ========
<PAGE>
3. LONG-TERM DEBT
Long-term debt consists of:
March 31, 1995 December 31, 1994
-------------- -----------------
Senior indebtedness:
Revolving credit facilities $194,000 $240,000
Taiwan Loan 56,849 56,849
Flexible Term Notes 10,800 -
Convertible Junior Subordinated
Notes 500,000 500,000
-------- --------
Total 761,649 796,849
Less current maturities 2,155 2,155
-------- --------
Long-Term debt $759,494 $794,694
======== ========
In January 1995, CommScope, Inc., an indirect wholly-owned
subsidiary of the Company, entered into an $11 million loan
agreement in connection with the issuance of notes by the
Alabama State Industrial Development Authority (the
"Flexible Term Notes"). Borrowings under the loan agreement
bear interest at variable rates based upon current
market conditions for short-term financing. The loan agree-
ment will mature on January 1, 2015 and any remaining
amounts outstanding under the Flexible Term Notes will be
due and payable on that date.
4. INCOME TAXES
The provision for income taxes for the three months ended
March 31, 1995 is based on the expected annual rate reduced
by a $12 million credit for the settlement of certain tax
matters.
5. SUBSEQUENT EVENTS
In April 1995, affiliates of Forstmann Little & Co. and
certain current and former directors of the Company sold an
aggregate of 15.595 million shares of Common Stock in a public
offering. The Company received no proceeds from such
offering.
In April 1995, the stockholders approved an amendment to the
Company's Certificate of Incorporation which increased the
number of authorized shares of Common Stock to 400 million.
<PAGE>
GENERAL INSTRUMENT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
Net sales for the three months ended March 31, 1995 ("First
Quarter 1995") were $609 million compared to $433 million in
the three month period ended March 31, 1994 ("First Quarter
1994"), an increase of $176 million, or 41%. This increase
relates primarily to higher sales volume in both the
Broadband Communications and Power Semiconductor segments.
Broadband Communications sales increased 42% in First Quarter
1995 over First Quarter 1994, primarily as a result of
increased sales volume of GI Communications' DigiCipher
digital compression products, distribution electronics and
analog addressable system products. The higher sales volume
reflects commercialization of digital broadband systems and
continued increased cable television operator infrastructure
spending in the United States, as well as the continued
deployment of new cable television systems in international
markets. Cable television product sales increased 24% in
First Quarter 1995 over First Quarter 1994 and international
sales of cable television electronics and coaxial cable
increased 61% in First Quarter 1995 over First Quarter 1994.
The increased sales in First Quarter 1995 were
partially offset by a decline in the sales of VideoCipher RS
analog satellite receiver consumer modules. In First Quarter
1994, the Company had significant sales of these modules to
persons who had been receiving without authorization (or
"pirating") the commercial satellite programming data
signals, whereas, in First Quarter 1995 these sales were at
minimal levels as expected. However, shipments of
VideoCipher RS analog satellite receiver consumer modules for
owners of new C-Band satellite dishes increased in First
Quarter 1995 over First Quarter 1994 and the Company expects
sales opportunities to potential new owners of C-Band
satellite dishes to continue into the second quarter of 1995
(although there can be no assurance as to the amount of those
sales), and to decline, perhaps substantially, thereafter.
Power Semiconductor sales increased 33% in First Quarter 1995
over First Quarter 1994, primarily as a result of increased
sales volume. Global demand for power rectifiers and
protection devices continued to fuel growth of the Power
Semiconductor segment with the most significant increases in
sales of components to be incorporated in telecommunications,
automotive, computer, and consumer electronics products.
GROSS PROFIT (NET SALES LESS COST OF SALES)
Gross profit increased $42 million, or 28%, to $191 million
in First Quarter 1995 from $149 million in First Quarter
1994. Gross profit was 31.3% of sales in First Quarter 1995
compared to 34.5% of sales in First Quarter 1994.
