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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
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 (I.R.S. EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
1303 EAST ALGONQUIN ROAD, SCHAUMBURG, ILLINOIS 60196
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER (708) 576-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Common Stock, $3 Par Value per Share New York Stock Exchange
Chicago Stock Exchange
Liquid Yield Option Notes due 2009 New York Stock Exchange
Liquid Yield Option Notes due 2013 New York Stock Exchange
Rights to Purchase Junior Participating New York Stock Exchange
Preferred Stock, Series A Chicago Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
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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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of January 31, 1994 was approximately $26.6 billion (based on
closing sale price of $98.50 per share as reported for the New York Stock
Exchange-Composite Transactions.)
The number of shares of the registrant's Common Stock, $3 par value per
share, outstanding as of January 31, 1994 was 278,781,510.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT LOCATION IN FORM 10-K
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Portions of Registrant's Proxy Statement for 1994 Annual Meeting of Stockholders Part III
Portions of Registrant's 1993 Annual Report to Stockholders Parts I, II and IV
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PART I
ITEM 1: BUSINESS
(a) General development of business.
Motorola, Inc. is a corporation organized under the laws of the State of
Delaware as the successor to an Illinois corporation organized in 1928.
Motorola's principal executive offices are located at 1303 East Algonquin Road,
Schaumburg, Illinois 60196 (telephone number: 708-576-5000).
Motorola, Inc., one of the world's leading providers of electronic equipment,
systems, components and services for worldwide markets, is engaged in the
design, manufacture and sale, principally under the Motorola brand, of a
diversified line of such products. These products include two-way land mobile
communication systems, paging and wireless data systems and other forms of
electronic communication systems; cellular mobile and portable telephones and
systems; semiconductors, including integrated circuits, discrete devices and
microprocessor units; information systems products such as modems, multiplexers
and network processors; electronic equipment for military and aerospace use;
electronic engine controls, and other automotive and industrial electronic
equipment; and multifunction computer systems for distributed data processing
and office automation applications. Motorola also provides services for paging,
cellular telephone and shared mobile radio.
The term "Motorola" as used hereinafter means Motorola, Inc. or Motorola, Inc.
and its subsidiaries, as the context requires.
(b) Financial information about industry segments.
The response to this section of Item 1 is incorporated by reference to Note 7
of the Notes to Consolidated Financial Statements of Motorola's 1993 Annual
Report to Stockholders.
(c) Narrative description of business.
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SEMICONDUCTOR PRODUCTS
Semiconductors control and amplify electrical signals and are used in a broad
range of electronic products, including television receivers and other consumer
electronic products, solid-state ignition systems and other automotive
electronic products, major home appliances, industrial controls, robotics,
aircraft, missiles, space vehicles, communications equipment, computers,
minicomputers, calculators and automatic controls.
The semiconductor products manufactured by Motorola's Semiconductor Products
Sector include integrated circuit devices (metal-oxide semiconductor and
bipolar) such as dynamic and static random access memories, microcontrollers,
microprocessors, microcomputers, gate arrays, standard cells, digital signal
processors, mixed signal and other logic and analog components. In addition,
the Sector manufactures a wide variety of discrete devices including zener and
tuning diodes, RF devices, power and small signal transistors, field effect
transistors, microwave devices, optoelectronics, rectifiers and thyristors.
The Sector sells its products worldwide to original equipment manufacturers
through its own sales force. Products also are sold through a network of
industrial distributors in the United States. Sales outside the United States
are made through the Sector's own sales staff and through independent
distributors. Semiconductors manufactured by the Sector are also supplied to
other operating units of Motorola. The Sector is affected by the cyclical
nature of the semiconductor industry. Available capacity, cyclical customer
demands, new product introduction and aggressive pricing can have a significant
impact on its business. The Sector's capacity is being increased to meet
current strong market demand. In addition to the Sector's factory expansion
program, it is actively pursuing additional capacity through the sourcing of
products from outside vendors. Because of the strong market demand, the
available quantity of some products have been allocated to customers from time
to time.
The semiconductor industry is subject to rapid changes in technology, requires a
high level of capital spending and an extensive research,
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development and design program to maintain state-of-the-art technology.
Accordingly, the Sector maintains an extensive research and development program
in advanced semiconductor technology.
The Sector's backlog amounted to $2.12 billion at December 31, 1993 and $1.55
billion at December 31, 1992. The 1993 backlog amount is believed to be
generally firm, and approximately 100% of that amount is expected to be shipped
during 1994. However, in the past, the Sector has experienced abrupt and
repeated rescheduling of previously firm and even expedited orders. The
estimate of the firmness of such orders is subject to future events which may
cause the percentage of the 1993 backlog actually shipped to change.
The Semiconductor Products Sector experiences intense competition from numerous
competitors, including Japanese companies and several other companies around the
world, ranging from large companies offering a full range of products to small
companies specializing in certain segments of the market. The competitive
environment is also changing as a result of increased alliances between
competitors. The Sector competes in many markets, including the
telecommunications, computer, industrial, automotive, consumer, federal
government and distributor markets. Due to the multitude of competitors, price,
service, technology and product quality are important factors in competition.
The ability to develop new products to meet customer requirements and to meet
customer delivery schedules are also competitive factors. Management believes
that Motorola's commitment to research and development of new products combined
with utilization of state-of-the-art technology should allow the Sector to
remain competitive.
The Sector is not currently experiencing, nor does it anticipate, any shortages
in obtaining raw materials. However, it is experiencing some extended lead
times on certain raw materials due to strong industry demand, but it is not
currently expected to have any material impact on the Sector's business. A
significant portion of certain materials and parts used by the Sector is
supplied from a single country. The Sector is actively seeking new sources of
supply to decrease this dependency. With respect to other materials, the Sector
is constantly seeking new sources of supply to minimize the risk of obtaining
materials from only a few
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sources. Electricity, oil and natural gas are used extensively in the Sector's
operations. All of these energy sources are available in adequate quantities
for current and foreseeable future needs. Electricity and oil are the primary
energy sources for the Sector's foreign operations, and presently, there are no
shortages of these sources although the reliability of electrical power has been
a problem from time to time.
Reference is made to the material under the heading "General" for information
relating to patents and trademarks and seasonality of business with respect to
this industry segment.
The Semiconductor Products Sector's headquarters is in Phoenix, Arizona, with
manufacturing facilities in Phoenix, Mesa, Tempe and Chandler, Arizona; Irvine,
California; Austin, Texas; Tianjin, China; Toulouse, France; Kwai Chung and Tai
Po, Hong Kong; Aizu and Sendai, Japan; Seoul, Korea; Kuala Lumpur and Seremban,
Malaysia; Guadalajara, Mexico; Singapore; East Kilbride, Scotland; Manila, the
Philippines; and Chung-Li, Taiwan.
COMMUNICATIONS PRODUCTS
Communications products are designed, manufactured and sold by Motorola's Land
Mobile Products Sector and its Paging and Wireless Data Group. In 1993, both
operations comprised the Company's Communications Products segment.
In January 1994, Motorola's Information Systems Group (consisting of Codex
Corporation and Universal Data Systems, Inc.) was combined with the Paging and
Wireless Data Group to form the Messaging, Information and Media Sector.
However, this new Sector does not constitute a separate reportable industry
segment, and the results of operations of the Information Systems Group will
continue to be reported under "Other Products."
As a principal supplier of mobile and portable FM two-way radio and radio paging
and wireless data systems, the Land Mobile Products Sector and the
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Paging and Wireless Data Group provide equipment and systems to meet the
communications needs of individuals and many different types of business,
institutional and governmental organizations. Products of the Land Mobile
Products Sector and certain products of the Paging and Wireless Data Group
provide voice and data communication between vehicles, persons and base
stations. The Paging and Wireless Data Group products provide signaling or
signaling and one-way voice communications or wireless data communications to
people away from their homes, vehicles or offices.
The principal customers for two-way radio and radio paging products include
public safety agencies, such as police, fire, highway maintenance departments
and forestry services; petroleum companies; gas, electric and water utilities;
telephone companies; diverse industrial companies; mining companies;
transportation companies, such as railroads, airlines, taxicab operations and
trucking firms; institutions, such as schools and hospitals; and companies in
the construction, vending machine and service businesses. Also, there is a
growing base of paging and wireless data customers using the products for
personal and family communication needs. These products are also sold and
leased to various federal agencies for many uses.
