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 period ending July 1, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from to
Commission file number: 1-7221
MOTOROLA, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-1115800
(State of Incorporation) (I.R.S. Employer Identification No.)
1303 E. Algonquin Road, Schaumburg, Illinois 60196
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 576-5000
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 [ ]
The number of shares outstanding of each of the
issuer's classes of common stock as of the close of business
on July 1, 1995:
Class Number of Shares
Common Stock; $3 Par Value 589,788,263
Motorola, Inc. and Consolidated Subsidiaries
Index
Part I
Financial Information Page
Item 1 Financial Statements
Statements of Consolidated Earnings
Three-Month and Six-Month Periods ended
July 1, 1995 and July 2, 1994 3
Condensed Consolidated Balance Sheets at
July 1, 1995 and December 31, 1994 4
Statements of Condensed Consolidated Cash Flows
Six-Month Periods ended
July 1, 1995 and July 2, 1994 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II
Other Information
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security
Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13
Part I - Financial Information
Motorola, Inc. and Consolidated Subsidiaries
Statements of Consolidated Earnings
(Unaudited)
(In millions, except per share amounts)
Three Months Ended Six Months Ended
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
Net sales $ 6,877 $ 5,439 $12,888 $10,132
Costs and expenses
Manufacturing and other
costs of sales 4,394 3,379 8,272 6,287
Selling, general and
administrative expenses 1,209 1,074 2,299 2,060
Depreciation expense 478 362 909 672
Interest expense, net 34 38 55 75
Total costs and expenses 6,115 4,853 11,535 9,094
Earnings before income taxes 762 586 1,353 1,038
Income taxes provided on earnings 281 219 500 373
Net earnings $ 481 $ 367 $ 853 $ 665
Net earnings per common and common equivalent share (1)
Fully diluted:
Net earnings per common and
common equivalent share $ .79 $ .63 $ 1.40 $ 1.14
Average common and common
equivalent shares outstanding,
fully diluted (in millions) 609.2 588.7 609.2 588.7
Dividends paid per share $ .10 $ .07 $ .20 $ .125
(1) Average primary common and common equivalent shares
outstanding for the three months and six months ended
July 1, 1995 and July 2, 1994 were 608.3 million and
588.7 million, respectively. Primary earnings per
common and common equivalent share were one cent higher
than fully diluted for the three and six months ended
July 1, 1995 and the same for the three and six months
ended July 2, 1994.
See accompanying notes to condensed consolidated financial
statements.
Motorola, Inc. and Consolidated Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(In millions)
July 1, December 31,
1995 1994
Assets
Cash and cash equivalents $ 760 $ 741
Short-term investments 319 318
Accounts receivable, less allowance for
doubtful accounts (1995, $119; 1994, $118) 4,018 3,421
Inventories 3,182 2,670
Other current assets 2,019 1,775
Total current assets 10,298 8,925
Property, plant and equipment, less
accumulated depreciation
(1995, $7,503; 1994, $6,657) 8,495 7,073
Other assets 1,672 1,538
Total Assets $20,465 $17,536
Liabilities and Stockholders' Equity
Notes payable and current portion of
long-term debt $ 1,870 $ 916
Accounts payable 1,799 1,678
Accrued liabilities 3,695 3,323
Total current liabilities 7,364 5,917
Long-term debt 1,519 1,127
Other liabilities 1,603 1,396
Stockholders' equity 9,979 9,096
Total liabilities and stockholders' equity $20,465 $17,536
See accompanying notes to condensed consolidated financial
statements.
Motorola, Inc. and Consolidated Subsidiaries
Statements of Condensed Consolidated Cash Flows
(Unaudited)
(In millions)
Six Months Ended
July 1, July 2,
1995 1994
Net cash provided by operations $ 1,201 $ 342
Investing
Payments for property, plant and equipment (2,076) (1,470)
(Increase) decrease in short-term investments (1) 57
(Increase) in other investing
activities (413) (34)
Net cash used for investing activities (2,490) (1,447)
Financing
Net increase in commercial paper
and short-term borrowings 957 1,037
Proceeds from issuance of debt 414 19
Repayment of debt (21) (105)
Payment of dividends to stockholders (118) (70)
Other financing activities 76 21
Net cash provided by financing activities 1,308 902
Net increase (decrease) in cash and
cash equivalents $ 19 $ (203)
Cash and cash equivalents, beginning of year $ 741 $ 886
Cash and cash equivalents, end of period $ 760 $ 683
See accompanying notes to condensed consolidated financial
statements.
