GENERAL INSTRUMENT CORP /DE/, 424B1, 1995-04-21

GENERAL INSTRUMENT CORP /DE/
424B1, 1995-04-21
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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<PAGE>
15,000,000 SHARES
[LOGO] GENERAL INSTRUMENT CORPORATION
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
--------------

Of the 15,000,000 shares of Common Stock offered, 3,000,000 shares are being
offered hereby in an international offering outside the United States and
12,000,000 shares are being offered in a concurrent offering in the United
States. The initial public offering price and the aggregate underwriting
discount per share are identical for both offerings. See "Underwriting".

All of the shares of Common Stock offered hereby are being sold by the
Selling Stockholders. The largest stockholders of the Company, who are
affiliates of Forstmann Little & Co., are selling 14,891,035 shares of Common
Stock in the offerings. See "Selling Stockholders". The Company will not receive
any of the proceeds from the sale of the shares offered hereby.

The last reported sale price of the Common Stock on the New York Stock
Exchange Composite Tape on April 20, 1995 was $34.50 per share. See "Price Range
of Common Stock and Dividend Policy".

SEE "RISK FACTORS" FOR CERTAIN MATTERS RELEVANT TO AN INVESTMENT IN THE
COMMON STOCK.
--------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT (1) STOCKHOLDERS (2)
---------------- -------------- -------------------
<S> <C> <C> <C>
Per Share................................................. $34.375 $1.15 $33.225
Total (3)................................................. $ 515,625,000 $ 17,250,000 $ 498,375,000
<FN>
- --------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting".
(2) Expenses of the offerings estimated at $1,002,460 will be paid by the
Company.
(3) Certain of the Selling Stockholders have granted the International
Underwriters an option for 30 days to purchase up to an additional 450,000
shares at the initial public offering price per share, less the
underwriting discount, solely to cover over-allotments. Additionally, such
Selling Stockholders have granted the U.S. Underwriters an option for 30
days to purchase up to an additional 1,800,000 shares at the initial public
offering price per share, less the underwriting discount, solely to cover
over-allotments. If such options are exercised in full, the total initial
public offering price, underwriting discount and proceeds to the Selling
Stockholders will be $592,968,750, $19,837,500 and $573,131,250,
respectively. See "Underwriting".
</TABLE>

--------------

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
April 27, 1995.

GOLDMAN SACHS INTERNATIONAL
LAZARD CAPITAL MARKETS
MERRILL LYNCH INTERNATIONAL LIMITED

ABN AMRO HOARE GOVETT CREDIT LYONNAIS SECURITIES
DEUTSCHE BANK NIKKO EUROPE PLC S.G.WARBURG SECURITIES
AKTIENGESELLSCHAFT
-----------

The date of this Prospectus is April 20, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part and
which term shall encompass any amendments thereto) on Form S-3 pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits and schedules thereto,
certain portions of which are omitted as permitted by the rules and regulations
of the Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete;
with respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. For further information
about the Company and the securities offered hereby, reference is made to the
Registration Statement and to the exhibits filed as a part hereof.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. The
Registration Statement, the exhibits and schedules forming a part thereof and
the reports and other information filed by the Company with the Commission in
accordance with the Exchange Act may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the following regional
offices of the Commission: Seven World Trade Center, Suite 1300, New York, New
York 10048 and Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material or any part thereof may also be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates. Such reports and other
information can be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
--------------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission pursuant to
the Exchange Act (File No. 1-5442) are incorporated in this Prospectus by
reference:

(1) The Company's Annual Report on Form 10-K for the year ended December 31,
1994;

(2) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed with the Commission on April 17, 1992,
as amended; and

(3) The Company's Current Report on Form 8-K, dated April 17, 1995.

All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offerings of shares of Common
Stock hereby shall be deemed incorporated by reference in this Prospectus and to
be a part hereof from the respective date of filing of such documents.

Any statement contained herein or in a document incorporated, or deemed to
be incorporated, by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained or incorporated by reference herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded,
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.

The Company will provide without charge to any person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any and all information incorporated by
reference in this Prospectus (except exhibits to such information, unless such
exhibits are specifically incorporated by reference in such information). Such
requests should be directed to: Corporate Legal Department, General Instrument
Corporation, 181 West Madison Street, Chicago, Illinois 60602 (telephone (312)
541-5000).

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE
DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
APPEARING ELSEWHERE, AND INCORPORATED BY REFERENCE, IN THIS PROSPECTUS. UNLESS
THE CONTEXT OTHERWISE REQUIRES, REFERENCES TO THE "COMPANY" OR "GI" INCLUDE
GENERAL INSTRUMENT CORPORATION AND ITS DIRECT AND INDIRECT SUBSIDIARIES,
INCLUDING GENERAL INSTRUMENT CORPORATION OF DELAWARE (FORMERLY KNOWN AS GI
CORPORATION) ("GI DELAWARE"), THE COMPANY'S PRINCIPAL OPERATING SUBSIDIARY. ALL
SHARE AND PER SHARE INFORMATION CONTAINED IN THIS PROSPECTUS, UNLESS OTHERWISE
SPECIFIED, REFLECTS A TWO-FOR-ONE SPLIT OF THE COMMON STOCK ON AUGUST 8, 1994
EFFECTED IN THE FORM OF A 100% STOCK DIVIDEND.

THE COMPANY

General Instrument Corporation (the "Company" or "GI") is a leading
worldwide supplier of broadband communications systems and equipment. Through
its two Broadband Communications segment divisions, GI Communications and
CommScope (which together contributed approximately 84% of GI's consolidated
sales in the year ended December 31, 1994), the Company is the world's largest
manufacturer of addressable systems and subscriber equipment, and is a leading
manufacturer of fiber optic and RF (radio frequency) distribution electronics
for the cable television industry. The Company believes that it has supplied a
majority of the addressable systems in use by cable television operators in the
United States and abroad. The GI Communications Division is also the world's
largest manufacturer and supplier of access control, scrambling and descrambling
equipment used by television programmers for the satellite delivery of their
programming. In addition, GI is the largest supplier of coaxial cable for the
U.S. cable television industry. Through its Power Semiconductor Division, the
Company is also a leading manufacturer of discrete power rectifying and
transient voltage suppression components used in telecommunications, automotive
and consumer electronics products.

In 1994, sales of GI's analog terrestrial products, including addressable
subscriber systems, distribution electronics and coaxial cable, reached their
highest levels to date. The Company believes this has been a result of increased
capital spending on analog equipment by cable television operators in the United
States and abroad. GI expects cable operators to continue to upgrade their basic
networks and invest in new system construction primarily for four reasons:
first, new competition has arisen from other television programming sources,
such as direct broadcast satellite and cable networks planned by some telephone
companies; second, a majority of U.S. cable subscribers do not yet have
addressable terminals, and a majority are served by a system that is not capable
of offering more than 54 channels of programming; third, analog addressable
systems are the preferred choice for cable operators that have subscribers with
an expected usage profile that does not justify the higher cost of more advanced
digital systems; and fourth, international markets, where cable penetration is
low and demand for entertainment programming is growing, are being developed
using U.S. architecture and systems.

The Company is a worldwide leader in the development and implementation of
the "enabling" technologies upon which the Company believes the next generation
of broadband communications networks will be built. GI produced the first
commercial application of digital compression products and has been a leader in
the development of addressable cable television subscriber terminals, advanced
fiber optic electronics and high-capacity coaxial cable. The Company believes
that it is in the unique position of having produced, and of currently
producing, the majority of the world's analog addressable systems, while also
developing the digital technology that will eventually replace these systems.

GI believes that an important future market for the Company will be the
commercialization of advanced digital broadband systems and equipment. During
the first stage of digital systems deployment, programmers and commercial
headend operators will use digital equipment to increase channel capacity,
improve signal quality and enhance security. The first stage began in late 1993,
when GI began shipping its first-generation DigiCipher-Registered Trademark- I
encoders and decoders for satellite programmers and cable television commercial
headend operators.

In the next stage of digital deployment, GI believes that satellite
programmers, cable operators and other network providers will begin to deploy
digital terminals in their subscribers' homes in order to take advantage of the
enhanced capabilities of the digital networks. This stage began in the satellite
market during the second quarter of 1994, when GI began shipping
DigiCipher-Registered Trademark- I consumer receivers to

3
<PAGE>
PRIMESTAR Partners for the medium power Ku-band direct-to-home satellite market.
The Company's DigiCipher-Registered Trademark- II digital compression system,
which is compatible with the recently finalized industry standard for digital
compression and transport (Motion Picture Experts Group 2), is expected to be
available in mid-1995 for satellite applications. For cable television
applications, to date, GI has obtained orders and letters of intent for more
than 2.6 million of its DigiCable-TM- digital subscriber terminals from 11 major
cable operators. Volume shipments of these advanced digital subscriber terminals
for cable television applications are expected to begin in late 1995.
Additionally, GI has entered into a letter of intent and is negotiating a
definitive agreement under which it expects to supply digital and analog
equipment for the deployment of Bell Atlantic Corporation's announced large
scale broadband network. GI has also entered into an agreement under which it
expects to supply digital and analog equipment for the first three sites of GTE
Corporation's announced broadband network. See "Risk Factors -- New
Technologies; Digital Products" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- New Technologies; Digital
Products."

The Company was organized in 1990 in connection with the acquisition (the
"Acquisition") of General Instrument Corporation, then a publicly traded
company, by affiliates of Forstmann Little & Co., a private investment firm
("Forstmann Little"). Affiliates of Forstmann Little (the "Forstmann Little
Partnerships") own approximately 30% of the currently outstanding shares of the
common stock, par value $.01 per share ("Common Stock"), of the Company, and 25%
of the shares of Common Stock on a fully diluted basis. After giving effect to
the Offerings (as defined below), the Forstmann Little Partnerships will own
approximately 18% of the currently outstanding shares of Common Stock, and 15%
of the shares of Common Stock on a fully diluted basis (13% if the Underwriters'
over-allotment options are exercised in full). See "Selling Stockholders."

The principal executive offices of the Company are located at 181 West
Madison Street, Chicago, Illinois 60602, and the telephone number of the Company
is (312) 541-5000.

RISK FACTORS

Before making an investment in the Common Stock, prospective purchasers
should carefully consider certain factors, including: that the Company's
business is dependent on capital spending in the cable television industry,
which has fluctuated significantly in the past; that the Company is subject to
restrictive financial and operating covenants, including restrictions on
dividends, under the Credit Agreement (as defined below); that the Company
competes with a substantial number of other companies and the rapid
technological changes occurring in the Company's markets are expected to lead to
the entry of new competitors; that the Company's future success will be
dependent upon its ability to continue to develop appropriate technologies and
successfully implement applications based on those technologies; and that sales
of substantial amounts of Common Stock in the public market could adversely
affect the market price of the Common Stock. See "Risk Factors."

THE OFFERINGS

<TABLE>
<S> <C>
Common Stock offered:
U.S. Offering................... 12,000,000 shares (1)
International Offering.......... 3,000,000 shares (1)
Total......................... 15,000,000 shares (1)
Common Stock outstanding.......... 122,613,885 shares (2)
Use of Proceeds................... All of the Common Stock offered hereby is being sold by
the Selling Stockholders. The Company will not receive
any proceeds from the sale of the shares offered
hereby.
New York Stock Exchange symbol.... GIC
<FN>
- --------------
(1) Assumes the Underwriters' over-allotment options are not exercised.
(2) Includes 108,965 shares to be issued upon exercise of stock options and
sold in the Offerings. See "Selling Stockholders." Does not include
5,956,374 shares issuable upon exercise of other stock options outstanding
as of April 20, 1995.
</TABLE>

The offering of 12,000,000 shares of Common Stock being offered in the
United States (the "U.S. Offering") and the offering of 3,000,000 shares of
Common Stock being offered outside the United States (the "International
Offering") are collectively referred to herein as the "Offerings." The closing
of the International Offering is conditioned upon the closing of the U.S.
Offering, and vice versa.

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table presents summary consolidated financial data derived
from the historical financial statements of the Company for periods subsequent
to the Acquisition (which occurred on August 15, 1990). As of December 31, 1991,
the Company changed the end of its fiscal year from the last day in February to
December 31. The pro forma statement of operations data for the twelve months
ended December 31, 1991 was derived from the historical statements of operations
of the Company adjusted to give effect to the change in fiscal year from the
last day of February to December 31. The following data should be read in
conjunction with the Company's consolidated financial statements and notes
thereto, which are included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1994 and incorporated herein by reference, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AUGUST 15, TWELVE
1990 TEN MONTHS MONTHS
THROUGH ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
28, 1991 31, 1991 31, 1991 31, 1992 31, 1993 31, 1994
----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(PRO FORMA
FOR CHANGE
IN FISCAL
YEAR)
STATEMENTS OF
OPERATIONS DATA:
Net sales........... $ 533,118 $ 785,139 $ 928,826 $1,074,695 $1,392,522 $2,036,323
Cost of sales..... 406,235 566,358 668,441 755,466 956,154 1,403,585
Selling, general
and
administrative... 69,293 103,487 123,311 137,335 149,362 179,631
Research and
development...... 32,134 46,182 57,082 58,149 73,741 111,462
Amortization of
excess of cost
over fair value
of net assets
acquired......... 12,206 21,567 25,637 25,883 25,722 25,574
Operating income.... 13,250 47,545 54,355 97,862 187,543 316,071
Interest expense
-- net........... (64,718) (102,791) (123,440) (110,304) (72,458) (52,751)
Income (loss) from
operations before
extraordinary item
and cumulative
effect of changes
in accounting
principles......... (57,704) (93,787) (110,657) (41,395) 90,366 248,452(4)
Net income (loss)... $ (57,704) $ (93,787) $(110,657) $ (52,993)(1) $ 90,583 $ 246,535(4)
Weighted average
shares
outstanding(2)..... 72,700 72,624 72,624 97,985 122,237 123,393
Primary earnings
(loss) per share
before
extraordinary item
and cumulative
effect of changes
in accounting
principles(2)...... $ (.79) $ (1.29) $ (1.52) $ (.42) $ .74 $ 2.01(4)
Fully diluted
earnings (loss) per
share before
extraordinary item
and cumulative
effect of changes
in accounting
principles(2)...... (.79) (1.29) (1.52) (.42) .74(3) 1.89(3)(4)
BALANCE SHEET DATA
(AT END OF
PERIODS):

<CAPTION>
FEBRUARY DECEMBER DECEMBER DECEMBER DECEMBER
28, 1991 31, 1991 31, 1992 31, 1993 31, 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Working capital
(deficiency)....... $ (50,676) $ (149,541) $ (13,705) $ (16,102) $ 213,290
Property, plant and
equipment, net..... 309,862 286,443 265,974 262,173 343,868
Total assets........ 1,940,699 1,783,006 1,727,495 1,776,088 2,108,951
Long-term debt,
including current
maturities......... 1,352,800 1,253,901 989,222 840,204 796,849
Other non-current
liabilities........ 191,019 170,885 138,458 209,432 186,615
Redeemable
securities......... 3,724 3,500 -- -- --
Stockholders'
equity............. 120,634 26,847 291,332 389,105 677,178
<FN>
- ------------------
(1) Net loss includes a $12 million extraordinary charge for the write-off of
deferred financing costs in conjunction with the early extinguishment of
debt.
(2) On July 6, 1994, the Company's Board of Directors declared a two-for-one
split of Common Stock, which was effected in the form of a 100% stock
dividend on August 8, 1994. All share and per share data have been restated
for all periods presented to reflect the stock split.
(3) Fully diluted earnings per share assumes conversion of the Convertible
Junior Subordinated Notes and reflects adjustments for interest expense and
amortization of deferred financing costs, net of taxes, and number of
shares outstanding.
(4) Includes an income tax benefit of $30 million, or $.24 per primary share
and $.20 per fully diluted share, as a result of a reduction in a valuation
allowance, as of December 31, 1994, related to domestic deferred income tax
assets.
</TABLE>

5
<PAGE>
RISK FACTORS

Prospective purchasers of the shares of Common Stock should carefully
consider the following factors, as well as other information set forth in this
Prospectus, before making an investment in the Common Stock.