Users of two-way radios are regulated by a variety of governmental and other
regulatory agencies throughout the world. In the United States, users of
two-way radios are licensed by the Federal Communications Commission ("FCC")
which has broad authority to make rules and regulations and prescribe
restrictions and conditions to carry out the provisions of the Communications
Act of 1934. The FCC's authority includes, among other things, the power to
classify radio stations, prescribe the nature of the service to be rendered by
each class of station, assign frequencies to the various classes of stations and
regulate the kinds of equipment which may be used. Regulatory agencies in other
countries have similar types of authority. Consequently, the business of this
segment may be affected by the rules and regulations adopted by the FCC or
regulatory agencies in other countries from time to time.
Motorola has developed products using trunking and data communications
technologies to enhance spectral efficiencies. The growth of the two-way
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radio communications industry may be affected, however, by the regulations of
the FCC or other regulatory agencies relating to the allocation of frequencies
for land mobile communications users, especially in urban areas where such
frequencies are heavily used.
The Land Mobile Products Sector also manufactures and sells signaling and
control systems and communication control centers used in two-way radio
operations.
This segment carries on an extensive product development program. Its products
make substantial use of solid-state semiconductor components, including
large-scale integrated circuits.
The products manufactured and marketed by this segment are sold directly through
its own distribution force, or through independent authorized distributors and
dealers, radio common carriers and independent commission sales representatives.
Leasing and conditional sale arrangements are also made available to customers.
The direct distribution force also provides systems engineering and technical
services to meet the customer's particular needs. The customer may choose to
install and maintain the equipment with its own employees, or may obtain
installation, service and parts from a network of Motorola authorized service
stations (most of whom are also authorized dealers) or from other non-Motorola
service stations. The majority of the leases and conditional sale contracts
entered into by this segment are sold to several unaffiliated finance companies
and banks on terms which, in most instances, provide recourse to Motorola with
certain limitations. Some leases and conditional sale contracts are sold to a
Motorola subsidiary.
This segment's backlog amounted to $1.71 billion at December 31, 1993 and $1.12
billion at December 31, 1992. The 1993 backlog amount is believed to be
generally firm, and approximately 91% of that amount is expected to be shipped
during 1994. The estimate of the firmness of such orders is subject to future
events which may cause the percentage of the 1993 backlog actually shipped to
change.
This segment experiences widespread, intense competition from numerous
competitors ranging from some of the world's largest, diversified
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companies to many small, specialized firms. The principal manufacturing
operations of many competitors are located outside of the United States.
Competitive factors include price, product performance, product quality, quality
and availability of service, and quality and availability of systems
engineering, with no one factor being dominant. Management believes that
Motorola's commitment to research and development programs for improving
existing products and developing new products and its utilization of
state-of-the-art technology should allow this segment to remain competitive.
Availability of materials and components required by this segment is relatively
dependable and certain, but normal fluctuations in market demand/supply could
cause temporary, selective shortages. Direct sourcing of materials and
components from foreign suppliers is becoming more extensive. This segment
operates certain offshore subassembly plants, the loss of one or more of which
could constrain this segment's production capabilities. Natural gas,
electricity and, to a lesser extent, oil, are the primary sources of energy.
Current supplies of these forms of energy are considered to be adequate for this
segment's United States and foreign operations.
Reference is made to the material under the heading "General" for information
relating to patents and trademarks with respect to this segment.
The Land Mobile Products Sector has entered into agreements in principle with
Dial Page, Inc., CenCall Communications Corp. and NEXTEL Communications, Inc. to
transfer substantially all of its 800 MHz specialized mobile radio businesses,
systems and licenses in the United States in exchange for equity interests in
these companies. This represents a move forward with the Sector's strategic
plans of being primarily a technology supplier and equipment manufacturer,
rather than a network systems operator in the United States. Further
information on this subject is contained in Note 6 of the Notes to
Consolidated Financial Statements and in the material under the caption
"Results of Operations" in Motorola's 1993 Annual Report to Stockholders,
which information is incorporated herein by reference.
-8-
This segment's headquarters are located in Schaumburg, Illinois, with
manufacturing facilities in Schaumburg, Illinois; Boynton Beach and Plantation,
Florida; Mount Pleasant, Iowa; Ft. Worth, Texas; Tianjin, China; Bangalore,
India; Dublin, Ireland; Arad, Israel; Penang, Malaysia; Vega Baja, Puerto Rico;
Taunusstein, Germany; and Singapore.
GENERAL SYSTEMS PRODUCTS
General systems products are designed, manufactured and sold by Motorola's
General Systems Sector which includes the Cellular Subscriber Group, the
Cellular Infrastructure Group, the Network Ventures Division, Personal
Communications Systems ("PCS") and the Motorola Computer Group.
The Cellular Subscriber and Infrastructure Groups manufacture, sell, install and
service cellular infrastructure and radiotelephone equipment. In addition, the
Cellular Subscriber Group resells cellular line service in the U.S., New
Zealand, Germany, France, and the U.K. markets. The Network Ventures Division
is a joint venture partner in cellular and telepoint operating systems in
Argentina, Uruguay, Hong Kong, Israel, Chile, Mexico, Thailand, Pakistan,
Nicaragua, Dominican Republic and Japan. The Cellular Infrastructure Group
products include electronic exchanges (i.e., telephone switches), base site
controllers and radio base stations. Radiotelephone products include mobile,
portable, personal and transportable radiotelephones with various options,
personal communications equipment and cordless telephones. PCS products include
subscriber and infrastructure equipment for the personal communications market.
Products are marketed worldwide through original equipment manufacturers,
carriers, distributors, dealers, retailers and, in certain countries, through a
direct sales force. Financing of cellular infrastructure equipment is sometimes
offered to qualifying customers.
Radio frequencies are required to provide cellular service. The allocation of
frequencies is regulated in the United States and other countries throughout the
world, and limited spectrum space is allocated for cellular and personal
communications services. The growth of the cellular and
-9-
personal communications industry may be affected if adequate frequencies are not
allocated for its use, or alternatively, if new technology is not developed to
increase capacity on presently allocated frequencies.
The Motorola Computer Group develops, manufactures, sells and services
multi-function computer systems and board level products, together with
operating systems and system enablers. Board and system level products comprise
a line of VME products based on the Motorola 68000 and 88000 series
microprocessors. These products are sold worldwide to a variety of customers,
some of whom produce computer products which compete with the group. The
Computer Group's products are marketed to end-users, original equipment
manufacturers, value added resellers and distributors throughout the world. The
Motorola Computer Group also markets computer products and peripherals that it
does not manufacture.
General Systems products are subject to constant changes in technology.
Consequently, the Sector has an extensive research and development program.
The Sector's backlog amounted to $1.2 billion at December 31, 1993 and $721
million at December 31, 1992. The 1993 backlog is believed to be generally
firm, and approximately 100% of that amount is expected to be shipped during
1994. The estimate of the firmness of such orders is subject to future events
which may cause the percentage of the 1993 backlog actually shipped to change.
The General Systems Sector experiences intense competition from numerous
competitors ranging from some of the world's largest companies to small,
specialized firms. Competitive factors in the market for the products are
price, service, delivery, product quality and product and system performance.
An additional factor for the Motorola Computer Group products is the
availability of software products to address specific user applications.
Management believes that Motorola's commitment to research and development
programs for improving existing products and developing new products and its
utilization of state-of-the-art technology should allow the General Systems
Sector to remain competitive.
-10-
Materials used in the Sector's operations are generally second-sourced to ensure
a continuity of supply. Energy necessary for the Sector's operations consists
of electricity and natural gas, all of which are currently adequate in supply.
The Sector's factories are highly automated and therefore, dependent upon a
steady supply of electrical power.
Patent protection is very important to the cellular business. Also, reference
is made to the material under the heading "General" for information relating to
patents and trademarks with respect to this industry segment.
The General Systems Sector's headquarters is located in Arlington Heights,
Illinois. It operates manufacturing facilities in Tempe, Arizona; Arlington
Heights, Grayslake and Libertyville, Illinois; Swindon, England; Penang,
Malaysia; Easter Inch, Scotland; Flensburg, Germany; and Tianjin, China. The
Sector also has a joint venture manufacturing operation in Austria.
