UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
---------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_______to______
Commission file number 1-5442
--------
General Instrument Corporation
------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3575653
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8770 West Bryn Mawr Avenue, Chicago, Illinois 60631
---------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(312) 695-1000
-----------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
----- ----
As of April 30, 1996 there were 126,131,665 shares of Common Stock
outstanding.
<PAGE>
<TABLE>
PART I
FINANCIAL INFORMATION
GENERAL INSTRUMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
ASSETS
<CAPTION>
(Unaudited)
March 31, December 31,
1996 1995
---------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............................................................ $ 14,149 $ 36,382
Accounts receivable, less allowance for doubtful accounts
of $14,625 and $14,321, respectively ............................................ 381,871 367,672
Inventories .......................................................................... 343,681 281,398
Prepaid expenses and other current assets ............................................ 22,118 26,992
Deferred income taxes, net of valuation allowance .................................... 101,600 111,750
---------- ----------
Total current assets ............................................................ 863,419 824,194
Property, plant and equipment - net .................................................. 466,537 437,194
Intangibles, less accumulated amortization of $98,412
and $94,654, respectively ....................................................... 142,888 146,646
Excess of cost over fair value of net assets acquired, less
accumulated amortization of $141,731 and $135,654,
respectively ...................................................................... 828,487 842,954
Investments and other assets ......................................................... 30,041 27,576
Deferred income taxes, net of valuation allowance .................................... 16,814 8,885
Deferred financing costs, less accumulated amortization
of $29,195 and $28,045, respectively .............................................. 12,159 13,309
---------- ----------
TOTAL ASSETS ......................................................................... $2,360,345 $2,300,758
========== ==========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL INSTRUMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
(Unaudited)
March 31, December 31,
1996 1995
----------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable ................................................................. $ 223,325 $ 215,761
Accrued interest payable ......................................................... 9,636 3,571
Income taxes payable ............................................................. 24,254 33,904
Accrued liabilities .............................................................. 189,538 204,874
Current portion of long-term debt ................................................ 4,310 4,310
----------- -----------
Total current liabilities ................................................... 451,063 462,420
----------- -----------
Deferred income taxes ............................................................ 27,402 22,221
----------- -----------
Long-term debt ................................................................... 770,569 738,569
----------- -----------
Other non-current liabilities .................................................... 164,096 162,205
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $.01 par value; 20,000,000 shares
authorized; no shares issued ................................................ -- --
Common Stock, $.01 par value; 400,000,000 shares
authorized; 126,057,455 and 126,034,911 issued at
March 31, 1996 and December 31, 1995, respectively ........................... 1,261 1,260
Additional paid-in capital ....................................................... 666,664 666,190
Retained earnings ................................................................ 287,580 256,416
----------- -----------
955,505 923,866
Less - Treasury stock, at cost, 229,011 shares ................................... (7,246) (7,246)
Unearned compensation ..................................................... (1,044) (1,277)
----------- -----------
Total stockholders' equity .................................................. 947,215 915,343
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....................................... $ 2,360,345 $ 2,300,758
=========== ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL INSTRUMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Earnings Per Share)
<CAPTION>
Three Months Ended
March 31,
(Unaudited)
-----------------------------------
1996 1995
--------- ----------
<S> <C> <C>
NET SALES ........................................................................ $ 615,762 $ 608,717
--------- ---------
OPERATING COSTS AND EXPENSES:
Cost of sales ................................................................ 441,738 417,885
Selling, general and administrative .......................................... 57,323 64,032
Research and development ..................................................... 48,699 33,659
Amortization of excess of cost over fair value
of net assets acquired .................................................... 6,077 6,176
--------- ---------
Total operating costs and expenses ...................................... 553,837 521,752
--------- ---------
OPERATING INCOME ................................................................. 61,925 86,965
Other expense, net ............................................................... (116) (74)