DEPENDENCE ON THE CABLE TELEVISION INDUSTRY AND CABLE TELEVISION CAPITAL
SPENDING

Approximately 58% of the Company's consolidated sales and approximately 69%
of its operating income for the year ended December 31, 1994 came from sales of
systems and equipment to the cable television industry. Demand for these
products depends primarily on capital spending by cable television operators for
constructing, rebuilding or upgrading their systems. The amount of this capital
spending and, therefore, a majority of the Company's sales and profitability,
are affected by a variety of factors, including general economic conditions,
access by cable television operators to financing, regulation of cable
television operators and technological developments in the broadband
communications industry. Capital spending in the cable television industry fell
sharply in the middle of 1990 compared to 1989 and remained at a low level until
it began to recover in mid-1992. Although the Company believes that the
constraining pressures on cable television capital spending eased and that cable
television capital spending increased throughout 1993, 1994 and early 1995,
there can be no assurance that such increases will continue or that such
increased level of cable television capital spending will be maintained. In
addition, during 1993 and 1994, the Federal Communications Commission (the
"FCC") adopted rules under the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), regulating rates that cable
television operators may charge for lower tiers of service and generally not
regulating the rates for higher tiers of service. The Company believes that the
cable television industry continues to evaluate its capital spending plans based
on these regulations. Accordingly, the economic impact of the 1992 Cable Act and
those rules on the cable television industry and the Company is still uncertain.

Although the domestic cable television industry is comprised of more than
11,200 cable systems, a small number of cable television operators own a
majority of cable television systems and account for a majority of the capital
expenditures made by cable television operators. Ten cable television operators
accounted for approximately 34% of the Company's consolidated sales for the year
ended December 31, 1994. The loss of some or all of these cable television
operators as customers could have a material adverse effect on the business of
the Company.

CERTAIN RESTRICTIONS UNDER THE CREDIT AGREEMENT

The Credit Agreement governing the outstanding bank indebtedness of GI
Delaware (the "Credit Agreement"), contains restrictive financial and operating
covenants, including restrictions on incurring indebtedness and liens, entering
into any transaction to acquire or merge with any entity, making certain other
fundamental changes, selling property, and paying dividends, and contains
requirements that GI Delaware maintain certain financial ratios and meet certain
tests with respect to, among other things, minimum current ratio, net worth,
leverage and interest coverage. The Company has guaranteed the indebtedness
under the Credit Agreement.

General Instrument Corporation is a holding company with no operations or
significant assets other than its investment in GI Delaware. As a result, the
Company's ability to pay dividends on its Common Stock will be dependent upon
the ability of GI Delaware to pay cash dividends or make other distributions to
the Company. The Credit Agreement contains provisions which limit GI Delaware's
ability to pay cash dividends or make other distributions to the Company. See
"Price Range of Common Stock and Dividend Policy" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

SIGNAL PIRACY

The satellite television industry, in which the GI Communications Division
is engaged, experienced illegal modification of the first generation
VideoCipher-Registered Trademark- II descrambling modules (which were sold until
March 1991) for purposes of theft of programming (or "signal piracy"). In 1993,
the Company and

6
<PAGE>
several providers of premium programming completed a security upgrade program
which the Company believes has restored an acceptable level of security to the
backyard satellite dish industry. However, there can be no assurance that there
will not be unauthorized modification of descrambling modules or other methods
of signal piracy in the future, which could have a material adverse effect on
the business of the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Broadband
Communications -- GI Communications Division -- Analog and Digital Satellite
Products."

COMPETITION

The Company's products and services compete with those of a substantial
number of foreign and domestic companies, some with greater resources, financial
or otherwise, than the Company, and the rapid technological change occurring in
the Company's markets are expected to lead to the entry of new competitors. The
Company's ability to anticipate such changes and introduce enhanced products on
a timely basis will be a significant factor in the Company's ability to expand
and remain competitive. Existing competitors' actions and new entrants may have
an adverse impact on the Company's operations. The Company believes that it
enjoys a strong competitive position due to its large installed cable television
equipment base, its strong relationships with the major cable television
operators, its technology leadership and new product development capabilities,
and the likely need for compatibility of new technologies with currently
installed systems. There can be no assurance, however, that competitors will not
be able to develop systems compatible with, or that are alternatives to, the
Company's proprietary technology or systems.

NEW TECHNOLOGIES; DIGITAL PRODUCTS

The Company is entering a new competitive environment in which its success
will be dependent upon numerous factors, including its ability to continue to
develop appropriate technologies and successfully implement applications based
on those technologies. The Company believes that a key step in the evolution of
cable television system architecture and satellite delivery of programming will
be the implementation of digital video compression, which converts television
signals to a digital format and then compresses the signals of several channels
of television programming into the bandwidth currently used by just one channel.
GI has developed a digital compression system, DigiCipher-Registered Trademark-,
that enables satellite programmers and cable television operators to deliver,
over their existing networks, four to ten times as much information as is
possible with existing analog technology.

GI has been shipping its first-generation DigiCipher-Registered Trademark- I
digital encoders and decoders for satellite programmers and cable television
commercial headend operators since 1993, and began deployment of
DigiCipher-Registered Trademark- I consumer receivers to PRIMESTAR Partners for
the medium power Ku-band direct-to-home satellite market in the second quarter
of 1994. The Company's DigiCipher-Registered Trademark- II compression system is
compatible with the recently finalized industry standard for digital compression
and transport, Motion Picture Experts Group 2 ("MPEG2"). The development of the
DigiCipher-Registered Trademark- II system ("MPEG2/DC-II") has taken longer than
anticipated as a result of several factors, including increased system
complexity, evolving international MPEG2 standards and other system design
issues. Consequently, volume deployment of MPEG2/DC-II digital products, which
had been anticipated in early 1995, is now expected to begin in mid-1995 for
satellite products and late 1995 for cable products, although there can be no
assurance that additional delays will not occur.

Deployment of MPEG2/DC-II digital products for PRIMESTAR Partners, expected
to begin in mid-1995, will include an upgrade to MPEG2/DC-II, for a fee, of
DigiCipher-Registered Trademark- I receivers currently in use. As a result of
the high costs of initial production, DigiCipher-Registered Trademark- I
products and the upgrades to MPEG2/DC-II that are shipped during 1995 will carry
substantially lower margins than the Company's mature analog products. As the
Company progresses through the initial stages of production of its MPEG2/DC-II
products, the Company expects margins of its digital products to improve. See
"Business -- Broadband Communications -- GI Communications Division."

With other new technologies and applications under development, the Company
believes it is well positioned to take advantage of the opportunities presented
in the new competitive environment. There

7
<PAGE>
can be no assurance, however, that these technologies and applications will be
successfully developed, or, if they are successfully developed, that they will
be implemented by the Company's traditional customers or that the Company will
otherwise be able to successfully exploit these technologies and applications.
See "Business -- Technology and Licensing" and "Business -- Research and
Development."

INTERNATIONAL OPERATIONS; FOREIGN CURRENCY RISKS

U.S. broadband system designs and equipment are increasingly being employed
in international markets, where cable television penetration is low. However,
there can be no assurance that international markets will continue to develop or
that the Company will receive additional contracts to supply its systems and
equipment in international markets. See "Risk Factors -- Competition" and
"Business -- International Markets."

A significant portion of GI's products are manufactured or assembled in
Mexico, Taiwan (Republic of China), Ireland and other countries outside the
United States. In addition, the Company's sales of its equipment into
international markets have grown. These foreign operations are subject to the
usual risks inherent in situating operations abroad, including risks with
respect to currency exchange rates, economic and political destabilization,
restrictive actions by foreign governments, nationalization, the laws and
policies of the United States affecting trade, foreign investment and loans, and
foreign tax laws. GI's cost-competitive status relative to other competitors
could be adversely affected if the Mexican peso, the New Taiwan dollar or
another relevant currency appreciates relative to the United States dollar. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Foreign Exchange."

SHARES ELIGIBLE FOR SALE

Sales of substantial amounts of Common Stock in the public market under Rule
144 ("Rule 144") under the Securities Act or otherwise, or the perception that
such sales could occur, may adversely affect prevailing market prices of the
Common Stock. The Selling Stockholders have agreed not to offer, sell or
otherwise dispose of shares of Common Stock acquired other than in the open
market and the Company has agreed not to offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, in each case, for a period
of 180 days after the date of this Prospectus without the prior written consent
of the representatives of the Underwriters, subject to certain exceptions. See
"Underwriting." Following the 180-day period, the 22,303,665 shares of Common
Stock (20,053,665 shares if the Underwriters' over-allotment options are
exercised in full) held by the Forstmann Little Partnerships will be tradable
pursuant to Rule 144, subject to the volume and other resale limitations
thereof. In addition, after the 180-day period the Forstmann Little Partnerships
have the right to demand registration under the Securities Act of shares of
Common Stock and have the right to have shares of Common Stock included in
future registered public offerings of securities by the Company. Sales by the
Forstmann Little Partnerships in the future could adversely affect the market
price of the Common Stock and could impair the Company's future ability to raise
capital through an offering of its equity securities. See "Selling
Stockholders."

ENVIRONMENT

The Company is subject to various federal, state, local and foreign laws and
regulations governing the use, discharge and disposal of hazardous materials.
The Company's manufacturing facilities are believed to be in substantial
compliance with current laws and regulations. Compliance with current laws and
regulations has not had, and is not expected to have, a material adverse effect
on the Company's financial condition. The Company is also involved in
remediation programs, principally with respect to former manufacturing sites,
which are proceeding in conjunction with federal and state regulatory oversight.
In addition, the Company is currently named as a "potentially responsible party"
with respect to the disposal of hazardous wastes at seven hazardous waste sites
located in four states.

The Company engages independent consultants to assist management in
evaluating potential liabilities related to environmental matters. Management
assesses the input from these independent consultants along with other
information known to the Company in its effort to continually monitor these

8
<PAGE>
potential liabilities. Management assesses its environmental exposure on a
site-by-site basis, including those sites where the Company has been named a
potentially responsible party. Such assessments include the Company's share of
remediation costs, information known to the Company concerning the size of the
hazardous waste sites, their years of operation and the number of past users and
their financial viability. Although the Company estimates, based on assessments
and evaluations made by management, that its exposure with respect to these
environmental matters could be as high as $64 million, the Company believes that
the reserve for environmental matters of $45 million at December 31, 1994 is
reasonable and adequate. However, there can be no assurance that the ultimate
resolution of these matters will approximate the amount reserved.

Based on the factors discussed above, capital expenditures and expenses for
the Company's remediation programs, and the proportionate share of the cost of
the necessary investigation and eventual remedial work that may be needed to be
performed at the sites for which the Company has been named as a "potentially
responsible party," are not expected to have a material adverse effect on the
Company's financial statements. The Company's present and past facilities have
been in operation for many years, and over that time in the course of those
operations, GI's facilities have used substances which are or might be
considered hazardous, and GI has generated and disposed of wastes which are or
might be considered hazardous. Therefore, it is possible that additional
environmental issues may arise in the future which the Company cannot now
predict.

9
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock has been listed on the New York Stock Exchange
since June 10, 1992 under the symbol "GIC". The following table sets forth on a
per share basis, as adjusted to give effect to a two-for-one stock split
effected in the third quarter of 1994, the high and low sale prices for the
Common Stock as reported on the New York Stock Exchange Composite Tape (the
"NYSE Composite Tape") for the periods indicated.

<TABLE>
<CAPTION>
COMMON STOCK
PRICE RANGE
--------------------
HIGH LOW
--------- ---------
<S> <C> <C>
1993
First Quarter.................................................................. $ 18.125 $ 11.625
Second Quarter................................................................. 20.563 12.813
Third Quarter.................................................................. 28.125 18.750
Fourth Quarter................................................................. 30.125 25.250
1994
First Quarter.................................................................. 30.875 21.500
Second Quarter................................................................. 31.625 21.250
Third Quarter.................................................................. 33.000 28.250
Fourth Quarter................................................................. 34.625 26.750
1995
First Quarter.................................................................. 36.250 25.625
Second Quarter (through April 20, 1995)........................................ 37.125 33.125
</TABLE>

For a recent sale price for the Common Stock, see the cover page of this
Prospectus.

Since the Acquisition, the Company has not paid dividends on its Common
Stock and does not anticipate paying dividends in the future. As a holding
company, the ability of the Company to pay dividends will depend upon the
receipt of dividends or other payments from its subsidiary, GI Delaware. The
Credit Agreement generally prohibits GI Delaware from declaring and paying
dividends to the Company, except that GI Delaware may pay dividends in an
aggregate amount equal to the excess of the Consolidated Net Worth (as defined)
of the Company and its subsidiaries at a specified date over the Consolidated
Net Worth required to be maintained under the Credit Agreement as of such date,
but in no event may the aggregate amount of dividends paid by GI Delaware (i)
the proceeds of which are used by the Company to pay dividends on its Common
Stock exceed $50 million in any fiscal year, or (ii) the proceeds of which are
used by the Company to purchase its outstanding Common Stock exceed $150 million
in any fiscal year. Any determination to pay cash dividends in the future will
be at the discretion of the Company's Board of Directors and will be dependent
upon the Company's results of operations, financial condition, contractual
restrictions and other factors deemed relevant at that time by the Company's
Board of Directors.