GOVERNMENT AND SYSTEMS TECHNOLOGY PRODUCTS
The Government and Systems Technology Group is engaged in the design,
development and production of electronic systems and products, and it competes
for a variety of United States Government projects and commercial business. The
Group is expanding its commercial businesses and is giving increased attention
to international business opportunities. The Group produces products related to
electronic and communications equipment that has various applications based upon
customer requirements of the Group's three business segments: Traditional
Government, Commercial, and Satellite Communications. The Traditional
Government business segment, previously known as the Government Electronics
Group, consists of the Tactical Electronics Division and the Communications
Division, and primarily does research, development and production work under
contracts with governmental agencies, but also conducts independent research and
development programs. The Traditional Government business segment produces
products such as diversified
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military and space electronic equipment, including aerospace telecommunications
systems, military communications equipment, radar systems, data links, display
systems, positioning and navigation systems, instrumentation products,
countermeasures systems, missile guidance equipment, electronic ordnance devices
and drone electronic systems. The Traditional Government business segment has
been predominantly dependent upon the United States Government as its main
customer, acting as either a prime contractor or a subcontractor to other prime
contractors. The total loss of all of this business could have a material
adverse effect on the Group. Contracts are secured from United States Government
agencies and their suppliers by negotiation and competitive bidding. The
government procurement environment is becoming more competitive and regulated.
Competition is expected to increase substantially in all aspects of the
Traditional Government business due to a slowdown in procurement resulting from
a lower defense budget. Competitors include technically competent firms,
including large diversified firms as well as smaller firms specializing in
narrow product lines. This segment expects to continue to meet competition on
the basis of price and quality of product performance.
The Group is diversifying by applying its core technologies to quasi-government
and commercial opportunities. During 1993, the Group organized its commercial
business thrusts into the Diversified Technologies Division (DTD) which is
marketing products in the secure telecommunications and commercial test
equipment markets. It is developing products for positioning and navigation
systems, and personal alarm and reporting systems markets. These businesses are
expected to grow in the future, and substantial development and marketing
efforts are being exerted in these areas. DTD is actively pursuing potential
markets for its developmental product lines. Growth in the Commercial business
segment may offset a decline in U.S. Government business. Distribution
agreements for the domestic secure telecommunications market are in place with
the sales force of the Land Mobile Products Sector (LMPS). International and
government markets are handled directly by the Group's own sales force. During
1993, the world wide sales force of LMPS was also used to market test equipment.
In 1994, DTD plans to expand the distribution network to penetrate new market
segments.
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The Group's Satellite Communications Division (SATCOM) is developing the IRIDIUM
TM/SM satellite-based communication system. The IRIDIUM system is a space-based
wireless communications system that is being designed to provide global digital
service to hand-held telephones and related equipment. The IRIDIUM system
involves four components: (1) a constellation of low earth orbit satellites, (2)
a centralized system control center, (3) gateways distributed throughout the
world and (4) individual subscriber units including, for example, voice, data,
facsimile, pager and geolocation units. SATCOM is the prime contractor under
contracts with Iridium, Inc. to provide and launch the satellites and maintain
the system. The loss of these contracts could have a material adverse effect on
the Group. IRIDIUM is a trademark and service mark of Iridium, Inc.
Total sales for the Group include sales made to a number of free world
governments and corporations. Products of the Group are marketed outside the
United States by a few distributors, by independent representatives and by the
Group's own sales force. In 1993, approximately 5% of the Group's business was
conducted internationally, primarily through the Traditional Government business
sector. As the competition for U.S. defense business increases, however, the
Group has been focusing increased attention on the international market in the
Commercial business and the Traditional Government business sectors.
The Group's backlog amounted to $634 million at December 31, 1993 and $553
million at December 31, 1992. The 1993 backlog is believed to be generally firm
and approximately 81% of that amount is expected to be shipped during 1994. All
contracts with the United States Government are subject to cancellation at the
convenience of the Government, and the contracts with Iridium, Inc. may be
terminated by Iridium, Inc. pursuant to their terms. The estimate of the
firmness of the 1993 backlog is subject to future events which may cause the
percentage actually shipped to change.
Materials used by the Group in its operations are generally available.
Natural gas and electricity are the principal types of energy used, and
availability of both to the Group is currently more than adequate.
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Patents are becoming more important as competition increases in a declining U.S.
Government market and as the Group expands into commercial and international
markets. Also, reference is made to the material under the heading "General" for
information relating to patents and trademarks with respect to this industry
segment.
The Group has its headquarters in Scottsdale, Arizona, with
manufacturing facilities in Scottsdale and Chandler, Arizona.
INFORMATION SYSTEMS PRODUCTS
Information systems products are designed, manufactured and sold by the
Information Systems Group, which consists of Codex Corporation ("Motorola
Codex") and Universal Data Systems, Inc. ("UDS"), which are wholly owned
subsidiaries of Motorola. In January 1994, the Group was combined with the
Paging and Wireless Data Group to form the Messaging, Information and Media
Sector. However, this new Sector does not constitute a separate reportable
industry segment, and the results of operations of the Information Systems
Group will continue to be reported under "Other Products."
Motorola Codex manufactures and sells high-speed leased-line and dial
modems, digital transmission devices, data/voice, time division and statistical
multiplexers, network management and control systems, X.25 networking equipment
and local area network interconnection products. These products are offered
alone, and increasingly in systems, which have been configured to transmit
information among personal computers, terminals, other peripheral devices and
host computers. Motorola Codex also markets a few communication products it does
not manufacture. UDS manufactures and sells a broad line of analog and digital
data communications equipment, including modems and DDS (Digital Dataphone
Services) service units for dedicated and switched networks, multiplexers, ISDN
(Integrated Digital Services Network) terminal adaptors, network management
systems and LAN (Local Area Network) product. UDS markets a few data
communication products it does not manufacture.
Motorola Codex products are sold through a domestic sales organization which
sells through direct and indirect channels, such as distributors and
- 14 -
value added resellers. Motorola Codex's international unit sells and services
products in 90 nations through several subsidiaries and numerous distributors.
UDS sells its products in the United States directly through its own sales force
and through indirect channels, such as independent distributors and value added
resellers. UDS has its own international sales organization which utilizes local
distributors where it is deemed necessary.
Information systems products are subject to constant changes in technology.
Consequently, the Group has an extensive research and development program.
The Information Systems Group experiences intense competition from numerous
competitors ranging from some of the world's largest companies, including AT&T
and IBM, to small, specialized firms. Competitive factors in the market for
these products are product quality and performance, customer service and price.
Management believes that Motorola's commitment to research and development
programs for improving existing products and developing new technologies and its
utilization of state-of-the-art technology should allow the Group to remain
competitive.
Materials used in the Group's business consist primarily of electronic
components and assemblies which are generally available from multiple sources.
Occasionally, shortages or extended delivery periods occur in various component
parts, the effects of which have been industry-wide and short in duration. The
Group requires commercially available electrical energy for manufacturing and
administrative operations. Facilities are temperature controlled with oil or gas
heat and electrical power. These types of energy are currently readily
available.
Reference is made to the material under the heading "General" for information
relating to patents and trademarks with respect to this industry segment.
Motorola Codex is headquartered in Mansfield, Massachusetts where it has
separate product engineering and marketing facilities. Manufacturing operations
are located in Mississauga, Ontario, Canada and Mansfield,
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Massachusetts. Motorola Codex also has numerous sales and service offices
throughout the world. UDS's headquarters and manufacturing facilities are
located in Huntsville, Alabama.
AUTOMOTIVE, ENERGY AND CONTROLS PRODUCTS
The Automotive, Energy and Controls Group (formerly, the Automotive and
Industrial Electronics Group) manufactures and sells products in three major
categories: automotive and industrial electronics; energy storage products and
systems; and ceramic and quartz electronic components. The Group also includes
operations which manufacture electronic ballasts for fluorescent lighting and
radio frequency identification devices. The Group is involved in a number of
joint ventures. Manufacturing facilities are located at both domestic and
foreign locations.