Interest expense, net ............................................................ (11,544) (13,028)
--------- ---------
INCOME BEFORE INCOME TAXES ....................................................... 50,265 73,863
Provision for income taxes ....................................................... (19,101) (16,807)
--------- ---------
NET INCOME ....................................................................... $ 31,164 $ 57,056
========= =========
Weighted Average Shares Outstanding .............................................. 126,405 123,282
Primary earnings per share ....................................................... $ 0.25 $ 0.46
========= =========
Fully diluted earnings per share ................................................. $ 0.24 $ 0.42
========= =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL INSTRUMENT CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited - In Thousands)
<CAPTION>
Total
Common Stock Additional Common Unearned Stock-
-------------------- Paid-In Retained Stock in Compens- holders'
Shares Amount Capital Earnings Treasury ation Equity
-------- -------- -------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 ............... 126,035 $ 1,260 $666,190 $256,416 $ (7,246) $ (1,277) $ 915,343
Net income for the three months
ended March 31, 1996 ................... 31,164 31,164
Exercise of stock options ................ 22 1 389 390
Tax benefit from exercise of
stock options .......................... 85 85
Amortization of unearned
compensation .......................... 233 233
-------- -------- -------- -------- -------- -------- ------------
BALANCE, MARCH 31, 1996 .................. 126,057 $ 1,261 $666,664 $287,580 $ (7,246) $ (1,044) $ 947,215
======== ======== ======== ======== ======== ======== ============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
GENERAL INSTRUMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - In Thousands)
<CAPTION>
Three Months Ended
March 31,
------------------------------
1996 1995
-------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income .............................................................................. $ 31,164 $ 57,056
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization ........................................................ 29,634 26,010
Changes in assets and liabilities:
Accounts receivable ............................................................. (21,379) (44,194)
Inventories ..................................................................... (65,921) (6,102)
Prepaid expenses and other current assets ....................................... (476) (1,101)
Other non-current assets ........................................................ (2,465) (507)
Deferred income taxes ........................................................... 15,793 (4,301)
Accounts payable, income taxes payable and other
accrued liabilities ........................................................... 407 42,603
Other non-current liabilities ................................................... 1,891 7
Other ................................................................................ 675 237
-------- --------
Net cash (used in)/provided by operating activities ...................................... (10,677) 69,708
-------- --------
INVESTMENT ACTIVITIES:
Proceeds from sale of assets ......................................................... 4,368 --
Additions to fixed assets - net ...................................................... (48,314) (26,864)
Investments in other assets .......................................................... -- (6,506)
-------- --------
Net cash used in investment activities ................................................... (43,946) (33,370)
-------- --------
FINANCING ACTIVITIES:
Costs associated with the sale of Common Stock ....................................... -- (358)
Proceeds from the issuance of Flexible Term Notes .................................... -- 10,800
Net proceeds from/(repayments of) revolving credit facilities ........................ 32,000 (46,000)
Proceeds from stock options .......................................................... 390 3,117
-------- --------
Net cash provided by/(used in) financing activities ...................................... 32,390 (32,441)
-------- --------
(Decrease)/increase in cash and cash equivalents ......................................... (22,233) 3,897
Cash and cash equivalents, beginning of period ........................................... 36,382 5,128
-------- --------
Cash and cash equivalents, end of period ................................................. $ 14,149 $ 9,025
======== ========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
GENERAL INSTRUMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In Thousands, Unless Otherwise Noted)
1. BASIS OF PRESENTATION
The consolidated balance sheet as of March 31, 1996, the consolidated statements
of income for the three months ended March 31, 1996 and 1995, the consolidated
statements of cash flows for the three months ended March 31, 1996 and 1995 and
the consolidated statement of stockholders' equity for the three months ended
March 31, 1996 of General Instrument Corporation (the "Company" or "GI") are
unaudited and reflect all adjustments of a normal recurring nature which are, in
the opinion of management, necessary for a fair presentation of the interim
period financial statements. There were no adjustments of a non-recurring nature
recorded during the three months ended March 31, 1996 and 1995, except for an
adjustment in March 1995 to reflect the settlement of certain tax matters (See
Note 4). These consolidated financial statements should be read in conjunction
with the Company's December 31, 1995 consolidated financial statements.
Certain reclassifications have been made to the comparative prior period
financial statements to conform to the current period presentation.
