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    1995 S U M M A R Y A N N U A L REPORT

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    Motorola is one of the world's leading providers of wireless communications, semiconductors and advanced electronic systems, components and services. Major equipment businesses include cellular telephone, two-way radio, paging and data communications, personal communications, automotive, defense and space electronics and computers. Motorola semi- conductors power communication devices, computers and millions of other products. This report is in a summary format. It is a new format for Motorola and is intended to present 1995 results in a simple, readable style. The more detailed operational and financial material included in previous annual reports is now part of the Proxy Statement, which was distributed to stockholders along with this report. A copy may be obtained from the Motorola Investor Relations department. See inside back cover for details. Contents Financial Highlights 1 To Our Stockholders and Other Friends 2 Motorola at a Glance 14 Financial Statements 17 Condensed Notes to Consolidated Financial Statements 20 Five Year Financial Summary 23 Directors and Management Board of Motorola, Inc. 24 CEO Quality Awards and Dan Noble Fellows 24 Stockholder Reference Information Inside Back Cover

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    FINANCIAL HIGHLIGHTS (In millions, except as noted) Motorola, Inc. and Consolidated Subsidiaries Years ended December 31 1995 1994 Net sales $27,037 $22,245 Earnings before income taxes 2,782 2,437 % to sales 10.3% 11.0% Net earnings 1,781 1,560 % to sales 6.6% 7.0% Primary net earnings per common and common equivalent share (in dollars) 2.93 2.66 Fully diluted net earnings per common and common equivalent share (in dollars) 2.93 2.65 Research and development expenditures 2,197 1,860 Fixed asset expenditures 4,225 3,322 Working capital 2,717 3,008 Current ratio 1.35 1.51 1 Return on average invested capital 14.7% 17.5% % of net debt to net debt plus equity2 19.8% 12.1% Book value per common share (in dollars) 18.68 15.47 Year-end employment (in thousands) 142 132 y Average invested capital is defined as stockholders' equity plus long and short-term debt less short-term investments (includes short-term investments categorized as cash equivalents). 1 Includes short-term investments categorized as cash equivalents. Net Sales Earnings Before Fully Diluted Return on Income Taxes* Net Earnings Average Per Share Invested Capital •I || (In billions) | (In millions) (In dollars) (In percentages) • •1 •1n 1 •1 3200 4.00 20 • • •I I! I •1 •1 1 | •1 •1 •I •II | | •• V • | •' •• • •11 •1 •1 | • I• 24 ••| • 2400 I I• •11 3.00 •1• | • • |' 15 | •1 •I • •1•• •• ••| I ••| I •1V• • • I• I• | •1 V• • ••| • •1I• • • •• I• |• | I• 16 •• • 1600 •1• • 2.00 | l 10 I• • • • • II• • 1 1 •• •• ••| • •• •• •• •• •• •• | *| | •• | • • I•• I•• •• •• | | I• I• • I| • m• I I •••• 800 1.00 | | •• •• •• •• •• • || • • II | I I• • • | • • 1 | I• •I I I 1 I 91 92 93 94 95 • I| 91 92 93 94 95 91 92 93 94 95 I ••• 91 92 93 94 95 *And cumulative I Before cumulative I Before cumulative effect of change in effect of change in effect of change in accounting principle acco unting principle acco unting p rinciple

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    TO O U R S T O C K H O L D E R S A N D O T H E R F R I E N D S Motorola in 1995 invested as never before in technology platforms that promise to improve the way people live and work. This investment included research and development, as well as plant and equipment to serve our customers more effectively. These expenditures went into semicon- ductor, telecommunications and other electronic products and facilities throughout the world. We have tremen- Sales and earnings again set records, although the rate of growth was lower than in the previous two years. Concern over this slower growth rate was reflected in the price of Motorola dous confidence common stock. While 1995 was disappointing in this respect, the five-year cumulative total return in the future of our continues well above the Standard & Poor's 500 Index, with a compound annual growth rate of 35%. We remain optimistic about the long-term growth potential of our businesses, and in this global communi- year's summary annual report, we will examine Motorola's core strategies for building on our cations and elec- strengths in some of the fastest-growing arenas in the world. Financial Results Sales in 1995 increased 22% to $27.0 billion from $22.2 billion in 1994. Earnings tronic businesses. were $1.78 billion, or $2.93 per fully diluted common and common equivalent share, compared with $1.56 billion, or $2.65 per share, a year ago. Net margin on sales was 6.6% in 1995 and 7.0% in 1994. The increases were broad-based throughout the company's major businesses, and growth was highest in international markets. Summary operating and financial results of our various business segments appear on page 22. Detailed results appear in the Proxy Statement, as well as on the Internet at http://www.mot.com. Board of Directors Judy C. Lewent, senior vice president and chief financial officer, Merck & Co., and John A. White, dean of engineering, Georgia Institute of Technology, were elected to Motorola's Board of Directors in 1995. David R. Clare, John T. Hickey and Gardiner L. Tucker are not standing for reelection to the board, in line with our policy on age and tenure of directors. We acknowledge with appreciation their many contributions to Motorola.

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    Gary L. Tooker Christopher B. Galvin The Future In the following pages, we will share with you our strategic vision, beginning with where we are today, the core competencies on which we are building and the cornerstones that define the corporation. These create exciting opportunities for sustained growth in a global market- place where technology continually enhances the way people live and work. In recent years, we have become increasingly global, and we expect that trend to continue. In 1995, 63% of our sales were outside the United States. Leading this growth is capital invest- ment in communications infrastructure, especially in emerging economies that are anxious to become part of the global economy as soon as possible. This growth is expected to continue to be the highest in Asia, as well as in Latin America. Economic expansion is also likely to acceler- ate in Japan, while the U.S. and European economies should advance more slowly. Wireless markets in the more-developed economies continue to experience pricing pressures, which had a negative impact on net earnings in 1995. These conditions may continue to result in lower sales growth and difficult earnings comparisons for the next few quarters. Our major investments in technology and production capacity have also had a negative impact on net earnings, but we believe they are setting the stage for sustained long-term growth. In terms of global penetration, wireless communications is still in its early stages of develop- ment, especially in consumer markets. As we have seen in cellular and other electronics industries, more-developed markets continue to be stimulated by exciting products and semiconductor applica- tions such as the ones featured in this report. We expect demand for communications equipment to continue to be stimulated by new technologies, new radio frequency spectrum licensed by govern- ments around the world and an increase in the number of service providers. We have tremendous confidence in the future of our global communications and electronics businesses. Gary L. Tooker ' Christopher B. Galvin Vice Chairman and Chief Executive Officer President and Chief Operating Officer