The Group sells its automotive and industrial electronics products to original
equipment manufacturers, including foreign and domestic automobile
manufacturers, heavy vehicle manufacturers, farm equipment manufacturers and
industrial customers. A large part of its business is dependent upon two
customers, the loss of either of which could have a material adverse effect on
the business of the Group. Demand for products is linked to automobile sales
in the United States and other countries where the Group sells its products.
The Group experiences competition from numerous global competitors including
automobile manufacturers.
The energy storage products business and the ceramic and quartz products
business sell primarily to other industry segments within Motorola, principally
the Communications and General Systems Products segments.
All materials used by the Group have good availability at this time. The Group
uses electricity and gas in its operations, which are currently adequate in
supply.
Competitive factors in the sale of all of the Group's products include price,
product quality and performance, supply integrity, quality
- 16 -
reputation, experience, responsiveness and design and manufacturing technology.
Reference is made to the material under the heading "General" for information
relating to patents and trademarks with respect to this industry segment.
The Group's headquarters is located in Northbrook, Illinois. It has
manufacturing operations located in Scottsdale, Arizona; San Jose, California;
Northbrook, Buffalo Grove, Schaumburg and Vernon Hills, Illinois;
Albuquerque, New Mexico; Elma, New York; Carlisle, Pennsylvania; Seguin,
Texas; Angers, France; Stotfold, England; Tuas, Singapore; Tianjin, China;
Chung-Li, Taiwan; Penang, Malaysia; Vega Baja, Puerto Rico; Dublin, Ireland;
and San Jose, Costa Rica.
GENERAL
CUSTOMERS. Motorola is not dependent for a material part of its business upon a
single or a very few customers. Slightly less than 4.5% of Motorola's total
sales and revenues in 1993 were received from various branches and agencies,
including the armed services, of the United States Government.
All contracts with the United States Government are subject to cancellation at
the convenience of the Government.
Government contractors, including Motorola, are routinely subjected to numerous
audits and investigations, which may be either civil or criminal in nature. The
consequences of these audits and investigations may include administrative
action to suspend business dealings with the contractor and to exclude it from
receiving new business. In addition, Motorola, like other contractors, is
internally reviewing aspects of its government contracting operations, and,
where appropriate, taking corrective actions and making voluntary disclosures to
the Government. From time to time, these audits and investigations may adversely
affect Motorola.
- 17 -
BACKLOG. Motorola's aggregate backlog position, including the backlog position
of subsidiaries through which some of its business units operate, as of the end
of the last two fiscal years, was approximately as follows:
December 31, 1993. . . $6.006 billion
December 31, 1992. . . $4.321 billion
The orders supporting the 1993 backlog amounts shown in the foregoing table are
believed to be generally firm, and approximately 94% of orders on hand at
December 31, 1993 are expected to be shipped during 1994. However, future events
may cause the percentage actually shipped to change.
RESEARCH AND DEVELOPMENT. Throughout its history, Motorola has relied, and
continues to rely primarily on its research and development programs for the
development of new products and its production engineering capabilities for the
improvement of existing products. Technical data and product application ideas
are exchanged among Motorola's industry segments on a regular basis. Research
and development expenditures relating to new product development or product
improvement, other than customer-sponsored contracts, were approximately $1,521
million in 1993, $1,306 million in 1992 and $1,133 million in 1991.
In addition, research funded under customer-sponsored contracts amounted to
approximately $324 million in 1993, $37 million in 1992 and $49 million in 1991.
The 1993 increase in customer sponsored research and development was
predominantly attributable to new contracts with Iridium, Inc. and regulatory
agencies.
Motorola presently expects to incur $1.7 billion in research and development
expenditures in 1994. This is an estimate, and the actual amount which will be
spent may vary.
Approximately 14,100 professional employees were engaged in such research
activities (including customer-sponsored) during 1993.
- 18 -
PATENTS AND TRADEMARKS. Motorola owns 5,888 patents in the United States and
4,234 in foreign countries. These foreign patents are counterparts of Motorola's
United States patents. Many of the patents owned by Motorola are licensed to
others, and Motorola is licensed to use certain patents owned by others. In some
instances, certain of the patents licensed by Motorola to others have generated
significant amounts of revenue to Motorola.
During 1993, Motorola was granted 841 United States patents. Although many of
Motorola's patents are used in its operations or licensed for use by others,
neither Motorola's business nor that of any of its industry segments is
dependent to any material degree on any one patent or group of related patents.
Motorola considers its trademark "MOTOROLA" and the "M" symbol to be valuable
assets. These are protected through trademark registrations. Other trademarks of
Motorola are protected and registered in the relevant markets, but are used only
on limited product lines.
CORPORATE MISSION. Motorola's corporate mission is to grow rapidly, in each of
its chosen arenas of the electronics industry, by providing its worldwide
customers what they want, when they want it, with six sigma quality (virtually
zero defects, i.e., no more than 3.4 parts per million defective) and
best-in-class cycle time, as it strives to achieve its fundamental objective of
total customer satisfaction and to achieve its stated goals of increased global
market share; best-in-class people, marketing, manufacturing, technology,
service and product software, hardware and systems; and superior financial
results. To try to fulfill this mission, Motorola has concentrated on five key
operational initiatives: first, designing products that will accept reasonable
variation in component parts, developing manufacturing processes that will
produce minimum variation in final output product and designing systems that
will achieve six sigma performance; second, examining the total product system
to reduce the time from when an order is placed or a product is conceived until
it is delivered; third, emphasizing the need for product development and
manufacturing disciplines to work together; fourth, implementing a long-term,
customer-driven approach that shows it where to commit its resources to give
customers what they want; and
- 19 -
fifth, empowerment for all, in a participative, cooperative and creative
workplace to achieve more synergy, greater efficiency and improved quality
within and between organizations. In addition, it has tried to develop the
following key attributes or elements of a successful quality program:
leadership; communications; training; establishing high goals and high
expectations; providing for recognition; and developing a participative,
cooperative, creative and receptive culture.
ENVIRONMENTAL QUALITY. Motorola operations are from time to time the subjects of
investigations, conferences, discussions and negotiations with various federal,
state and local environmental agencies with respect to the discharge or cleanup
of hazardous waste and compliance by those operations with environmental laws
and regulations. The balance of the response to this section of Item 1 is
incorporated by reference to Note 6 of the Notes to Consolidated Financial
Statements under the caption "Environmental and Legal" and the information
contained under the caption "Environmental Matters" in Motorola Management's
Discussion and Analysis of Financial Condition and Results of Operations in
Motorola's 1993 Annual Report to Stockholders.
FIXED ASSET EXPENDITURES. Motorola presently expects to incur approximately $2.9
billion of fixed asset expenditures in 1994. This is an estimate, and the actual
amount which will be spent may vary.
MISCELLANEOUS. At December 31, 1993, there were approximately 120,000 employees
of Motorola and its subsidiaries. The business of Motorola and its industry
segments is not seasonal to any significant extent, although the Semiconductor
Products Sector has tended to have stronger, seasonally-adjusted sales in the
first half of the year.
(d) Financial information about foreign and domestic operations and export
sales.
Local governments and their policies and the societal and economic conditions
prevailing in those countries in which Motorola operates (particularly unstable
governments and social conditions, rates of inflation, monetary fluctuations and
balance of payments problems) may have significant effects on Motorola's
business.
- 20 -
Domestic export sales to third parties were $1.83 billion in 1993, $1.14 billion
in 1992 and $871 million in 1991. Domestic export sales to affiliates were $3.16
billion in 1993, $2.32 billion in 1992 and $2.06 billion in 1991.
The remainder of the response to this section of Item 1 is incorporated by
reference to Note 7 of the Notes to Consolidated Financial Statements and the
"Results of Operations" section of Motorola's 1993 Annual Report to
Stockholders.
Item 2: Properties
Motorola's principal executive offices are located at 1303 East Algonquin Road,
Schaumburg, Illinois 60196. Its other major facilities in the United States are
located in Arlington Heights, Buffalo Grove, Grayslake, Libertyville, Northbrook
and Schaumburg, Illinois; Elma, New York; Phoenix, Chandler, Scottsdale, Mesa
and Tempe, Arizona; Boynton Beach and Plantation, Florida; Austin, Dallas, Ft.