2. INVENTORIES
Inventories consist of:
March 31, 1996 December 31, 1995
-------------- -----------------
Raw Materials $194,044 $142,573
Work in Process 35,717 38,565
Finished Goods 113,920 100,260
-------- --------
Inventories $343,681 $281,398
======== ========
3. LONG-TERM DEBT
Long-term debt consists of:
March 31, 1996 December 31, 1995
-------------- -----------------
Senior indebtedness:
Revolving credit facilities $215,000 $183,000
Taiwan Loan 54,694 54,694
Flexible Term Notes 10,800 10,800
Convertible Junior
Subordinated Notes 494,385 494,385
-------- --------
Total 774,879 742,879
Less current maturities 4,310 4,310
-------- --------
Long-Term debt $770,569 $738,569
======== ========
<PAGE>
4. INCOME TAXES
The provision for income taxes for the three months ended March 31, 1996 and
1995 is based on the Company's expected annual effective rate. The provision for
the three months ended March 31, 1995 was reduced by a $12 million credit for
the settlement of certain tax matters.
5. LITIGATION
On April 10, 1995, prior to the Company's acquisition of Next Level on
September 27, 1995, DSC Communications Corporation and DSC Technologies
Corporation (collectively, "DSC") brought suit in Texas state court against Next
Level, Thomas R. Eames and Peter W. Keeler (the founders of Next Level and
current Next Level employees). Next Level and the individual defendants
subsequently removed the case to federal court. On March 28, 1996, a jury
verdict was reached in the case, entitled DSC Communications Corporation and DSC
Technologies Corporation v. Next Level Communications, Thomas R. Eames and Peter
W. Keeler, Case No. 4:95cv96 in the United States District Court for the Eastern
District of Texas, Sherman Division. The verdict states that Messrs. Eames and
Keeler breached certain employee agreements with DSC, failed to disclose and
diverted a corporate opportunity of DSC, misappropriated DSC trade secrets and
conspired to take certain of the foregoing actions, and that Next Level used or
benefited from the diversion of corporate opportunity and misappropriation of
trade secrets. The verdict would award to DSC compensatory damages against the
defendants in amounts ranging between $24 and $120 million with respect to the
respective causes of action as to which the jury found liability. Although DSC
has taken the position that the aggregate amount of all compensatory damages
awarded is $359 million, the Company believes that the cumulation of all the
amounts awarded would be improper because it would lead to multiple recoveries
for the same damages. The verdict would also award punitive damages in the
amount of $10 million against Next Level and $100 thousand against each of
Messrs. Eames and Keeler. DSC also has applied to the court for injunctive
relief, to which the Company believes DSC is not entitled. The Company believes
that the verdict is not legally sustainable, and the defendants have filed a
motion to set aside the verdict. Judgment has not yet been entered in the case.
The time for defendants to appeal any judgment will not begin to run until such
judgment has been entered by the court. In connection with the acquisition of
Next Level, the Company entered into agreements to indemnify Messrs. Eames and
Keeler for any judgment that may be awarded against them in this matter, to the
extent permitted by applicable law. The nature of any judgment is not reasonably
determinable at this time and there is no assurance that such amount will not
have a material adverse effect on the Company's financial statements.
<PAGE>
GENERAL INSTRUMENT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLARS IN MILLIONS)
NET SALES
- ---------
Net sales for the three months ended March 31, 1996 ("First Quarter 1996") were
$616 compared to $609 for the three month period ended March 31, 1995 ("First
Quarter 1995"), an increase of $7, or 1%. This increase relates primarily to
higher sales in the Power Semiconductor segment.
Broadband Communications sales were $518 in First Quarter 1996 compared to $519
in First Quarter 1995. Worldwide terrestrial broadband sales of $373 in First
Quarter 1996 increased 14% from First Quarter 1995 primarily as a result of
increased sales volume of GI's next-generation products, including GI's latest
generation CFT 2200 advanced analog set top terminals and cableoptic systems,
and CommScope cables. These sales reflect the continued commitment of domestic
cable television operators to deployment of state of the art addressable systems
and enhanced services, commitments which the Company believes were enhanced by
enactment of federal telecommunications reform during the quarter, and also
reflect the continued deployment of new cable television systems in
international markets. International terrestrial broadband sales increased 12%
in First Quarter 1996 over First Quarter 1995 and represented 31% of worldwide
terrestrial broadband sales in First Quarter 1996. Worldwide satellite broadband
sales decreased $46 to $145 in First Quarter 1996 due to lower sales volumes, as
expected, of VideoCipher analog satellite receiver consumer modules.