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    Motorola Today Motorola is the largest provider of wireless communications equipment in the world, and our semiconductor business leads the world in many of the markets it serves. Building on technology platforms such as these, we We are No. 1 in the create new markets for our products, as well as new industry segments. Our philosophy is to manage for long-term growth and profitability, while consis- world in cellular tently and appropriately investing in technology to maintain competitive leadership. We are telephone, paging No. 1 in the world in cellular telephone, paging and two-way radio. These wireless businesses account for about 60% of our total sales. We are the world leader in many key segments of and two-way radio. the semiconductor industry. Our semiconductor business accounts for 29% of our sales. The We are the world remainder of our sales come from advanced electronic systems and components. Motorola's compound annual sales growth rate of 24% over the last five years reflects the explosive leader in many key growth of communications and electronics in the global marketplace, especially in emerging segments of the economies. The most rapid rate of growth was outside the United States. The largest portion of our communications portfolio is cellular telephone. This semiconductor market has grown rapidly, from 23 million subscribers in 1992 to an estimated 85 million at industry. the end of 1995, but the industry is still in its early stages. Many people in the world have never used a telephone, and wireless systems are the fastest and often most cost-effective way to establish service. Global market penetration is still less than 2%. Motorola offers a broad range of infrastructure products and telephones for many major signaling formats in all regions of the world. The paging market has grown from 36 million users in 1992 to an estimated 95 million at the end of 1995. About half the world's population is only now being introduced to paging services. In countries such as China and India, paging often functions as a basic communica- At just 3.1 ounces, tions tool. In more-developed markets, paging is the new StarTAC™ cellular phone can becoming a service for consumers as well as for literally be "worn" by consumers in businesses as costs come down. New Motorola need of reliable but unobtrusive communications. technologies have set the stage for two-way paging, voice paging and advanced messaging. ®

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    . ^ •*#r ^^^^^^^l^fchv NEW DIMENSIONS IN WIRELESS COMMUNICATIONS Above: The new Tango™ pager makes two-way wireless messaging a reality. It enables users to reply to messages instantaneously by selecting one of many preprogrammed, stored responses. It operates on newly allocated narrowband Personal Communications Services (PCS) spectrum. Below: The new StarTAC™ wearable cellular phone brings the Space Age to ancient Rome. Soon to be available in Italy, the StarTAC is the world's smallest and, at 3.1 ounces, the world's lightest cellular phone. The first wearable cellular phone, it was introduced in January 1996. r-!i

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    Core Technical Competencies Industries such as cellular and paging are built on Motorola's core technical competencies, including software, semicon- ductor and radio frequency design. We expect the Technology has transformed our original two-way land mobile radio business. This market has grown from 33 million subscribers in 1992 to about 45 million at the end of 1995. Astro™ world semiconduc- digital technology has renewed markets such as public safety, while Radius® two-way radios tor industry to grow have penetrated consumer markets. In shared systems, Integrated Dispatch Enhanced Network technology combines dispatch and telephone interconnect, voice and data. IDEN™ systems from $150 billion at are targeted for workgroups on the move. the end of 1995 to Communications also is one of the fastest-growing segments of the semicon- ductor market. That's one reason that our Semiconductor Products Sector has achieved a more than $300 bil- compound annual growth rate of 23% since 1991. Motorola has a breadth and scope of prod- lion by the end of ucts that is unmatched in the industry. In addition to wireless, we are No. 1 in several of the fastest-growing markets, including energy/environment and industrial; automotive; multimedia the decade. set-top boxes; personal computer printers; and interactive, microcontroller-based smartcards. As technologies and markets converge, the PowerPC™ microprocessor is becoming more attractive. The PowerPC scales the full range of applications, from computing to embedded control. More than 40 companies have selected the PowerPC as their desktop, laptop, work- station or server processor, while hundreds will use the PowerPC for embedded applications. The PowerPC platform is at the heart of a full range of offerings from the Motorola Computer Group. The semiconductor content of the products shipped by our customers was about 2% in the 1960s and is expected to approach 30% by the end of this decade. We expect the world The Power Macintosh™ semiconductor industry to grow from $150 billion at computer is at the head of the class when the end of 1995 to more than $300 billion by the end it comes to speed and performance. It uses the advanced RISC of the decade. Our expansion program is designed technology of the Motorola PowerPC to enable us to achieve and maintain leadership in 603™ Microprocessor. our key markets. ©

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    UQA r MAKING LIFE MORE E F F I C I E N T — A N D C O N V E N I E N T Above: Motorola two-way radios help athletes and coaches stay in touch at the U.S. Olympic Training Center in Colorado Springs, Colo. As a Centennial Olympic Games Partner-level sponsor and U.S. Olympic Team sponsor. Motorola is providing the largest two-way radio communication network ever to be deployed at an athletic event, utilizing its Astro™ and iDEN™ digital technologies. Below: Smartcards make it more convenient to pay the bill in this Paris restaurant. Motorola microcontrollers bring the "smart" to smartcards by storing, computing and protecting data. Smartcard chips serve applications such as banking, transportation, health care and digital mobile phones. '•IV\

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    Creating Our Future By building on our core compe- tencies, we create an exciting future. We apply our resources, in a timely, effective manner, to the process of renewal. Our strategy is to build on the strengths of new and existing busi- nesses to create major new global industry segments. Our strategy is For example, in our Messaging, Information and Media Sector, our new FLEX™ family to build on the of protocols has emerged as the worldwide standard. The FLEX protocol has been adopted by seven of the world's 10 largest paging markets. The ReFLEX™ protocol is for data strengths of new messaging and two-way wireless messaging, while the InFLEXion™ protocol enables voice and existing busi- technology as well as high-speed data. Messaging also includes wireless devices such as the Envoy® personal communicator, which enables people to exchange electronic mail messages nesses to create or access information wherever they are. major new global We also expect to create new industry segments that combine wired and wireless com- industry segments. munications. High-speed modems from our Information Systems Group provide access to the Internet. Our CableComm technology is being used in a test system that offers telephone service on the same coaxial cable that carries television programs. Several cable TV operators have ordered CyberSURFR™ modems that provide high-speed access to the Internet. CableComm technology is designed to provide full-motion videoconferencing. We also have built on our strength in satellite communications to create the IRIDIUM® global wireless communications network, designed to serve handheld telephones 1995 Market and permit voice, data, fax or paging messages to reach their destinations Sales by Region almost anywhere on the surface of the earth. The network will be operated by Iridium, Inc., a private international consortium of leading telecommuni- cations and industrial companies, and is expected to begin initial operation in 1998. The system is designed to track the location of the handheld tele- I United States 37% phones, so a call can be directed almost anywhere on earth, even if the • Europe 23% I Asia-Pacific 12% subscriber's location is unknown. The potential market ranges from interna- • China/ Hong Kong 12% tional business travelers to developing nations. The system also should be I Japan 8% I Rest of World 8% ideal for rescue, relief and supply efforts during natural disasters.