10
<PAGE>
CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company and its subsidiaries at December 31, 1994. The information presented
below should be read in conjunction with the Company's consolidated financial
statements and the related notes thereto incorporated herein by reference and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1994
--------------------
<S> <C>
(IN THOUSANDS)
Current debt:
Current portion of long-term debt............................................... $ 2,155
-----------
Long-term debt:
Revolving credit facilities..................................................... 240,000
Taiwan loan..................................................................... 54,694
5% Convertible Junior Subordinated Notes........................................ 500,000
-----------
Total long-term debt.......................................................... 794,694
-----------
Total debt.................................................................... 796,849
-----------
Stockholders' equity:
Preferred Stock, $.01 par value; 20,000,000 shares authorized;
no shares issued............................................................... --
Common Stock, $.01 par value; 175,000,000 shares authorized; 122,231,348 issued
(1)............................................................................ 1,222
Additional paid-in capital (1).................................................. 543,728
Retained earnings............................................................... 132,634
Less -- Treasury stock, at cost, 11,259 shares of Common Stock.................. (17)
Unearned compensation.................................................... (389)
-----------
Total stockholders' equity.................................................... 677,178
-----------
Total capitalization.......................................................... $ 1,474,027
-----------
-----------
<FN>
- --------------
(1) On July 6, 1994, the Company's Board of Directors declared a two-for-one
split of the Company's Common Stock, which was effected in the form of a
100% stock dividend distributed on August 8, 1994 to stockholders of record
on July 18, 1994. Common Stock was increased by the par value of the
additional shares issued with an offsetting reduction to additional paid-in
capital.
</TABLE>

11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

(IN THOUSANDS EXCEPT PER SHARE DATA)

The following table presents selected consolidated financial data derived
from the historical financial statements of the Company for periods subsequent
to the Acquisition (which occurred on August 15, 1990). As of December 31, 1991,
the Company changed the end of its fiscal year from the last day in February, to
December 31. The pro forma statement of operations data for the twelve months
ended December 31, 1991 was derived from the historical statements of operations
of the Company adjusted to give effect to the change in fiscal year from the
last day of February to December 31.

The following data should be read in conjunction with the Company's
consolidated financial statements and the related notes thereto, which are
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1994 and incorporated herein by reference, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
AUGUST 15, TEN TWELVE
1990 MONTHS MONTHS
THROUGH ENDED ENDED YEAR ENDED YEAR ENDED
FEBRUARY DECEMBER DECEMBER DECEMBER DECEMBER YEAR ENDED
28, 31, 31, 31, 31, DECEMBER
1991 1991 1991 1992 1993 31, 1994
----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(PRO FORMA
FOR CHANGE
IN FISCAL
YEAR)
STATEMENTS OF
OPERATIONS DATA:
Net sales........... $ 533,118 $ 785,139 $ 928,826 $1,074,695 $1,392,522 $2,036,323
Cost of sales..... 406,235 566,358 668,441 755,466 956,154 1,403,585
Selling, general
and
administrative... 69,293 103,487 123,311 137,335 149,362 179,631
Research and
development...... 32,134 46,182 57,082 58,149 73,741 111,462
Amortization of
excess of cost
over fair value
of net assets
acquired......... 12,206 21,567 25,637 25,883 25,722 25,574
Operating income.... 13,250 47,545 54,355 97,862 187,543 316,071
Interest expense
-- net........... (64,718) (102,791) (123,440) (110,304) (72,458) (52,751)
Income (loss) from
operations before
extraordinary item
and cumulative
effect of changes
in accounting
principles......... (57,704) (93,787) (110,657) (41,395) 90,366 248,452(4)
Net income (loss)... $ (57,704) $ (93,787) $(110,657) $ (52,993)(1) $ 90,583 $ 246,535(4)
Weighted average
shares outstanding
(2)................ 72,700 72,624 72,624 97,985 122,237 123,393
Primary earnings
(loss) per share
before
extraordinary item
and cumulative
effect of changes
in accounting
principles (2)..... $ (.79) $ (1.29) $ (1.52) $ (.42) $ .74 $ 2.01(4)
Fully diluted
earnings (loss) per
share before
extraordinary item
and cumulative
effect of changes
in accounting
principles (2)..... (.79) (1.29) (1.52) (.42) .74(3) 1.89(3)(4)

BALANCE SHEET DATA
(AT END OF
PERIODS):

<CAPTION>
FEBRUARY DECEMBER DECEMBER DECEMBER DECEMBER
28, 31, 31, 31, 31,
1991 1991 1992 1993 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Working capital
(deficiency)....... $ (50,676) $ (149,541) $ (13,705) $ (16,102) $ 213,290
Property, plant and
equipment, net..... 309,862 286,443 265,974 262,173 343,868
Total assets........ 1,940,699 1,783,006 1,727,495 1,776,088 2,108,951
Long-term debt,
including current
maturities......... 1,352,800 1,253,901 989,222 840,204 796,849
Other non-current
liabilities........ 191,019 170,885 138,458 209,432 186,615
Redeemable
securities......... 3,724 3,500 -- -- --
Stockholders'
equity............. 120,634 26,847 291,332 389,105 677,178
<FN>
- ------------------
(1) Net loss includes a $12 million extraordinary charge for the write-off of
deferred financing costs in conjunction with the early extinguishment of
debt.
(2) On July 6, 1994, the Company's Board of Directors declared a two-for-one
split of Common Stock, which was effected in the form of a 100% stock
dividend on August 8, 1994. All share and per share data have been restated
for all periods presented to reflect the stock split.
(3) Fully diluted earnings per share assumes conversion of the Convertible
Junior Subordinated Notes and reflects adjustments for interest expense and
amortization of deferred financing costs, net of taxes, and number of
shares outstanding.
(4) Includes an income tax benefit of $30 million, or $.24 per primary share
and $.20 per fully diluted share, as a result of a reduction in a valuation
allowance, as of December 31, 1994, related to domestic deferred income tax
assets.
</TABLE>

12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The Company's major business segments are Broadband Communications and Power
Semiconductor. Segment net sales are presented below. The Company's Broadband
Communications segment is comprised of two divisions, GI Communications (formed
through a merger of the Company's former Jerrold Communications and VideoCipher
divisions in 1993 -- see "Business -- Broadband Communications -- GI
Communications Division") and CommScope. The principal determinant of sales for
GI Communications and CommScope is the amount of spending for development and/or
upgrade of cable television systems in the United States and around the world,
as well as the amount of spending by television programmers on access control,
scrambling and descrambling equipment for the satellite delivery of their
programming. Power Semiconductor products are incorporated into a variety of end
products, including computers, consumer electronics, automobiles, lighting
ballasts and telecommunications products. Power Semiconductor sales are
influenced by, among other things, the general level of economic activity.

The following discussion and analysis should be read in conjunction with the
consolidated financial statements of the Company and the notes thereto
incorporated herein by reference.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1992 DECEMBER 31, 1993 DECEMBER 31, 1994
------------------- ------------------- -------------------
<S> <C> <C> <C>
(IN MILLIONS)
SEGMENT INFORMATION:
Net Sales
Broadband Communications.............. $ 844 $ 1,125 $ 1,720
Power Semiconductor................... 231 268 316
------- ------- -------
Total............................... $ 1,075 $ 1,393 $ 2,036
------- ------- -------
------- ------- -------
</TABLE>

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 WITH
THE YEAR ENDED DECEMBER 31, 1993

NET SALES. Net sales for the year ended December 31, 1994, were $2,036
million compared to $1,393 million for the year ended December 31, 1993, an
increase of $643 million, or 46%. This increase reflects continued higher sales
volumes in both the Broadband Communications and Power Semiconductor segments,
partially offset by a decline in selling prices of certain products. Broadband
Communications' sales increased $595 million, or 53%, to $1,720 million in 1994,
primarily as a result of increased sales volume of analog addressable systems,
distribution electronics and CommScope cable products. This higher sales volume
reflects increased investment in infrastructure by major cable television
operators in the United States as well as the deployment of new cable television
systems in international markets. International sales of cable television
electronics and CommScope cables increased 75% for the year ended December 31,
1994 in comparison to 1993. In addition, sales of
DigiCipher-Registered Trademark- digital compression products represented in
excess of 30% of the Broadband Communications sales increase. Sales of
DigiCipher-Registered Trademark- digital compression products in 1994
represented the start of the second stage of the commercialization of digital
broadband systems, during which satellite programmers, cable operators and other
network providers will begin to deploy digital terminals in their subscribers'
homes in order to take advantage of the enhanced capabilities of digital
networks. This stage began with the satellite market during the second quarter
of 1994, when GI began shipping its first generation
DigiCipher-Registered Trademark- I consumer receivers to PRIMESTAR Partners for
the medium power Ku-band direct-to-home satellite market. See "New Technologies;
Digital Products" below. During 1994, the Company continued sales of VideoCipher
RS-TM- analog satellite receiver consumer modules to persons who had been
receiving without authorization (or "pirating") the commercial satellite
programming data signals. In 1994, these sales declined to minimal levels as
expected. However, shipments of VideoCipher RS-TM- analog satellite receiver
consumer modules for new owners of C-band satellite dishes increased in 1994

13
<PAGE>
over 1993. 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 $48 million, or 18%, in 1994 in
comparison to 1993. This increase reflects higher sales volumes to all major end
user product markets in which Power Semiconductor products are incorporated,
partially offset by a decline in selling prices of certain products. The most
significant sales volume increases were in the sales of discrete power
rectifying and transient voltage suppression components to be incorporated in
computers, consumer electronics, automotive and telecommunications products.
International sales increased $35 million, or 18%, to $224 million for the year
ended December 31, 1994 in comparison to 1993.

GROSS PROFIT (NET SALES LESS COST OF SALES). Gross profit increased $197
million, or 45%, to $633 million in 1994 from $436 million in 1993, and was
approximately 31% of sales in each period. Broadband Communications segment
gross profit increased 49% over 1993 and was approximately 31% of sales in each
period. Broadband Communications gross profit and gross profit margin were
positively affected by: the 53% increase in sales discussed above; reduced
material costs because of higher volume purchasing; and improved per unit labor
and overhead costs resulting from increased production. These positive effects
were partially offset by the shift in product mix to
DigiCipher-Registered Trademark- digital compression products, which initially
carry lower margins. Power Semiconductor gross profit increased 28% from 1993 to
1994 and increased as a percentage of sales to 34% in 1994 from 31% in 1993,
primarily as a result of the 18% increase in sales discussed above, and improved
per unit labor and overhead costs resulting from increased production volumes,
partially offset by decreased selling prices of certain products.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
("SG&A") expense increased $30 million, or 20%, in 1994 in comparison to 1993,
and decreased as a percentage of sales to 9% in 1994 from 11% in 1993. The
increase in SG&A expense was principally attributable to increased marketing and
selling expenditures, which contributed to the higher sales volumes discussed
above. 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. SG&A expense in 1993 also included a charge of approximately $6 million
to provide for costs to be incurred in conjunction with the combining of the
Company's former Jerrold Communications and VideoCipher divisions into the GI
Communications Division.

RESEARCH AND DEVELOPMENT. Research and development expense increased $37
million, or 51%, to $111 million in 1994 from $74 million in 1993, and was
approximately 5% of sales in each period. The Company's efforts are focused on:
continued development of the next generation of cable terminals, which
incorporate digital compression and multimedia capabilities; development of
enhanced addressable analog terminals; advanced digital systems for cable and
satellite television distribution; and product development through strategic
alliances. Emerging research and development activities include broadband
telephony products and interactive multimedia technologies for broadband
networks.

OPERATING INCOME. Operating income increased by $128 million, or 69%, to
$316 million in 1994 from $188 million in 1993.

OTHER INCOME (EXPENSE). Other income (expense) for the year ended December
31, 1994 consisted primarily of a charge related to the write-down of
non-operating real estate.

Other income (expense) for the year ended December 31, 1993 included a net
gain on the sale of a portion of a partnership interest in an affiliate and
equity in losses of this unconsolidated affiliate. Also included was a $7
million charge related to the write-down of a facility which was principally
offset by a gain on the settlement of a lawsuit with regard to patent
infringements.

INTEREST EXPENSE. Interest expense declined $19 million to $54 million in
1994 from $73 million in 1993. The decline was due primarily to lower interest
rates which were principally attributable to the June

14
<PAGE>
1993 debt restructuring and the July 1994 amendment and restatement of the
senior bank credit agreement of GI Delaware, the Company's principal operating
subsidiary. See "Liquidity and Capital Resources" below.

GAIN (LOSS) FROM DIVESTITURE BUSINESSES AND ASSETS. During the year ended
December 31, 1994, the Company recognized a net loss of $3 million which was
principally comprised of a $4 million charge related to a settlement of certain
legal matters associated with a former divestiture business, partially offset by
gains on the sale of certain real estate holdings and other divestiture assets.
Charges related to the carrying costs associated with divestiture assets
(principally real estate) were not significant.

During 1993, the Company substantially completed its divestiture program
with the sale of its Wagering Group for an amount that approximated net book
value. During the year ended December 31, 1993, the Company recognized a net
gain of $0.3 million which was comprised of $4 million in gains on the
settlement of an action related to the Company's divested Defense Systems
business, offset by charges related to changes in the estimated amount of
divestiture liabilities retained and carrying costs associated with the
remaining divestiture assets (principally real estate). Carrying costs
attributable to real estate held for sale were not significant.

INCOME TAXES Income taxes decreased $14 million in 1994 from 1993 due
primarily to the recognition of an income tax benefit of $30 million as a result
of a reduction in a valuation allowance, as of December 31, 1994, related to
domestic deferred income tax assets. This benefit was partially offset by
increased taxes on higher foreign sourced income. Additionally, it is
anticipated that the Company's effective income tax rates for 1995 will increase
in comparison to 1994 and 1993. For further discussion, see Note 6 to the
consolidated financial statements incorporated herein by reference.

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 approximately $2 million. The annual charge to operations as a
result of adopting SFAS No. 112 is not significant.

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1993 WITH
THE YEAR ENDED DECEMBER 31, 1992

NET SALES. Net sales for the year ended December 31, 1993, were $1,393
million compared to $1,075 million for the year ended December 31, 1992, an
increase of $318 million, or 30%. This increase reflects continued higher sales
volumes in both the Broadband Communications and Power Semiconductor segments,
partially offset by a decline in selling prices of certain CommScope and Power
Semiconductor products.