Motorola, Inc. and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The Condensed Consolidated Balance Sheet as of July 1,
1995, the Statements of Consolidated Earnings for the
three-month and six-month periods ended July 1, 1995 and
July 2, 1994, and the Statements of Condensed
Consolidated Cash Flows for the six-month periods ended
July 1, 1995 and July 2, 1994 have been prepared by the
Company. In the opinion of management, all adjustments
(which include reclassifications and normal recurring
adjustments) necessary to present fairly the financial
position, results of operations and cash flows at July 1,
1995 and for all periods presented, have been made.
Certain information and footnote disclosures normally
included in the financial statements prepared in
accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that
these condensed consolidated financial statements be read
in conjunction with the financial statements and notes
thereto included in the Company's December 31, 1994
annual report to stockholders. The results of operations
for the three-month and six-month periods ended July 1,
1995 are not necessarily indicative of the operating
results for the full year.
2. Inventories
Inventories consist of the following (in millions):
July 1, Dec. 31,
1995 1994
Finished goods $ 997 $ 699
Work in process and production materials 2,185 1,971
$ 3,182 $ 2,670
3. Income Taxes
The Internal Revenue Service (IRS) has examined the
federal income tax returns for Motorola, Inc. through
1985 and the returns have been settled through that year.
The settlement did not result in a material adverse
effect on the consolidated financial position, liquidity
or results of operations of the Company. The IRS has
completed its field audit of the years 1986 and 1987. In
connection with these audits, the IRS has proposed
adjustments to the Company's income and tax credits for
those years which would result in additional tax. The
Company disagrees with certain of the proposed
adjustments and is contesting them. In the opinion of
the Company's management, the final disposition of these
matters, and proposed adjustments from other tax
authorities, will not have a material adverse effect on
the consolidated financial position, liquidity or results
of operations of the Company.
4. Supplemental Cash Flows Information
Cash payments for income taxes were $473 million during
the first six months of 1995 and $455 million for the
same period a year earlier. Cash payments for interest
expense (net of amount capitalized) were $88 million and
$100 million, for the first six-month periods of 1995 and
1994, respectively.
Motorola, Inc. and Consolidated Subsidiaries
Management's Discussion and Analysis
of Financial Condition and Results of Operations
This commentary should be read in conjunction with the
referenced sections of the following documents for a full
understanding of Motorola's financial condition and results
of operations: from Motorola, Inc.'s 1994 Annual Report to
Stockholders, the Letter to Stockholders - Financial Results
paragraph on page 2, the Review of Operations section on
pages 20 through 23, the Financial Review section on pages
24 through 28, and the Consolidated Financial Statements and
Footnotes to the Consolidated Financial Statements, pages 30
through 43; and from Motorola, Inc.'s Quarterly Report on
Form 10-Q for the period ending July 1, 1995, of which this
commentary is a part, the Condensed Consolidated Financial
Statements and Notes to the Condensed Consolidated Financial
Statements, pages 3 through 6.
Results of Operations:
Motorola, Inc. reported higher sales and earnings for the
second quarter and first half of 1995. Sales rose to $6.9
billion in the second quarter of 1995, up 26 percent from
$5.4 billion in the second quarter of 1994. In the first
half, sales reached $12.9 billion, up 27 percent from $10.1
billion a year ago. Earnings in the second quarter of 1995
were $481 million, compared with $367 million in the same
period a year earlier. Fully diluted net earnings per
common and common equivalent share for the second quarter of
1995 were 79 cents, compared to 63 cents in the year-earlier
period. Earnings in the first six months were $853 million,
compared with $665 million a year earlier. Fully diluted
net earnings per common and common equivalent share were
$1.40, compared to $1.14 a year earlier. The 1994 per-share
figures reflect a two-for-one stock split distributed April
18, 1994 to stockholders of record as of March 15, 1994.
Motorola's net margin on sales (net earnings divided by net
sales) during the second quarter of 1995 was 7.0 percent
compared to 6.7 percent a year ago, while in the first half
it was 6.6 percent, unchanged from the year-earlier period.
General Systems Sector's segment sales rose to $2.9 billion,
an increase of 39 percent from the second quarter of 1994.