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    THE WORLD AT YOUR FINGERTIPS Above: This engineering facility in Chandler, Ariz., will be the control center during the initial build-up of the first 40 IRIDIUM® satellites in the constellation. The orbiting network also will be monitored from facilities in Virginia and in Italy. Below: Motorola's CableComm technology enables telephone and cable companies to offer telephony, high-speed data, video phone and other Internet and interactive multimedia services over cable systems. The new CyberSURFR™ cable modem can receive information at speeds hundreds of times faster than today's conventional modems. *%%

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    Cornerstones The way Motorola does business is grounded in unchanging key beliefs coupled with a dynamic balance of customer-focused initiatives and strategies. They combine to create a unique set of competitive strengths. Our management Our management philosophy begins with two key beliefs—respect for the dignity of the individual and uncompromising integrity in everything we do. This helps to create an environment philosophy is of empowerment for all in a culture of participation. It encourages us to manage for long-term based on respect growth and invest in technology to maintain competitive leadership. Motorola's Six Sigma quality initiative has been one of the driving forces in for the dignity of achieving this leadership. In the last nine years, it has enabled us to reduce in-process defect the individual and levels 250-fold. At the same time, productivity, measured in sales per employee, has increased 13.2% per year. Our quality, cycle-time reduction and software initiatives are designed to give uncompromising our customers what they want, when they want it, with superb quality at an affordable price. integrity in every- A measure of this competitive strength is our portfolio of intellectual property rights. The number of U.S. patents issued to Motorola in the last five years has risen from 613 in thing we do. 1991 to 1,016 in 1995. We rank No. 3 in the United States. As the software content of our products increases and the cost of computing drops, sophisticated products become easier to use and less expensive. This creates enormous new global market opportunities and spurs our investments in the skills of our people, in software development, and in our ability to manufacture efficiently, anywhere in the world. We have embarked on the largest world- 1995 Net Sales wide expansion in semiconductor capacity in our history. We are also by Business Segment reshaping customer-supplier relationships as systems-level integration and combinational technologies revolutionize the industry. One of the most striking examples of the power of technology is our fixed Wireless Local Loop telephone systems. WiLL® systems can be I General Systems Products 36% installed more quickly and often at a lower cost than wired systems in Semiconductor Products 29% I Messaging, places where phone service does not exist or where existing service is Information & Media Productsl2% I Land Mobile inadequate. WiLL telephone systems can play a key role in transforming Products 12% I Other Products 11% emerging economies. 10

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    THE LATEST TECHN0L0GY — A NYWHERE Above: Motorola's investment in semiconductor wafer fabrication enables it to maintain manufacturing leadership. In this new facility at Chandler, Ariz., named "Fab of the Year" in 1995 by Semiconductor Internationalmagazine, highly trained employees use automated equipment to inspect 8-inch wafers and track measurements during the manufacturing process. Below: People in rural Spain are keeping in touch through a new Motorola wireless local loop telephone system. This fixed system produced by our Cellular Infrastructure Group serves 350,000 users. '•sr

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    "Motorola. What You Never Thought Possible" New technolo- gies—many of them created by Motorola—are combining with global geopolitical forces to create an exciting new kind of world. This is a result of digital technology that lowers cost Motorola creates and adds functionality; the expanding availability of radio frequency spectrum; deregulation; and the creation of standards that enable a variety of systems to connect with each other. innovative products "Motorola. What You Never Thought Possible"™ is a theme that will be featured in our and technologies to messages throughout the world. People who buy a Motorola product know they have made a wise investment, because it has been built on a heritage of quality. make the world a We at Motorola are helping to create a world where: • You could take a phone out of better place to live. your purse or your pocket, unfold it and reach the person you need, wherever that person is, almost anywhere in the world • You could write a message in longhand, or in Chinese char- acters, and have the message printed on a computer, anywhere in the world • You could keep in touch with your child in a day-care center—both visually and by voice—wherever you are. These are only a few small examples of what we envision. We are creating the kinds of products and systems that enable emerging economies to develop a modern communications infrastructure and leapfrog into the 21st century. At the personal level, our products make life easier, more productive—and more fun. People have more time to do the things they want to do. They have access to entertainment wherever they are, at home or while traveling. Our communications products make people feel more secure, because they can get help and stay in touch with people they need. For example, our global positioning system (GPS) receiver is used in the car pic- tured on the opposite page. We look forward with tremendous confidence as we create innovative products Lexicus LexiPen™ is the Q B Z 9 I H I B H B B M B B H E 1 - E ] and technologies that make the world a better place world's first highly accu- rate cursive Chinese ^mA% to live. We generate exciting new ways for people character recognizer. Chinese writers can &w« input 13,000 Chinese to communicate, work and play. characters into stan- dard desktop and rH PowerPC™ is a trademark of IBM Corporation. notebook computers. o _——'—'——_ Macintosh*** is a trademark of Apple Computer, Inc. fREAL jOVR jO5iOPM IRIDIUM® is a registered trademark and service mark of Indium, Inc. 12

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    EXPANDING T H E W A Y W E STAY IN TOUCH Above: Motorola's GP68 portable two-way radio, designed for commercial and industrial markets in Asia, helps construction workers coordinate work activities and the flow of materials in the construction of a new railway station in Beijing, China. Below: Activated by the push of a button, the new Lincoln RESCLJ system (Remote Emergency Satellite Cellular Unit) sends a vehicle's location to an operator who puts the driver in touch with a public safety agency or roadside assistance program. The system, available on 1996 Lincoln Continentals, was developed in partnership with Ford Motor Co. and Westinghouse Electric Corp. and is manufactured by Motorola.

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    MOTOROLA AT A GLANCE General Systems Sector Semiconductor Products Sector Messaging, Information and Media Sector Business Activities Designs, manufactures and distributes RF-based Designs, produces and distributes a broad line Designs, manufactures and distributes a variety cellular radiotelephones and systems, personal of discrete semiconductors and integrated cir- of messaging products, including pagers and communications systems, computers and micro- cuits, including microprocessors, RF devices, paging systems, wireless and wireline data computer boards. microcontrollers, digital signal processors, mem- communications products, handwriting recogni- ories and sensors. tion software, infrastructure equipment, systems and services. Organization Cellular Infrastructure Group Asia-Pacific Semiconductor Group Information Systems Group Cellular Subscriber Group Communications, Power and Multimedia Group Computer Group Signal Technologies Group Paging Products Group Network Ventures Division European Semiconductor Group Wireless Data Group Logic and Analog Technologies Group International Networks Division Microcontroller Technologies Group Lexicus Division Microprocessor and Memory Technologies Group Semiconductor Products Division, Nippon Motorola Limited ISDN Terminal Adapter BitSURFR™ Modem SC 4800™ Compact Cellular Base Station for PCS Personal Messenger1* 100D PCMCIA Radio Modem Envoy0 Wireless Communicator SENSEON™ Accelerometer Sensor