Broadband Communications' sales increased $281 million, or 33%, to $1,125
million in 1993 primarily as a result of increased sales volume of the GI
Communications and CommScope divisions' cable television and satellite products,
partially offset by a decline in selling prices of certain CommScope coaxial
cable products. The increases in Broadband Communications segment sales reflect
continued increased investment in infrastructure by major cable television
operators in the United States. GI Communications Division sales increased $226
million, or 41%, due to increased sales volume of distribution electronics,
analog addressable terminals, VideoCipher RS-TM- analog satellite receiver
consumer modules and DigiCipher-Registered Trademark- digital compression
products. The Company believes that the increase in VideoCipher RS-TM- analog
satellite receiver consumer module sales volume is attributable to sales to
persons who had been receiving without authorization (or "pirating"), the
commercial data signals and further believes that those persons purchased
consumer descrambler modules as a result of the effectiveness of actions taken
to make "pirating" of the commercial data signals more difficult. CommScope
sales increased by $55 million, or 19%, as compared to 1992, principally
reflecting increased coaxial cable sales volume, partially offset by a decline
in selling prices of certain coaxial cable products.

15
<PAGE>
Power Semiconductor sales increased $37 million, or 16%, to $268 million in
1993. This increase reflects higher sales volumes to all end user product
markets in which Power Semiconductor products are incorporated, including
computers, consumer electronics, lighting ballasts, automotive and
telecommunications products. The most significant sales volume increases were
realized in the sale of discrete power rectifying and transient voltage
suppression components to be incorporated in computer, lighting ballasts and
consumer electronics products. Power Semiconductor sales also reflect
incremental sales attributable to the acquisition, in August 1992, of General
Semiconductor Ireland ("GSI"), partially offset by a decline in selling prices
of certain products. The GSI operations contributed approximately $27 million to
1993 sales as compared to $11 million in 1992.

GROSS PROFIT (NET SALES LESS COST OF SALES). Gross profit increased $117
million, or 37%, to $436 million in 1993 from $319 million in 1992, and
increased as a percentage of sales to 31% in 1993 from 30% in 1992. Broadband
Communications segment gross profit increased 37% over 1992 (constant as a
percentage of sales at 31%), reflecting the 33% increase in sales, as discussed
above, as well as an increase in the proportion of VideoCipher RS-TM- analog
satellite receiver consumer module sales, which have higher margins, partially
offset by a charge of $12 million associated with costs to be incurred in
effecting enhancements to the Company's DigiCipher-Registered Trademark- digital
compression technology, and incremental depreciation and amortization in 1993
relating to the adoption of Financial Accounting Standards Board Statement No.
109, Accounting for Income Taxes. See "Cumulative Effect of Changes in
Accounting Principles" below. Power Semiconductor Division gross profit
increased 36% from 1992 to 1993, and increased as a percentage of sales to 31%
in 1993 from 27% in 1992. The increase was due primarily to an increase in the
proportion of sales of transient voltage suppression components, which have
higher margins, and lower per unit manufacturing costs associated with the
higher sales volumes discussed above.

SELLING, GENERAL AND ADMINISTRATIVE. SG&A expense increased $12 million, or
9%, in 1993 in comparison to 1992. SG&A expense was 11% of sales in 1993 as
compared to 13% in 1992. The increase in SG&A expense was principally
attributable to increased marketing and selling expenditures, which contributed
to the higher sales volumes discussed above, and a charge of $6 million to
provide for costs to be incurred in conjunction with the combining of the
Company's former Jerrold Communications and VideoCipher divisions into the GI
Communications Division. SG&A expense in 1993 also included $2 million of
compensation expense attributable to stock appreciation rights compared to $9
million of compensation expense in 1992 related to the issuance of Common Stock,
the granting of stock options and the effects of stock appreciation rights. SG&A
expense in 1992 also included $9 million of expense related to funding for
Digital Cable Radio, a digital cable audio venture. GI sold a portion of its
ownership interest in Digital Cable Radio in January 1993, thereby reducing
future funding requirements.

RESEARCH AND DEVELOPMENT. Research and development expense of $74 million
in 1993 increased 27% in comparison to 1992 when research and development
expense was $58 million. This increase reflected the continued focus on
development activities for the next generation of cable terminals, which
incorporate digital compression and multimedia capabilities, and on advanced
digital systems for cable and satellite television distribution. Other major
programs included enhancement of addressable analog terminals, distribution
electronics, wireless terminal development and security enhancements for both
satellite and cable products.

OPERATING INCOME. Operating income in 1993 increased by $90 million, or
92%, to $188 million from $98 million in 1992.

OTHER INCOME (EXPENSE). See "-- Comparison of Results of Operations for the
Year Ended December 31, 1994 with the Year Ended December 31, 1993 -- Other
Income (Expense)" above for 1993 components.

Other Income (expense) for the year ended December 31, 1992 included
miscellaneous items that were not significant.

16
<PAGE>
INTEREST EXPENSE. Interest expense declined $38 million in 1993 primarily
as a result of lower interest rates attributable to the restructuring of the
Company's senior and subordinated debt and a reduction in the amount of debt
outstanding. See "-- Liquidity and Capital Resources" for further discussion of
the debt restructuring.

GAIN (LOSS) FROM DIVESTITURE BUSINESSES AND ASSETS. See "-- Comparison of
Results of Operations for the Year Ended December 31, 1994 with the Year Ended
December 31, 1993 -- Gain (Loss) from Divestiture Businesses and Assets" above
for 1993 components.

During the year ended December 31, 1992, the Company recognized a net loss
of approximately $15 million which was comprised of a $32 million charge, which
represented the anticipated loss on sale of the Wagering Group, net of a gain of
approximately $11 million from the sale of marketable securities and a $6
million gain on the settlement of an action related to the Company's divested
Defense Systems business.

INCOME TAXES. Income taxes increased $9 million in 1993 from 1992, due
primarily to increased profitability in the foreign jurisdictions in which the
Company has operations.

CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES. Effective January 1,
1993, the Company adopted Financial Accounting Standards Board Statements No.
109, Accounting for Income Taxes ("SFAS No. 109"), and No. 106, Accounting for
Postretirement Benefits other than Pensions ("SFAS No. 106"). As a result of
adopting SFAS No. 109 and SFAS No. 106, the Company recorded a cumulative effect
credit to income of approximately $10 million and a cumulative effect charge to
income of approximately $10 million, respectively. See Notes 6 and 10 to the
consolidated financial statements incorporated herein by reference. As a result
of adopting SFAS No. 109, the assets and liabilities that were adjusted to fair
value net of tax effects, as of the date of the Acquisition, were remeasured to
their unamortized gross amounts as of January 1, 1993. Consequently, there was
an increase in depreciation and amortization expense in 1994 and 1993 of
approximately $4 million and $8 million, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operations for the year ended December 31, 1994 was $162
million compared to $166 million in 1993 and a negative $9 million in 1992. Cash
provided by operations in 1994 was relatively constant with 1993 as the impact
of increased earnings in 1994 was offset by increased working capital. Cash
provided by operations in 1993 was impacted by costs associated with the
issuance of debt, as described below.

The improvement in cash flow from operations in 1993 compared to 1992
reflects increased sales volume and improved operating margins. Cash provided by
operations in 1992 was impacted by significant expenditures related to the
VideoCipher-Registered Trademark- security upgrade program and the payment of
lump sum royalties pursuant to a license under an unaffiliated third party's
patent regarding encryption and decryption of satellite television signals.

At December 31, 1994, working capital was $213 million compared to a
negative $16 million at December 31, 1993 and a negative $14 million at December
31, 1992. The working capital increase in 1994 over 1993 was due principally to
increased sales volume and projected business growth with corresponding
increases in accounts receivable, inventory, and accounts payable. 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 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. The increase in working capital at December 31, 1994 also reflects
the recognition of net current deferred tax assets of $90 million as a result of
reductions in a valuation allowance related to domestic deferred income taxes,
and the reclassification of $31 million of debt outstanding at December 31, 1993
from short-term to long-term in connection with the 1994 amendment and
restatement of GI Delaware's senior bank credit agreement, as discussed below.

17
<PAGE>
Working capital at December 31, 1993 was relatively constant with the 1992
level but there were several significant changes in 1993 including: increased
accounts receivable and inventory reflecting increased and projected sales;
reduced accrued interest payable as a result of the restructuring of the
Company's existing indebtedness, as discussed below; a reduction in assets held
for sale due to the sale of the Company's remaining divestiture business and the
use of the proceeds to repay long-term debt; increased accounts payable
reflecting increased sales and investment in plant and equipment; and an
increase in the current maturities of long-term debt consistent with the
maturity payment schedule in effect at December 31, 1993.

During the year ended December 31, 1994, the Company invested $136 million
in equipment and facilities compared with $67 million in 1993 and $37 million in
1992. The higher level of capital spending was attributable to capacity
expansion across all businesses to meet increased current and future demands. In
1995, the Company expects to continue to expand its capacity to meet increased
current and future demands for analog and digital products, cables, and power
rectifiers with capital expenditures for the year ending December 31, 1995
expected to approximate $170 million.

The Company's research and development expenditures (principally focused on
the Broadband Communications businesses) were $111 million for the year ended
December 31, 1994 compared to $74 million in 1993 and $58 million in 1992, and
are expected to approximate $135 million for the year ending December 31, 1995.
See "-- Comparison of Results of Operations for the Year Ended December 31, 1994
with the Year Ended December 31, 1993 -- Research and Development" above for
further discussion.

At December 31, 1994, the Company had $5 million of cash and cash
equivalents on hand compared to $6 million at December 31, 1993 and $19 million
at December 31, 1992. At December 31, 1994, long-term debt (including current
maturities) was $797 million, compared to $840 million at December 31, 1993 and
$989 million at December 31, 1992.

In June 1993, the Company completed a two-part program to restructure its
existing indebtedness in order to lower its interest costs and obtain greater
operating flexibility. The first part of this program was consummated with the
public offering of $500 million principal amount of 5% Convertible Junior
Subordinated Notes (the "Notes"). The second part of this program encompassed
amending and restating the senior bank credit agreement of GI Delaware to
include $275 million of term loans and a $225 million revolving credit facility
maturing on December 31, 1998, and to provide for lower interest rates and less
restrictive financial and operating covenants. The proceeds from the offering of
the Notes and borrowings under the revolving credit facility were used to prepay
the entire $600 million of the Company's 9-1/2% Subordinated Debentures.

Effective July 7, 1994, the Company further amended and restated the senior
bank credit agreement of GI Delaware (as further amended and restated, the
"Credit Agreement") to lower its interest costs, increase available credit
commitments and obtain greater operating flexibility. The Credit Agreement
provides for a $500 million unsecured Revolving Credit Facility which matures on
December 31, 1999 and converted all outstanding term loans to long-term
revolving credit loans under the new Revolving Credit Facility. Amounts
outstanding as of December 31,1994 under this facility are classified as long-
term based on the Company's intent and ability to maintain these loans on a
long-term basis. The Revolving Credit Facility commitment will be reduced by $50
million each year commencing December 31, 1995.

The Company also has a $15 million uncommitted borrowing facility pursuant
to which the aggregate amount of borrowings outstanding under this facility and
the Revolving Credit Facility cannot exceed the total available credit
commitment under the Credit Agreement. At April 20, 1995, the Company had
borrowings of $220 million and credit commitments, which the Company had not
borrowed against, of $280 million under its revolving credit facilities. In
addition, on January 10, 1995, CommScope entered into a $10.8 million loan
agreement in connection with the issuance of notes by the Alabama State
Industrial Development Authority. At April 20, 1995, the entire amount under the
loan agreement was outstanding.

18
<PAGE>
The Credit Agreement contains numerous financial and operating covenants,
including restrictions upon: incurring indebtedness and liens; entering into any
transaction to acquire or merge with any entity; making certain other
fundamental changes; selling property; and paying dividends. At December 31,
1994, the Company was in compliance with all financial and operating covenants.

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 the Credit Agreement 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 the Credit Agreement 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.

On a selective basis, the Company enters into interest rate cap or swap
agreements to reduce the potentially negative impact of increases in interest
rates on its outstanding variable rate debt. In the fourth quarter of 1994, the
Company entered into two interest rate cap agreements to hedge an aggregate
notional amount of $150 million of outstanding variable rate borrowings under
the Credit Agreement covering the period from January 3, 1995 through January 3,
1996. The Company monitors its underlying interest rate exposures on its
variable rate debt on an ongoing basis and believes that it can modify or adapt
its hedging strategies as needed. See Note 12 to the consolidated financial
statements incorporated herein by reference for additional information on the
Company's hedging strategies.

NEW TECHNOLOGIES; DIGITAL PRODUCTS

GI has been shipping its first-generation DigiCipher-Registered Trademark- I
digital encoders and decoders for satellite programmers and cable television
commercial headend operators since 1993, and began deployment of
DigiCipher-Registered Trademark- I consumer receivers to PRIMESTAR Partners for
the medium power Ku-band direct-to-home satellite market in the second quarter
of 1994. The Company's DigiCipher-Registered Trademark- II compression system is
compatible with the recently finalized industry standard for digital compression
and transport, MPEG2. The development of the DigiCipher-Registered Trademark- II
system (MPEG2/DC-II) has taken longer than anticipated as a result of several
factors, including increased system complexity, evolving international MPEG2
standards and other system design issues. Consequently, volume deployment of
MPEG2/DC-II digital products, which had been anticipated in early 1995, is now
expected to begin in mid-1995 for satellite products and late 1995 for cable
products, although there can be no assurance that additional delays will not
occur.

19
<PAGE>
With other new technologies and applications under development, the Company
believes it is well positioned to take advantage of the opportunities presented
in the new competitive environment. There can be no assurance, however, that
these technologies and applications will be successfully developed, or, if they
are successfully developed, that they will be implemented by the Company's
traditional customers or that the Company will otherwise be able to successfully
exploit these technologies and applications.

FOREIGN EXCHANGE

A significant portion of the Company's products are manufactured or
assembled in countries outside the United States. In addition, as discussed
above, the Company's sales of its equipment into international markets have
grown. These foreign operations are subject to risk with respect to currency
exchange rates. The Company monitors its underlying exchange rate exposures on
an ongoing basis and continues to implement selective hedging strategies to
reduce the market risks from changes in exchange rates. See Note 12 to the
consolidated financial statements incorporated herein by reference.

EFFECT OF INFLATION

The Company continually attempts to minimize any effect of inflation on
earnings by controlling its operating costs and selling prices. During the past
few years, the rate of inflation has been low and has not had a material impact
on the Company's results of operations.