The increase in gross profit principally reflects the higher
sales volume discussed above. The lower gross profit margin
in First Quarter 1995 compared to First Quarter 1994
primarily reflects a shift in product mix from higher margin
VideoCipher RS analog satellite receiver consumer modules to
DigiCipher digital compression products, which initially
carry lower margins, partially offset by the positive effects
of production efficiencies as a result of increased volume
and cost reduction efforts.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative ("SG&A") expenses
increased $25 million to $64 million in First Quarter 1995
from $39 million in First Quarter 1994, and increased as a
percentage of sales to 10.5% in First Quarter 1995 from 9% in
First Quarter 1994.
SG&A expense in First Quarter 1995 included expenses of $8
million related to the start-up of a national advertising
campaign to support sales of C-Band satellite systems and a
$5 million provision related to the potential
uncollectibility of certain receivables. Adjusting for these
two items, SG&A expense was $51 million and 8.5% of sales.
The Company has been increasing its sales force, field
support and marketing activities to take advantage of
increased growth opportunities in international cable and
satellite television and worldwide telecommunications markets.
The increase in SG&A expense partly reflects such increased
marketing and selling costs which contributed to the higher
sales volumes discussed above.
RESEARCH AND DEVELOPMENT
Research and development ("R&D") expense was $34 million in
First Quarter 1995 compared to $26 million in First Quarter
1994 and was approximately 6% of sales in each period. This
level of spending reflects continued development of the
second generation of cable set-top terminals, which
incorporate digital compression and multimedia capabilities;
development of enhanced addressable analog terminals;
development of advanced digital systems for cable and
satellite television distribution; and product development
through strategic alliances. Emerging R&D activities include
development of broadband telephony products and interactive
multimedia technologies for broadband networks.
NET INTEREST EXPENSE
Net interest expense was $13 million both in First Quarter
1995 and First Quarter 1994. Lower weighted average
borrowings in First Quarter 1995 compared to First Quarter
1994 were offset by higher interest rates.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
Effective January 1, 1994, the Company adopted Financial
Accounting Standards Board Statement No. 112, Employers'
Accounting for Postemployment Benefits ("SFAS No. 112"). As
a result of adopting SFAS No. 112, the Company recorded a
cumulative effect charge to income of $2 million.
INCOME TAXES
Income taxes increased to $17 million in First Quarter 1995
from $11 million in First Quarter 1994 and the effective tax
rate increased to 23% in First Quarter 1995 from 17% in
First Quarter 1994. The increase in the effective tax
rate in First Quarter 1995 is attributable to the Company
having a valuation allowance related to domestic deferred
tax assets in 1994 which was reduced during First Quarter
1994, to the extent that domestic taxable income was
generated. As of December 31, 1994, the majority of the
Company's domestic deferred tax assets were determined to be
realizable and therefore there was no valuation allowance
impact on income taxes in First Quarter 1995. In addition,
the First Quarter 1995 income tax provision reflects a $12
million credit to income, related to the settlement of
certain tax matters.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, working capital was $279 million compared
to $213 million at December 31, 1994. The working capital
increase of $66 million was due principally to increased
sales volume with a corresponding increase in accounts
receivable and increased deferred tax assets. Based on
current levels of order input and backlog, as well as
significant sales agreements not yet reflected in order and
backlog levels, the Company believes that operational working
capital levels are appropriate to support future operations.
There can be no assurance, however, that future industry
specific developments or general economic trends will not
alter the Company's working capital requirements. At March
31, 1995, the Company had borrowings of $194 million under
its revolving credit facilities and credit commitments, which
the Company had not borrowed against, of $306 million. In
addition, in January 1995, CommScope, Inc., an indirect
wholly-owned subsidiary of the Company, entered into an $11
million loan agreement in connection with the issuance of
notes by the Alabama State Industrial Development Authority.
See Note 3 to the consolidated financial statements.
During First Quarter 1995, the Company invested $27 million
in equipment and facilities. These capital expenditures were
used to expand capacity to meet increased current and future
demands for analog and digital products, coaxial cable and
rectifiers. Capital expenditures for the year ending
December 31, 1995 are expected to approximate $170 million.
The Company's research and development expenditures
(principally focused on the Broadband Communications
business) were $34 million and $26 million in First Quarter
1995 and First Quarter 1994, respectively, and are expected
to approximate $130 million for the year ending December 31,
1995.
At March 31, 1995, the Company had $9 million of cash and cash
equivalents on hand compared to $5 million at December 31,
1994. At March 31, 1995, long-term debt, including current
maturities, was $762 million compared to $797 million at
December 31, 1994.