Worth and Seguin, Texas; Mount Pleasant, Iowa; Mansfield, Massachusetts;
Huntsville, Alabama; Albuquerque, New Mexico; Carlisle, Pennsylvania; and
Irvine and San Jose, California. Motorola also operates manufacturing
facilities or sales offices in 39 other countries. (See "Narrative Description
of Business" for information regarding the location of the principal
manufacturing facilities for each industry segment.) The United States
facilities (both manufacturing and administrative) owned by Motorola contain
approximately 16.6 million square feet. Motorola also leases facilities in the
United States containing approximately 4.2 million square feet. Motorola's
facilities outside the United States contain approximately 8.0 million square
feet of which approximately 2.8 million square feet are leased.
Motorola considers the productive capacity of the plants operated by each of its
industry segments adequate and suitable for the requirements of each of such
segments, except for the Semiconductor Products Sector which is engaged in a
factory expansion program to meet the strong market demand for its products.
- 21-
The extent of utilization of such manufacturing facilities varies from plant to
plant and from time to time during the year.
Item 3: Legal Proceedings
Motorola is a named defendant in five cases arising out of alleged groundwater,
soil and air pollution in Phoenix and Scottsdale, Arizona. MCINTIRE ET AL. V.
MOTOROLA and CAMELHEAD EQUITIES ET AL. V. MOTOROLA ET AL. are pending in the
U.S. District Court for the District of Arizona, and BAKER ET AL. V. MOTOROLA ET
AL., LOFGREN ET AL. V. MOTOROLA ET AL. and BETANCOURT ET AL. V. MOTOROLA ET AL.
are pending in the Arizona Superior Court, Maricopa County. The MCINTIRE
lawsuit, filed on December 20, 1991, involves over 900 plaintiffs who allege
that the operations of Motorola at several facilities in Phoenix and Scottsdale,
Arizona have caused property damage and health problems by contaminating the
soil, groundwater and air in the area surrounding those facilities. CAMELHEAD
EQUITIES, filed on June 1, 1993, is a suit for business losses by four failed
real estate development limited partnerships. The BAKER lawsuit, filed on
February 11, 1992, is also a proposed class action, involving seven purportedly
representative individual named plaintiffs, alleging that Motorola and other
defendants contaminated the soil, air and groundwater in the Phoenix/Scottsdale
area, diminishing property values and exposing members of the class to possible
adverse health effects. The LOFGREN lawsuit, filed on April 6, 1993, is a
proposed class action, involving approximately 130 purportedly representative
individual named plaintiffs, alleging that Motorola and other defendants
contaminated the soil, air and groundwater in the Phoenix/Scottsdale area,
causing health problems to members of the class. The BETANCOURT lawsuit, filed
on July 16, 1993, involves claims for personal injury by approximately 25
individuals, alleging that Motorola and other defendants contaminated the soil,
air and groundwater in the Phoenix/ Scottsdale area, causing health problems to
plaintiffs.
All five lawsuits seek compensatory and punitive damages. The MCINTIRE
complaint includes personal injury and property damage claims and seeks
injunctive relief. The BAKER complaint seeks damages for medical monitoring and
alleges claims for property, business and economic loss and seeks declaratory
and injunctive relief.
- 22-
A class action, FELDMAN ET AL. V. MOTOROLA, INC. ET AL., against Motorola and
several of its officers for alleged violations of Sections 10(b), 20(a) and 20A
of the Securities Exchange Act of 1934 and SEC Rule 10b-5 is pending in the U.S.
District Court for the Northern District of Illinois. The pending complaint, a
consolidation of four cases, maintains that Motorola and the individual
defendants committed fraud on the market by artificially inflating the price of
Motorola stock through a series of alleged material misrepresentations and
omissions. It also alleges that certain of the individual defendants engaged in
unlawful insider trading. Plaintiffs propose a class period of May 4, 1990
through January 16, 1991, and seek an unspecified amount of monetary damages.
On February 1, 1993, Motorola was named as a defendant in a purported class
action that alleged economic loss to purchasers of portable cellular telephones.
VERB ET AL. V. MOTOROLA, INC. ET AL., Circuit Court of Cook County, Illinois, 93
CH 00969. The plaintiffs amended their complaint several times. In its final
form, the complaint named seven additional defendants (all of which were
manufacturers of cellular phones) and added two new plaintiffs. The two new
plaintiffs (Messrs. Crist and Pogue) also claimed personal injury, alleging that
use of portable cellular phones had aggravated pre-existing brain cancers.
Crist's personal injury claim was against Motorola alone while that of Pogue was
against another defendant alone. In September 1993, the court dismissed all
claims except those of Crist and Pogue. The plaintiffs have appealed this
decision to the Illinois Court of Appeal. Subsequently, the court denied the
motion of Crist and Pogue for class status and transferred the case from the
equity division to the law division. After the transfer, the court severed the
cases. Crist's claim for individual economic injury and for personal injury
(for aggravation of a pre-existing cancer) is pending against Motorola alone,
and there are no other parties associated with the case.
The information contained in Motorola Management's Discussion and Analysis of
Financial Condition and Results of Operations under the caption "Environmental
Matters" and in Note 6 of the Notes to Consolidated Financial Statements under
the caption "Environmental and Legal" in Motorola's 1993 Annual Report to
Stockholders is incorporated herein by reference.
- 23-
Motorola is a defendant in various other suits, claims and investigations which
arise in the normal course of business. In the opinion of management, the
ultimate disposition of these matters, including those matters described above
in this Item 3, will not have a material adverse effect on the business or
financial position of Motorola.
Item 4: Submission of Matters to a Vote of Security Holders
Not applicable.
Executive Officers of the Registrant
Following are the persons who were the executive officers of Motorola as of
December 31, 1993, their ages as of December 31, 1993 and their current titles
and positions held during the last five years:
Gary L. Tooker; age 54; Vice Chairman of the Board and Chief Executive Officer
since December 1993; President and Acting Chief Executive Officer from October
1993 to December 1993; President and Chief Operating Officer from January 1990
to October 1993; and Chief Operating Officer and Senior Executive Vice President
from January 1988 to January 1990.
Christopher B. Galvin; age 43; President and Chief Operating Officer since
December 1993; Senior Executive Vice President and Assistant Chief Operating
Officer from January 1990 to December 1993; Executive Vice President and Chief
Corporate Staff Officer from May 1989 to January 1990; and Senior Vice President
and Chief Corporate Staff Officer from January 1988 to May 1989.
Robert W. Galvin; age 71; Chairman of the Executive Committee of the Board of
Directors since January 1990; and Chairman of the Board of Directors from
November 1959 to January 1990.
John F. Mitchell; age 65; Vice Chairman of the Board and Officer of the Board
since January 1988.
- 24 -
Keith J. Bane; age 54; Senior Vice President and Motorola Director of Strategy,
Technology and External Relations since October 1993; and Senior Vice President
and Motorola Director of Strategy from November 1988 to October 1993.
Arnold S. Brenner; age 56; Executive Vice President and General Manager,
Japan Group since November 1988; and Senior Vice President and General
Manager, Japan Operations from January 1988 to November 1988.
James Donnelly; age 54; Executive Vice President and Motorola Director of Human
Resources (name changed from Personnel to Human Resources in 1993) since
December 1987.
Thomas D. George; age 53; Executive Vice President, and President and General
Manager, Semiconductor Products Sector since April 1993; Executive Vice
President and Assistant General Manager, Semiconductor Products Sector from
November 1992 to April 1993; and Senior Vice President and Assistant General
Manager, Semiconductor Products Sector from July 1986 to November 1992.
Robert L. Growney; age 51; Executive Vice President and President and General
Manager, Messaging, Information and Media Sector since January 1994; Executive
Vice President and General Manager, Paging and Wireless Data Group from
September 1992 to January 1994; Senior Vice President and General Manager,
Paging and Telepoint Systems Group from January 1991 to September 1992; Senior
Vice President and General Manager, Radio Technologies Group, Communications
Sector from May 1989 to January 1991; and Corporate Vice President and General
Manager, Radio Technologies Group, Communications Sector from September 1987 to
May 1989.