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    In addition to these sectors and groups, the New Enterprises organization manages Motorola's entry into strategically relevant, emerging high-growth and high-technology global business opportunities. Land Mobile Products Sector Automotive, Energy and Controls Group Government and Space Technology Group Designs, manufactures and distributes analog Designs and manufactures a broad range of Specializes in research, development and produc- and digital two-way radio products and systems electronic components, modules and integrated tion of electronic systems and products for U.S. for applications worldwide, from on-site to electronic systems and products for automo- government projects and commercial business. wide-area communications. tive, industrial, transportation, navigation, com- The group's Satellite Communications Division munication, energy systems, consumer and is developing the IRIDIUM® satellite-based lighting markets. communication system. Integrated Dispatch Enhanced Automotive and Industrial Electronics Group Diversified Technologies Division Network (iDEN) Group Component Products Group Government Electronics Division Network Services Group Energy Products Division Satellite Communications Division Radio Network Solutions Group Flat Panel Display Division Radio Parts and Service Group Indala Corporation Radio Products Group Motorola Lighting, Inc. EMTEK Health Care Systems, Inc. iDEN™ Portable Two-Way Radio Tempest™ 3V Temperature Compensated Crystal Oscillator Handie-Com™ Light Industrial Portable Two-Way Radio IRIDIUM8 System Satellite 3.5V Lithium Ion Battery tor StarTAC™ Personal Cellular Telephone CipherTAC™ Security Module Chrysler JTEC (Jeep Truck Engine Controller) SPEAKeasy II Radio System iDEN™ Mobile Two-Way Radio FORTE™ Wireless CommPad

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    M A N A G E M E N T ' S R E S P O N S I B I L I T Y F O R F I N A N C I A L S T A T E M E N T S Motorola, Inc. and Consolidated Subsidiaries Management is responsible for the preparation, integrity and objectivity of audits conducted in accordance with generally accepted auditing standards, the consolidated financial statements and other financial information pre- which includes the consideration of the Company's internal controls to sented in this report. The accompanying condensed consolidated financial establish a basis for reliance thereon in determining the nature, timing statements were prepared in accordance with generally accepted account- and extent of audit tests to be applied. ing principles, applying certain estimates and judgments as required. The Board of Directors exercises its responsibility for these financial Motorola's internal controls are designed to provide reasonable assur- statements through its Audit Committee, which consists entirely of inde- ance as to the integrity and reliability of the financial statements and to pendent non-management Board members. The Audit Committee meets adequately safeguard, verify and maintain accountability of assets. Such periodically with the independent auditors and with the Company's internal controls are based on established written policies and procedures, are auditors, both privately and with management present, to review account- implemented by trained, skilled personnel with an appropriate segregation ing, auditing, internal controls and financial reporting matters. of duties and are monitored through a comprehensive internal audit pro- gram. These policies and procedures prescribe that the Company and all its employees are to maintain the highest ethical standards and that its business practices throughout the world are to be conducted in a manner which is above reproach. Gary L. Tooker Carl F. Koenemann KPMG Peat Marwick LLP, independent auditors, are retained to audit Vice Chairman and Executive Vice President Motorola's financial statements. Their accompanying report is based on Chief Executive Officer and Chief Financial Officer I N D E P E N D E N T A U D I T O R S ' REPORT The Board of Directors and Stockholders of Motorola, Inc.: opinion, the information set forth in the accompanying condensed con- solidated financial statements is fairly presented, in all material respects, We have audited, in accordance with generally accepted auditing standards, in relation to the consolidated financial statements from which it has the consolidated balance sheets of Motorola, Inc. and consolidated sub- been derived. sidiaries as of December 31,1995 and 1994, and the related statements of consolidated earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31,1995, appearing in the appendix to the proxy statement for the 1996 Annual Meeting of Shareholders of the Corporation (not presented herein); and in our report KPMG Peat Marwick LLP dated January 9,1996, except for Note 6, which is as of February 16, Chicago, Illinois 1996, also appearing in that proxy statement appendix, we expressed an unqualified opinion on those consolidated financial statements. In our February 16,1996 16

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    STATEMENTS OF CONSOLIDATED EARNINGS (In millions, except per share amounts) Motorola, Inc. and Consolidated Subsidiaries Years ended December 31 1995 1994 1993 Net sales $27,037 $22,245 $16,963 Costs and expenses Manufacturing and other costs of sales 17,545 13,760 10,351 Selling, general and administrative expenses 4,642 4,381 3,776 Depreciation expense 1,919 1,525 1,170 Interest expense, net 149 142 141 Total costs and expenses 24,255 19,808 15,438 Earnings before income taxes 2,782 2,437 1,525 Income taxes provided on earnings 1,001 877 503 Net earnings $ 1,781 $ 1,560 $ 1,022 Fully diluted net earnings per common and common equivalent share12 $ 2.93 $ 2.65 $ 1.78 2 Fully diluted average common and common equivalent shares outstanding' 609.8 592.7 583.7 ^Primary earnings per common and common equivalent share were the same as fitlly diluted for all years shown, except in 1994 when they were one cent higher than fully diluted. Average primary common and common equivalent shares outstanding for 1995, 1994 and 1993 were 609- 7, 591.7 and 582.6, respectively (which includes the dilntive effects of the convertible zero coupon notes and the outstanding stock options). 2 Includes adjustments for the 1994 two-for-one stock split effected in the form of a 100 percent stock dividend. S T A T E M E N T S O FC O N S O L I D A T E D S T O C K H O L D E R S ' E Q U I T Y Common Stock and (In millions, except per share amounts) Additional Paid-in Capital1 Retained Earnings Years ended December 31 1995 1994 1993 1995 1994 1993 Balances at January 1 179 $1,875 $1,510 $5,917 $4,534 $3,634 Net earnings - - - 1,781 1,560 1,022 Conversion of zero coupon notes 23 251 216 - - - Stock issuance2 - 973 - - - - Unrealized net gain (loss) on certain investments 328 (8) - - - Stock options exercised and other 57 88 149 _ Dividends declared ($.40 per share in 1995, $.31 in 1994 and $.22 in 1993) (237) (177) (122) Balances at December 31 $3,587 $3,179 $1,875 $7,461 $5,917 $4,534 1 1994 Stock Split: An amount equal to the par value of the additional shares issued has been transferred from additional paid-in capital to common stock due to the two-for-one stock split effected in the form of a 100 percent stock dividend. All references to shares outstanding, dividends and per share amounts during 1994 and 1993 have been adjusted on a retroacti ive basis. 2 During November 1994, the Company completed a public equity offering of 17.1 million shares of common stock. See accompanying condensed notes to consolidated financial statements. 17

