-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FLr5NDFKhY1tjHLYWC22n2vX7zxKMMlX9v8aKA0FQiZcZ7szNMJXhmkNmLNRYNwA Vyez1KU4/LUMjcK23fuDQQ== 0000912057-96-004991.txt : 19960325 0000912057-96-004991.hdr.sgml : 19960325 ACCESSION NUMBER: 0000912057-96-004991 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960322 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOTOROLA INC CENTRAL INDEX KEY: 0000068505 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 361115800 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07221 FILM NUMBER: 96537601 BUSINESS ADDRESS: STREET 1: 1303 E ALGONQUIN RD CITY: SCHAUMBURG STATE: IL ZIP: 60196 BUSINESS PHONE: 7085765000 FORMER COMPANY: FORMER CONFORMED NAME: MOTOROLA DELAWARE INC DATE OF NAME CHANGE: 19760414 10-K 1 10-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K /X/ FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR / / 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 (847) 576-5000 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED - -------------------------------------------- ----------------------------- 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 ------------------------ 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, 1996 was approximately $30.8 billion (based on closing sale price of $53.75 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, 1996 was 591,696,173. DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT LOCATION IN FORM 10-K - ---------------------------------------------------------------------------------------- ------------------------ Portions of Registrant's Proxy Statement for 1996 Annual Meeting of Stockholders Parts I, II, III and IV Including Management's Discussion and Analysis and Consolidated Financial Statements
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -2- 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: 847-576-5000). 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, personal communications equipment and systems and other forms of electronic communication systems; subscriber and infrastructure equipment for the telephone market; 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, shared mobile radio and wireless data. 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 the Consolidated Financial Statements contained in the attachment to Motorola's Proxy Statement for the 1996 annual meeting of stockholders. (c) Narrative description of business. -3- GENERAL SYSTEMS SECTOR The General Systems Sector includes the Cellular Subscriber Group, the Cellular Infrastructure Group, the Network Ventures Division 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 operating systems in Argentina, Uruguay, Hong Kong, Israel, Chile, Mexico, Thailand, Pakistan, Nicaragua, Dominican Republic, Russia, Honduras, Jordan, Lithuania 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. Products are marketed worldwide through original equipment manufacturers, carriers, distributors, dealers, retailers and, in certain countries, through a direct sales force. Financing of cellular and personal communications infrastructure equipment is sometimes offered to qualifying customers. Radio frequencies are required to provide cellular and personal communications services. The allocation of frequencies is regulated in the United States and other countries throughout the world, and limited spectrum space is allocated for these services. The growth of the cellular and personal communications industry and Motorola's results 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 based on the Motorola 68000, 88000 and Power PC 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 -4- 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. Its products make substantial use of solid state semiconductor components, including integrated circuits. The Sector's backlog amounted to $1.47 billion at December 31, 1995 and $1.66 billion at December 31, 1994. The 1995 backlog is believed to be generally firm, and approximately 100% of that amount is expected to be shipped during 1996. This forward-looking estimate of the firmness of such orders is subject to future events which may cause the percentage of the 1995 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. The Sector competes in markets worldwide. 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. Participation in a very competitive industry requires a continuing high level of investment in technology. Management believes that, looking forward, 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 will allow the General Systems Sector to remain competitive. Materials used in the Sector's operations are generally second-sourced to ensure a continuity of supply. Occasionally, there are shortages of required purchased components. Energy necessary for the Sector's operations consists of electricity, natural gas and gasoline, all of which are currently adequate in supply. The Sector's factories are highly automated and therefore, dependent upon a steady supply of electrical -5- power. Difficulties in obtaining any of the aforementioned items could affect the Group's and Motorola's results. The Cellular Subscriber Group carries reasonable product inventories in distribution centers to meet customer delivery requirements. As a general rule, the Cellular Subscriber and Infrastructure Groups do not permit customers to return merchandise. The Motorola Computer Group permits customers to return products in accordance with practices followed in the computer industry. The Cellular Subscriber Group has offered extended payment terms when necessary to meet competitive offerings. In the Cellular Infrastructure Group, payment terms are particular to individual contracts, a majority of which provide for the hold back of certain residual payments until system acceptance by the customer. For qualifying customers, the Cellular Infrastructure Group finances equipment purchases under various arrangements. Credit terms offered by the Motorola Computer Group normally are in accordance with practices followed in the computer industry. Occasionally, the Motorola Computer Group uses installment sale agreements and leases which are sold to a Motorola finance subsidiary. 