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 June 29, 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: 1-7221
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: (847) 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 June 29, 1996:
Class Number of Shares
Common Stock; $3 Par Value 592,583,494
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
June 29, 1996 and July 1, 1995 3
Condensed Consolidated Balance Sheets at
June 29, 1996 and December 31, 1995 4
Statements of Condensed Consolidated Cash Flows
Six-Month Periods ended
June 29, 1996 and July 1, 1995 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 14
Item 2 Changes in Securities 14
Item 3 Defaults Upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8-K 15
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
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
Net sales $ 6,835 $ 6,877 $13,790 $12,888
Costs and expenses
Manufacturing and other
costs of sales 4,585 4,394 9,303 8,272
Selling, general and
administrative expenses 1,126 1,209 2,198 2,299
Depreciation expense 576 478 1,099 909
Interest expense, net 47 34 98 55
Total costs and expenses 6,334 6,115 12,698 11,535
Earnings before income taxes 501 762 1,092 1,353
Income taxes provided on earnings 175 281 382 500
Net earnings $ 326 $ 481 $ 710 $ 853
Net earnings per common and common equivalent share (1)
Fully diluted:
Net earnings per common and
common equivalent share $ .54 $ .79 $ 1.17 $ 1.40
Average common and common
equivalent shares outstanding,
fully diluted (in millions) 609.6 609.2 609.6 609.2
Dividends paid per share $ .10 $ .10 $ .20 $ .20
(1) Average primary common and common equivalent shares outstanding
for the three months and six months ended June 29, 1996 and July
1, 1995 were 609.1 million and 608.3 million, respectively.
Primary earnings per common and common equivalent share were $1.17
and $1.41 for the six months ended June 29, 1996 and July 1, 1995,
respectively and $.54 and $.80 for the second quarters ended June
29, 1996 and July 1, 1995, respectively.
See accompanying notes to condensed consolidated financial statements.
Motorola, Inc. and Consolidated Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(In millions)
June 29, December 31,
1996 1995
ASSETS
Cash and cash equivalents $ 941 $ 725
Short-term investments 291 350
Accounts receivable, less allowance for
doubtful accounts (1996, $132; 1995, $123) 3,941 4,081
Inventories 3,433 3,528
Other current assets 1,847 1,826
Total current assets 10,453 10,510
Property, plant and equipment, less
accumulated depreciation
(1996, $8,903; 1995, $8,110) 9,761 9,356
Other assets (1) 3,381 2,935
Total Assets $23,595 $22,801
LIABILITIES AND STOCKHOLDERS EQUITY
Notes payable and current portion of
long-term debt $ 1,763 $ 1,605
Accounts payable 1,751 2,018
Accrued liabilities 4,123 4,170
Total current liabilities 7,637 7,793
Long-term debt 1,948 1,949
Other liabilities (1) 2,254 2,011
Stockholders' equity (1) 11,756 11,048
Total liabilities and stockholders' equity $23,595 $22,801
(1) SFAS No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" requires the carrying value of certain
investments to be adjusted to their fair value which resulted in
the Company recording an increase to stockholders equity, other
assets and deferred taxes of $478 million, $790 million and $312
million as of June 29, 1996; and $328 million, $543 million, and
$215 million as of December 31, 1995.
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
June 29, July 1,
1996 1995
NET CASH PROVIDED BY OPERATIONS $ 1,655 $ 1,201
INVESTING
Payments for property, plant and equipment (1,559) (2,076)
(Increase) decrease in short-term investments 59 (1)
(Increase) in other investing
activities (194) (413)
Net cash used for investing activities (1,694) (1,447)
FINANCING
Net increase in commercial paper
and short-term borrowings 145 957
Proceeds from issuance of debt 21 414
Repayment of debt (10) (21)
Payment of dividends to stockholders (118) (118)
Other financing activities 217 76
Net cash provided by financing activities 255 1,308
NET INCREASE IN CASH AND
CASH EQUIVALENTS $ 216 $ 19
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR $ 725 $ 741
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 941 $ 760
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 June 29, 1996, the
Statements of Consolidated Earnings for the three-month and six-
month periods ended June 29, 1996 and July 1, 1995, and the
Statements of Condensed Consolidated Cash Flows for the six-month
periods ended June 29, 1996 and July 1, 1995 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 June 29, 1996 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 appendix of the Company's proxy statement
for the 1996 Annual Meeting of Shareholders of the Corporation. The
results of operations for the three and six-month periods ended June
29, 1996 are not necessarily indicative of the operating results for
the full year.