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    CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) Motorola, Inc. and Consolidated Subsidiaries December 31 1995 1994 Assets Current assets Cash and cash equivalents 725 $ 741 Short-term investments 350 318 Accounts receivable, less allowance for doubtful accounts (1995, $123; 1994, $118) 4,081 3,421 Inventories 3,528 2,670 Future income tax benefits 1,222 928 Other current assets 604 847 Total current assets 10,510 8,925 Property, plant and equipment, less accumulated depreciation (1995, $8,110; 1994, $6,657) 9,356 7,073 Other assets 2,935 1,538 Total assets $22,801 $17,536 Liabilities and Stockholders' Equity Current liabilities Notes payable and current portion of long-term debt $ 1,605 $ 916 Accounts payable 2,018 1,678 Accrued liabilities 4,170 3,323 Total current liabilities 7,793 5,917 Long-term debt 1,949 1,127 Deferred income taxes 968 509 Other liabilities 1,043 887 Stockholders' equity Common stock, $3 par value Authorized shares: 1995 and 1994, 1,400 Issued and outstanding shares: 1995, 591.4; 1994, 588.0 1,774 1,764 Preferred stock, $100 par value issuable in series Authorized shares: 0.5 (none issued) Additional paid-in capital 1,813 1,415 Retained earnings 7,461 5,917 Total stockholders' equity 11,048 9,096 Total liabilities and stockholders' equity $22,801 $17,536 See accompanying condensed notes to consolidated financial statements. 18

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    S T A T E M E N T S O FC O N S O L I D A T E D C A S H F L O W S (In millions) Motorola, Inc. and Consolidated Subsidiaries Years ended December 31 1995 1994 1993 Operating Net earnings $ 1,781 $1,560 $1,022 Add (deduct) non-cash items Depreciation 1,919 1,525 1,170 Deferred income taxes (55) (177) 50 Amortization of debt discount and issue costs 12 22 26 Gain on disposition of investments in affiliated companies (111) (9) (9) Change in assets and liabilities, net of effects of acquisitions and dispositions Accounts receivable, net (653) (945) (439) Inventories (856) (806) (539) Other current assets (100) (328) (44) Accounts payable and accrued liabilities 1,172 1,134 927 Other assets 30 595 (95) Other liabilities 148 (19) 245 Net cash provided by operations 3,287 2,552 2,314 Investing Acquisitions and advances to affiliated companies (563) (894) (408) Dispositions of investments in affiliated companies 252 23 67 Payments for property, plant and equipment (4,225) (3,320) (2,187) Other changes to property, plant and equipment, net (11) 183 126 (Increase) decrease in short-term investments (32) 40 (105) Net cash used for investing activities (4,579) (3,968) (2,507) Financing Net increase (decrease) in commercial paper and short-term borrowings less than 90 days 686 517 (38) Proceeds from issuance of debt 851 32 521 Repayment of debt (74) (190) (74) Issuance of common stock 49 1,061 113 Payment of dividends (236) (149) (120) Net cash provided by financing activities 1,276 1,271 402 Net increase (decrease) in cash and cash equivalents $ (16) $ (145) $ 209 Cash and cash equivalents, beginning of year $ 741 $ 886 $ 677 Cash and cash equivalents, end of year $ 725 $ 741 $ 886 Supplemental Cash Flow Information (In millions) Motorola, Inc. and Consolidated Subsidiaries Years ended December 31 1995 1994 1993 Non-Cash Activities Conversion of zero coupon notes $ 23 $251 $216 Unrealized net gain (loss) on certain investments $336 Issuance of common stock for investment acquisition $ - 36 See accompanying condensed notes to consolidated financial statements. 19

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    C O N D E N S E D N O T E S T OC O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S Motorola, Inc. and Consolidated Subsidiaries 1. Summary of Significant Accounting Policies market on a monthly basis. Other gains or losses on financial instruments Consolidation: The consolidated financial statements include the that do not qualify as hedges are recognized immediately as income or accounts of the Company and those majority-owned subsidiaries where expense. Gains and losses on financial instruments which hedge firm the Company has control. All significant intercompany accounts and trans- future commitments are deferred until such time as the underlying trans- actions are eliminated in consolidation. actions are recognized or immediately when the transaction is no longer expected to occur. The Company does not speculate in these financial Cash Equivalents: The Company considers all highly liquid investments instruments for profit on the exchange rate price fluctuation alone. The purchased with an original maturity of three months or less to be cash Company does not trade in currencies for which there are no underlying equivalents. exposures, nor enter into trades for any currency to intentionally increase Marketable Securities: Effective January 1,1994, the Company adopted the underlying exposure. Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting Many of the Company's non-functional currency receivables and payables for Certain Investments in Debt and Equity Securities." SFAS No. 115 denominated in major currencies which can be traded on open markets requires that the carrying value of certain investments be adjusted to their are hedged. Some of the Company's exposure is to currencies which are not fair value. As of December 31,1995, the Company recorded an increase to traded on open markets, such as those in Latin America and China, and these stockholders' equity, other assets and deferred taxes of $328 million, $543 are addressed, to the extent reasonably possible, through managing net asset million and $215 million, respectively, primarily due to the fair value recog- positions, product pricing, and other means, such as component sourcing. nition of the Nextel investment which was completed during July of 1995. Currently, the Company primarily hedges firm commitments. The Company As of December 31,1994, the effects of SFAS No. 115 were immaterial. expects that there could be hedges of anticipated transactions in the future. Revenue Recognition: The Company uses the percentage-of-completion Stock Options: The Company has evaluated the effects of the recent method to recognize revenues and costs associated with most long-term accounting pronouncement, SFAS No. 123, "Accounting for Stock-Based contracts. For contracts involving certain technologies, revenues and profits, Compensation," which will be effective for the Company's fiscal year 1996. or parts thereof, are deferred until technological feasibility is established Based on an initial evaluation, the effects are not expected to have a and customer acceptance is obtained. For other product sales, revenue is material effect on the Company's consolidated financial position, liquidity recognized at the time of shipment, and reserves are established for price or results of operations. protection and cooperative marketing programs with distributors. Disclosure of Certain Significant Risks and Uncertainties: The Inventories: Inventories are valued at the lower of average cost (which preparation of financial statements in conformity with generally accepted approximates computation on a first-in, first-out basis) or market (i.e., net accounting principles requires management to make certain estimates realizable value or replacement cost), less progress payments on long- and assumptions that affect the reported amounts of assets and liabilities term contracts. and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during Property, Plant and Equipment: Property, plant and equipment are the reporting period. Actual results could differ from those estimates. The stated at cost less accumulated depreciation. Depreciation is recorded Company's periodic filings with the Securities and Exchange Commission principally using the declining-balance method, based on the estimated include, where applicable, disclosures of estimates, assumptions, uncertain- useful lives of the assets (buildings and building equipment, 5-50 years; ties and concentrations in products, sources of supply and markets which machinery and equipment, 2-12 years). could affect the financial statements and future operations of the Company. Foreign Currency Translation: The Company's European and Japanese Reclassifications: Certain amounts in prior years' financial statements and operations use the respective local currencies, instead of the U.S. dollar, related notes have been reclassified to conform to the 1995 presentation. as the functional currency. For all other operations, the Company uses the U.S. dollar as the functional currency. The effects of translating the financial 2. Commitments and Contingencies position and results of operations of local functional currency operations Financial: In July 1995, the Company completed the sale of its 800 mega- are included in stockholders' equity. The effects of foreign currency trans- hertz specialized mobile radio businesses, systems and licenses in the actions are included in the statement of earnings. continental United States to Nextel Communications, Inc. for approximately The Company uses financial instruments to hedge, and therefore attempt 59 million shares of Nextel stock. The transaction was accounted for as to reduce, its overall exposure to the effects of currency fluctuations on an exchange of productive assets with no gain realized in the Statement cash flows of foreign operations and investments in foreign countries. The of Consolidated Earnings. Nextel agreed to purchase, subject to specified Company's strategy is to offset the gains or losses of the financial instru- conditions, substantial quantities of equipment from Motorola over a five- ments against losses or gains on the underlying operational cash flows or year period which began in 1994 for use on its specialized mobile radio investments based on the operating business units' assessment of risk. systems. Motorola has agreed to provide up to $685 million of secured Gains and losses on hedges of existing assets or liabilities are marked to vendor financing for such equipment and related services to Nextel and 20