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 and seasonality of business with respect to this industry segment. The General Systems Sector's headquarters are located in Schaumburg, Illinois. The Sector operates manufacturing facilities in Tempe, Arizona; Arlington Heights, Grayslake, Harvard, Libertyville and McHenry, Illinois; Ft. Worth, Texas; Swindon, England; Penang, Malaysia; Easter Inch, Scotland; Flensburg, Germany; Arad, Israel; and Tianjin, China. A new manufacturing facility is under construction in Harvard, Illinois. The Sector also has joint venture manufacturing operations in Austria and China. SEMICONDUCTOR PRODUCTS SECTOR Semiconductors control and amplify electrical signals and are used in a broad range of electronic products, including television receivers and -6- 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, 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. Products manufactured by the Sector are also supplied to other operating units of Motorola. Other sectors of Motorola collectively constitute one of the Sector's two largest customers, and the loss of, or significant reduction of purchases by, either could affect the Sector's results. The Sector and its results are affected by the cyclical nature of the semiconductor industry. Available capacity, cyclical customer demands, new product introduction and aggressive pricing could impact its business and results. The Sector's capacity is being increased to meet current market demand, but the Sector is still experiencing some isolated areas of capacity constraints. In addition to the Sector's factory expansion program, which includes some joint venture manufacturing facilities, it is actively pursuing additional capacity through the sourcing of products from outside vendors. Because of the market demand, the available quantity of some products have been allocated among customers, including other Motorola operating units, from time to time, which has affected the Sector's and Motorola's results. -7- The semiconductor industry is subject to rapid changes in technology, requires a high level of capital spending and an extensive research, 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 $3.25 billion at December 31, 1995 and $2.68 billion at December 31, 1994. The 1995 backlog amount is believed to be generally firm, and approximately 100% of that amount is expected to be shipped during 1996. However, in the past, the Sector has experienced abrupt and repeated rescheduling of previously firm and even expedited orders. This forward-looking estimate of the firmness of such orders is subject to future events which may cause the percentage of the 1995 backlog actually shipped to change. The Semiconductor Products Sector experiences intense competition from numerous competitors 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, personal computer/work station, industrial, automotive, consumer, computer, government and distributor markets. In 1994, the Sector announced that it is discontinuing its military business. 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, looking forward, 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 any shortages in obtaining raw materials. However, it is experiencing some extended lead times on certain raw materials due to industry demand, but this is not currently having 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 seeking additional sources of supply to decrease -8- this dependency. With respect to other materials, the Sector also is seeking additional sources of supply to minimize the risk of obtaining materials from only a few 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 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. Difficulties in obtaining any of the aforementioned items could affect the Sector's and Motorola's results. 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 are in Phoenix, Arizona. Its manufacturing facilities are located in Chandler, Mesa, Phoenix and Tempe, Arizona; Irvine, California; Research Triangle Park, North Carolina; Austin, Texas; Tianjin, China; Toulouse, France; Munich, Germany; Kwai Chung and Tai Po, Hong Kong; Aizu and Sendai, Japan; Seoul, Korea; Kuala Lumpur and Seremban, Malaysia; Guadalajara, Mexico; Carmona and Manila, the Philippines; Singapore; Chung-Li, Taiwan; and East Kilbride and South Queensferry, Scotland. MESSAGING, INFORMATION AND MEDIA SECTOR Motorola's Messaging, Information, and Media Sector ("MIMS") is composed of the Paging Products Group, the Wireless Data Group, the Information Systems Group, the International Networks Division and the newly-formed Multimedia Group. The Paging Products Group designs, manufactures and distributes paging subscriber, paging infrastructure, and related products in almost all geographic regions of the world. The Wireless Data Group designs, manufactures and distributes wireless data hardware and software products, infrastructure equipment and systems. The Information Systems Group designs, manufactures and sells modems, analog and digital transmission devices and similar products. The International Networks Division operates paging, wireless data and -9- gateway communications services on a worldwide basis. These services are provided