Power Semiconductor sales increased 9% to $98 in First Quarter 1996 over First
Quarter 1995, primarily as a result of a shift in product mix to higher priced
products and increased selling prices. International Power Semiconductor sales
increased 6% in First Quarter 1996 over First Quarter 1995 and represented 71%
of worldwide Power Semiconductor sales in First Quarter 1996.
GROSS PROFIT (NET SALES LESS COST OF SALES)
- -------------------------------------------
Gross profit decreased $17, or 9%, to $174 in First Quarter 1996 from $191 in
First Quarter 1995. Gross profit was 28.3% of sales in First Quarter 1996
compared to 31.3% of sales in First Quarter 1995.
The decreased gross profit and gross profit margin resulted from a shift in
product mix from higher margin VideoCipher RS(TM) analog satellite receiver
consumer modules to CFT 2200 advanced analog and DigiCipher(TM) digital
television system products, new products which initially carry lower margins.
Next-generation product margins, including GI's cableoptic systems and digital
products, in First Quarter 1996 increased compared to First Quarter 1995 as a
result of cost-reduction programs. Next-generation system sales in First Quarter
1996 increased 28% over First Quarter 1995, but related gross profit increased
68%.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- --------------------------------------------
Selling, general and administrative ("SG&A") expenses decreased $7 to $57 in
First Quarter 1996 from $64 in First Quarter 1995, and decreased as a percentage
of sales to 9.3% in First Quarter 1996 from 10.5% in First Quarter 1995.
SG&A expense in First Quarter 1995 included expenses of $8 related to the
start-up of a national advertising campaign to support sales of C-Band satellite
systems and a $5 provision related to the potential uncollectibility of certain
receivables. SG&A spending in First Quarter 1996 was targeted for new growth
opportunities, including the marketing of Next Level Communications' broadband
access systems to telephone companies for interactive digital video, voice and
data services, and increased sales force, field support and marketing activities
to take advantage of increased growth opportunities in international cable and
satellite television and worldwide telecommunications markets.
<PAGE>
RESEARCH AND DEVELOPMENT
- ------------------------
Research and development ("R&D") expense was $49 in First Quarter 1996 compared
to $34 in First Quarter 1995 and was 7.9% of sales in First Quarter 1996
compared to 5.5% in First Quarter 1995. The increased level of spending reflects
continued development of next-generation product opportunities, including cable
modems, telephone company access products through Next Level Communications and
interactive multimedia technologies for broadband networks; the further
development of enhanced addressable analog terminals and advanced digital
systems for cable and satellite television distribution; and product development
and international expansion through strategic alliances.
NET INTEREST EXPENSE
- --------------------
Net interest expense was $12 in First Quarter 1996 compared to $13 in First
Quarter 1995. This decrease resulted from lower weighted average borrowings and
lower interest rates in First Quarter 1996 compared to First Quarter 1995.
INCOME TAXES
- ------------
Income taxes increased to $19 in First Quarter 1996 from $17 in First Quarter
1995 and the effective tax rate increased to 38% in First Quarter 1996 from 23%
in First Quarter 1995. The lower effective tax rate in First Quarter 1995
resulted from a $12 million credit to income related to the settlement of
certain tax matters.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At March 31, 1996, working capital was $412 compared to $362 at December 31,
1995. The working capital increase of $50 was due principally to inventory
build-up to support business growth and the introduction of new products. Based
on current levels of order input and backlog, as well as significant sales
agreements not yet reflected in order and backlog levels, the Company believes
that operational working capital levels are appropriate to support future
operations. There can be no assurance, however, that future industry specific
developments or general economic trends will not alter the Company's working
capital requirements. At March 31, 1996, the Company had borrowings of $215
under its revolving credit facilities and available credit of $235 under these
facilities.
During First Quarter 1996, the Company invested $48 in equipment and facilities.