David W. Hickie; age 60; Mr. Hickie retired as an officer of the Company in
December 1993; he was formerly Executive Vice President and Chief Corporate
Staff Officer from November 1990 to December 1993; Senior Vice President and
Chief Corporate Staff Officer from May 1990 to November 1990; and Senior Vice
President and Assistant Chief Financial Officer from November 1985 to May 1990.
- 25 -
Carl F. Koenemann; age 55; Executive Vice President and Chief Financial Officer
since December 1991; Senior Vice President and Assistant Chief Financial Officer
from May 1990 to December 1991; Corporate Vice President and Assistant Chief
Financial Officer from January 1990 to May 1990; and Corporate Vice President
and Director of Finance, General Systems Group, from May 1987 to January 1990.
James A. Norling; age 51; Executive Vice President, and President, Motorola
Europe, Middle East and Africa since April 1993; Executive Vice President, and
President and General Manager, Semiconductor Products Sector from December 1989
to April 1993; and Executive Vice President and General Manager, Semiconductor
Products Sector from July 1986 to December 1989.
Edward F. Staiano; age 57; Executive Vice President, and President and General
Manager, General Systems Sector since December 1989; and Executive Vice
President and General Manager, General Systems Group from December 1987 to
December 1989.
Morton L. Topfer; age 57; Executive Vice President, and President and General
Manager, Land Mobile Products Sector since August 1991; Senior Vice President,
and President and General Manager, Land Mobile Products Sector from December
1990 to August 1991; and Senior Vice President and Assistant General Manager,
Communications Sector from December 1987 to December 1990.
Frederick T. Tucker; age 53; Executive Vice President and General Manager,
Automotive, Energy and Controls Group (name changed from Automotive and
Industrial Electronics Group in 1993) since September 1992; Senior Vice
President and General Manager, Automotive and Industrial Electronics Group from
April 1988 to September 1992; and Corporate Vice President and Assistant General
Manager, Automotive and Industrial Electronics Group from January 1987 to April
1988.
Richard H. Weise; age 58; Senior Vice President, General Counsel and Secretary
since November 1985.
- 26 -
David G. Wolfe; age 58; Executive Vice President and General Manager, Government
and Systems Technology Group (name changed from Government Electronics Group in
1992) since November 1990; and Senior Vice President and General Manager,
Government Electronics Group from January 1988 to November 1990.
Richard W. Younts; age 54; Executive Vice President and Corporate Executive
Director International-Asia and Americas since December 1993; Senior Vice
President and Corporate Executive Director, International-Asia and Americas from
July 1991 to December 1993; Senior Vice President and President, Nippon Motorola
Ltd., Japanese Group from May 1991 to July 1991; and Corporate Vice President
and President, Nippon Motorola Ltd. from August 1987 to May 1991.
The above executive officers, with the exception of Mr. Hickie, will serve as
officers of Motorola until the regular meeting of the Board of Directors in May
1994 or until their respective successors shall have been elected. Christopher
B. Galvin is a son of Robert W. Galvin. There is no family relationship between
any of the other executive officers listed above.
PART II
Item 5: Market for Registrant's Common Equity and Related
Stockholder Matters
Motorola's Common Stock is listed on the New York, Chicago, London and Tokyo
Stock Exchanges. The remainder of the response to this Item is incorporated by
reference to the information under the caption "Quarterly and Other Financial
Data" of Motorola's 1993 Annual Report to Stockholders.
Item 6: Selected Financial Data
The response to this Item is incorporated by reference to the information under
the caption "Five Year Financial Summary" of Motorola's 1993 Annual Report to
Stockholders.
- 27 -
Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations
The response to this Item is incorporated by reference to the information under
the captions "Financial Review", "Financial Results" and "Review of Operations"
of Motorola's 1993 Annual Report to Stockholders.
Item 8: Financial Statements and Supplementary Data
The response to this Item is incorporated by reference to the information under
the captions "Management's Responsibility For Financial Statements",
"Independent Auditors' Report", "Statements of Consolidated Earnings",
"Statements of Consolidated Stockholders' Equity", "Consolidated Balance
Sheets", "Statements of Consolidated Cash Flows", "Supplemental Cash Flow
Information", "Notes to Consolidated Financial Statements", "Quarterly and Other
Financial Data" and "Five Year Financial Summary" of Motorola's 1993 Annual
Report to Stockholders.
Item 9: Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10: Directors and Executive Officers of the Registrant
The response to this Item required by Item 401 of Regulation S-K, with respect
to directors, is incorporated by reference to the information under the caption
"Nominees" on pages 2 through 11 of Motorola's Proxy Statement for the 1994
annual meeting of stockholders and with respect to executive officers, is
contained in Part I hereof under the caption "Executive Officers of the
Registrant". The response to this Item required by Item 405 of Regulation S-K
is incorporated by reference to the information under the caption "Security
Ownership of Management of the
- 28 -
Company" on page 18 of Motorola's Proxy Statement for the 1994 annual meeting of
stockholders.
Item 11: Executive Compensation
The response to this Item is incorporated by reference to the information under
the captions "Director Compensation" and "Compensation Committee Interlocks and
Insider Participation" on pages 14, 15 and 16 of Motorola's Proxy Statement for
the 1994 annual meeting of stockholders and "Summary Compensation Table," "Stock
Option Grants in 1993," "Aggregated Option Exercises in Last Fiscal Year and
FY-End Option Values," "Long-Term Incentive Plans - Awards in Last Fiscal Year,"
"Pension and Supplementary Retirement Plans," and "Other Policies and
Agreements" on pages 19 through 23 of Motorola's Proxy Statement for the 1994
annual meeting of stockholders.
Item 12: Security Ownership of Certain Beneficial Owners and
Management
The response to this Item is incorporated by reference to the information under
the caption "Security Ownership of Management of the Company" on pages 17 and 18
of Motorola's Proxy Statement for the 1994 annual meeting of stockholders.
Item 13: Certain Relationships and Related Transactions
The response to this Item is incorporated by reference to the information under
the captions "Director Compensation" and "Compensation Committee Interlocks and
Insider Participation" on pages 14, 15 and 16 of Motorola's Proxy Statement for
the 1994 annual meeting of stockholders.
- 29 -
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) 1. Financial Statements
See Part II, Item 8 hereof.
2. Financial Statement Schedules and Auditors' Report
TITLE SCHEDULE
Property, Plant and Equipment. . . . . . . . .V
Accumulated Depreciation of Property,
Plant and Equipment. . . . . . . . . . . .VI
Valuation and Qualifying Accounts. . . . . . ..VIII
Short-term Borrowings. . . . . . . . . . . . . IX
All schedules omitted are inapplicable or the information required is shown in
the consolidated financial statements or notes thereto. The auditors' report of
KPMG Peat Marwick with respect to the Financial Statement Schedules is located
at page 31.
3. Exhibits
Exhibits required to be attached by Item 601 of Regulation S-K are listed in the
Exhibit Index attached hereto, which is incorporated herein by this reference.
Following is a list of management contracts and compensatory plans and
arrangements required to be filed as exhibits to this form by Item 14(c) hereof:
Motorola Executive Incentive Plan ("MEIP")
Share Option Plan of 1982
Share Option Plan of 1991
Motorola Long Range Incentive Plan of 1994
Motorola Elected Officers Supplementary Retirement Plan
Officers Supplemental Medical Plan
Accidental Death and Dismemberment Insurance for MEIP
- 30 -
Participants
Arrangement for Directors' Fees
Retirement Plan for Non-employee Directors
Deferred Fee Plan for Outside Directors
Officers' Group Life Insurance Policy
Consultant Agreements with William J. Weisz, John T. Hickey,
Gardiner L. Tucker, Donald R. Jones and Erich Bloch
Form of Termination Agreement
Policy Protecting Salary and Medical Benefits
Insurance Policy for Non-employee Directors
(b) Reports on Form 8-K. Motorola filed no reports on Form 8-K during the last
quarter of 1993.
(c) Exhibits See Item 14(a)3 above.