primarily through joint ventures but also through wholly-owned subsidiaries. All of the paging and wireless data operating companies with which the International Networks Division is involved operate under radio frequency licenses issued by governmental authorities in the various countries of the world. The Multimedia Group, formed in 1995, is developing products that are expected to enable voice, video and high speed communications over cable networks. The introduction of some products is expected in late 1996. MIMS provides equipment and systems to meet the communication needs of many different types of businesses, institutional and government organizations. Also, there is a growing base of paging and wireless data customers using the products for personal and family communication needs. Radio frequencies are required to provide paging and wireless data information services. The allocation of frequencies is regulated in the United States and other countries throughout the world, and limited spectrum space is allocated for these services. The growth of the paging and wireless data information industry and Motorola's results could 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 Sector's backlog amounted to $1.1 billion at December 31, 1995 and $0.7 billion at December 31, 1994. The 1995 backlog is believed to be generally firm, and approximately 100% of that amount is expected to be shipped during 1996. This forward-looking estimate of the firmness of such orders is subject to future events which may cause the percentage of the 1995 backlog actually shipped to change. No one customer or a few customers represent a material part of the business of the MIMS segment. MIMS products are sold through both domestic and international sales organizations which sell through direct and indirect channels such as distributors, retailers and value added resellers. -10- This segment carries on an extensive product development program. Its products make substantial use of solid-state semiconductor components, including integrated circuits. This segment experiences widespread, intense competition from numerous competitors ranging from some of the world's largest, diversified companies to foreign state-owned telecommunications companies to many small, specialized firms. The principal manufacturing operations of many competitors are located outside of the United States. Competitive factors for MIMS include, but are not limited to, price, quality, time-to-market, technology, company image, service, warranty, product features and availability. Materials and components required by this segment are relatively dependable and certain, but normal fluctuations in market demand and supply could cause temporary, selective shortages. Occasionally, shortages or extended delivery periods have occurred in various component parts, the effects of which have generally been industry-wide and short in duration. MIMS requires commercially available electrical energy for manufacturing and administrative operations. Facilities are temperature controlled with oil and gas heat and electrical power. These types of energy are currently readily available. Difficulties in obtaining any of the aforementioned items could affect the Sector's and Motorola's results. Reference is made to the material under the heading "General" for information relating to patents and trademarks and seasonality with respect to this segment. This segment's headquarters are located in Schaumburg, Illinois, with manufacturing facilities in Lake Zurich, Illinois; Boynton Beach, Florida; Ft. Worth, Texas; Mansfield, Massachusetts; Huntsville, Alabama; Arad, Israel; Singapore; Tianjin, China; Vega Baja, Puerto Rico; Dublin, Ireland; Bangalore, India; and Seoul, Korea. -11- LAND MOBILE PRODUCTS SECTOR The Land Mobile Product Sector ("LMPS") designs, manufactures and sells analog and digital two-way voice and data products and systems for a variety of worldwide applications. As a principal supplier of mobile and portable FM two-way radio products and systems, LMPS provides equipment and systems to meet the communications needs of individuals and many different types of business, institutional and governmental organizations. Products of LMPS provide voice and data communication between vehicles, persons and base stations. Also, LMPS provides network services for two-way radio subscribers in U.S. and international markets through joint ventures and wholly-owned companies. The principal customers for two-way radio products and systems 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 base of customers using the products for personal and family communication needs. These products are also sold and leased to various federal agencies for many uses. No one customer represents a material part of the business of the Land Mobile Products segment. However, LMPS has a few customers that, collectively, the loss of, or a significant reduction in purchases by, could be material to its business. 