2. INVENTORIES
Inventories consist of the following (in millions):
June 29, Dec. 31,
1996 1995
Finished goods $ 989 $ 1,026
Work in process and production materials 2,444 2,502
Inventories $ 3,433 $ 3,528
3. INCOME TAXES
The Internal Revenue Service (IRS) has examined the federal income
tax returns for Motorola, Inc. through 1987 and has settled the
respective returns through 1985. 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 most 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 $396 million during the first
six months of 1996 and $473 million for the same period a year
earlier. Cash payments for interest expense (net of amount
capitalized) were $117 million and $88 million, for the first six-
month periods of 1996 and 1995, 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 sections of the
following documents for a full understanding of Motorola's financial
condition and results of operations: from Motorola, Inc.'s 1995 Summary
Annual Report to Stockholders, the Letter to Stockholders on page 2; and
from the Proxy Statement for the 1996 Annual Meeting of Shareholders of
the Corporation, Managements Discussion and Analysis of Financial
Condition and Results of Operations pages F-1 through F-11, and the
Consolidated Financial Statements and Footnotes to the Consolidated
Financial Statements, pages F-13 through F-28; and from Motorola, Inc.'s
Quarterly Report on Form 10-Q for the period ending June 29, 1996, 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 lower sales and earnings for the second quarter
of 1996. Second quarter sales totaled $6.83 billion in 1996 down 1
percent from $6.88 billion in the year-earlier period. In the first
half, sales reached $13.8 billion, up 7 percent from $12.9 billion a
year ago. Earnings for the second quarter of 1996 were $326 million,
compared with $481 million in the same period a year earlier. Fully
diluted net earnings per common and common equivalent share for the
second quarter of 1996 were 54 cents, compared to 79 cents in the year-
earlier period. Earnings in the first six months were $710 million,
compared with $853 million a year earlier. Fully diluted net earnings
per common and common equivalent share were $1.17, compared to $1.40 a
year earlier. Motorola's net margin on sales (net earnings divided by
net sales) during the second quarter of 1996 was 4.8 percent compared to
7.0 percent a year ago, while in the first half it was 5.1 percent,
compared to 6.6 percent from the year-earlier period.
Gross margin declined to 32.9 percent of sales in the second quarter of
1996 from 36.1 percent of sales during the year-earlier period. Gross
margin declined in all of the Company's major businesses except Land
Mobile Products Sector, and was offset, in part, by lower selling,
general and administrative costs as a percent of sales. Depreciation
and interest expense increased as a percent of sales.
General Systems Sector's segment sales declined to $2.8 billion, a
decrease of 4 percent from the second quarter of 1995. Orders increased
5 percent and operating profits were lower than in the second quarter of
1995.
Cellular Subscriber Group recorded lower sales and orders in the second
quarter of 1996 compared to the year-earlier period due to declines in
selling prices. Sales were higher in Pan America but were lower in all
other markets. By technology, digital sales were higher and analog
sales were lower during the second quarter of 1996 compared with the
year-earlier period.
Cellular Infrastructure Group sales were higher, and orders, paced by
the Japanese market, grew significantly. Sales increased significantly
in Europe and were higher in Japan and North Asia including China.
Sales were lower in the rest of Asia/Pacific and Pan America. By
technology, analog sales were lower and digital sales increased
significantly, representing approximately 40 percent of the total
sector's sales. Motorola Computer Group sales and orders were lower.
Segment sales in the Semiconductor Products Sector decreased 5 percent
from the second quarter of 1995 to $2.0 billion. Orders decreased 34
percent and operating profits were lower than in the second quarter of
1995. Pricing pressures resulting from a broad weakening of demand in
semiconductor products along with significantly higher depreciation on
manufacturing capacity additions during the past six quarters have had
the greatest negative affects on operating profits.
All geographic regions posted lower orders. Among major market
segments, only automotive orders were higher. Distributor orders
declined. Bookings were lower in all of the sector's technology groups.
Most product categories experienced weaker demand and more competitive
pricing. Motorola's measured participation in dynamic random access
memories (DRAMs) has limited the negative impact from declining prices.