These capital expenditures were used to expand capacity to meet increased
current and anticipated future demands for analog and digital products, coaxial
cable and rectifiers. Capital expenditures for the year ending December 31, 1996
are expected to approximate $200.
The Company's research and development expenditures (principally focused on the
Broadband Communications business) were $49 and $34 in First Quarter 1996 and
First Quarter 1995, respectively, and are expected to approximate $200 for the
year ending December 31, 1996.
At March 31, 1996, the Company had $14 of cash and cash equivalents on hand
compared to $36 at December 31, 1995. At March 31, 1996, long-term debt,
including current maturities, was $775 compared to $743 at December 31, 1995.
The Company's principal source of liquidity both on a short-term and long-term
basis is cash flow provided by operations. Occasionally, however, the Company
may borrow against its revolving credit facilities to supplement cash flow from
operations. The Company believes that, based upon its analysis of its
consolidated financial position, its cash flow during the past 12 months and the
expected results of operations in the future, operating cash flow and available
funding under its revolving credit facilities will be adequate to fund
operations, research and development expenditures, capital expenditures and debt
service for the next 12 months. The Company intends to repay its remaining
indebtedness primarily with cash flow from operations. There can be no
assurance, however, that future industry specific developments or general
economic trends will not adversely affect the Company's operations or its
ability to meet its cash requirements.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Between October 10 and October 27, 1995, five purported class action
complaints were filed in the United States District Court for the
Eastern District of Pennsylvania and seven purported class action
complaints were filed in the United States District Court for the
Northern District of Illinois. These complaints name as defendants the
Company, certain officers and directors of the Company and, in some
cases, Forstmann Little & Co. Plaintiffs allege that the defendants
violated federal securities laws by, among other things, making
misrepresentations and omitting material facts in statements to the
public, thereby allegedly causing the Company's stock price to be
artificially inflated. Plaintiffs seek, among other things, unspecified
monetary damages and attorneys' fees and costs, on behalf of all
shareholders who purchased shares during various periods generally
extending from March 21, 1995 through October 18, 1995.
On October 24, 1995, a purported derivative complaint on behalf of the
Company was filed in the United States District Court for the Eastern
District of Pennsylvania by Seymour Lazar against each of the Company's
current directors, a former executive officer, Forstmann Little & Co.,
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-IV ("MBO-IV") and Instrument Partners. The conduct
complained of generally related to the same matters alleged in the class
actions described above and to the sale by directors Daniel F. Akerson,
John Seely Brown, J. Tracy O'Rourke and Robert S. Strauss, as well as by
MBO-IV, Instrument Partners and a former officer of the Company, of
shares of the Company's stock while they were allegedly in possession of
material non-public information. Plaintiff seeks, among other things,
unspecified monetary damages and attorneys' fees and costs.
On February 20, 1996, an order was issued by the Judicial Panel on
Multidistrict Litigation transferring the class and derivative actions
described above to the United States District Court for the Northern
District of Illinois. These actions are in an early stage, with only
limited discovery having commenced.