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, -12- 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 and results of this segment could 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 and results of the two-way 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. LMPS 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 integrated circuits. The products manufactured and marketed by LMPS are sold directly through its own distribution force, or through independent authorized distributors and dealers, commercial radio service operators 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 LMPS have been 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 were sold to a Motorola finance subsidiary. Subscriber units are sold directly and through indirect distribution channels. -13- This segment's backlog amounted to $1.18 billion at December 31, 1995 and $1.30 billion at December 31, 1994. The 1995 backlog amount is believed to be generally firm, and approximately 88% of that amount is expected to be shipped during 1996. This forward-looking estimate of the firmness of such orders is subject to future events which may cause the percentage of the 1995 backlog actually shipped to change. This segment experiences widespread, intense competition from numerous competitors ranging from some of the world's largest, diversified companies to foreign state-owned telecommunications companies to many small, specialized firms. The principal manufacturing operations of many competitors are located outside of the United States. Competitive factors for LMPS 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, looking forward, 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 and supply could cause temporary, selective shortages and affect results. Direct sourcing of materials and components from foreign suppliers is becoming more extensive. LMPS operates certain offshore subassembly plants, the loss of one or more of which could constrain its production capabilities and affect results. 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. Difficulties in obtaining any of the aforementioned items could affect the Sector's and Motorola's results. LMPS provides custom products based on assembling basic units into a large variety of models or combinations. This requires stocking of inventories and large varieties of piece parts as well as a variety of basic level assemblies to meet short delivery requirements. -14- Reference is made to the material under the heading "General" for information relating to patents and trademarks with respect to this segment. Information with respect to the transfer of LMPS's 800 MHz Specialized Mobile Radio licenses and assets to Nextel Communications, Inc. is incorporated by reference to the information under the caption "Land Mobile Products" in the Management's Discussion and Analysis of Financial Condition and Results of Operations and in Note 6 of the Notes to the Consolidated Financial Statements, both contained in the attachment to Motorola's Proxy Statement for the 1996 annual meeting of stockholders. This segment's headquarters are located in Schaumburg, Illinois, with major manufacturing facilities in Schaumburg, Illinois; Plantation, Florida; Mount Pleasant, Iowa; Swords, Ireland; Arad, Israel; and Penang, Malaysia. GOVERNMENT AND SPACE TECHNOLOGY GROUP The Government and Space 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 expanded the application of its core capabilities to support global growth opportunities within other Motorola businesses. The Group produces products related to electronic and communications equipment that have various applications based upon customer requirements of the Group's three business segments: government, commercial and satellite communications. The government business segment, known as the Government Electronics Division and Government Systems Operations, primarily performs research, development and production work under contracts with governmental agencies, but also conducts independent research and development programs. The government business segment produces products such as diversified military electronic equipment, including military communications equipment, radar systems, data links, display systems, positioning and navigation systems, missile guidance equipment, electronic ordnance devices and drone electronic systems. The -15- 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 highly regulated and continues to be very competitive. Competition has increased substantially in all aspects of the government business due to a slowdown in procurement resulting from a lower defense budget. Competitors include large and small technically competent firms. Some competitors from whom the segment procured subcontract work in the past are becoming more vertically integrated and are performing the work previously subcontracted. This segment currently expects to continue to meet competition on the basis of price and quality of product performance. The Group has diversified its activities by applying its core technologies to other non-federal government and commercial opportunities. During 1993, the Group organized its commercial business thrusts into the Diversified Technologies Division ("DTD"). This segment designs, builds, and markets commercial test equipment and evaluates new product and market opportunities utilizing various technologies. Also, in 1995, DTD established a core group of technical capabilities to meet the global growth opportunities of other Motorola businesses. This activity is expected to continue to make a significant contribution toward meeting those needs. The Group's Satellite Communications Division (SATCOM) is developing the IRIDIUM-Registered Trademark- satellite-based communication system. The IRIDIUM-Registered Trademark- 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-Registered Trademark- 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 and paging. SATCOM is the prime contractor under contracts with Iridium, Inc. to provide and launch the satellites, control the ground stations and maintain the system. During the last four years, this contract for -16- development effort has become a significant portion of the Group's business and is expected to remain a major contributor to the Group's sales for the next several years. The loss of these contracts could have a material adverse effect on the Group's and Motorola's results. SATCOM has entered into significant subcontracts for portions of the system for which it will generally remain obligated even if Iridium, Inc. is unable to satisfy the terms of its contracts with SATCOM, including funding. SATCOM also performs research, development, design and manufacturing services for space-based equipment for government customers. IRIDIUM-Registered Trademark- is a registered 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 1995, a small percentage (approximately 4%) of the Group's business was conducted internationally, primarily through the government business sector. These sales generally relate to the development and deployment of defense, security and commercial air traffic management systems with selected countries, concentrated in the Asia-Pacific region and Canada. 