Orders increased 25 percent and operating profits were
higher than in the second quarter of 1994. The Cellular
Infrastructure Group's (CIG) sales and orders were up
substantially in the second quarter of 1995 compared to the
year-earlier period. Order growth was strongest in Greater
China, Europe and Japan, while there was a small decline in
orders in Pan America. Sales showed very good growth in all
regions, including Pan America. The Cellular Subscriber
Group (CSG) recorded higher orders and a substantial
increase in sales. Order growth was strongest in Greater
China and Asia-Pacific, while orders declined slightly in
Japan, Europe and Pan America. In the U.S. specifically,
inventories of cellular phones in the distribution channels
returned to a normal range late in the second quarter and
order patterns were improved from the first quarter of 1995.
Backlog in the second quarter of 1995 decreased in CSG and
increased substantially in CIG compared to the second
quarter of 1994.
Segment sales in the Semiconductor Products Sector increased
22 percent from the second quarter of 1994 to $2.1 billion.
Orders increased 36 percent and operating profits were
higher than in the second quarter of 1994. All major market
regions showed double-digit order growth, led by Europe and
Asia-Pacific. Personal computer/work station, communication
and automotive led market segment order growth.
Distribution orders also were higher. Highest order growth
among product lines included RISC (reduced instruction set
computers) microprocessors, analog and logic devices, fast
static random access memories and microcontrollers.
Operating margins in the Semiconductor Product Segment
declined during the second quarter of 1995 compared to the
second quarter of 1994, primarily due to start-up costs,
increased depreciation (as a percent to sales) and
inefficiencies related to the new manufacturing capacity.
The Company presently expects that this segment will
continue to incur significant start-up costs and
inefficiencies and experience increased depreciation
expenses (as a percent of sales) for several quarters as a
result of its capacity expansion program. Based on the
recent past and other considerations, the Company also
expects that the sales growth rate of this segment will
probably lag the order growth rate, resulting in an increase
in backlog, as was experienced in the first and second
quarters of 1995 versus the respective year-earlier periods.
Motorola's Semiconductor Products Sector continues to
experience limits on the amount of orders it can accept for
certain types of products, due to capacity constraints.
These constraints may also restrict Motorola's ability to
ship cellular telephones and certain other products. If
customer demand for semiconductors and wireless
communications products remains strong, Motorola does not
expect that these capacity constraints will ease until
sufficient wafer fabrication capacity becomes available,
which is currently expected to start for some products
during the second half of 1995.
In the Messaging, Information and Media Segment businesses,
comprised of the Paging Products and Wireless Data Groups
(formerly reported as part of the Communications Segment)
and Information Systems Group (formerly reported as part of
the "Other Products" segment), segment sales increased 24
percent from the second quarter of 1994 to $895 million and
operating profits, including a net gain from unusual items
in the second quarter of 1995, were higher than the year-
earlier period. Orders increased 42 percent from the second
quarter of 1994. Paging Products Group orders increased
substantially compared to the year-earlier period, driven by
international market growth, particularly in China and
Europe, while in Japan orders were lower. In the U.S.,
orders increased slightly in the second quarter of 1995
compared to the year-earlier period.
In the Land Mobile Products Sector business segment,
comprised of the Radio Products, Radio Parts and Services,
Network Services and Business Strategies, and Radio Network
Solutions Groups (formerly reported as part of the
Communications Segment), sales increased 4 percent to $872
million and operating profits were lower from the second
quarter of 1994. Orders declined 18 percent from the second
quarter of 1994. The results were affected by factors
related to iDEN (trademark symbol inserted here) (Integrated Dispatch Enhanced
Network) technology, which offset improved results in the sector's
non-iDEN business. This slow-down in sales adversely
affected the Segment's manufacturing margin as capacity
utilization declined. This pattern is expected to continue
as the Company and its customers continue with iDEN-related
issues which must be resolved before any accelerated
nationwide build-out of these systems can proceed. Gross
margins on iDEN products will vary from quarter to quarter
depending on the types of equipment sold under various
contracts.
Results in the iDEN business declined due to continued
investments in systems optimization and iDEN technology
development, provisions for an anticipated contract revision
with a customer, and the need for major U.S. customers to
complete merger and financing transactions. New orders for
iDEN equipment were received from Nextel Communications,
Inc. for its U.S. network and from Clearnet for its systems
in Canada. In the sector's non-iDEN business, sales, orders
and operating profits were higher. Demand was strong for
portable and mobile two-way radios sold through dealers and
for large private trunking systems, especially in the U.S.
and Asia.