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    Motorola, Inc. and Consolidated Subsidiaries certain of its subsidiaries, subject to certain lending conditions. As of financing arrangements. Commitments represent the maximum amounts December 31,1995, Nextel had drawn $225 million of such financing available under these arrangements and may not be completely utilized. commitments. Nextel will require financing in addition to Motorola's ven- Environmental and Legal: Under the Comprehensive Environmental dor financing to complete its currently planned networks and acquisitions. Response Compensation and Liability Act of 1980, as amended (CERCLA, Nextel's failure to obtain additional financing or to meet the conditions or Superfund), the Company has been designated as a potentially respon- for any financing could adversely affect future sales and orders of the sible party by the United States Environmental Protection Agency with Company's iDEN® equipment. There can be no assurances that such addi- respect to certain waste sites with which the Company may have had tional financing will be obtained or such conditions met. direct or indirect involvement. Such designations are made regardless of The Company further advanced its strategic investment in the IRIDIUM® the extent of the Company's involvement. These claims are in various stages global communications system. At December 31,1995, the Company's of administrative or judicial proceedings. They include demands for recov- equity investment in and commitments to make equity investments in ery of past governmental costs and for future investigations or remedial Iridium, Inc. was approximately $400 million; additionally, it has committed, actions. In many cases, the dollar amounts of the claims have not been subject to action by the Iridium, Inc. Board of Directors, to additional specified, and have been asserted against a number of other entities for the equity investments totaling approximately $60 million. In February 1996, same cost recovery or other relief as was asserted against the Company. the Company has committed to purchase approximately $160 million of The Company accrues costs associated with environmental matters when securities to be issued by Iridium, Inc. during 1996. Iridium, Inc. will require they become probable and reasonably estimable, which totaled $86 mil- additional funding and, quite possibly, other financial support from various lion and $70 million as of December 31,1995 and 1994, respectively. The sources in order to complete the global communications system, which is amount of such charges to earnings was $24 million, $20 million and expected to take place over the next three years. There can be no assurance $36 million in 1995,1994 and 1993, respectively. However, due to their that Motorola or any other person will provide such funding or financial uncertain nature, the amounts accrued could differ, perhaps significantly, support. Motorola is the largest investor in Iridium, Inc. and a failure of from the actual costs that will be incurred. These amounts assume no Iridium, Inc. to obtain additional funding or financial support would materi- substantial recovery of costs from any insurer. The remedial efforts include ally adversely affect Motorola's investment in Iridium, Inc. and in ancillary environmental cleanup costs and communication programs. These liabili- products. The Company's investment in Iridium, Inc. is included in the ties represent only the Company's share of any possible costs incurred in Consolidated Balance Sheet category "Other Assets." environmental cleanup sites, since in most cases, potentially responsible The Company has executed three contracts with Iridium, Inc. for the con- parties other than the Company may exist. struction and operation of the global communications system, providing for The Company is a defendant in various suits, including environmental approximately $6.5 billion in payments by Iridium, Inc. over a ten-year period and product-related suits, and is subject to various claims which arise in the which began in 1993. The Company has in turn entered into significant normal course of business. In the opinion of management, the ultimate dis- subcontracts for portions of the system, for which it will generally remain position of these matters will not have a material adverse effect on the con- obligated even if Iridium, Inc. is unable to satisfy the terms of the contracts solidated financial position, liquidity or results of operations of the Company. with the Company, including funding. Separately, the Company is making IRIDIUM® is a registered trademark and service mark of Iridium, Inc. significant investments to produce ancillary products for the system, such as subscriber units. The Federal Communications Commission (FCC) has 3. Information by Industry Segment and Geographic Region issued a license to a Motorola subsidiary to construct, operate and launch Information for 1994 and 1993 has been reclassified to reflect the realign- the IRIDIUM system. However, other authorizations are still required for the ment of various business units. Messaging, Information and Media Products IRIDIUM system to begin commercial service in the U.S. and in other coun- segment includes the Paging Products and Wireless Data Groups (formerly tries in which service will be provided. Except as noted above, the Company reported as part of the Communications segment) and the Information had no significant concentrations of credit risk as of December 31,1995. Systems Group (formerly reported as part of the Other Products segment). The Company has entered into arrangements with non-consolidated Land Mobile Products (formerly reported as part of the Communications affiliates whereby the Company may increase, for an amount up to approxi- segment) is a separate reportable segment. The Government and Space mately $250 million, its percentage interest in these affiliates at the option Technology Group is reported as part of the Other Products segment. of each respective affiliate or Motorola at various dates which are not to Operating profit (revenues less operating expenses) excludes general extend beyond June 1997. corporate expenses, net interest and income taxes. Intersegment and inter- Other off-balance-sheet commitments to extend or guarantee financing geographic transfers are accounted for on an arm's length pricing basis. and recourse obligations under receivable sales arrangements which repre- Identifiable assets (excluding intersegment receivables) are the Company's sent firm obligations at December 31,1995 and 1994, aggregated approxi- assets that are identified with classes of similar products or operations mately $173 million and $273 million, respectively. Commitments to extend in each geographic area. Corporate assets primarily include cash, market- or guarantee financing include commitments for customer financing and for able securities, equity investments and the administrative headquarters the financing of non-consolidated affiliates. Customer financing commit- of the Company. ments require the customer to meet certain conditions established in the (n)