Some current semiconductor expansion projects have been delayed, in
response to the slower growth rate in the semiconductor industry in
1996. During the second quarter of 1996, Motorola and Siemens entered
into an agreement to construct and operate a jointly owned facility in
Richmond, Virginia to manufacture next-generation 64-megabit DRAMs, the
products of which will be sold solely to the partners. First production
is expected in mid-1998.
In the Messaging, Information and Media segment, sales increased 20
percent to $1.1 billion and orders increased 4 percent. Operating
profits were higher compared with the second quarter of 1995. Sales
were higher in all business units. Paging sales were up significantly
in the U.S., and higher in China and Latin America while being lower in
other international markets. Paging orders were higher, led by growth
in the U.S. while orders were lower in all international markets except
Japan. Orders were lower in the Information Systems Group, reflecting
aggressive pricing for modems. Wireless Data Group orders were down
significantly.
In the Land Mobile Products Sector business segment, sales increased 8
percent to $943 million and orders advanced 19 percent. Operating
profits were higher largely due to a net gain from the sale of assets
while last year's results included a charge for an adjustment in a
customer contract. Sales and orders for iDEN (TM) (integrated Dispatch
Enhanced Network) equipment increased significantly versus a year ago.
Nextel Communications, Inc. placed an order for $117 million in iDEN
infrastructure equipment. An order for a new iDEN system was received
from a major service provider in Latin America. The iDEN systems in
Argentina, Canada, Israel, Japan and Singapore were expanded. During
the second quarter of 1996, Motorola's finance subsidiary sold, with
recourse, a majority of the outstanding receivables due from Nextel
Communications Inc. for prior years' sales of iDEN equipment aggregating
approximately $200 million. In the Radio Products Group and the Radio
Network Solutions Group, sales and orders were higher in the second
quarter of 1996 compared with a year ago.
In the Automotive, Energy and Controls Group, sales decreased 3 percent,
orders decreased 5 percent and operating profits were lower from the
second quarter of 1995, reflecting pricing pressures in automotive
markets and reduced demand for components and energy products for
cellular telephones. The results for this group are reported as part of
the "Other Products" segment.
In the Government and Space Technology Group (GSTG), group sales
decreased 36 percent and orders were 56 percent lower. The group
recorded an operating loss compared with a profit a year ago. The
results reflect the fact that fewer contractual milestone payments were
due for the IRIDIUM (Registered symbol inserted here) global
communications system during the second quarter of 1996 as compared with
the year-earlier period. Development of the system continued on
schedule during the quarter. GSTG is recording reserves that currently
result in a minimal level of profit recognition for the IRIDIUM project.
These reserves are reevaluated periodically.
Order booking for the IRIDIUM project was delayed pending completion of
a short-term credit facility currently being negotiated by Iridium, Inc.
Iridium, Inc. must have this credit facility in place during the third
quarter of 1996 to continue to be able to make contractual payments to
Motorola. Iridium, Inc. is also negotiating a permanent $2.6 billion
credit facility to replace the short-term facility. Motorola is
currently negotiating to guarantee, during the initial technology
deployment and regulatory approval phases of the Iridium project, up to
$750 million of Iridium, Inc.'s bank financing. There can be no
assurances as to the outcome of any of these negotiations or that
Motorola's guarantee will be sufficient to secure the bank financing.
The results for GSTG are reported as part of the "Other Products"
segment.
Motorola's manufacturing and other costs of sales during the second
quarter of 1996 and 1995 were $4.6 billion, 67.1 percent of net sales,
and $4.4 billion, 63.9 percent of net sales, respectively. The increase
as a percent of net sales was a result of more competitive pricing for
semiconductors, especially memory products as industry growth has
slowed, and the continuation of a competitive pricing environment in
cellular telephones, paging and, more recently, modems. While all major
operations are continuing to invest in key programs for the future, the
Company intends to focus on controlling budgeted costs in response to
slowing demand and competitive pricing. Manufacturing run rates are
also being adjusted in response to changing demands.
Motorola's selling, general and administrative expenses during the
second quarter of 1996 were $1.1 billion, 16.5 percent of sales, versus
$1.2 billion, 17.6 percent of sales, during the year-earlier period.
Major transitions to new technologies continue in Motorola's equipment
businesses. These are very important to the Company's long-term growth
and are already beginning to result in significant new businesses.