Motorola and Nextel have extended the agreement by which
Motorola will receive up to 59.5 million shares of Nextel
stock in exchange for most of Motorola's 800 megahertz (MHz)
specialized mobile radio service (SMRS) businesses, systems
and licenses in the continental United States. Motorola
currently expects the transaction to occur in the third
quarter of 1995. Nextel's shareholders and public debt
holders have approved the transaction.
In the Automotive, Energy and Controls Group, sales
increased 16 percent and orders increased 10 percent from
the second quarter of 1994. Operating profits were higher
compared to the second quarter of 1994. Order growth came
from component and energy products used in wireless
communications products as well as electronic ballasts from
Motorola Lighting. Automotive electronics orders were
slightly lower than a year ago because of softness in U.S.
and European markets. The results for this group are
reported as part of the "Other Products" segment.
In the Government and Space Technology Group (GSTG), group
sales increased from the second quarter of 1994 by 106
percent due to increased sales by the Satellite
Communications Division to Iridium, Inc. Orders were 33
percent higher, and the group recorded an operating profit
compared with a loss a year ago. Development of the IRIDIUM (registered mark
inserted here) global communications system continued on schedule, as
Motorola met all contractual milestones during the quarter.
As previously indicated, Iridium, Inc. will require
additional financing to continue to make payments to
Motorola under a contract to construct the global
communications system. The additional financing is expected
to be required beginning in early 1996. GSTG is recording
reserves that currently result in a minimal level of profit
recognition for the IRIDIUM project. These reserves are
reevaluated periodically. The results for this group are
reported as part of the "Other Products" segment.
Motorola's manufacturing and other costs of sales during the
second quarter of 1995 and 1994 were $4.4 billion, 64
percent of net sales, and $3.4 billion, 62 percent of net
sales, respectively. The increase during the second quarter
of 1995 as a percent of net sales was a result of start-up
costs and inefficiencies associated with adding major
elements of new semiconductor manufacturing capacity to
support growth in sales and orders, as well as the
continuation of a strategy to remain the price leader in the
cellular telephone and paging industries worldwide, to
influence the continuing growth of these markets.
Motorola's wireless communications businesses have been
attracting significant price competition for some time,
which is expected to continue. Motorola intends to protect
and, if possible, improve its market share in these
businesses by utilizing its high volume manufacturing
capabilities. This may also mean tolerating lower gross
margins. It is management's current intention to continue
to manage selling, general and administrative expenses in
line with this strategy.
Motorola's selling, general and administrative expenses
during the second quarter of 1995 were $1.2 billion, 18
percent of sales, versus $1.1 billion, 20 percent of sales,
during the year-earlier period.
The tax rate for the quarter was 37 percent compared with 38
percent in the second quarter of 1994 and 36 percent for the
full year 1994. Fully diluted average common and common
equivalent shares outstanding increased to 609.2 million
from 588.7 million a year ago, largely as a result of the
Company completing a public equity offering of 17.1 million
shares during November 1994.
Liquidity and Capital Resources:
Inventories at July 1, 1995 increased by 19 percent or $512
million, compared to inventories at December 31, 1994.
Inventories increased in all segments led by the General
Systems Sector and Semiconductor Products Sector.
Property, plant and equipment, less accumulated depreciation
at July 1, 1995, has increased $1.4 billion since December
31, 1994, largely due to the semiconductor business capacity
expansions. Depreciation expense increased 32 percent for
the second quarter of 1995 in comparison to the year-earlier
period.
The Company is currently anticipating that depreciation
expense will rise as a percent of sales for the full year,
as was experienced in the first half of 1995 when
depreciation increased to 7.1 percent of sales versus 6.6
percent for the year-earlier period.
Motorola's notes payable and current portion of long-term
debt increased $954 million, or 104 percent from the amount
at December 31, 1994. The increase is primarily due to a
significant increase in fixed asset expenditures, sales
growth which is driving increases in receivables and
inventory, and the Company's inability to achieve improved
rates of inventory turnover and receivable collections.