On February 9, 1996, a complaint was filed in the United States District
Court for the Northern District of California captioned BKP Partners,
L.P. et al. v. General Instrument Corporation, NLC Acquisition Corp. and
Next Level Communications, Inc. Plaintiffs, who are some of the former
holders of preferred stock of Next Level, allege, among other things,
that the defendants violated federal securities laws by making
misrepresentations and omissions and breached fiduciary duties to Next
Level in connection with the acquisition by the Company of Next Level
Communications in September 1995. Plaintiffs seek, among other things,
unspecified compensatory and punitive damages and attorneys' fees and
costs. The Company has requested that this action be transferred to the
United States District Court for the Northern District of Illinois
because of its relationship to the other cases which have been
transferred to that court. That transfer motion is set for argument
before the Judicial Panel on Mutidistrict Litigation on May 31, 1996.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Computation of Earnings Per Share
Exhibit 99 - Forward-Looking Information
(b) Report on Form 8-K
The Company filed a report on Form 8-K dated January 29, 1996 reporting
that PRIMESTAR Partners, a leading provider of direct-to-home satellite
television programming, deferred its transition to the Company's MPEG-2
digital transmission network system, and instead, will expand its use of
the Company's DigiCipher I technology and expects to purchase more than
1 million additional DigiCipher I digital consumer satellite receivers
from GI in 1996.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENERAL INSTRUMENT CORPORATION
May 15, 1996 /s/Paul J. Berzenski
- ------------ ------------------------------
Date Paul J. Berzenski
Vice President and Controller
Signing both in his capacity
as Vice President on behalf of
the Registrant and as Chief
Accounting Officer of the
Registrant
<PAGE>
<TABLE>
GENERAL INSTRUMENT CORPORATION
Exhibit 11 - Computation of Earnings Per Share
(In Thousands Except Per Share Amounts)
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1996 1995
-------- --------
<S> <C> <C>
PRIMARY:
Net Income ...................................................................... $ 31,164 $ 57,056
======== ========
Weighted average common shares outstanding ........................................... 125,816 122,304
Incremental shares under stock option plans ..................................... 589 978
-------- --------
Weighted average common and common equivalent
shares outstanding ......................................................... 126,405 123,282
======== ========
Primary earnings per share:
Net income ...................................................................... $ 0.25 $ 0.46
======== ========
FULLY DILUTED:
Net income ...................................................................... $ 31,164 $ 57,056
Interest and amortization of debt issuance costs
related to the Convertible Junior Subordinated
Notes, net of income tax effects ........................................... 4,076 4,119
-------- --------
Adjusted net income ............................................................. $ 35,240 $ 61,175
======== ========
Weighted average common shares outstanding ........................................... 125,816 122,304
Incremental shares under stock option plans ..................................... 846 1,236
Incremental shares attributable to Convertible
Junior Subordinated Notes .................................................. 20,816 21,053
-------- --------
Adjusted weighted average shares outstanding .................................... 147,478 144,593
======== ========
Fully diluted earnings per share:
Net income ...................................................................... $ 0.24 $ 0.42
======== ========
</TABLE>
Note: The computations of primary and fully diluted earnings per share assume
incremental shares under stock option plans using the treasury method.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the General
Instrument Corporation financial statements for the three months ended
March 31, 1996 and is qualified in its entirety by references to such financial
statements.
</LEGEND>
<CIK> 0000040656
<NAME> GENERAL INSTRUMENT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 14,149
<SECURITIES> 0
<RECEIVABLES> 381,871
<ALLOWANCES> 14,625
<INVENTORY> 343,681
<CURRENT-ASSETS> 863,419
<PP&E> 466,537
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,360,345
<CURRENT-LIABILITIES> 451,063
<BONDS> 770,569
<COMMON> 1,261
0
0
<OTHER-SE> 945,954
<TOTAL-LIABILITY-AND-EQUITY> 2,360,345
<SALES> 615,762
<TOTAL-REVENUES> 615,762
<CGS> 441,738
<TOTAL-COSTS> 441,738
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,544
<INCOME-PRETAX> 50,265
<INCOME-TAX> 19,101
<INCOME-CONTINUING> 31,164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,164
<EPS-PRIMARY> .25
<EPS-DILUTED> .24
</TABLE>
GENERAL INSTRUMENT CORPORATION
EXHIBIT 99 - FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. The Company's Form 10-K, the Company's
Annual Report to Shareholders, this or any other Form 10-Q or any Form 8-K of
the Company or any other written or oral statements made by or on behalf of the
Company may include forward-looking statements which reflect the Company's
current views with respect to future events and financial performance. These
forward-looking statements are subject to certain uncertainties and other
factors that could cause actual results to differ materially from such
statements. These uncertainties and other factors include, but are not limited
to, uncertainties relating to economic conditions, uncertainties relating to
government and regulatory policies, uncertainties relating to customer plans and
commitments, the Company's dependence on the cable television industry and cable
television spending, signal security, the pricing and availability of equipment,
materials and inventories, technological developments, the competitive
environment in which the Company operates, changes in the financial markets
relating to the Company's capital structure and cost of capital, the
uncertainties inherent in international operations and foreign currency
fluctuations. The words "believe," "expect," "anticipate," "project" and similar
expressions identify forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date the statement was made. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