20
<PAGE>
BUSINESS

GENERAL

GI is a leading worldwide supplier of broadband communications systems and
equipment. Through its two Broadband Communications segment divisions, GI
Communications (formed through a merger of the Company's former Jerrold
Communications and VideoCipher divisions) and CommScope (which together
represented 84% of the Company's consolidated sales for the year ended December
31, 1994), the Company supplies a broad range of technologies and products
required for the distribution of video programming to consumers over cable and
satellite television systems. Through its Power Semiconductor Division (which
represented 16% of the Company's consolidated sales for the year ended December
31, 1994), the Company is also a leading manufacturer of discrete power
rectifying and transient voltage suppression components used in
telecommunications, automotive and consumer electronic products.

The following table sets forth sales for the Company's Broadband
Communications segment, and each of that segment's divisions, and the Power
Semiconductor Division, for the years ended December 31, 1992, 1993 and 1994.
For further financial information regarding the Company's business segments, see
Note 14 to the consolidated financial statements incorporated herein by
reference.

<TABLE>
<CAPTION>
NET SALES FOR THE
YEAR ENDED
DECEMBER 31,
-------------------------------
1992 1993 1994
--------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
Broadband Communications
GI Communications (1)............................................................ $ 557 $ 783 $ 1,275
CommScope........................................................................ 287 342 445
--------- --------- ---------
Total.......................................................................... 844 1,125 1,720
Power Semiconductor Division....................................................... 231 268 316
--------- --------- ---------
Total.............................................................................. $ 1,075 $ 1,393 $ 2,036
--------- --------- ---------
--------- --------- ---------
<FN>
- --------------
(1) GI Communications Division was formed in 1993 as a result of the merger
between the former Jerrold Communications and VideoCipher divisions. See
"Business -- Broadband Communications."
</TABLE>

THE COMPANY'S BROADBAND COMMUNICATIONS STRATEGY

The Company's strategy is to enhance its market leadership position as a
provider of broadband systems and equipment by emphasizing the following
factors:

- TECHNOLOGICAL LEADERSHIP AND NEW PRODUCT DEVELOPMENT. GI is a
worldwide leader in the development and implementation of new
"enabling" technologies for advanced television signal transmission.
GI produced the first commercial application of digital compression
products and has been a leader in the development of addressable cable
television subscriber terminals, advanced fiber optic electronics and
high-capacity coaxial cable.

- HIGHLY-INTEGRATED PRODUCT LINE. GI has a broad, highly-integrated
product line, which is one of the largest in the broadband equipment
industry. The Company believes this extensive product line gives it a
significant competitive advantage in developing new broadband
technologies, in anticipating and serving customer needs, and in
providing customers with highly-integrated end-to-end systems.

- INCREASING THE INSTALLED BASE. The Company believes that it has
supplied the majority of the addressable systems in use by cable
television operators in the United States and abroad. GI's strategy
has been to expand the number of installed systems which utilize its
hardware and software to control network security, services and
programming access and to increase its product content in these
systems.

- RAPID INTERNATIONAL EXPANSION. The Company believes that the
development of international markets will be an important factor in
its future growth due to the relatively low penetration of

21
<PAGE>
cable television systems and growing demand for entertainment
programming abroad. The Company believes that its leadership position
in the U.S. market enhances its ability to provide analog and digital
cable, satellite and wireless products to its growing international
customer base.

- STRATEGIC ALLIANCES. GI has forged alliances with partners in other
industries possessing complementary technological and marketing
capabilities in order to maximize new opportunities, such as the
emerging market for multimedia equipment and the increasing telephone
company demand for broadband equipment for video applications.

BROADBAND COMMUNICATIONS

The Company's Broadband Communications segment consists of the GI
Communications and CommScope divisions. The GI Communications Division was
formed in 1993 by combining the Company's former Jerrold Communications and
VideoCipher divisions. This combination was undertaken due to the rapid
convergence of the broadband technologies used for the wired and wireless
distribution of television programming by the cable, satellite, and telephone
industries. The names Jerrold-Registered Trademark- and
VideoCipher-Registered Trademark- remain as GI product brands. The GI
Communications Division is the world's largest manufacturer of addressable
systems and subscriber equipment, and is a leading manufacturer of fiber optic
and RF (radio frequency) distribution electronics for broadband television
systems. GI Communications is also the world's largest manufacturer of access
control, scrambling and descrambling equipment used by television programmers
for the satellite distribution of their proprietary programming. In addition, GI
Communications is leading the development and commercialization of digital video
compression and decompression equipment for use in broadband cable, satellite
and wireless transmission systems. GI's CommScope Division is the largest
supplier of coaxial cable for the U.S. cable television industry.

GI COMMUNICATIONS DIVISION

ANALOG TERRESTRIAL PRODUCTS. The Company's principal analog terrestrial
products include subscriber and distribution hardware and software. Analog
terrestrial subscriber products represented 27%, 24% and 25% of the Company's
consolidated sales in the years ended December 31, 1994, 1993 and 1992,
respectively. Subscriber products include primarily addressable systems which
permit control, through a set-top terminal, of a subscriber's cable television
services from a central headend computer without requiring access to the
subscriber's premises. Addressable systems also enable a cable television
operator to more easily provide pay-per-view programming services and multiple
tiers of programming packages. Analog terrestrial distribution products
represented 13%, 11% and 10% of the Company's consolidated sales in the years
ended December 31, 1994, 1993 and 1992, respectively. Distribution products
include headend signal processing equipment, distribution amplifiers, fiber
optic transmission equipment and passive components for wired television
distribution systems.

Beginning in mid-1992 and continuing through the first quarter of 1995, GI
has experienced significant increases in purchase orders for its analog products
both from domestic and international customers. GI's sales of analog addressable
systems reached their highest levels to date in 1994 when the Company shipped
more than 4.7 million analog addressable set-top terminals, a 73% increase over
1993 shipments. The Company believes that during this period cable operators
have sought to improve the quality, capacity and capabilities of their networks
and to increase their revenue per subscriber by increasing their capital
spending for addressable systems and distribution infrastructure upgrades. GI
expects cable operators in the U.S. and abroad to continue to upgrade their
basic networks and invest in new system construction primarily for four reasons:
first, new competition has arisen from other television programming sources,
such as direct broadcast satellite ("DBS") and cable networks planned by some
telephone companies; second, a majority of U.S. cable subscribers do not yet
have addressable terminals, and a majority are served by a system that is not
capable of offering more than 54 channels of programming; third, analog
addressable systems are the preferred choice for cable operators that have
subscribers with an expected usage profile that does not justify the higher cost
of more advanced digital systems; and fourth, international markets, where cable
penetration is low and demand for entertainment programming is growing, are
being developed using U.S. architecture and systems. In addition,

22
<PAGE>
the Company has continued to increase the functionality and features of its
analog addressable subscriber terminals. Its latest product, the CFT 2200,
scheduled to begin shipment in the second quarter of 1995, incorporates a user
feature platform that will allow the cable operator to write applications for
new services, including electronic program guides, supplementary sports and
entertainment information and play-along game shows. The addressable terminal
can be modularly upgraded to deliver digital audio, providing CD-quality
simulcasts of premium services, and can also be upgraded to GI's
DigiCipher-Registered Trademark- II digital compression technology.

DIGITAL TERRESTRIAL PRODUCTS. The Company believes that an important future
market for GI Communications will be the commercialization of advanced digital
broadband systems and equipment, which will provide for greatly expanded channel
capacity and programming options, improved quality and security of signal
transmission and the capability of delivering enhanced features and services.
The Company believes that its potential position in this developing market is
significantly enhanced by GI's leadership in a key enabling technology, digital
compression, which allows the broadcast of multiple digital channels in the same
bandwidth occupied by one uncompressed video channel. Although there can be no
assurances as to the commercial development of this technology, digital
compression is considered to be the basis for the development of "500-channel"
systems and interactive multimedia applications such as video-on-demand. The
Company's DigiCipher-Registered Trademark- system was the first digital video
compression system to demonstrate capabilities over cable and satellite
television networks.

The Company believes that the commercialization of digital broadband systems
will follow a two-stage process. First, programmers and operators of commercial
headends will use digital equipment to increase channel capacity, improve signal
quality and enhance security. This stage began in late 1993, when GI
Communications began shipping its first-generation
DigiCipher-Registered Trademark- I digital satellite encoders and decoders for
programmers and cable television commercial headend operators. Second, the
Company expects that cable, satellite and other broadband network operators will
begin to deploy digital terminals in their customers' homes in order to take
advantage of the enhanced capabilities of the digital networks. The rate of
deployment will depend largely on consumer demand for the new services made
available through the digital network and the relative cost of the more advanced
digital terminals. To date, GI has obtained orders and letters of intent for
more than 2.6 million of its DigiCable-TM- digital subscriber terminals from 11
major cable system operators. In addition, GI has entered into a letter of
intent and is negotiating a definitive agreement under which it expects to
supply digital and analog equipment for the deployment of Bell Atlantic
Corporation's announced large scale broadband network. GI has also entered into
an agreement under which it expects to supply digital and analog equipment for
the first three sites of GTE Corporation's announced broadband network.

GI's DigiCable-TM- terminals will incorporate the Company's latest
generation digital compression system, DigiCipher-Registered Trademark- II,
which is compatible with the recently finalized industry standard for digital
compression and transport, Motion Picture Experts Group 2. The
DigiCipher-Registered Trademark- II system has the capacity to carry various
video, audio, and data elements through a complex information infrastructure
that will have an improved capability to interact with other consumer devices
using MPEG2 compression. The features of MPEG2 were not finalized until November
1994 which, in addition to other system design issues, has caused delays in the
deployment of MPEG2/DC-II products. As a result, volume shipments of these
advanced digital cable terminals are not expected to begin until late 1995, and
there can be no assurance that additional delays will not occur. See "Risk
Factors -- New Technologies; Digital Products" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- New Technologies;
Digital Products."

ANALOG AND DIGITAL SATELLITE PRODUCTS. GI Communications' satellite
products consist primarily of analog and digital access control, scrambling and
descrambling products for satellite-based distribution of television
programming. Satellite products represented 23%, 22% and 16% of the Company's
consolidated sales in the years ended December 31, 1994, 1993 and 1992,
respectively. GI is the largest manufacturer of access control, scrambling and
descrambling equipment used by television programmers for the satellite
distribution of their proprietary programming.

23
<PAGE>
The Company's analog satellite products are the exclusive systems for the
distribution of encrypted C-Band satellite-delivered programming to cable
television operators and large-diameter backyard satellite dish owners. The
system consists primarily of scramblers, installed at the originating point for
the programming, and descramblers, which are installed at the commercial
headends of most cable television systems or purchased by consumers for use with
their backyard C-Band satellite dishes. As a result of a number of factors,
including significant black market economic incentives, the Company's first
generation system, VideoCipher-Registered Trademark- II, was illegally modified
("pirated"), beginning in the mid-1980s, by approximately 1.3 million consumers
to receive programming without paying for the service. In 1989, GI introduced
VideoCipher II Plus-TM-, a second generation product which, to GI's knowledge,
has not been "pirated." In 1991, in recognition of the need to provide for
ongoing security enhancements, GI introduced VideoCipher RS-TM-, which provides
the ability to upgrade security by inserting a credit-card-like TVPass Card-TM-
into a module rather than by replacing the entire module. In 1993, the Company
completed a two-part security upgrade program pursuant to which GI replaced the
VideoCipher-Registered Trademark- II units of the customers of several providers
of premium programming with VideoCipher RS-TM- units and those programmers
ceased transmission of the VideoCipher-Registered Trademark- II programming
signals. The Company believes this program has restored an acceptable level of
security to the backyard C-Band satellite dish market. In addition, the Company
believes that the security upgrade resulted in the one-time sale of more than
800,000 VideoCipher RS-TM- units between the second-quarter of 1992 and the
second-quarter of 1994 to former "pirate" consumers who wanted to restore their
access to scrambled programming.

From 1991 through 1993, more than 250,000 new backyard C-Band satellite
dishes were installed annually in North America, each requiring the use of an
analog VideoCipher-Registered Trademark- descrambler in order to receive
scrambled programming. In 1994, new installations totalled more than 350,000
satellite dishes. The Company believes that the introduction of the Hughes
DirecTV and PRIMESTAR satellite television services has contributed to increased
awareness about satellite programming and has resulted in a higher rate of new
installation of backyard C-Band satellite equipment. The Company is a supplier
to PRIMESTAR but not to Hughes DirecTV. The Company expects sales opportunities
for VideoCipher RS-TM- modules 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. The Company believes that the providers of C-Band
delivered programming using VideoCipher-Registered Trademark- analog equipment
represent an important future opportunity for sales of the Company's
DigiCipher-Registered Trademark- satellite systems, although there can be no
assurance that such sales will occur.

GI Communication's digital satellite products include primarily the
DigiCipher-Registered Trademark- I system, the world's first digital
compression, access control and encryption transport system, designed for the
delivery of video entertainment signals. As in the analog satellite system, the
digital system relies on encoders at the origination point of the programming,
and decoders, either at commercial headends or at consumers' homes for use with
their own satellite dishes. DigiCipher-Registered Trademark- I encoders and
commercial decoders have been shipped worldwide and hold the leading share of
the equipment used by programmers of satellite distributed digital video
programming. As of December 31, 1994, DigiCipher-Registered Trademark- I
encoders had been installed by 21 different programmer/operators to encode
approximately 200 digital channels in North America and 21 programmer/operators
to encode approximately 150 digital channels internationally. In most cases, the
Company expects these programmers to upgrade to GI's new MPEG2/DC-II system
after it becomes available in mid-1995.

The Company supplies DigiCipher-Registered Trademark- I digital consumer
receivers to PRIMESTAR Partners, a consortium of cable television operators and
GE Americom, which is offering a medium-power Ku-band direct-to-home satellite
television system currently transmitting 96 digital video channels. PRIMESTAR's
business generally competes with the Hughes DirecTV high-power Ku-band satellite
television system. GI began shipments of DigiCipher-Registered Trademark- I
consumer decoders/receivers in the second quarter of 1994 and volumes are
expected to increase in 1995. Deployment of MPEG2/DC-II digital products for
PRIMESTAR Partners, expected to begin in mid-1995, will include an upgrade to
MPEG2/DC-II, for a fee, of DigiCipher-Registered Trademark- I receivers
currently in use. See "Risk Factors -- New Technologies; Digital Products" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- New Technologies; Digital Products."

24
<PAGE>
COMMSCOPE

CommScope (which represented 22%, 25% and 27% of the Company's consolidated
sales for the years ended December 31, 1994, 1993 and 1992, respectively) is the
largest manufacturer and supplier of coaxial cable for cable television
applications in the U.S. in terms of sales volume, with more than a 50% market
share. CommScope also manufacturers fiber optic cable under a non-exclusive
license from AT&T Corporation for sale to cable television customers in the
United States. In addition, CommScope manufactures and sells other electronic
cable primarily for local area network applications in the United States.