These technologies include two-way and voice paging, CDMA (code
divisional multiple access) for cellular and PCS (personal
communications systems), wireless local loop, telephone and high speed
data modems for cable systems, and integrated dispatch radios. As new
technologies enter the Company's revenue base, their early life cycle
levels of profitability are low until markets mature and manufacturing
economies of scale develop to reduce unit costs.
During the past several quarters, a variety of factors have continued to
slow the Company's rate of growth in sales and orders which have had an
adverse effect on net earnings. These factors include: (1) the
continuation of a competitive pricing environment in cellular telephones
and paging; (2) a moderating growth rate of the cellular subscriber base
in the U.S.; (3) a weakening demand within the semiconductor industry
resulting in pricing pressures; (4) increased start-up costs and
depreciation associated with adding new semiconductor manufacturing
capacity during 1995 and early 1996; (5) continued expenditures
associated with the development and introduction of new technologies;
and (6) a slow-down of economic growth within the European market.
Motorola expects these factors, which have affected the second quarter
1996 earnings, to continue into the third quarter of 1996. Furthermore,
the 1995 third quarter earnings were favorably affected by gains on
asset sales.
The tax rate for the quarter was 35 percent compared with 37 percent in
the second quarter of 1995 and 36 percent for the full year ended 1995.
LIQUIDITY AND CAPITAL RESOURCES
Inventories at June 29, 1996 decreased by 3 percent or $95 million,
compared to inventories at December 31, 1995. Property, plant and
equipment, less accumulated depreciation, increased $405 million since
December 31, 1995, largely due to adding new capacity within the
Semiconductor Products Sector and the General Systems Sector. The
Company is currently selectively deferring capacity expansion programs
and expect fixed asset expenditures to be 15 to 20 percent lower than in
1995. Depreciation expense increased 20.5 percent to $576 million for
the second quarter of 1996 in comparison with $478 million for the year-
earlier period.
Motorola's notes payable and current portion of its long-term debt
increased $158 million, or 9.8 percent from the amount at December 31,
1995. Long-term debt remained flat at $1.9 billion from the amount at
December 31, 1995. 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 decreased to 19.0 percent at June
29, 1996 from 19.8 percent at December 31, 1995. The Company's total
domestic and foreign credit facilities aggregated $3.6 billion at June
29, 1996, of which $473 million were used and the remaining amount was
not drawn, but was available to back up outstanding commercial paper
which totaled $1.3 billion at June 29, 1996.
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.
As of June 29, 1996, and July 1, 1995, the Company had net outstanding
foreign exchange contracts totaling $1.2 billion for each year
respectively. The following schedule shows the five largest foreign
exchange hedge positions as of June 29, 1996, and the corresponding
positions at July 1, 1995:
Millions of U.S. Dollars
Buy (Sell) June 29, July 1,
1996 1995
Japanese Yen (357) (387)
British Pound Sterling (185) (182)
Spanish Peseta (84) (75)
Singapore Dollar 84 70
Italian Lire (67) (59)
As of June 29, 1996 and July 1, 1995, 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 June 29, 1996. 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.
Motorola's research and development expense was $625 million in the
second quarter of 1996, compared with $551 million in the second quarter
of 1995. Research and development expenditures for the year ended
December 31, 1995 were $2.2 billion. The Company continues to believe
that a strong commitment to research and development drives long-term
growth. At June 29, 1996, the Company's fixed asset expenditures for
the second quarter totaled $736 million, compared with $1,102 million in
the second quarter of 1995. The Company is currently anticipating that
fixed asset expenditures incurred during 1996 could total approximately
$3.5 billion, significantly lower than fixed asset expenditures incurred
during 1995 which aggregated $4.2 billion. The decrease in expected
fixed asset expenditures for 1996 reflects management's commitment to
adjusting investment levels to better match current industry conditions,
particularly with respect to the semiconductor industry.
Return on average invested capital (net earnings divided by the sum of
stockholders' equity, long-term debt, notes payable and the current
portion of long-term debt, less short-term investments and cash
equivalents) was 12.2 percent based on the performance of the four
preceding fiscal quarters ending June 29, 1996, compared with 16.5
percent based on the performance of the four preceding fiscal quarters
ending July 1, 1995. Motorola's current ratio (the ratio of current
assets to current liabilities) was 1.37 at June 29, 1996, compared to
1.35 at December 31, 1995.