Long-term debt increased $392 million or 35 percent from the
amount at December 31, 1994, as a result of the Company
issuing, during the second quarter of 1995, 7 1/2 percent
debentures due May 15, 2025 in an aggregate principal amount
of $400 million under the universal shelf registration
statement filed during 1994. The Company anticipates that
through the second half of the year, cash will be required
to fund additional fixed asset purchases and to complete
other investment activities. Net debt (notes payable and
current portion of long-term debt plus long-term debt less
short-term investments and cash equivalents) to net debt
plus equity rose to 20.3 percent at July 1, 1995 from 12.1
percent at December 31, 1994. The Company's total domestic
and foreign credit facilities aggregated $2.9 billion at
July 1, 1995, of which $349 million were used and the
remaining amount was not drawn, but was available to back up
outstanding commercial paper which totaled $1.5 billion at
July 1, 1995.
The Company uses financial instruments to hedge, and
therefore help reduce, its overall exposure to the effects
of currency fluctuations on cash flows of foreign operations
and investments in foreign countries. The Company's
strategy is to offset the gains or losses of the financial
instruments against losses or gains on the underlying
operational cash flows or investments based on the operating
business units assessment of risk. Motorola does not
speculate in these financial instruments for profit on the
exchange rate price fluctuations alone. Motorola does not
trade in currencies for which there are no underlying
exposures, and the Company does not enter into trades for
any currency to intentionally increase the underlying
exposure.
Essentially all the Company's non-functional currency
receivables and payables denominated in major currencies
which can be traded on open markets are hedged. Some of the
Company's exposure is to currencies which are not traded on
open markets, such as those in Latin America and China, and
these are addressed, to the extent reasonably possible,
through managing net asset positions, product pricing, and
other means, such as component sourcing. Currently, the
Company primarily hedges firm commitments. The Company
expects that there could be hedges of anticipated
transactions in the future. The foreign exchange financial
instruments which hedge various investments in foreign
subsidiaries are marked to market monthly as are the
underlying investments and the results are recorded in the
financial statements.
As of July 1, 1995 and July 2, 1994, the Company had net
outstanding foreign exchange contracts totaling $1.2 billion
and $1 billion, respectively. The following schedule shows
the five largest foreign exchange hedge positions as of July
1, 1995, and the corresponding positions at July 2, 1994:
Millions of U.S. Dollars
Buy (Sell) July 1, July 2,
1995 1994
Japanese Yen (387) (480)
German Deutsche Mark (221) (126)
British Pound Sterling (182) (117)
Spanish Peseta (75) (52)
Singapore Dollar 70 --
As of July 1, 1995 and July 2, 1994, outstanding foreign
exchange contracts primarily consisted of short-term forward
contracts. Net deferred losses on these forward contracts
which hedge designated firm commitments were immaterial at
July 1, 1995.
Motorola's research and development expense was $551 million
in the second quarter of 1995, compared to $455 million in
the second quarter of 1994. In the first half of 1995,
research and development expense was $1,052 million,
compared to $865 million a year ago. The Company continues
to believe that a strong commitment to research and
development drives long-term growth.
Return on average invested capital (net earnings divided by
the sum of stockholders' equity, long-term debt, notes
payable and current portion of long-term debt, less short-
term investments and cash equivalents) was 16.5 percent
based on the performance of the four preceding fiscal
quarters ending July 1, 1995, unchanged from the year-
earlier period. Motorola's current ratio (the ratio of
current assets to current liabilities) was 1.4 at July 1,
1995, compared to 1.5 at December 31, 1994.
IRIDIUM (registered mark inserted here) is a registered trademark and service
mark of Iridium, Inc.
Information by Industry Segment (Unaudited)
Summarized below are the Company's segment sales as defined
by industry segment for the three-months and six-months
ended July 1, 1995 and July 2, 1994:
Segment Sales
for the three months ended
July 1, July 2,
(In millions) 1995 1994 (1) % Change
General Systems Products $2,883 $2,072 39
Semiconductor Products 2,085 1,713 22
Messaging, Information and
Media Products 895 720 24
Land Mobile Products 872 840 4
Other Products 901 644 40
Adjustments and eliminations (759) (550) 38
Industry segment totals $6,877 $5,439 26
Segment Sales
for the six months ended
July 1, July 2,
(In millions) 1995 1994 (1) % Change
General Systems Products $5,229 $3,739 40
Semiconductor Products 3,966 3,328 19
Messaging, Information and
Media Products 1,683 1,353 24
Land Mobile Products 1,662 1,590 5
Other Products 1,719 1,182 45
Adjustments and eliminations (1,371) (1,060) 29
Industry segment totals $12,888 $10,132 27
(1) Information for 1994 has been reclassified to reflect
the realignment of various business units. Messaging,
Information and Media Products segment includes the Paging
Products and Wireless Data Groups (formerly reported as part
of the Communications segment) and the Information Systems
Group (formerly reported as part of the Other Products
segment). The Government and Space Technology Group is
reported as part of the Other Products segment.