The Company believes that CommScope's competitive strength in the coaxial
cable market is due to its extensive coaxial cable product line and its
efficient, low-cost manufacturing and delivery capability. CommScope's
manufacturing facility in Catawba, North Carolina is highly automated, operates
24 hours a day and is capable of producing approximately 400 miles of trunk and
distribution coaxial cable and over 5 million feet of dropwire per day. In 1994,
CommScope shipments of dropwire and distribution coaxial cable increased an
average of 15% over the levels shipped in 1993. The Company believes this growth
is a result of the network upgrades being undertaken by CommScope's traditional
cable television customers, in addition to increasing orders from new customers
such as telephone companies and international cable television operators. In
order to meet increased demand, CommScope is expanding its Catawba, North
Carolina facility for distribution coaxial cable and is constructing a new
manufacturing facility in Scottsboro, Alabama to be used primarily for the
production of dropwire.

Growth in demand for coaxial cable has occurred despite the replacement of
coaxial cable with fiber optic cable in the trunk portion of many cable
television networks. This is because the vast majority of the coaxial cable used
in a typical, modern cable television network occurs beyond the trunk, in the
distribution portion of the network and in the dropwire into the home. The
Company believes that broadband networks will have an ongoing need for coaxial
cable to maintain, expand and upgrade their facilities. The Company believes
that coaxial cable remains the most efficient means for the transmission of
broadband signals to the home over short distances because it is less expensive
to install in short lengths than fiber optic cable, has less costly electronics,
and has the necessary capacity to handle upstream and downstream signal
transmission.

CommScope has recently received orders from U.S. telephone operating
companies, several of which have announced plans to install broadband networks
for the delivery of video, telephone and other services to some portion, or all,
of their telephone service areas. The broadband networks that are being proposed
by some of the telephone companies utilize hybrid fiber optic/coaxial cable
technologies similar to those being utilized by many cable television operators.
While there is no assurance that these proposed networks will be built, to the
extent they are implemented, they could represent a significant incremental
sales opportunity for CommScope beyond its traditional cable television customer
base.

Cable produced by CommScope for local area network applications also grew
significantly in 1994 with sales for these applications increasing by more than
40%. CommScope is expanding the capacity of its Claremont, North Carolina
facility in order to meet the growing demand for local area network and other
electronic cable.

INTERNATIONAL MARKETS

The Company believes that international markets represent a key growth
opportunity for its sales of broadband equipment. During the year ended December
31, 1994, GI's international broadband equipment sales increased 82% over the
year ended December 31, 1993 and accounted for approximately 23% of GI's total
broadband equipment revenues in 1994.

International markets employ broadband technology in three ways: through
broadband television systems similar to those in the United States; through
Multichannel Multipoint Distribution Systems ("MMDS") or wireless microwave
systems; and through DBS systems. MMDS is typically used in areas where the cost
of installing a cable television distribution infrastructure is not justified
due to the low density of homes, a relatively small potential subscriber base,
or geographic constraints. DBS systems

25
<PAGE>
with digital compression capabilities are expected to have significant growth
internationally as programmers and satellite operators seek to maximize their
limited satellite transponder capacity in order to reach geographically
dispersed subscribers.

In certain countries, like the United Kingdom, operators have been using
system architectures that rely on U.S. broadband designs partly because many of
these systems are being developed by affiliates of certain U.S. cable television
operators and telephone companies. In addition to the United Kingdom, plans for
new construction of significant systems have been announced in Hong Kong,
Thailand, Australia, Latin America and the Middle East. The Company believes
that these markets present significant opportunities because cable, wireless and
satellite television penetration is low in these areas. For example, according
to industry sources, less than 35% of the households in Western Europe have
access to cable, compared with more than 95% having access in the United States.
In South America, industry sources estimate that, out of the region's
approximately 72 million television households, less than 7 million receive any
sort of multichannel television service.

The Company believes that it enjoys significant competitive strengths in
these markets because of its leadership in the United States market for
broadband communications equipment, its strong technology, its relationships
with the U.S. cable operators who are building many of the systems in
international markets, and its ability to deliver complete systems due to its
fully-integrated product line. The Company believes that to date it has supplied
a majority of the addressable systems and equipment in use in international
markets. However, because of the need to form alliances in order to operate
effectively in many international markets and the larger number of competitors
in international markets than in U.S. markets, among other factors, there can be
no assurance as to the Company's future success as international markets expand.

POWER SEMICONDUCTOR DIVISION

The Power Semiconductor Division (which represented 16%, 19% and 22% of the
Company's consolidated sales in the years ended December 31, 1994, 1993 and
1992, respectively) is a world leader in the design, manufacture and sale of
low- to-medium power rectifiers and transient voltage suppressors in axial,
bridge, and surface mount and array packages. These products are used throughout
the electrical and electronics industries to condition current and voltage and
to protect electrical circuits from power surges. Applications include
components for circuits in consumer electronics, telecommunications, lighting
ballasts, home appliances, computers and automotive and industrial products. The
demand for increased electronic functions, global sourcing and higher
reliability within these markets is adding to the growth of the Power
Semiconductor Division worldwide business.

The Company believes that the competitive strengths of the Power
Semiconductor Division are the quality of its products, its global sales and
distribution channels and the low cost and efficiency of its operation. The
Division is a leader in sales of low-to-medium power rectifiers and transient
voltage suppressers in North America, Southeast Asia and Europe, with 71% of its
sales for the year ended December 31, 1994 generated from customers outside of
the United States.

New products and technologies continue to play a significant role in the
Power Semiconductor Division's growth. The Division's patented PAR (Passivated
Anisotrophic Rectifier) process is serving to increase the reliability of many
automotive electronic applications. The Division has also developed a new line
of transient voltage protection and diode arrays, using monolithic chip
technology, which allows customers to use a small single component to replace
numerous larger components in telecommunications and computer applications.

The Power Semiconductor Division has undertaken a significant capacity
expansion in its Taiwan, U.S. and Ireland facilities in order to meet the
increased demand for its products worldwide.

26
<PAGE>
TECHNOLOGY AND LICENSING

The Company believes it is in the unique position of having produced, and of
currently producing, the majority of the world's analog addressable systems,
while also developing the digital technology that will eventually replace these
systems. As a result, GI has sought to build upon its core enabling
technologies, digital compression, encryption and conditional access and
control, in order to lead the transition of the market for broadband
communications networks from analog to digital systems.

GI has continued development efforts in digital compression, which are
leading to the introduction of its MPEG2/DC-II product line. In an effort to
make its DigiCipher-Registered Trademark- II system architecture and products
widely available, the Company has chosen to make available for licensing
significant elements of its compression technology. To date, licensees of GI's
DigiCipher-Registered Trademark- II compression technology include
Scientific-Atlanta, Inc., Hewlett-Packard Company, and Zenith Electronics Corp.
In addition, GI has licensed Motorola, Inc., SGS-THOMSON Microelectronics, Inc.,
LSI Logic Corporation and C-Cube Microsystems to use
DigiCipher-Registered Trademark- II technology to manufacture semiconductor
circuits for use in digital video products.

The Company has also entered into other license agreements, both as licensor
and licensee, covering certain products and processes with various companies.
Among those agreements, in 1993, GI granted an unaffiliated third party a
license under certain GI patents regarding addressable converters pursuant to
which GI will earn royalties of $1.5 million per year for five years. The
Company also holds a non-exclusive worldwide license under an unaffiliated third
party's patent regarding encryption and decryption of satellite televison
signals. This license agreement requires the payment of certain royalties, which
are not expected to be material to the Company's financial statements.

RESEARCH AND DEVELOPMENT

The Company actively pursues the development of new technologies and
applications. Research and development expenditures for the year ended December
31, 1994 were $111 million and are expected to be approximately $135 million for
the year ending December 31, 1995 compared to $74 million and $58 million for
the years ended December 31, 1993 and 1992, respectively. The Company's efforts
are focused on: continued development of the next generation of cable terminals,
which incorporate digital compression and multimedia capabilities; development
of enhanced addressable analog terminals; advanced digital systems for cable and
satellite television distribution; and product development through strategic
alliances. Emerging research and development activities include broadband
telephony products and interactive multimedia technologies for broadband
networks.

BACKLOG

The backlog information set forth below includes only orders for products
scheduled to be shipped within six months. Orders may be revised or cancelled,
either pursuant to their terms or as a result of negotiations; consequently, it
is impossible to predict accurately the amount of backlog orders that will
result in sales.

<TABLE>
<CAPTION>
BACKLOG
-------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1992 1993 1994
--------------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C>
Broadband Communications.......................................... $ 189 $ 418 $ 578
Power Semiconductor............................................... 84 95 122
----- ----- -----
Total......................................................... $ 273 $ 513 $ 700
----- ----- -----
----- ----- -----
</TABLE>

27
<PAGE>
MANAGEMENT

Set forth below are the directors and executive officers of the Company as
of the date of this Prospectus. In connection with the Company's initial public
offering, on April 6, 1992, each executive officer of GI Delaware as of that
date was appointed to serve as an executive officer of the Company. Certain
executive officers of the Company also serve as presidents of the various
divisions and subsidiaries of GI Delaware. Officers serve at the discretion of
the Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
- ---------------------------------- --- -------------------------------------------------------------
<S> <C> <C>
Daniel F. Akerson (b) 46 Chairman of the Board of Directors and Chief Executive
Officer
Richard S. Friedland (c) 44 President, Chief Operating Officer and Director
J. A. Blanchard, III 52 Executive Vice President
Paul J. Berzenski 42 Vice President and Controller
Charles T. Dickson 40 Vice President and Chief Financial Officer
Thomas A. Dumit 52 Vice President, General Counsel and Secretary
Richard C. Smith 50 Vice President -- Taxes, Treasurer and Assistant Secretary
Frank M. Drendel (b) 50 Chairman, President and Chief Executive Officer of CommScope,
Inc., a subsidiary of GI Delaware, and Director of the
Company
Ronald A. Ostertag 54 Vice President of the Company and President, Power
Semiconductor Division
Laurence L. Osterwise 47 Vice President of the Company and President, GI
Communications Division
John Seely Brown (d) 54 Director
Lynn Forester (c) 40 Director
Nicholas C. Forstmann (a)(c) 48 Director
Theodore J. Forstmann (a)(d) 55 Director
Steven B. Klinsky (b) 38 Director
Morton H. Meyerson (d) 56 Director
J. Tracy O'Rourke (c) 60 Director
Felix G. Rohatyn (d) 66 Director
Paul G. Stern (b) 56 Director
Robert S. Strauss (b) 76 Director
<FN>
- --------------
(a) Theodore J. Forstmann and Nicholas C. Forstmann are brothers.
(b) Member of Class I of the Board of Directors, with a term expiring in 1996.
(c) Member of Class II of the Board of Directors, with a term expiring in 1997.
(d) Member of Class III of the Board of Directors, with a term expiring in
1995.
</TABLE>

The principal occupations and positions for the past several years of each
of the directors and executive officers of the Company are as follows:

Daniel F. Akerson has served as Chairman of the Board and Chief Executive
Officer of the Company since August 1993 and as a director of the Company since
July 1993. He was President of the Company from August 1993 to October 1993. He
served as Chief Operating Officer and President of MCI Communications
Corporation ("MCI") from 1992 to August 1993. He served as Executive Vice
President and Group Executive of MCI from 1990 to 1992, Executive Vice President
and Chief Financial Officer of MCI

28
<PAGE>
from 1987 to 1990, Senior Vice President of MCI from 1987 to 1988, and held
various positions within MCI since 1983. Mr. Akerson is a General Partner of FLC
Partnership, L.P., the General Partner of
Forstmann Little & Co.

Richard S. Friedland has been a director of the Company since October 1993.
He became President and Chief Operating Officer of the Company and GI Delaware
in October 1993. He was Chief Financial Officer of the Company and GI Delaware
from March 1992 to January 1994 and Vice President, Finance, of the Company from
May 1991 to October 1993. He was Vice President -- Finance and Assistant
Secretary of GI Delaware from October 1990 to October 1993 and Vice President
and Controller of GI Delaware from November 1988 to January 1994. He is a
director of Department 56, Inc.

J. A. Blanchard, III became Executive Vice President of the Company on
January 10, 1994. He was Chairman and Chief Executive Officer of Harbridge
Merchant Services from 1991 to 1993. From 1989 to 1991 he was a Senior Vice
President at AT&T and prior to that a Group Vice President of AT&T from 1986 to
1989. He is a director of Telular Corp. and of Xpedite Systems, Inc.

Paul J. Berzenski became Controller of the Company in January 1994 and Vice
President of the Company in November 1994. He was Assistant Controller of GI
Delaware from January 1991 to January 1994 and a Controller in the Company's
former Jerrold Communications Division from January 1988 to January 1991.

Charles T. Dickson became Vice President and Chief Financial Officer of the
Company on January 17, 1994. He was employed by MCI from 1984 to 1994. He served
as Vice President, Finance and Administration, for several divisions of MCI from
1988 to 1994. From 1984 to 1988 he held various positions within MCI's corporate
staff.

Thomas A. Dumit became Vice President, General Counsel and Secretary of GI
Delaware in January 1991. From January 1988 through 1990, Mr. Dumit was Senior
Vice President and General Counsel of Whitman Corporation, a diversified
company. From 1986 to 1987 he was Senior Vice President and General Counsel of
Household Financial Services, a consumer finance division of Household
International, Inc., and from 1984 to 1985 he was Vice President and General
Counsel of American Hospital Supply Corporation.

Richard C. Smith has been Vice President of GI Delaware since March 1989,
Treasurer of the Company since September 1991 and Assistant Secretary of GI
Delaware since June 1986. Mr. Smith has been Vice President and Assistant
Secretary of the Company since May 1991 and has been Treasurer of the Company
since March 1992. He was Assistant Treasurer of GI Delaware from June 1986 to
June 1987 and from February 1991 to September 1991. From June 1986 to November
1994, he was Director of Taxes of GI Delaware and from May 1991 to November 1994
he was Director of Taxes of the Company. From June 1987 to March 1989 he was
also Director, Risk Management and Customs of GI Delaware.

Frank M. Drendel served as a director of GI Delaware and its predecessors
from 1987 to March 1992, when he was elected to serve as a director of the
Company. He has served as Chairman and President of CommScope since 1986 and has
served as Chief Executive Officer of CommScope since 1976. Mr. Drendel was
Executive Vice President of the predecessor to the Company from September 1986
to November 1988. From February 1981 to September 1986, Mr. Drendel was
Executive Vice President and, from July 1982 to September 1986, he was Vice
Chairman of the board of M/A-COM, Inc. Mr. Drendel is a director of Alcatel
Alsthom Compagnie Generale d'Electricite.