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 the terms set forth in the contracts. 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. However, difficulties in obtaining any of the aforementioned items could affect the Group's and Motorola's results. Patents continue to become more important as competition increases in a declining U.S. Government market and as the Group expands quasi-government commercial opportunities. Also, reference is made to the material under the heading "General" for information relating to patents and trademarks. -17- The Group has its headquarters in Scottsdale, Arizona, with manufacturing facilities in Scottsdale and Chandler, Arizona. AUTOMOTIVE, ENERGY AND CONTROLS GROUP The Automotive, Energy and Controls Group manufactures and sells products in three major categories: automotive and industrial electronics; energy storage products and systems; printed circuit boards 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 established a Flat Panel Display Division to develop the next generation of flat panel displays. The Group is involved in several joint ventures. 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. The energy storage products business and the ceramic and quartz products business sell primarily to other industry segments within Motorola, principally the Land Mobile and General Systems segments. A large part of the Group's business is dependent upon two external 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. 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. However, difficulties in obtaining any of the aforementioned items could affect the Group's and Motorola's results. Competitive factors in the sale of all of the Group's products include price, product quality and performance, supply integrity, quality reputation, experience, responsiveness and design and manufacturing technology. -18- 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; Atlanta, Georgia; Northbrook, Buffalo Grove, Schaumburg and Vernon Hills, Illinois; Albuquerque, New Mexico; Elma, New York; Carlisle, Pennsylvania; Seguin, Texas; Angers, France; Stotfold, England; 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 overall business upon a single or a very few customers. Approximately 2.7% of Motorola's total sales and revenues in 1995 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 and its results. -19- 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, 1995. . . $8.024 billion December 31, 1994. . . $7.594 billion The orders supporting the 1995 backlog amounts shown in the foregoing table are believed to be generally firm, and approximately 98% of orders on hand at December 31, 1995 are expected to be shipped during 1996. However, this is a forward-looking estimate of the amount expected to be shipped, and future events may cause the percentage actually shipped to change. Motorola uses the percentage-of-completion method to recognize revenues and costs associated with most long-term contracts. For contracts involving certain technologies, revenues and profits, or parts thereof, are deferred until technological feasibility is established and customer acceptance is obtained. For other product sales, revenue is recognized at the time of shipment, and reserves are established for price protection and cooperative marketing programs with distributors. 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 $2,197 million in 1995, $1,860 million in 1994 and $1,521 million in 1993. In addition, research funded under customer-sponsored contracts amounted to approximately $546 million in 1995, $601 million in 1994 and $324 million in 1993. Approximately 11,600 professional employees were engaged in such research activities (including customer-sponsored) during 1995. -20- PATENTS AND TRADEMARKS. Motorola owns 7,254 patents in the United States and 6,411 in foreign countries. These foreign patents are counterparts of Motorola's United States patents. During 1995, Motorola was granted 1,016 United States patents. Many of the patents owned by Motorola are used in its operations or licensed for use by 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. 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. 