- 31 -
KPMG Peat Marwick
Certified Public Accountants
Peat Marwick Plaza
303 East Wacker Drive
Chicago, IL 60601-9973
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
of Motorola, Inc.:
Under date of January 13, 1994, we reported on the consolidated balance sheets
of Motorola, Inc. and consolidated subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the years in the three-year period ended December 31,
1993, as contained in the 1993 annual report to stockholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the annual report on Form 10-K for the year 1993. In connection
with our audits of the aforementioned consolidated financial statements, we also
have audited the related financial statement schedules as listed in Part IV,
Item 14(a)2. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick
January 13, 1994
- 32 -
Motorola, Inc. and Subsidiaries Schedule V
Property, Plant and Equipment
Three Years Ended December 31, 1993
(In millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at Balance
beginning Additions Other changes at end
Classification of period at cost Retirements add (deduct) of period
- -----------------------------------------------------------------------------------------------------------------------------------
1993
- ----
Land $ 115 $ 35 $ 10 $ 11 (2) $ 151
Buildings 2,185 324 24 (29) (1) 2,475
19 (2)
Machinery 5,476 1,770 266 (395)(1) 6,690
105 (2)
Equipment leased 403 58 51 (17)(1) 390
to others (3)(2)
------- -------- ------- -------- --------
$8,179 $2,187 $ 351 $ (309) $ 9,706
------- -------- ------- -------- --------
------- -------- ------- -------- --------
(1) Fully depreciated assets
(2) Miscellaneous adjustments
- 33-
Motorola, Inc. and Subsidiaries Schedule V
Property, Plant and Equipment (continued)
Three Years Ended December 31, 1993
(In millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at Balance
beginning Additions Other changes at end
Classification of period at cost Retirements add (deduct) of period
- ------------------------------------------------------------------------------------------------------------------------------------
1992
- ----
Land $ 117 $ 1 $ --- $ (3) (2) $ 115
Buildings 1,993 243 23 (20) (1) 2,185
(8) (2)
Machinery 4,864 1,143 194 (345) (1) 5,476
8 (2)
Equipment leased 415 55 37 (22) (1) 403
to others (8) (2)
------- ------- ------- ------- -------
$7,389 $1,442 $254 $(398) $8,179
------- ------- ------- ------- -------
------- ------- ------- ------- -------
(1) Fully depreciated assets
(2) Miscellaneous adjustments
- 34 -
Motorola, Inc. and Subsidiaries Schedule V
Property, Plant and Equipment (continued)
Three Years Ended December 31, 1993
(In millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at Balance
beginning Additions Other changes at end
Classification of period at cost Retirements add (deduct) of period
- -----------------------------------------------------------------------------------------------------------------------------------
1991
- ----
Land $ 116 $ 6 $ 2 $ (3)(2) $ 117
Buildings 1,771 268 23 (22)(1) 1,993
(1)(2)
Machinery 4,257 1,043 202 (252)(1) 4,864
18 (2)
Equipment leased 415 70 46 (16)(1) 415
to others (8)(2)
------- -------- ------- ------ -------
$6,559 $1,387 $273 $(284) $7,389
------- ------- ------ ------- -------
------- ------- ------ ------- -------
(1) Fully depreciated assets
(2) Miscellaneous adjustments
- 35 -
Motorola, Inc. and Subsidiaries Schedule VI
Accumulated Depreciation of Property, Plant and Equipment
Three Years Ended December 31, 1993
(In millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at Additions Balance
beginning charged to costs Other changes at end
Classification of period & expenses Retirements add (deduct) of period
- -----------------------------------------------------------------------------------------------------------------------------------
1993
- ----
Buildings $ 644 $ 126 $ 14 $ (29) (1) $ 733
6 (2)
Machinery 2,752 995 189 (395) (1) 3,225
62 (2)
Equipment leased 207 49 40 (17) (1) 202
to others
3 (2)
------- ------- ------ ------- -------
$3,603 $1,170 $243 $(370) $4,160
------- ------- ------ ------- -------
------- ------- ------ ------- -------
(1) Fully depreciated assets
(2) Miscellaneous adjustments
- 36 -
Motorola, Inc. and Subsidiaries Schedule VI
Accumulated Depreciation of Property, Plant and Equipment (continued)
Three Years Ended December 31, 1993
(In millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at Additions Balance
beginning charged to costs Other changes at end
Classification of period & expenses Retirements add (deduct) of period
- -----------------------------------------------------------------------------------------------------------------------------------
1992
- ----
Buildings $ 571 $ 113 $ 13 $ (20) (1) $ 644
(7) (2)
Machinery 2,405 835 141 (345) (1) 2,752
(2) (2)
Equipment leased 219 52 32 (22) (1) 207
to others (10) (2)
------- ------- ------ ------- -------
$3,195 $1,000 $186 $(406) $3,603
------ ------ ------ ------- -------
------ ------ ------ ------- -------
(1) Fully depreciated assets
(2) Miscellaneous adjustments
- 37 -
Motorola, Inc. and Subsidiaries Schedule VI
Accumulated Depreciation of Property, Plant and Equipment (continued)
Three Years Ended December 31, 1993
(In millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at Additions Balance
beginning charged to costs Other changes at end
Classification of period & expenses Retirements add (deduct) of period
- -----------------------------------------------------------------------------------------------------------------------------------
1991
- ----
Buildings $ 508 $ 98 $ 9 $ (22) (1) $ 571
(4) (2)
Machinery 2,051 724 157 (252) (1) 2,405
39 (2)
Equipment leased 222 64 41 (16) (1) 219
to others (10) (2)
------- ------- ------ ------ -------
$2,781 $886 $207 $(265) $3,195
------- ------- ------ ------- -------
------- ------- ------ ------- -------
(1) Fully depreciated assets
(2) Miscellaneous adjustments
- 38 -
Motorola, Inc. and Subsidiaries Schedule VIII
Valuation and Qualifying Accounts
Three Years Ended December 31, 1993
(In millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- -----------------------------------------------------------------------------------------------------------------------------------
Additions
Balance at -------------------------------- Balance
beginning Charged to Charged to at end
of period costs & expenses other accounts Deductions of period
- -----------------------------------------------------------------------------------------------------------------------------------
1993
- ----
Allowance for doubtful accounts $ 69 $ 54 -- $ 32 (1) $ 91
Product and service warranties 117 110 -- 61 (2) 166
1992
- ----
Allowance for doubtful accounts $ 79 $ 20 -- $ 30 (1) $ 69
Product and service warranties 92 64 -- 39 (2) 117
1991
- ----
Allowance for doubtful accounts $ 68 $ 43 -- $ 32 (1) $ 79
Product and service warranties 73 110 -- 91 (2) 92
(1) Uncollectible accounts written off
(2) Warranty claims paid
- 39 -
Motorola, Inc. and Subsidiaries Schedule IX
Short-term Borrowings
Three Years Ended December 31, 1993
(In millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted Maximum Average Weighted
Category of average amount amount average
aggregate Balance interest rate outstanding outstanding interest rate
short-term at end of at end of during the during the during the
borrowings period period period period (1) period (1)
- -----------------------------------------------------------------------------------------------------------------------------------
1993
- ----
Banks and other $ 97 6.5% $ 343 $ 179 7.7%
Commercial paper 293 3.3% 456 308 3.2%
1992
- ----
Banks and other $103 9.7% $ 157 $ 120 8.6%
Commercial paper 325 3.5% 517 511 3.7%
1991
- ----
Banks and other $ 70 10.8% $ 269 $ 198 9.1%
Commercial paper 703 4.8% 937 870 5.8%
(1) Computed on a daily average basis for domestic borrowings
and on a month end basis for foreign borrowings.
- 40 -
KPMG Peat Marwick
Certified Public Accountants
Peat Marwick Plaza
303 East Wacker Drive
Chicago, IL 60601-9973
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
of Motorola, Inc.:
We consent to incorporation by reference in the registration
statements on Form S-8 (Nos. 33-40876 and 33-58714) and Form S-3
(Nos. 33-30662, 33-55080, 33-59252 and 33-50207) of Motorola,
Inc. and consolidated subsidiaries of our reports dated January
13, 1994, relating to the consolidated balance sheets of
Motorola, Inc. and consolidated subsidiaries as of December 31,
1993 and 1992 and the related statements of consolidated
earnings, stockholders' equity, and cash flows and related
financial statement schedules for each of the years in the
three-year period ended December 31, 1993, which reports appear
in or are incorporated by reference in the Annual Report on Form
10-K of Motorola, Inc. for the year ended December 31, 1993.