The Company's principal source of liquidity both on a short-
term and long-term basis is cash flow provided by operations.
Occasionally, however, the Company may borrow against its
revolving credit facilities to supplement cash flow from
operations. The Company believes that, based upon its
analysis of its consolidated financial position, its cash
flow during the past 12 months and the expected results of
operations in the future, operating cash flow and available
funding under its revolving credit facilities will be
adequate to fund operations, research and development
expenditures, capital expenditures and debt service for the
next 12 months. The Company intends to repay its remaining
indebtedness primarily with cash flow from operations. There
can be no assurance, however, that future industry specific
developments or general economic trends will not adversely
affect the Company's operations or its ability to meet its
cash requirements.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Computation of Earnings Per Share
(b) Report on Form 8-K
No reports on Form 8-K were filed by the Registrant during
the three months ended March 31, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this amendment to be signed on
its behalf by the undersigned thereunto duly authorized.
GENERAL INSTRUMENT CORPORATION
August 29, 1995 /s/Paul J. Berzenski
- -------------- -------------------------------------
Date Paul J. Berzenski
Vice President and Controller
Signing both in his capacity as Vice
President on behalf of the Registrant
and as Chief Accounting Officer of
the Registrant
<PAGE>
<TABLE>
GENERAL INSTRUMENT CORPORATION
Exhibit 11 - Computation of Earnings Per Share
(In Thousands Except Per Share Amounts)
<CAPTION>
Three Months Ended
March 31,
------------------
1995 1994
------- --------
<S> <C> <C>
PRIMARY:
Income before cumulative effect of
a change in accounting principle $57,056 $52,901
Cumulative effect of a change in
accounting principle - (1,917)
_______ _______
Net Income $57,056 $50,984
======= =======
Weighted average common shares
outstanding 122,304 120,432
Incremental shares under stock
option plans 978 2,532
_______ _______
Weighted average common and common
equivalent shares outstanding 123,282 122,964
======= =======
Primary earnings per share:
Income before cumulative effect
of a change in accounting principle $0.46 $0.43
Cumulative effect of a change in
accounting principle - (.02)
_____ _____
Net income $0.46 $0.41
===== =====
FULLY DILUTED:
Income before cumulative effect of a
change in accounting principle $57,056 $52,901
Interest and amortization of debt
issuance costs related to the
Convertible Junior Subordinated
Notes, net of income tax effects 4,119 6,470
------ -------
Adjusted income before a cumulative
effect of a change in accounting
principle 61,175 59,371
Cumulative effect of a change in
accounting principle - (1,917)
_______ ________
Adjusted net income $61,175 $57,454
======= =======
Weighted average common shares
outstanding 122,304 120,432
Incremental shares under stock
option plans 1,236 2,532
Incremental shares attributable
to Convertible Junior Subordinated
Notes 21,053 21,053
_______ _______
Adjusted weighted average shares
outstanding 144,593 144,017
======= =======
Fully diluted earnings per share:
Income before cumulative effect of
a change in accounting principle $0.42 $0.41
Cumulative effect of a change in
principle accounting - (.01)
_______ _______
Net income $0.42 $0.40
======= =======
<FN>
Note: The computations of primary and fully diluted earnings per
share assume incremental shares under stock option plans using
the treasury method.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 9,025
<SECURITIES> 0
<RECEIVABLES> 350,947
<ALLOWANCES> 13,707
<INVENTORY> 220,282
<CURRENT-ASSETS> 725,173
<PP&E> 356,152
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,176,996
<CURRENT-LIABILITIES> 446,194
<BONDS> 759,494
<COMMON> 1,225
0
0
<OTHER-SE> 738,421
<TOTAL-LIABILITY-AND-EQUITY> 2,176,996
<SALES> 608,717
<TOTAL-REVENUES> 608,717
<CGS> 417,885
<TOTAL-COSTS> 417,885
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,028
<INCOME-PRETAX> 73,863
<INCOME-TAX> 16,807
<INCOME-CONTINUING> 57,056
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,056
<EPS-PRIMARY> $0.46
<EPS-DILUTED> $0.42
</TABLE>