Part II - Other Information
Item 1 - Legal Proceedings.
Motorola and several of its directors and officers are named
defendants in three alleged class actions for alleged
violations of section 10(b) and 20 (a) of the Securities
Exchange Act and SEC Rule 10b-5, Kaufman, et al. v.
Motorola, Inc., et al.; Hoffman Ira Rollover Account et al.
v. Motorola, Inc., et al.; and Miller v. Motorola, Inc., et
al. On June 1, 1995, these three cases were consolidated
into one lawsuit which is pending in the U.S. District Court
for the Northern District of Illinois.
A class action, In Re Nextel Communications Securities
Litigation, against Nextel Communications, Inc., certain of
its officers and directors and Motorola for alleged
violations of Sections 10(b) and 20 of the Securities
Exchange Act of 1934 and SEC Rule 10b-5, is pending in the
United States District Court for the District of New Jersey.
The pending complaint, a consolidation of cases previously
filed against Nextel, maintains that the defendants
artificially inflated the price of Nextel common stock
through a series of alleged misrepresentations and
omissions. Plaintiffs propose a class period of July 22,
1993 through January 10, 1995 and seek an unspecified amount
of monetary damages.
There are currently six cases pending in Phoenix, Arizona
arising out of alleged groundwater, soil and air pollution
in Phoenix and Scottsdale, Arizona. The plaintiffs in Baker
et al. v. Motorola et al. filed a Third Amended Complaint on
June 30, 1995 which added seven new defendants (See Item 3
of the Company's Annual Report on Form 10-K for the year
ended 1994, and the Company's first quarter report on Form
10-Q for additional disclosures regarding cases arising out
of alleged groundwater, soil and air pollution in Phoenix
and Scottsdale, Arizona). In the opinion of management, the
ultimate disposition of these matters will not have a
material adverse effect on the consolidated financial
condition, liquidity or results of operations of Motorola.
Item 2 - Changes in Securities.
Not applicable.
Item 3 - Defaults Upon Senior Securities.
Not applicable.
Item 4 - Submission of Matters to a Vote of Security
Holders.
Not applicable.
Item 5 - Other Information.
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits
10 Consulting Agreement between Motorola Inc.
and John F. Mitchell.
11 Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per Common
and Common Equivalent Share for the three
months ended
July 1, 1995 and July 2, 1994.
11.1 Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per Common
and Common Equivalent Share for the six
months ended
July 1, 1995 and July 2, 1994.
(b) Reports on Form 8-K
During the second quarter of 1995, the
Company filed one current report on Form 8-K,
dated May 15, 1995, containing no financial
statements but describing, under Item 5, the
filing of a prospectus supplement and
including copies of exhibits under Item 7.
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.
MOTOROLA, INC.
(Registrant)
Date: July 17, 1995 By: /s/ Kenneth J. Johnson
Kenneth J. Johnson
Corporate Vice President and Controller
(Chief Accounting Officer and
Duly Authorized Officer of the Registrant)
EXHIBIT INDEX
Number Description of Exhibits Page No.