Ronald A. Ostertag has been Vice President of GI Delaware since February
1989, and President, Power Semiconductor Division since September 1990. From
April 1989 to September 1990 he was Senior Vice President -- Operations for the
former VideoCipher division and from August 1984 to April 1989 was Vice
President and General Manager of the Computer Products division of GI Delaware.

Laurence L. Osterwise became Vice President of the Company and President GI
Communications Division in November 1994. He was employed by IBM Corporation
from 1969 to November 1994, serving as General Manager of Production Industries
Consulting and Services from January 1994 to November 1994,

29
<PAGE>
Corporate Director of Market Driven Quality from December 1991 to January 1994,
U.S. Vice President of Market Driven Quality from January 1991 to December 1991,
Site General Manager Rochester, Minnesota, Director, Application Business
Systems from 1985 to 1991 and in various capacities prior to 1985.

John Seely Brown has been a director of the Company since July 1993. He has
been Chief Scientist of Xerox Corporation since 1992 and Corporate Vice
President of Xerox Corporation since 1990. From 1986 to 1990 he was Vice
President, Advanced Research, Palo Alto Research Center, of Xerox Corporation
and Associate Director of the Institute for Research on Learning. He is also the
director of the Xerox Palo Alto Research Center. He is a Fellow of the American
Association for Artificial Intelligence and a member of the National Academy of
Education.

Lynn Forester has been a director of the Company since February 1995. She
has been President and Chief Executive Officer of FirstMark Holdings, Inc., an
owner and operator of telecommunications companies, since 1984. From 1989 to
December 1994, she was also Chairman and Chief Executive Officer of TPI
Communications International, Inc., a radio common carrier and paging company.
She is a member of the U.S. Advisory Council on the National Information
Infrastructure.

Nicholas C. Forstmann served as a director of GI Delaware from August 1990
to March 1992, when he was elected to serve as a director of the Company. He has
been a General Partner of FLC Partnership, L.P., the General Partner of
Forstmann Little & Co., since he co-founded Forstmann Little & Co. in 1978. He
is a director of The Topps Company, Inc. and Department 56, Inc.

Theodore J. Forstmann served as a director of GI Delaware from August 1990
to March 1992, when he was elected to serve as a director of the Company. He has
been a General Partner of FLC Partnership, L.P., the General Partner of
Forstmann Little & Co., since he co-founded Forstmann Little & Co. in 1978. He
is a director of The Topps Company, Inc. and Department 56, Inc.

Steven B. Klinsky served as a director of GI Delaware from August 1990 to
March 1992, when he was elected to serve as a director of the Company. He has
been a General Partner of FLC Partnership, L.P., the General Partner of
Forstmann Little & Co., since December 1986.

Morton H. Meyerson has been a director of the Company since July 1993. Since
1992, he has served as Chairman and Chief Executive Officer of Perot Systems
Corporation, a computer and communication services company. From 1989 to 1992,
he was a private investor. He was President from 1979 to 1986, and Vice Chairman
in 1986, of Electronic Data Systems Corp., a company which designs, installs and
operates business information and communications systems. He serves on a number
of corporate and advisory boards, including Energy Service Company, Inc. and the
National Parks Foundation.

J. Tracy O'Rourke served as a director of GI Delaware from September 1990 to
March 1992, when he was elected to serve as a director of the Company. He has
been Chairman and Chief Executive Officer of Varian Associates, Inc., a
manufacturer of electronic devices, semiconductor manufacturing equipment and
analytical instruments, since early 1990. Mr. O'Rourke was Executive Vice
President and Chief Operating Officer of Rockwell International from 1989 to
1990 and President of Allen-Bradley Inc., an electrical equipment manufacturer,
from 1981 to 1989. He is a director of National Semiconductor Corp.

Felix G. Rohatyn has been a director of the Company since October 1993. He
has been a general partner of Lazard Freres & Co., Investment Bankers, since
1960 and served as Chairman of the Municipal Assistance Corporation for the City
of New York from 1975 to October 1993. He is a director of Pfizer Inc. and
Howmet Corporation.

Paul G. Stern has been a director of the Company since February 1994. He has
been associated with Forstmann Little & Co. since July 1993. From March 1989
through March 1993, he served as Chairman and Chief Executive Officer of
Northern Telecom Ltd., a manufacturer of digital telecommunications equipment.
He is a director of The Dow Chemical Company, LTV Steel Co., Inc., Varian
Associates, Inc. and Whirlpool Corporation. He also serves on the White House
National Security Telecommunications Advisory Committee.

30
<PAGE>
Robert S. Strauss has been a director of the Company since December 1992. He
was a director of GI Delaware from August 1990 to September 1991. Mr. Strauss, a
founder of and partner in the law firm of Akin, Gump, Strauss, Hauer & Feld,
served as United States Special Trade Representative from 1977 to 1979 and as
U.S. Ambassador to the Soviet Union, and upon its dissolution, to the Russian
Federation from August 1991 to November 1992. Mr. Strauss is a director of
Archer-Daniels-Midland Co.

SELLING STOCKHOLDERS

All of the shares of Common Stock being offered hereunder are being sold by
certain stockholders as indicated below (the "Selling Stockholders"). The
Company will not receive any of the proceeds from the shares of Common Stock
being sold. The following table sets forth certain information regarding the
beneficial ownership of the Common Stock, as of the date hereof and as adjusted
after giving effect to the Offerings hereunder, by each Selling Stockholder.

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED PERCENTAGE NUMBER OF NUMBER OF SHARES PERCENTAGE
BEFORE THE BEFORE SHARES BEING BENEFICIALLY OWNED AFTER
NAME OFFERINGS (1) OFFERINGS (1) OFFERED (1) AFTER OFFERINGS(1) OFFERINGS (1)
- ----------------------------------- ------------------ --------------- ------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
MBO-IV (2) 17,410,550 14.2% 6,970,378 10,440,172 8.5%
Instrument Partners (2) 19,784,150 16.1 7,920,657 11,863,493 9.7
Nicholas C. Forstmann (2) 37,194,700 30.4 14,891,035 22,303,665 18.2
Theodore J. Forstmann (2) 37,194,700 30.4 14,891,035 22,303,665 18.2
Winston W. Hutchins (2) 37,194,700 30.4 14,891,035 22,303,665 18.2
Steven B. Klinsky (2) 37,194,700 30.4 14,891,035 22,303,665 18.2
Wm. Brian Little (2) 19,784,150 16.1 7,920,657 11,863,493 9.7
John A. Sprague (2) 19,784,150 16.1 7,920,657 11,863,493 9.7
James M. Denny (3) 16,150 * 16,150 0 0
J. Tracy O'Rourke (4) 47,210 * 25,000 22,210 *
Derald H. Ruttenberg (5) 45,210 * 45,210 0 0
Robert S. Strauss (6) 55,210 * 22,605 32,605 *
<FN>
- --------------
* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock.
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days after the date of this Prospectus. For
purposes of computing the percentage of outstanding shares of Common Stock
held by such person or group of persons named above, any security which
such person or persons has or have the right to acquire within 60 days
after the date of this Prospectus is deemed to be outstanding, but is not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person. For purposes of this table, the number of
shares of Common Stock assumes that the Underwriters' over-allotment
options are not exercised.
(2) MBO-IV and Instrument Partners are the Forstmann Little Partnerships. The
general partner of Instrument Partners is FLC XXII Partnership, a general
partnership of which Messrs. Wm. Brian Little, Nicholas C. Forstmann, John
A. Sprague, Steven B. Klinsky and Winston W. Hutchins, and TJ/JA L.P., a
Delaware limited partnership ("TJ/JA L.P."), are general partners. The
general partner of TJ/ JA L.P. is Theodore J. Forstmann. The general
partner of MBO-IV is FLC Partnership, L.P., a limited partnership of which
Messrs. Theodore J. Forstmann, Nicholas C. Forstmann, Steven B. Klinsky,
Winston W. Hutchins and Daniel F. Akerson and Ms. Sandra J. Horbach are
general partners. Accordingly, each of such individuals and partnerships
(other than Mr. Akerson and Ms. Horbach, for the reasons described below)
may be deemed the beneficial owners of shares owned by MBO-IV and
Instrument Partners in which such individual or partnership is a general
partner and for purposes of this table, such beneficial ownership is
included. Neither Mr. Akerson nor Ms. Horbach has any voting or investment
power with respect to, or any economic interest in, the shares of Common
Stock held by MBO-IV; and, accordingly, Mr. Akerson and Ms. Horbach are not
deemed to be the beneficial owners thereof. Theodore J. Forstmann and
Nicholas C. Forstmann are brothers.
</TABLE>

31
<PAGE>
<TABLE>
<S> <C>
Mr. Little is a special limited partner in FLC Partnership, L.P. and each
of FLC Partnership L.P. and FLC XXII Partnership is a limited partner of
Instrument Partners. None of the other limited partners in each of MBO-IV
and Instrument Partners is otherwise affiliated with the Company, GI
Delaware or Forstmann Little. The address of MBO-IV and Instrument Partners
is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, New York 10153.
(3) Includes 16,150 shares subject to options which are exercisable currently,
all of which are being exercised in order to sell the underlying shares in
the Offerings. Mr. Denny is a former director of the Company.
(4) Includes 45,210 shares subject to options which are exercisable currently.
Of such options, 25,000 are being exercised in order to sell the underlying
shares in the Offerings.
(5) Includes 45,210 shares subject to options which are exercisable currently,
all of which are being exercised in order to sell the underlying shares in
the Offerings. Mr. Ruttenberg is a former director of the Company. Mr.
Ruttenberg and an entity controlled by his children are limited partners of
Instrument Partners.
(6) Includes 45,210 shares subject to options which are exercisable currently.
Of such options, 22,605 are being exercised in order to sell the underlying
shares in the Offerings.
</TABLE>

DESCRIPTION OF CAPITAL STOCK
GENERAL

Pursuant to the Certificate of Incorporation, the Company's authorized
capital stock currently consists of (i) 20,000,000 shares of preferred stock,
par value $.01 per share ("Preferred Stock"), and (ii) 175,000,000 shares of
Common Stock, par value $.01 per share. As of April 20, 1995, 122,504,920 shares
of Common Stock were issued and outstanding. All outstanding shares of Common
Stock are fully paid and nonassessable. No shares of Preferred Stock are issued
and outstanding.

On March 30, 1992, the Company's name was changed from FLGI Holding Corp. to
General Instrument Corporation.

On November 3, 1994, the Board of Directors approved a proposed amendment to
the Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 175,000,000 to 400,000,000. The proposed amendment
will be presented to stockholders for approval at the Company's annual meeting
of stockholders on April 26, 1995.

COMMON STOCK

Each holder of Common Stock is entitled to one vote for each share owned of
record on all matters submitted to a vote of stockholders. There are no
cumulative voting rights. Accordingly, the holders of a majority of the shares
voting for the election of directors can elect all the directors if they choose
to do so, subject to any voting rights of holders of Preferred Stock to elect
directors. Subject to the preferential rights of any outstanding series of
Preferred Stock and to the restrictions on payment of dividends imposed by the
Credit Agreement (as described in "Price Range of Common Stock and Dividend
Policy"), the holders of Common Stock will be entitled to such dividends as may
be declared from time to time by the Board of Directors from funds legally
available therefor, and will be entitled, after payment of all prior claims, to
receive pro rata all assets of the Company upon the liquidation, dissolution or
winding up of the Company. Holders of Common Stock have no redemption,
conversion rights or preemptive rights to purchase or subscribe for securities
of the Company.

After giving effect to the Offerings, the Forstmann Little Partnerships will
own an aggregate of approximately 18% of the currently outstanding shares of
Common Stock or approximately 15% of the Common Stock on a fully diluted basis
(or 13% of the Common Stock on a fully diluted basis, assuming that the
Underwriters' over-allotment options are exercised in full). After the
Offerings, it is expected that the Forstmann Little Partnerships are likely to
continue to be among the largest stockholders of the Company.

The Common Stock is listed on the New York Stock Exchange under the symbol
"GIC."

32
<PAGE>
PREFERRED STOCK

The authorized capital stock of the Company includes 20,000,000 shares of
Preferred Stock, none of which is currently issued or outstanding. The Company's
Board of Directors is authorized to divide the Preferred Stock into series and,
with respect to each series, to determine the preferences and rights and the
qualifications, limitations or restrictions thereof, including the dividend
rights, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, sinking fund provisions, the number of shares
constituting the series and the designation of such series. The Board of
Directors could, without stockholder approval, issue Preferred Stock with voting
and other rights that could adversely affect the voting power of the holders of
Common Stock and could have certain anti-takeover effects. The Company has no
present plans to issue any shares of Preferred Stock.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Certificate of Incorporation provides that a director of the Company
will not be personally liable to the Company or its stockholders for monetary
damages for any breach of fiduciary duty as a director, except in certain cases
where liability is mandated by the Delaware General Corporation Law (the
"DGCL"). The provision has no effect on any non-monetary remedies that may be
available to the Company or its stockholders, nor does it relieve the Company or
its directors from compliance with federal or state securities laws. The
Certificate of Incorporation and the By-Laws of the Company provide for
indemnification, to the fullest extent permitted by the DGCL, of any person who
is or was involved in any manner in any investigation, claim or other proceeding
by reason of the fact that such person is or was a director or officer of the
Company, or is or was serving at the request of the Company as a director or
officer of another corporation, against all expenses and liabilities actually
and reasonably incurred by such person in connection with the investigation,
claim or other proceeding.

DELAWARE LAW AND LIMITATIONS ON CHANGES IN CONTROL

Section 203 of the DGCL prevents an "interested stockholder" (defined in
Section 203, generally, as a person owning 15% or more of a corporation's
outstanding voting stock) from engaging in a "business combination" (as defined
in Section 203) with a publicly-held Delaware corporation (or its majority-owned
subsidiaries) for three years following the date such person became an
interested stockholder unless (i) before such person became an interested
stockholder, the board of directors of the corporation approved the transaction
in which the interested stockholder became an interested stockholder or approved
the business combination; (ii) upon consummation of the transaction that
resulted in the interested stockholder's becoming an interested stockholder, the
interested stockholder owns at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding stock held by
directors who are also officers of the corporation and by employee stock plans
that do not provide employees with the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer);
or (iii) following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of 66 2/3% of the outstanding voting stock of the
corporation not owned by the interested stockholder.