"Safe Harbor" statement under the PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995: Statements that are not historical facts, including
statements about (i) Semiconductor Products Sector's production schedule
for new manufacturing facilities; (ii) Iridium, Inc. financing
negotiations; (iii) controlling budgeted costs and adjusting
manufacturing run rates; (iv) the effect of transitions to new
technologies and research and development activities; (v) fixed asset
expenditures; and (vi) the factors in the last paragraph of "Results of
Operations" are forward looking statements based on current expectations
and involve risks and uncertainties. Motorola wishes to caution the
reader that the factors below, along with the factors set forth in the
Company's 1996 proxy statement in Management's Discussion and Analysis
pages F-10 and F-11, in some cases have affected and could affect
Motorola's actual results causing results to differ materially from
those in any forward looking statement: delays in the start of
production at new semiconductor facilities due to construction delays or
market factors; the outcome of Iridium, Inc.'s financing negotiations
and the acceptance of Motorola's proposed guarantee for such financing;
product development risks, including technological difficulties and
commercialization factors; demand and market acceptance risks for new
and existing products, technologies and services, including new cellular
phones, PCS systems, CDMA systems, digital technology, paging products,
computer products, and automotive products; continued or increased
competitive pricing in the cellular telephone, paging and modem markets;
unexpected expenditures, including fixed asset expenditures; continued
or increased moderating growth rate in the cellular subscriber base in
the U.S.; cellular subscriber growth rates in other regions; continued
or increased pricing pressures, competition or weakening demand in
semiconductors worldwide; the effects of underutilization of plants and
facilities, including Semiconductor Product Sector's wholly owned and
joint venture facilities (some of which are not controlled by Motorola),
General System Sector's, and Automotive, Energy and Controls Group's
facilities; and the impact of world-wide economic conditions on growth
and demand for wireless communications.
IRIDIUM (Registered symbol inserted here) is a registered trademark and
service mark of Iridium, Inc.
INFORMATION BE INDUSTRY SEGMENT (UNAUDITED)
Summarized below are the Company's segment sales as defined by industry
segment for the three-months and six-months ended June 29, 1996 and July
1, 1995:
Segment Sales
for the three months ended
June 29, July 1,
(In millions) 1996 1995 % Change
General Systems Products $2,766 $2,883 (4)
Semiconductor Products 1,980 2,085 (5)
Messaging, Information and
Media Products 1,071 895 20
Land Mobile Products 943 872 8
Other Products 769 901 (15)
Adjustments and eliminations (694) (759) (9)
Industry segment totals $6,835 $6,877 (1)
Segment Sales
for the six months ended
June 29, July 1,
(In millions) 1996 1995 % Change
General Systems Products $5,482 $5,229 5
Semiconductor Products 4,126 3,966 4
Messaging, Information and
Media Products 2,061 1,683 22
Land Mobile Products 1,764 1,662 6
Other Products 1,685 1,719 (2)
Adjustments and eliminations (1,328) (1,371) (3)
Industry segment totals $13,790 $12,888 7
Part II - Other Information
ITEM 1 - LEGAL PROCEEDINGS.
There are currently eight cases pending in Phoenix, Arizona arising out
of alleged groundwater, soil and air pollution in Phoenix and
Scottsdale, Arizona. The plaintiffs in the consolidated
LOFGREN/BETANCOURT/FORD/WILKINS V. MOTOROLA lawsuits, pending in Arizona
Superior Court, Maricopa County, filed and served on Motorola a Fifth
Amended Complaint on June 27, 1996. These consolidated cases involve
claims by approximately 225 plaintiffs alleging that Motorola and
approximately 30 other defendants contaminated the soil, air and
groundwater in the Phoenix/Scottsdale area, causing health problems.
Motorola is a defendant in several cases arising out of the Company's
manufacture and sale of portable cellular telephones. IN VERT, ET AL.
V. MOTOROLA, INC., ET AL., Circuit Court of Cook County, Illinois, 93 L
3238, a purported economic loss class action by purchasers of portable
cellular phones against the Company and seven other corporate
defendants, plaintiffs have petitioned the Illinois Appellate Court for
rehearing of its March 29, 1996 decision affirming the trial courts
dismissal of the case.
RITMANN, ET. AL. V. MOTOROLA, INC., ET. AL., District Court for Tarrant
County, Texas, 348-160584-96, alleging that cellular phone use caused
brain cancer was dismissed by the plaintiffs and refiled in the 151st
District Court of Harris County, Texas, 96-31228.