10 Consulting Agreement between Motorola,
Inc. and John F. Mitchell. 17
11 Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per
Common and Common Equivalent Share for the three
months ended July 1, 1995 and July 2, 1994. 22
11.1 Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per
Common and Common Equivalent Share for the six
months ended July 1, 1995 and July 2, 1994. 23
Exhibit 11
Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per Common
and Common Equivalent Share
Three Months Ended July 1, 1995 and July 2, 1994
(In millions, except per share amounts)
Three Months Ended
July 1, July 2,
1995 1994 (1)
Net Income $ 481 $ 367
Add:
Interest on Zero coupon notes due 2009
and 2013, net of tax and effect of
executive incentive and employee
profit sharing plans 1 4
Adjusted net income $ 482 $ 371
Earnings per common and common equivalent
share - Primary:
Weighted average common shares outstanding 588.7 559.1
Common equivalent shares:
Stock options 12.3 12.0
Zero coupon notes due 2009 and 2013 7.3 17.6
Common and common equivalent
shares - primary (in millions) 608.3 588.7
Net earnings per share - primary $ .80 $ .63
Earnings per common and common equivalent
share - Fully Diluted:
Weighted average common shares outstanding 588.7 559.1
Common equivalent shares:
Stock options 13.2 12.0
Zero coupon notes due 2009 and 2013 7.3 17.6
Common and common equivalent
shares - fully diluted (in millions) 609.2 588.7
Net earnings per share - fully diluted $ .79 $ .63
(1) All 1994 earnings per common and common equivalent
share and weighted average common and common equivalent
shares outstanding have been restated to reflect the April
18, 1994 two-for-one stock split effected in the form of a
100 percent stock dividend payable to stockholders of record
on March 15, 1994.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule to 10-Q
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 760
<SECURITIES> 319
<RECEIVABLES> 4137
<ALLOWANCES> 119
<INVENTORY> 3182
<CURRENT-ASSETS> 10298
<PP&E> 15998
<DEPRECIATION> 7503
<TOTAL-ASSETS> 20465
<CURRENT-LIABILITIES> 7364
<BONDS> 1519
<COMMON> 1769
0
0
<OTHER-SE> 8210
<TOTAL-LIABILITY-AND-EQUITY> 20465
<SALES> 12888
<TOTAL-REVENUES> 0
<CGS> 8272
<TOTAL-COSTS> 10566<F1>
<OTHER-EXPENSES> 909<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55
<INCOME-PRETAX> 1353
<INCOME-TAX> 500
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 853
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.40
<FN>
<F1>Total cost includes cost of goods sold and selling, general and administrative
expenses.
<F2>Other expense includes depreciation expense.
</FN>
</TABLE>
Exhibit 11.1
Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per Common
and Common Equivalent Share
Six Months Ended July 1, 1995 and July 2, 1994
(In millions, except per share amounts)
Six Months Ended
July 1, July 2,
1995 1994 (1)
Net Income $ 853 $ 665
Add:
Interest on Zero coupon notes due 2009
and 2013, net of tax and effect of
executive incentive and employee
profit sharing plans 3 8
Adjusted net income $ 856 $ 673
Earnings per common and common equivalent
share - Primary:
Weighted average common shares outstanding 588.7 559.1
Common equivalent shares:
Stock options 12.3 12.0
Zero coupon notes due 2009 and 2013 7.3 17.6
Common and common equivalent
shares - primary (in millions) 608.3 588.7
Net earnings per share - primary $ 1.41 $ 1.14
Earnings per common and common equivalent
share - Fully Diluted:
Weighted average common shares outstanding 588.7 559.1
Common equivalent shares
Stock options 13.2 12.0
Zero coupon notes due 2009 and 2013 7.3 17.6
Common and common equivalent
shares - fully diluted (in millions) 609.2 588.7
Net earnings per share - fully diluted $ 1.40 $ 1.14
(1) All 1994 earnings per common and common equivalent
share and weighted average common and common equivalent
shares outstanding have been restated to reflect the April
18, 1994 two-for-one stock split effected in the form of a
100 percent stock dividend payable to stockholders of record
on March 15, 1994.
CONSULTANT AGREEMENT
This Agreement is entered into as of this 1st day of May, 1995, between
Motorola, Inc., a Delaware corporation, with an office at 1303 E. Algonquin
Road, Schaumburg, Illinois, 60196 ("Motorola") and John F. Mitchell
("Consultant"). In consideration of the mutual promises contained herein and
other valuable consideration, the parties mutually agree as follows:
1. TERM. This Agreement shall begin on May 1, 1995, and continue
through April 30, 1996, and may thereafter be renewed on an annual basis upon
written agreement of the parties, provided, however, that either Motorola or
Consultant may terminate this Agreement or any renewal thereof upon thirty
(30) days' notice to the other party.
2. STATEMENT OF SERVICES. Consultant agrees to make available to
Motorola consulting services in the areas described in Appendix A and other
areas as shall from time to time be agreed upon by Consultant and Motorola.
3. PAYMENT. For services performed pursuant to this Agreement,
Consultant will be compensated at an amount and under such terms as are
contained in a separate memo between Consultant and Gary Tooker; said memo
being incorporated herein as Appendix B. Consultant shall be reimbursed for
all expenses which are necessary for and incident to the performance of
service hereunder upon approval of Motorola.
4. RECORDS, REPORTS AND INFORMATION. Consultant agrees to furnish
Motorola with reports and information regarding the services covered by this
Agreement at such times and as often as Motorola may request.