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    C O N D E N S E D N O T E S T OC O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S (In millions, except as noted) Motorola, Inc. and Consolidated Subsidiaries Industry segment information Net Sales Operating Profit Years ended December 31 1995 1994 1993 1995 1994 1993 General Systems Products $10,660 $ 8,613 $ 5,236 $1,266 11.9% $1,214 14.1% $ 718 13.7% Semiconductor Products 8,539 6,936 5,707 1,218 14.3% 996 14.4% 801 14.0% Messaging, Information and Media Products 3,681 2,981 2,574 310 8.4% 282 9.5% 219 8.5% Land Mobile Products 3,598 3,399 2,882 324 9.0% 311 9.1% 150 5.2% Other Products 3,346 2,660 2,009 131 3.9% 97 3.6% 63 3.1% Adjustments and eliminations (2,787) (2,344) (1,445) (48) - (29) - (11) - Industry segment totals $27,037 $22,245 $16,963 3,201 11.8% 2,871 12.9% 1,940 11.4% General corporate expenses (270) (292) (274) Interest expense, net (149) (142) (141) Earnings before income taxes $2,782 10.3% $2,437 11.0% $1,525 9.0% Assets Fixed Asset Expenditures Depreciation Expense Years ended December 31 1995 1994 1993 1995 1994 1993 1995 1994 1993 General Systems Products $ 6,181 $ 4,740 $ 3,223 $ 762 $ 621 $ 453 $ 450 $ 327 $ 227 Semiconductor Products 7,938 5,886 4,507 2,530 1,640 1,120 909 683 529 Messaging, Information and Media Products 2,527 2,087 985 357 270 237 204 167 72 Land Mobile Products 2,097 2,232 2,673 169 217 141 155 142 225 Other Products 1,839 1,470 805 285 320 136 154 143 63 Adjustments and eliminations (224) (72) (24) - - - - - - Industry segment totals 20,358 16,343 12,169 4,103 3,068 2,087 1,872 1,462 1,116 General corporate 2,443 1,193 1,329 122 254 100 47 63 54 Consolidated totals $22,801 $17,536 $13,498 $4,225 $3,322 $2, 187 $1,919 $1,525 $1,170 Geographic area information' Net Sales Operating Profit Years ended December 31 1995 1994 1993 1995 1994 1993 United States $19,187 $16,297 $12,924 $1,681 8.8% $1,932 11.9% $ 970 7.5% Other nations 16,954 12,758 10,066 1,901 11.2% 1,292 10.1% 1,164 11.6% Adjustments and eliminations (9,104) (6,810) (6,027) (381) - (353) - (194) - Geographic totals $27,037 $22,245 $16,963 3,201 11.8% 2,871 12.9% 1,940 11.4% General corporate expenses (270) (292) (274) Interest expense, net (149) (142) (141) Earnings before income taxes $2,782 10.3% $2,437 11.0% $1,525 9.0% Assets December 31 1995 1994 1993 United States $12,552 $10,750 $ 7,731 Other nations 8,260 5,943 4,674 Adjustments and eliminations (454) (350) (236) Geographic totals 20,358 16,343 12,169 General corporate assets 2,443 1,193 1,329 Consolidated totals $22,801 $17,536 $13,498 } As measured by the locale of the revenue-producing operations. 1994 and 1993 have been reclassified to reflect the realignment of various business units. 22

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    FIVE YEAR F I N A N C I A L S U M M A R Y (In millions, except per share amounts and other data) Motorola, Inc. and Consolidated Subsidiaries Years ended December 31 1995 1994 1993 1992 1991 Operating Results Net sales $27,037 $22,245 $16,963 $13,303 $11,341 Manufacturing and other costs of sales 17,545 13,760 10,351 8,395 7,134 Selling, general and administrative expenses 4,642 4,381 3,776 2,951 2,579 Depreciation expense 1,919 1,525 1,170 1,000 886 Interest expense, net 149 142 141 157 129 Total costs and expenses 24,255 19,808 15,438 12,503 10,728 Earnings before income taxes and cumulative effect of change in accounting principle 2,782 2,437 1,525 800 613 Income taxes provided on earnings 1,001 877 503 224 159 Net earnings before cumulative effect of change in accounting principle $ 1,781 $ 1,560 $ 1,022 $ 576 $ 454 Net earnings $ 1,781 $ 1,560 $ 1,022 $ 453 $ 454 Net earnings before cumulative effect of change in accounting principle as a percent of sales 6.6% 7.0% 6.0% 4.3% 4.0% Net earnings as a percent of sales 6.6% 7.0% 6.0% 3.4% 4.0% Per Share Data (in dollars)12 Fully diluted Net earnings before cumulative effect of change in accounting principle $ 2.93 $ 2.65 $ 1.78 $ 1.05 $ 0.84 Cumulative effect of change in accounting principle - - - (0.22) Net earnings $ 2.93 $ 2.65 $ 1.78 $ 0.83 $ 0.84 Average common and common equivalent shares outstanding 609.8 592.7 583.7 567.1 558.5 Dividends declared $0,400 $0,310 $0,220 $0,198 $0,190 Balance Sheet Total assets $22,801 $17,536 $13,498 $10,629 $9,375 Working capital 2,717 3,008 2,324 1,883 1,424 Long-term debt . 1,949 1,127 1,360 1,258 954 Total debt 3,554 2,043 1,915 1,695 1,806 Total stockholders'equity $11,048 $9,096 $6,409 $5,144 $4,630 Other Data Current ratio 1.35 1.51 1.53 1.56 1.46 Return on average invested capital before cumulative effect of change in accounting principle 14.7% 17.5% 15.3% 9.4% 7.8% Return on average invested capital 14.7% 17.5% 15.3% 7.5% 7.8% Return on average stockholders' equity before cumulative effect of change in accounting principle 17.7% 21.0% 17.8% 11.7% 10.2% Return on average stockholders' equity 17.7% 21.0% 17.8% 9.4% 10.2% Fixed asset expenditures $ 4,225 3,322 2,187 1,442 1,387 % to sales 15.6% 14.9% 12.9% 10.8% 12.2% Research and development expenditures $ 2,197 1,860 1,521 1,306 1,133 % to sales 8.1% 8.4% 9.0% 9.8% 10.0% Year-end employment (in thousands) 142 132 120 107 102 ] All earnings per share, dividends and outstanding shares data have been restated to reflect the 1994 and 1992 two-for-one stock splits. 1 Primary earnings per common and common equivalent share were the same as fully diluted for all years shown except in 1994 and 1991 when primary earnings per share were one cent higher than fully diluted. Average primary common and common equivalent shares outstanding for 1995, 1994, 1993, 1992 and 1991 were 609.7, 591.7, 582.6, 565.6 and 555.6, respectively. 23