See Item 3 of the Company's Form 10-K for the year ended 1995 and Form
10-Q for the first quarter of 1996 for additional disclosures regarding
pending cases.
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
11 Motorola, Inc. and Consolidated Subsidiaries Primary
and Fully Diluted Earnings Per Common and Common
Equivalent Share for the three months ended
June 29, 1996 and July 1, 1995.
11.1 Motorola, Inc. and Consolidated Subsidiaries Primary
and Fully Diluted Earnings Per Common and Common
Equivalent Share for the six months ended
June 29, 1996 and July 1, 1995.
27 Financial Data Schedule (filed only electronically
with the SEC)
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the second
quarter of 1996.
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 16, 1996 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.
11 Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per
Common and Common Equivalent Share for the three
months ended June 29, 1996 and July 1, 1995. 18
11.1 Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per
Common and Common Equivalent Share for the six
months ended June 29, 1996 and July 1, 1995. 19
27 Financial Data Schedule (filed only
electronically with the SEC) --
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated Balance Sheet as of 6/29/96 and the Statement of Consolidated
Earnings for the quarter ended 6/29/96 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-29-1996
<CASH> 941
<SECURITIES> 291
<RECEIVABLES> 4073
<ALLOWANCES> (132)
<INVENTORY> 3433
<CURRENT-ASSETS> 10453
<PP&E> 18664
<DEPRECIATION> (8903)
<TOTAL-ASSETS> 23595
<CURRENT-LIABILITIES> 7637
<BONDS> 1948
0
0
<COMMON> 1778
<OTHER-SE> 9978
<TOTAL-LIABILITY-AND-EQUITY> 23595
<SALES> 13790
<TOTAL-REVENUES> 0
<CGS> 9303
<TOTAL-COSTS> 11501<F1>
<OTHER-EXPENSES> 1099<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 382
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 710
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
<FN>
<F1>Total cost includes: Cost of goods sold, selling general and administrative
expense and total foreign exchange (gain)/loss.
<F2>Other expense includes: Depreciation Expense.
</FN>
</TABLE>
Exhibit 11
Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per Common
and Common Equivalent Share
Three Months Ended June 29, 1996 and July 1, 1995
(In millions, except per share amounts)
Three Months Ended
June 29, July 1,
1996 1995
Net Income $ 326 $ 481
Add:
Interest on Zero coupon notes due 2009
and 2013, net of tax and effect of
executive incentive and employee
profit sharing plans 1 1
Adjusted net income $ 327 $ 482
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE - PRIMARY:
Weighted average common shares outstanding 592.0 588.7
Common equivalent shares:
Stock options 10.4 12.3
Zero coupon notes due 2009 and 2013 6.7 7.3
Common and common equivalent
shares - primary (in millions) 609.1 608.3
Net earnings per share - primary $ .54 $ .80
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE - FULLY DILUTED:
Weighted average common shares outstanding 592.0 588.7
Common equivalent shares:
Stock options 10.9 13.2
Zero coupon notes due 2009 and 2013 6.7 7.3
Common and common equivalent
shares - fully diluted (in millions) 609.6 609.2
Net earnings per share - fully diluted $ .54 $ .79
Exhibit 11.1
Motorola, Inc. and Consolidated Subsidiaries
Primary and Fully Diluted Earnings Per Common
and Common Equivalent Share
Six Months Ended June 29, 1996 and July 1, 1995
(In millions, except per share amounts)
Six Months Ended
June 29, July 1,
1996 1995
Net Income $ 710 $ 853
Add:
Interest on Zero coupon notes due 2009
and 2013, net of tax and effect of
executive incentive and employee
profit sharing plans 2 3
Adjusted net income $ 712 $ 856
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE - PRIMARY:
Weighted average common shares outstanding 592.0 588.7
Common equivalent shares:
Stock options 10.4 12.3
Zero coupon notes due 2009 and 2013 6.7 7.3
Common and common equivalent
shares - primary (in millions) 609.1 608.3
Net earnings per share - primary $ 1.17 $ 1.41
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE - FULLY DILUTED:
Weighted average common shares outstanding 592.0 588.7
Common equivalent shares:
Stock options 10.9 13.2
Zero coupon notes due 2009 and 2013 6.7 7.3
Common and common equivalent
shares - fully diluted (in millions) 609.6 609.2
Net earnings per share - fully diluted $ 1.17 $ 1.40