/s/ KPMG Peat Marwick
March 22, 1994
- 41 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Motorola, Inc. has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
March 10, 1994
MOTOROLA, INC.
By: /s/ Gary L. Tooker
-----------------------------
Gary L. Tooker
Vice Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of Motorola, Inc. and in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Gary L. Tooker Director and Principal 3/10/94
- ------------------------- Executive Officer
Gary L. Tooker
/s/ Carl F. Koenemann Principal Financial 3/10/94
- -------------------------- Officer
Carl F. Koenemann
/s/ Kenneth J. Johnson Principal Accounting 3/11/94
- --------------------------- Officer
Kenneth J. Johnson
- 42 -
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Erich Bloch Director 3/12/94
- --------------------------
Erich Bloch
/s/ David R. Clare Director 3/10/94
- --------------------------
David R. Clare
/s/ Wallace C. Doud Director 3/10/94
- --------------------------
Wallace C. Doud
/s/ Christopher B. Galvin Director 3/10/94
- --------------------------
Christopher B. Galvin
/s/ Robert W. Galvin Director 3/11/94
- --------------------------
Robert W. Galvin
/s/ John T. Hickey Director 3/10/94
- --------------------------
John T. Hickey
/s/ Anne P. Jones Director 3/13/94
- --------------------------
Anne P. Jones
/s/ Donald R. Jones Director 3/21/94
- --------------------------
Donald R. Jones
/s/ Walter E. Massey Director 3/13/94
- --------------------------
Walter E. Massey
- 43 -
SIGNATURE TITLE DATE
--------- ----- ----
/s/ John F. Mitchell
- ------------------------ Director 3/22/94
John F. Mitchell
/s/ Thomas J. Murrin Director 3/12/94
- --------------------------
Thomas J. Murrin
/s/ Samuel C. Scott III Director 3/10/94
- ---------------------------
Samuel C. Scott III
/s/ Gardiner L. Tucker Director 3/12/94
- --------------------------
Gardiner L. Tucker
/s/ William J. Weisz Director 3/16/94
- --------------------------
William J. Weisz
Director 3/ /94
- --------------------------
B. Kenneth West
- 44 -
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
- ----------- -------
3(i) Restated Certificate of Incorporation of Motorola, Inc.,including
Certificate of Designations for Junior Participating Preferred Stock,
Series A (incorporated by reference to Exhibit 3(i)(b) to Motorola's
Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 1993).
3(ii) By-Laws of Motorola, Inc., revised as of February 1, 1994.
4.1 Rights Agreement dated November 9, 1988 (incorporated by reference to
Exhibit 4.1 to Motorola's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988).
4.2 Amendment to Rights Agreement dated August 7, 1990 (incorporated by
reference to Exhibit 2 to Motorola's Form 8 dated August 9, 1990 amending
Motorola's Registration Statement on Form 8-A dated November 15, 1988).
4.3 Amendment No. 2 on Form 8 dated December 2, 1992 amending Motorola's
Registration Statement on Form 8-A dated November 15, 1988 (incorporated
by reference to Motorola's Form 8 dated December 2, 1992).
4.3(a)Amendment No. 3 on Form 8-A/A dated February 28, 1994 amending
Motorola's Registration Statement on Form 8-A dated November 15, 1988
(incorporated by reference to Motorola's Amendment No. 3 Form 8-A/A dated
February 28, l994).
4.4 LYONs Indenture dated September 1, 1989 (incorporated by reference to
Exhibit 4.1 to Motorola's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1989).
- 45 -
EXHIBIT NO. EXHIBIT
- ---------- -------
4.5 Indenture dated as of March 15, 1985 between Motorola, Inc. and Harris
Trust and Savings Bank, as Trustee, and specimen of 8.40% Debentures due
August 5, 2031 under the Indenture (incorporated by reference to Exhibits
4(C) and 4(B), respectively, to Motorola's Current Report on Form 8-K
dated August 12, 1991).
4.6 Indenture dated as of October 1, 1991 between Motorola, Inc. and Harris
Trust and Savings Bank, as Trustee (incorporated by reference to Exhibit
4.5 to Motorola's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991).
4.7 Specimen of 7.60% Notes due January 1, 2007 (incorporated by reference to
Exhibit 4.6 to Motorola's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991).
4.8 Specimen of 6 1/2% Notes due March 1, 2008 (incorporated by reference to
Exhibit 4(B) to Motorola's Current Report on Form 8-K dated
March 1, 1993).
4.9 LYONs Indenture dated September 1, 1993 (incorporated by reference to
Exhibit 4(v) to Motorola's Quarterly Report on Form 10-Q for the quarter
ended October 2, 1993.
10.1 Motorola Executive Incentive Plan, as amended through November 23, 1993.
10.2 Motorola Long Range Incentive Plan of 1994.
10.3 Share Option Plan of 1982, as amended through March 24, 1992 (incorporated
by reference to Exhibit 10.3 to Motorola's Annual Report on Form 10-K for
the fiscal year ended December 31, 1990, Exhibit 10.2(a) to Motorola's
Annual Report on Form 10-K for the
- 46 -
EXHIBIT NO. EXHIBIT
- ----------- -------
fiscal year ended December 31, 1991 and Exhibit 10.3 to Motorola's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992).
10.4 Share Option Plan of 1991, as amended through December 16, 1993.
10.5 Motorola Elected Officers Supplementary Retirement Plan, as amended
through June 21, 1993.
10.6 Officers supplemental medical plan (incorporated by reference to Exhibit
10.6 to Motorola's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990).
10.7 Accidental death and dismemberment insurance for MEIP participants
(incorporated by reference to Exhibit 10.7 to Motorola's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990).
10.8 Arrangement for directors' fees and retirement plan for non-employee
directors (description incorporated by reference from page 14 of
Motorola's Proxy Statement for the 1994 annual meeting of stockholders).
10.9 Deferred Fee Plan for Outside Directors (incorporated by reference to
Exhibit 10.10 to Motorola's Annual Report on Form 10-K for the fiscal year
ended December 31, 1986).
10.10 Officers' Group Life Insurance Policy (incorporated by reference to
Exhibit 10.10 to Motorola's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990).
10.11 Consultant Agreement dated February 15, 1994 between Motorola, Inc. and
William J. Weisz.
- 47 -
EXHIBIT NO. EXHIBIT
- ----------- --------
10.12 Consultant Agreement dated January 27, 1994 between Motorola, Inc. and
John T. Hickey.
10.13 Consultant Agreement dated January 27, 1994 between Motorola, Inc. and
Dr. Gardiner L. Tucker.
10.14 Consultant Agreement dated January 27, 1994 between Motorola, Inc. and
Donald R. Jones.
10.15 Consultant Agreement dated January 27, 1994 between Motorola, Inc. and
Erich Bloch.
10.16 Form of Termination Agreement in respect of a change in control
(incorporated by reference to Exhibit 10.15 to Motorola's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989).
10.17 Policy protecting salary and medical benefits of employees in the event of
an unsolicited change in control (incorporated by reference to Exhibit
10.16 to Motorola's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990).
10.18 Insurance policy covering non-employee Directors (incorporated by
reference to Exhibit 10.16 to Motorola's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989).
10.19 Iridium Space System Contract between Motorola, Inc. and Iridium, Inc.,
as amended to date, and Iridium Communications Systems Operations and
Maintenance Contract between Motorola, Inc. and Iridium, Inc., as amended
to date (incorporated by reference to Exhibits 99.2 and 99.3,
respectively, to Motorola's Current Report on Form 8-K dated
August 2, 1993.
11 Primary and Fully Diluted Earnings Per Common and Common Equivalent
Share.
11.1 Pro Forma Primary and Fully Diluted Earnings Per Common and Common
Equivalent Share Giving Retroactive Effect to the March 15, 1994
Two-for-One Stock Split.
13 Portions of Motorola's 1993 Annual Report to Stockholders.
- 48 -
EXHIBIT NO. EXHIBIT
- ----------- -------
21 Subsidiaries of Motorola.
23 Consent of KPMG Peat Marwick. See page 40 of the Annual
Report on Form 10-K of which this Exhibit Index is a part.