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    D I R E C T O R S A N D M A N A G E M E N T B O A R D OF M O T O R O L A , I N C . Directors Walter E. Massey Dr. John A. White Robert L Growney William J. Weisz President, Dean of Engineering, Executive Vice President, Motorola, Inc., Chairman of the Board; Morehouse College Georgia Institute of Technology President and General Manager, Messaging, formerly Vice Chairman of the Board Information and Media Sector and CEO, Motorola, Inc. John F Mitchell Director Emeritus Vice Chairman of the Board Elmer H. Wavering Carl F. Koenemann David R. Clare Motorola, Inc. Formerly Vice Chairman and Executive Vice President and Retired; formerly President, Chief Operating Officer, Chief Financial Officer Johnson & Johnson Thomas J. Murrin Motorola, Inc. Dean of Duquesne University's James A. Norling H. Laurance Fuller School of Business Administration Management Board Executive Vice President, Motorola, Inc., Chairman of the Board, President Keith J. Bane President, Motorola Europe, and CEO, Amoco Corporation John £ Pepper, Jr. Executive Vice President, Middle East and Africa Chairman of the Board Chief Corporate Staff Officer Christopher B. Galvin and Chief Executive, Edward F. Staiano President and Chief Operating Officer, Procter & Gamble Company Arnold S. Brenner Executive Vice President, Motorola Inc., Motorola, Inc. Executive Vice President, President and General Manager, Samuel C. Scott III General Manager, Japan Group General Systems Sector Robert W. Galvin Corporate Vice President, Chairman of the Executive Committee CPC International, Inc. Glenn A. Gienko * Gary I. Tooker of the Board, Motorola, Inc. Senior Vice President, Vice Chairman of the Board Gary I. looker Motorola Director of Human Resources and Chief Executive Officer John T. Hickey Vice Chairman of the Board Retired; formerly Executive Vice and Chief Executive Officer, Robert W. Galvin Frederick T. Tucker President and Chief Financial Officer, Motorola, Inc. Chairman of the Executive Committee Executive Vice President, Motorola, Inc., Motorola, Inc. of the Motorola Board of Directors General Manager, Automotive, Energy Gardiner L Tucker and Controls Group Anne P. Jones Retired; formerly Vice President * Christopher B. Galvin Consultant; formerly member of the for Science and Technology, President and Chief Operating Officer Richard H. Weise Federal Communications Commission International Paper Company Senior Vice President and Secretary Thomas D. George Donald R. Jones B. Kenneth West Executive Vice President, Motorola, Inc., Richard W. Younts Retired; formerly Executive Vice Senior Consultant for Corporate President and General Manager, Executive Vice President, President and Chief Financial Officer, Governance to Teachers Insurance Semiconductor Products Sector Corporate Executive Director, Motorola, Inc. and Annuity Association, College International-Asia and Americas Retirement Equities Fund; Merle L. Gilmore Judy C. Lewent Former Chairman of the Board Executive Vice President, Motorola, Inc., 'Chairman Senior Vice President and Chief Financial and Chief Executive Officer, President and General Manager, '"Vice Chairman Officer, Merck & Co., Inc. Harris Bankcorp, Inc. Land Mobile Products Sector C E O Q U A L I T Y A W A R D S A N D D A N N O B L E F E L L O W S The Chief Executive Office Quality Award General Systems Sector Messaging, Information Fellows chosen in 1995 were: is Motorola's highest award for quality Cellular Analog Software Organizations and Media Sector Herb Goronkin performance. Winners in 1995 were: Cork, Ireland; Tel Aviv, Israel; Osaka, China Paging Operation Corporate Japan; Arlington Heights, III. and Ft. Tianjin, China Steve Goude Corporate Worth, Texas, USA General Systems Sector Human Resources Team The Dan Noble Fellow is the highest Raymond Leopold Easter Inch, Scotland Government and Space honorary award that can be made to a Government and Space Technology Group Technology Group technologist within Motorola. It recog- Jim Mitzlaff Cross Sector Award Government Electronics Division nizes outstanding technical creativity, General Systems Sector Information Systems Group Scottsdale, Ariz., USA innovative ability and productive achieve- Morris Moore Mansfield, Mass., USA \ ments. It is named for Dan Noble, a Messaging, Information and Media Sector Nippon Motorola Ltd., Land Mobile Products Sector visionary technological pioneer, former Anthony Suppelsa Information Systems Operation Radius Design Team Vice Chairman of Motorola and Chairman Land Mobile Products Sector Tokyo, Japan Schaumburg, III. and Mt. Pleasant, of its Science Advisory Board. Iowa, USA (24)

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    STOCKHOLDER REFERENCE I N F O R M A T I O N Transfer Agent, Harris Trust and Savings Bank Registrar, Dividend Corporate Trust Operations Division Disbursing Agent P.O. Box 755 and Dividend 311 West Monroe Street Reinvestment Agent 14th Floor Chicago, IL 60690 USA (312)461-2339 Investor Relations Security analysts, investment Investor Relations, Motorola, Inc. Or call: (800) 262-8509 professionals and shareholders Corporate Offices Internet address: http:// should direct their business-rela 1303 East Alqonquin inquiries to: Schaumburg, IL 60196 USA Common Stock Motorola common stock is listed on the New York, Chicago, London and Annual Meeting The annual meeting will be held on stockholders on or about March 22, of Stockholders May 7,1996. A notice of the meeting, 1996, at which time proxies will be together with a form of proxy and a solicited by the Board of Directors. proxy statement, will be mailed to Proxy Statement A copy of the Proxy Statement may be obtained without charge. Contact the Investor Relations Dept. as listed above. Form10-K After the close of each fiscal year, tional information concerning its busi- Motorola submits a report on Form ness. A copy of this report may also be 10-K to the Securities and Exchange obtained without charge from Investor Commission containing certain addi- Relations. Auditors KPMG Peat Marwick LLP 303 East Wacker Drive Chicago, IL 60601 USA Safe Harbor Statements which are not historical facts, the iDEN business; the effects on Motorola's IRIDIUM project; capacity and supply con- Statement including statements about our confidence semiconductor business and Automotive, straints or difficulties, including underutilization and strategies and our expectations about Energy and Controls Group of changes in the of new or existing facilities, such as semicon- new and existing products, technologies and growth of the Company's equipment busi- ductor facilities; the results of financing efforts; opportunities, market and industry segment nesses; the impact of competitive products actual purchases under agreements and the growth, demand and acceptance of new and and pricing, including continued pressure on loss of any significant customers of any busi- existing products, and return on investments average selling prices for wireless and semi- ness; the effect of the Company's accounting in products and markets are forward looking conductor products; product development, policies; the effects of economic conditions statements that involve risks and uncertain- commercialization and technological delays or and trade, legal, social, and economic risks, ties. These include, but are not limited to, such as import, licensing, and trade restric- product demand and market acceptance risks, developing, producing, testing and selling nev tions, including those affecting trade with including a moderating growth rate in the products and technologies, such as two-way China and other emerging nations, and other cellular subscriber base in the United States and voice paging, wireless local loop, tele- risks detailed in the Company's Securities and, to some extent, Europe and market phony and high-speed data products and and Exchange Commission filings, including acceptance difficulties and other difficulties various market acceptance, software, tech- its Proxy Statement and Form 10-K for the experienced by: ent customers of nological and financing risks related to the year ended 1995. This entire report has been printed oh recycled paper.

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    Motorola, Inc. Corporate Offices 1303East Algonquin Road Schaumburg, IL 60196 USA Phone: (847) 576-5000 Motorola is an Equal Employment Opportunity/Affirmative Action Employer Motorola and M are registered trademarks of Motorola, Inc.

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