The Certificate of Incorporation provides for a classified Board of
Directors consisting of three classes. Each class consists, as nearly as may be
possible, of one-third of the total number of directors constituting the entire
Board. At each annual meeting of stockholders, successors to the class of
directors whose term expires at that annual meeting will be elected for a
three-year term and until their respective successors are elected and qualified.

The classified Board of Directors, the provisions authorizing the Board of
Directors to issue Preferred Stock without stockholder approval, and the
provisions of Section 203 of the DGCL could have the effect of delaying,
deferring or preventing a change in control of the Company or the removal of
existing management.

TRANSFER AGENT

The transfer agent for the Common Stock is Chemical Bank.

33
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK

The following discussion concerns the material United States federal income
and estate tax consequences of the ownership and disposition of shares of Common
Stock applicable to Non-U.S. Holders of such shares of Common Stock. In general,
a "Non-U.S. Holder" is any holder other than (i) a citizen or resident of the
United States, (ii) a corporation or partnership created or organized in the
United States or under the laws of the United States or of any State, or (iii)
any estate or trust whose income is includible in gross income for United States
federal income tax purposes regardless of its source. The discussion is based on
the provisions of the United States Internal Revenue Code of 1986, as amended
and regulations thereunder and judicial and administrative interpretations as of
the date hereof, all of which are subject to change, and is for general
information only. The discussion does not address all aspects of federal income
and estate taxation (including, without limitation, special rules applicable to
certain United States expatriates and certain former United States residents)
nor any aspects of state, local or foreign tax laws. The discussion does not
consider any specific facts or circumstances that may apply to a particular
Non-U.S. Holder (including the fact that in the case of a Non-U.S. Holder that
is a partnership, the United States tax consequences of holding and disposing of
shares of Common Stock may be affected by certain determinations made at the
partner level). Accordingly, prospective investors are urged to consult their
tax advisors regarding the United States federal, state, local and non-U.S.
income and other tax consequences of holding and disposing of shares of Common
Stock.

DIVIDENDS. In general, dividends paid to a Non-U.S. Holder will be subject
to United States withholding tax at a 30% rate (or lower rate as may be
prescribed by an applicable tax treaty) unless the dividends are effectively
connected with a trade or business carried on by the Non-U.S. Holder within the
United States. Dividends effectively connected with such a trade or business
will generally not be subject to withholding tax (if the Non-U.S. Holder
properly files an executed IRS Form 4224 with the payor of the dividend) and
will generally be subject to United States federal income tax on a net income
basis at regular graduated rates. In the case of a Non-U.S. Holder which is a
corporation, such effectively connected income also may be subject to the branch
profits tax (which is generally imposed on a foreign corporation on the
repatriation from the United States of effectively connected earnings and
profits at a 30% rate). The branch profits tax may not apply (or may apply at a
reduced rate) if the recipient is a qualified resident of certain countries with
which the United States has an income tax treaty. To determine the applicability
of a tax treaty providing for a lower rate of withholding, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country, unless the payor has definite knowledge that such presumption is not
warranted. Proposed Treasury regulations, if finally adopted, however, would
require Non-U.S. Holders to file certain forms to obtain the benefit of any
applicable tax treaty providing for a lower rate of withholding tax on
dividends. Such forms would be required to contain the beneficial owner's name
and address and, subject to a de minimis exception, an official statement by the
competent authority in the foreign country (as designated in the applicable tax
treaty) attesting to the beneficial owner's status as a resident thereof. A
Non-U.S. Holder that is eligible for a reduced rate of U.S. withholding tax
pursuant to a tax treaty may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund with the Internal Revenue Service. The
Company must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements apply regardless
of whether withholding was reduced or eliminated by an applicable tax treaty.
Copies of these information returns also may be made available under the
provisions of a specific treaty or agreement with the tax authorities in the
country in which the Non-U.S. Holder resides.

SALE OF COMMON STOCK. Generally, a Non-U.S. Holder will not be subject to
United States federal income tax on any gain realized upon the disposition of
such holder's shares of Common Stock unless (i) the gain is effectively
connected with a trade or business carried on by the Non-U.S. Holder within the
United States (in which case the branch profits tax described above may also
apply to a corporate Non-U.S. Holder); (ii) the Non-U.S. Holder is an individual
who holds the shares of Common Stock as a
capital asset and is present in the United States for 183 days or more in the
taxable year of the disposition, and either (a) such Non-U.S. Holder has a "tax
home," for federal income tax purposes, in the United States (unless the gain
from the disposition is attributable to an office or other fixed place of
business maintained by such Non-U.S. Holder in a foreign country and such gain
has been subject to a foreign income tax equal to at least 10%), or (b) the gain
from the disposition is attributed to an office or other fixed place of business
maintained by such non-U.S. Holder in the United States; (iii) the Non-U.S.

34
<PAGE>
Holder is subject to tax pursuant to the provisions of U.S. tax law applicable
to certain United States expatriates or to certain former United States
residents; or (iv) the Company is or has been a "U.S. real property holding
corporation" for federal income tax purposes (which the Company does not believe
that it has been, is or is likely to become) at any time during the five year
period ending on the date of disposition (or such shorter period that such
shares were held) and, subject to certain exceptions, the Non-U.S. Holder held,
directly or constructively, more than five percent of the Common Stock.

ESTATE TAX. Shares of Common Stock owned or treated as owned by an
individual who is a Non-U.S. Holder at the time of death will be includible in
the individual's gross estate for the United States federal estate tax purposes,
unless an applicable estate tax treaty provides otherwise, and may be subject to
United States federal estate tax.

BACKUP WITHHOLDING AND INFORMATION REPORTING. Under current United States
federal income tax law, backup withholding tax (which generally is a withholding
tax imposed at the rate of 31 percent on certain payments to persons that fail
to furnish certain required information) and information reporting requirements
apply to payments of dividends (actual and constructive) made to certain
Non-corporate United States persons. The United States backup withholding tax
and information reporting requirements (other than those described above under
"Dividends") will generally not apply to dividends paid on Common Stock to a
Non-U.S. Holder at an address outside the United States.

The payment of the proceeds from the disposition of shares of Common Stock
through the United States office of a broker will be subject to information
reporting and backup withholding unless the holder, under penalty of perjury,
certifies, among other things, its status as a Non-U.S. Holder, or otherwise
establishes an exemption. Generally, the payment of the proceeds from the
disposition of shares of Common Stock to or through a non-U.S. office of a
non-U.S. broker will not be subject to backup withholding and will not be
subject to information reporting. In the case of the payment of proceeds from
the disposition of shares of Common Stock through a non-U.S. office of a broker
that is a U.S. person or a "U.S. related person," existing regulations require
information reporting (but not backup withholding) on the payment unless the
broker receives a statement from the owner, signed under penalties of perjury,
certifying, among other things, its status as a Non-U.S. Holder, or the broker
has documentary evidence in its files that the owner is a Non-U.S. Holder and
the broker has no actual knowledge to the contrary. Proposed regulations state
that backup withholding will not apply to such payments (absent actual knowledge
that the payee is a U.S. person). For this purpose, a "U.S.-related person" is
(i) a "controlled foreign corporation" for United States federal income tax
purposes or (ii) a foreign person, 50% or more of whose gross income from all
sources for the three year period ending with the close of its taxable year
preceding the payment (or for such part of the period that the broker has been
in existence) is derived from activities that are effectively connected with the
conduct of a United States trade or business.

Any amounts withheld from a payment to a Non-U.S. Holder under the backup
withholding rules will be allowed as a credit against such holder's United
States federal income tax liability and may entitle such holder to a refund,
provided that the required information is furnished to the United States
Internal Revenue Service. The backup withholding and information reporting rules
are currently under review by the U.S. Treasury Department and their application
to the shares of Common stock is subject to change.

Non-U.S. Holders should consult their tax advisors regarding the application
of these rules to their particular situations, the availability of an exemption
therefrom and the procedure for obtaining such an exemption, if available.

35
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the International Underwriting
Agreement, the Selling Stockholders have agreed to sell to each of the
international Underwriters named below, and each of such International
Underwriters, for whom Goldman Sachs International, Lazard Brothers & Co.,
Limited and Merrill Lynch International Limited are acting as representatives,
has severally agreed to purchase from the Selling Stockholders, the respective
number of shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
INTERNATIONAL UNDERWRITER COMMON STOCK
- ------------------------------------------------------------------------------------ ------------------
<S> <C>
Goldman Sachs International......................................................... 834,000
Lazard Brothers & Co., Limited...................................................... 833,000
Merrill Lynch International Limited................................................. 833,000
ABN AMRO Bank N.V................................................................... 100,000
Credit Lyonnais Securities.......................................................... 100,000
Deutsche Bank Aktiengesellschaft.................................................... 100,000
Nikko Europe Plc.................................................................... 100,000
S.G. Warburg Securities Ltd......................................................... 100,000
----------
Total....................................................................... 3,000,000
----------
----------
</TABLE>

Under the terms and conditions of the International Underwriting Agreement,
the International Underwriters are committed to take and pay for all of the
shares offered hereby, if any are taken.

The International Underwriters propose to offer the shares of Common Stock
in part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus, and in part to certain securities dealers at
such price less a concession of $.69 per share. The International Underwriters
may allow, and such dealers may reallow, a concession not in excess of $.10 per
share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the representatives.

The Company and the Selling Stockholders have entered into an underwriting
agreement (the "U.S. Underwriting Agreement") with the underwriters of the U.S.
offering (the "U.S. Underwriters") providing for the concurrent offer and sale
of 12,000,000 shares of Common Stock in a U.S. offering in the United States.
The offering price and aggregate underwriting discount and commissions per share
for the two offerings are identical. The closing of the offering made hereby is
a condition to the closing of the U.S. offering, and vice versa. The
representatives of the U.S. Underwriters are Goldman, Sachs & Co., Lazard Freres
& Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of the
International Underwriters named herein has agreed that, as a part of the
distribution of the shares offered hereby and subject to certain exceptions, it
(i) will not, directly or indirectly, offer, sell or deliver the shares offered
hereby and other shares of Common Stock (a) in the United States (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction (the "United States") or to any U.S. Persons
(which term shall mean, for purposes of this paragraph: (I) any individual who
is a resident of the United States or (II) any corporation, partnership or other
entity organized in or under the laws of the United States or any political
subdivision thereof and whose office most directly involved with the purchase is
located in the United States) or (b) to any person who it believes intends to
reoffer, resell or deliver the shares in the United States or to any U.S.
Persons. and (ii) cause any dealer to whom it may sell such shares at any
concession to agree to observe a similar restriction. Each of the U.S.
Underwriters has agreed pursuant to the Agreement Between that, as a part of the
distribution of the shares offered as a part of the U.S. offering, and subject
to certain exceptions, it will offer, sell or deliver shares of Common Stock,
directly or indirectly, only in the United States and to U.S. Persons.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concessions.

36
<PAGE>
Certain of the Selling Stockholders have granted the International
Underwriters an option exercisable for 30 days after the date of this Prospectus
to purchase, at the initial public offering price per share less the
underwriting discount as set forth on the cover page of this Prospectus, up to
an aggregate of 450,000 additional shares of Common Stock to cover
over-allotments, if any. If the International Underwriters exercise their
over-allotment option, the International Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of shares to be purchased by each of them, as shown in
the foregoing table, bears to the 3,000,000 shares of Common Stock offered
hereby. The International Underwriters may exercise such option only to cover
over-allotments in connection with the sale of the 3,000,000 shares of Common
Stock offered hereby. Such Selling Stockholders have granted the U.S.
Underwriters an option exercisable for 30 days after the date of this Prospectus
to purchase, at the initial public offering price less the underwriting discount
as set forth on the cover page of this Prospectus, up to an aggregate of
1,800,000 additional shares of Common Stock, solely to cover over-allotments, if
any.

Each International Underwriter has also agreed that (i) it has not offered
or sold, and it will not offer or sell, in the United Kingdom, by means of any
document, any shares of Common Stock other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether as principal or
agent, or in circumstances which do not constitute an offer to the public within
the meaning of the Companies Act 1985 of Great Britain, (ii) it has complied,
and will comply, with all applicable provisions of the Financial Services Act
1986 of Great Britain with respect to anything done by it in relation to the
Common Stock in, from or otherwise involving the United Kingdom and (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of the shares of
Common Stock to a person who is of a kind described in Article 9(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.

Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.

The Selling Stockholders have agreed not to offer, sell or otherwise dispose
of any shares of Common Stock, and the Company has agreed not to offer, sell,
contract to sell or otherwise dispose of any Common Stock or any security
convertible into or exercisable or exchangeable for such Common Stock, in each
case for a period of 180 days after the date of this Prospectus, without the
prior written consent of the representatives of the Underwriters, except for
shares of Common Stock offered in connection with the Offerings, certain
permitted transfers by the Selling Stockholders to related parties who would
agree to abide by the foregoing restrictions and certain permitted sales by the
Selling Stockholders of shares of Common Stock acquired in the open market since
June 1992.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act. Felix G. Rohatyn, a director of the Company, is a general
partner of Lazard Freres & Co.

VALIDITY OF SHARES

The validity of the shares of Common Stock offered by the Selling
Stockholders hereby will be passed upon for the Company by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), New
York, New York and for the Underwriters by Sullivan & Cromwell, New York, New
York. Fried, Frank, Harris, Shriver & Jacobson renders legal services to
Forstmann Little on a regular basis.

EXPERTS

The consolidated balance sheets of the Company as of December 31, 1993 and
1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1994, and the financial statement schedules thereto incorporated by
reference in this Prospectus and in the Registration Statement have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports
incorporated herein by reference. Such financial statements and financial
statement schedules of the Company for the periods referred to above are
included herein in reliance upon such reports of Deloitte & Touche LLP given
upon the authority of such firm as experts in accounting and auditing.

37
<PAGE>
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- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

--------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Prospectus Summary............................. 3
Risk Factors................................... 6
Price Range of Common Stock and Dividend
Policy........................................ 10
Capitalization................................. 11
Selected Consolidated Financial Data........... 12
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 13
Business....................................... 21
Management..................................... 28
Selling Stockholders........................... 31
Description of Capital Stock................... 32
Certain United States Federal Tax
Considerations for Non-U.S. Holders of Common
Stock......................................... 34
Underwriting................................... 36
Validity of Shares............................. 37
Experts........................................ 37
</TABLE>

15,000,000 SHARES

GENERAL INSTRUMENT
CORPORATION

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

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[LOGO] GENERAL INSTRUMENT CORPORATION
---------

GOLDMAN SACHS INTERNATIONAL
LAZARD CAPITAL MARKETS
MERRILL LYNCH INTERNATIONAL LIMITED

REPRESENTATIVES OF THE UNDERWRITERS

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