5. INDEPENDENT CONTRACTOR. Consultant shall perform services
hereunder only as an independent contractor and shall not be entitled to
participate in Motorola's profit sharing, pension, or other plans for the
benefit of Motorola employees except as Consultant may otherwise be eligible
by virtue of any period of employment with Motorola.
6. CODE OF CONDUCT. Notwithstanding Consultant's status as an
independent contractor, Motorola expects that and Consultant hereby agrees to
conduct himself on behalf of Motorola in accordance with the relevant sections
of the Motorola Code of Conduct, which is attached hereto as Appendix C.
Should Consultant require interpretation of any section of said Code of
Conduct, such can be obtained by contacting Motorola's Senior Vice President
and General Counsel, who is currently Richard H. Weise, 1303 E. Algonquin
Road, Schaumburg, Illinois 60196; (708) 576-5009.
7. PROTECTION OF MOTOROLA'S BUSINESS.
Except as required to perform services under this Agreement, Consultant will
not use, publish or otherwise disclose to others, during the term of this
Agreement and for five (5) years after termination thereof, any confidential
17
information of Motorola or its customers or suppliers, and will take all
reasonable precautions to prevent disclosure of the confidential information
to any unauthorized persons or entities. Consultant further agrees that,
during the term of this Agreement and for a period of twelve (12) months after
the termination of this Agreement, he will not provide services as a
consultant or employee to any independent company or business segment of a
company to the extent that it competes with Motorola or a business segment of
Motorola.
8. WRITINGS AND OTHER DATA TO BECOME PROPERTY OF MOTOROLA.
Consultant agrees that all notes, writings, drawings, designs, analyses,
memoranda and other data prepared and/or produced by Consultant in the
performance of this Agreement shall be the sole property of Motorola,
including all rights, title and interest of whatever kind, and shall not be
disclosed to any other person or firm by Consultant. Upon termination of this
Agreement, Consultant shall return all of the above, and any other Motorola
property or records which relate to the business of Motorola to an appropriate
Motorola representative.
8. GENERAL REPRESENTATION OF COMPLIANCE. Consultant agrees to comply
with all standards, laws and procedures pertaining to this Agreement which are
currently in effect or which are subsequently implemented by any government
agency or industry consortium to which Motorola belongs.
9. ENTIRE AGREEMENT. This Agreement constitutes the final expression
of the agreement of the parties; it is intended as a complete and exclusive
statement of the terms of their agreement; and it supersedes all prior and
concurrent promises, representations, negotiations, discussions, and
agreements that may have been made in connection with the subject matter
hereof.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the day and year first above written.
MOTOROLA, INC.
By:/s/ John F. Mitchell BY:/s/Richard H. Weise
John F. Mitchell Richard H. Weise
Senior Vice President, General
Counsel and Secretary
APPENDIX A
Consultant agrees to make available to Motorola the following services
pursuant to the Consultant Agreement to which this Appendix is attached.
1. Acting as Senior Consultant to Motorola on Iridium issues, including:
- conclusion of the terrestrial network development contract;
agreements with Gateway operators;
- Iridium financing, including public debt issuance and establishment of
commercial
- banking relationships;
- global licensing and spectrum issues;
- Gateway joint ventures.
2. Participating in Motorola University training courses and other Motorola
University activities.
3. Other topics as may from time-to-time be decided upon by Consultant and
the CEO.
18
==============================
______________________________
==============================
Inter-Office Correspondence
APPENDIX B
DATE: April 12, 1995
TO: John Mitchell
FROM: Gary Tooker
RE: Consultant Agreement
As you know, I am very pleased that you have agreed to continue your
relationship with Motorola after your retirement through a consulting
arrangement. As we agreed, you will provide consulting services to Motorola
as specified in attached agreement, as well as handle other projects which,
from time to time, may arise.
The payment terms of your consulting arrangement are as follows:
1) you shall be compensated at the rate of $2,400 per day for your
services; 2) Motorola shall be responsible for all expenses which you incur
in performing the services pursuant to our arrangement; 3) we shall
provide you with office facilities and secretarial services in Chicago; and
4) you shall have the corporate aircraft made available to you, dependent
upon scheduling, to further your consulting activities for Motorola.
Once again, I am delighted that Motorola will continue to benefit from your
expertise which has proved so invaluable to the Company.
APPENDIX C
