FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 4, 1998
Motorola, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-7221 36-1115800
(Commission File Number) (I.R.S. Employer Identification No.)
1303 East Algonquin Road, Schaumburg, Illinois
(Address of principal executive offices)
Registrant's telephone number, including area code: (847) 576-5000
Not applicable
(Former name or former address, if changed since last report.)
Item 5. Other Events.
Motorola announced major cost reductions and anticipated weak second-
quarter outlook in a press release dated June 4, 1998.
Item 7. Financial Statements and Exhibits.
The following is filed as an Exhibit to this Report.
Exhibit Number 99
Description
Motorola Press Release dated June 4, 1998.
SIGNATURES
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.
Dated: June 5, 1998 By: /s/ Carl F. Koenemann
Carl F. Keonemann
Executive Vice President and
Chief Financial Officer
Exhibit 99
Motorola Announces Major Cost Reductions;
Second-Quarter Outlook Weakens
SCHAUMBURG, Ill. -- Motorola, Inc. said today it will implement a
comprehensive series of manufacturing consolidations, cost reductions
and restructuring steps to improve financial performance. Special
charges, totaling approximately $1.95 billion pre-tax, will be recorded
in the second quarter.
Second-quarter 1998 earnings, excluding special items, are
expected to be well below the expectations of the investment community
as a result of deteriorating demand and global pricing pressure,
principally in the Semiconductor Products segment and driven primarily
by economic conditions in Asia. This could result in an operating loss
for the quarter, the company said.
Robert L. Growney, president and chief operating officer, said,
"In the fourth quarter of last year our forecast for 1998 called for
higher sales growth and improved profitability, but that has not
materialized. It is clearly time to accelerate the implementation of
our renewal plan. We are determined to return our financial results to
an acceptable level as soon as possible. The goal is to generate
annualized savings, once all actions have been implemented, of more
than $750 million."
The company announced the following actions:
* Reduction in employment by 15,000 over the next 12 months.
Motorola currently has approximately 150,000 employees worldwide.
* Consolidation of manufacturing operations throughout the
company, with emphasis on the Semiconductor Products and
Messaging, Information and Media segments.
* Exit of additional non-strategic, poorly performing businesses.
* Write-down of assets, the value of which has become impaired,
either as a result of current business conditions or business
portfolio decisions.
Christopher B. Galvin, chief executive officer, said, "While we
very much regret the impact this will have on certain of our employees,
we must adjust our production capacity to the reality of current
business conditions and reduce costs to improve overall financial
performance. We will do all of this while continuing to invest in our
long-term growth opportunities, which are many."
Galvin said, "Motorola will focus on two powerful propositions
going forward. First, Motorola will create the WINGS for businesses
and consumers so they can take their worlds with them. Second, we will
embed our ideas and technology along with our customers' in order to
create everyday miracles. We call this DigitalDNA (Trademark) From
Motorola.
"Through these propositions, we intend to gain market share in key
businesses such as digital cellular telephones, where significant new
products are planned for introduction before the end of the third
quarter, and embedded semiconductors. We expect improved business
results from the renewal of the company's communications equipment
businesses, a process that began in April, the details of which will be
announced next month. At the same time, the Semiconductor Products
segment will continue to implement its business renewal plan. Our
recently announced investment in Teledesic LLC, along with the
continued success of the IRIDIUM (Registered) program, validates the
multi-year investments we have made to establish Motorola as a leader
in the emerging low-earth-orbit satellite industry.
"We believe," Galvin added, "that an improving trend of financial
performance can develop in the second half of 1998, given stabilized
economic conditions in Asia. Longer term, the actions we outlined
today can help provide stronger future financial performance and
superior returns to our stockholders."
###
Business Risks:
Statements in this press release are forward-looking and involve
risks and uncertainties. Motorola wishes to caution the reader that
the factors below and those in Motorola's 1998 Proxy Statement on pages
F-8 and F-9 and in its other SEC filings could cause Motorola's results
to differ materially from those stated in the forward-looking
statements. These factors include: (i) the ability of Motorola to
implement the manufacturing consolidations, cost reductions and
restructuring actions in a timely manner and the success of those
efforts; (ii) the ability of the Company to integrate its businesses to
reduce costs and increase efficiencies; (iii) unanticipated impact of
the actions described in this press release on productivity and the
ability of the Company to retain and where necessary recruit employees;
(iv) the success of efforts to stabilize economic conditions in Asia;
(v) pricing pressures and demand for the Company's products,
particularly semiconductors and messaging products, especially in light
of the current economic conditions in Asia; (vi) the potential that the
impact of weakened currencies in Southeast Asia could spread to
countries where Motorola does a sizable amount of business, including
China and Japan; (vii) the ability of Motorola's cellular businesses to
continue to transition to digital products and gain market share;
(viii) product and technology development and commercialization risks,
including for newer digital products and IRIDIUM (Registered) products;
(ix) steady growth in emerging markets; (x) unanticipated changes in
demand for products; and (xi) continued weak demand for paging products
in North America and China.
IRIDIUM (Registered) is a registered trademark and service mark of
Iridium LLC.
(Registered) Registered in the U.S. Patent and Trademark office by
Motorola, Inc. or others.
NOTE: A conference call for the investment community will be held at
8:00 A.M., Eastern Daylight Time, on Friday, June 5, 1998. On the
conference call will be Christopher B. Galvin, chief executive officer,
and Robert L. Growney, president and chief operating officer.
Participants can access the call by dialing 800-683-1535. The call is
available to the media, but questions will be restricted to the
investment community. A taped replay of the call will be available
until 5:00 P.M., Eastern Daylight Time, on Monday, June 8, 1998, by
dialing 888-284-4564.