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 the Consolidated Financial Statements under the caption "Environmental and Legal" and the information contained in Management's Discussion and Analysis of Financial Condition and Results of Operations under the caption "Environmental Matters" contained in the attachment to Motorola's Proxy Statement for the 1996 annual meeting of stockholders. MISCELLANEOUS. At December 31, 1995, there were approximately 142,000 employees of Motorola and its subsidiaries. The business of Motorola and its industry segments is taking on certain seasonal characteristics: the Semiconductor Products Sector has tended to have stronger, seasonally-adjusted sales in the first half of the year; sales of products, such as cellular telephones and pagers, in consumer markets tend to increase in the fourth quarter; also, as the market for paging products in China has matured, a seasonal pattern has developed in which orders decline in the fourth and first quarters. An increase or decrease in large system orders in the Cellular Infrastructure Group and the Land Mobile Products Sector could cause the volatility of orders, revenues and profits recognized in -21- any particular period. Radio frequencies are required to use many of Motorola's products and services. These frequencies and their use are regulated by a variety of agencies throughout the world. The growth in cellular, paging and other wireless communications products could be affected if adequate frequencies are not allocated for their use, or through regulation or regulatory changes. In the United States, the Federal Communications Commission has broad authority to make the rules and regulations and prescribe restrictions and conditions on the use of radio frequencies. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Except for historical matters, the matters discussed in this Form 10-K are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements under the following headings; (i) "General Systems Sector," about the allocation of frequencies, development of technologies, growth, expected shipments during 1996, and competitiveness through research and development and technology; (ii) "Semiconductor Products Sector," about the loss of or reduction in purchases by customers, capacity, cyclical customer demands, new product introductions, pricing, the allocation of available products among customers, expected shipments during 1996, competitiveness through research and development and technology and source of supply; (iii) "Messaging, Information and Media Sector," about the allocation of frequencies, development of technologies, growth, expected shipments during 1996, and competitiveness; (iv) "Land Mobile Products Sector," about the loss of or reduction in purchases by customers, the allocation and regulations of frequencies, expected shipments during 1996, competitiveness through research and development and technology and the availability of supplies; (v) "Government and Space Technology Group" about the U.S. government as a customer, competitiveness, the contribution of the Diversified Technology Group, the impact of the Company's investment in Iridium, Inc. and the availability of supplies; (vi) "Automotive, Energy and Controls Group," about the loss of or reduction in purchases by customers and the availability of supplies and the availability of supplies; (vii) "Backlog," about expected shipments during 1996; and (viii) "Miscellaneous," about seasonality, large system orders, and the growth from products. -22- Motorola wishes to caution readers that in addition to the important factors described elsewhere in this Form 10-K, the following important factors, among others, sometimes have affected, and in the future could affect, Motorola's actual results and could cause Motorola's actual consolidated results during 1996, and beyond, to differ materially from those expressed in any forward- looking statements made by, or on behalf of Motorola: - - Underutilization of Motorola's plants and factories, or of any plant expansions or new plants, including, but not limited to, those in the Semiconductor Products Segment, resulting in production inefficiencies and higher costs; start-up expenses and inefficiencies and delays and increased depreciation costs in connection with the start of production in new plants and expansions, including but not limited to, those in the Semiconductor Products Segments; - - Motorola's actions in connection with continued and increasing competition in many product areas, including, but not limited to, cellular subscriber products and including price competition; fluctuating demand for certain products in certain seasons, such as paging and cellular subscriber products, as more products are sold to the consumer market; and the focus by some of Motorola's businesses - in particular, the cellular infrastructure and land mobile products businesses - on large system orders, which could result in fluctuating results from quarter to quarter; - - Difficulties in obtaining raw materials, supplies, power and natural resources and any other items needed for the production of semiconductors and other products, and capacity constraints which could limit the amounts of orders the Semiconductor Products Segment and other segments can accept for certain products, causing effects on Motorola's ability to ship paging products, cellular phones and other products; Difficulties or delays in the development, production, testing and marketing of products, including, but not limited to, a failure to ship new products and technologies when anticipated, including, but not limited to, two-way and voice paging, CDMA for cellular and PCS -23- systems, wireless local loop, telephony and high-speed data for cable and integrated dispatch radio, the failure of customers to accept these products or technologies when planned, any defects in products and a failure of manufacturing economies to develop when planned; Risks related to the IRIDIUM-Registered Trademark- project, including any software, technological or market acceptance issues, performance failures or other difficulties by a party to any IRIDIUM-Registered Trademark- related contracts or subcontracts, including any failure of Iridium, Inc. to receive additional financing needed for Iridium, Inc. to continue to make payments, or any events which would require Motorola to provide additional financial support for Iridium, Inc. as well as the amount of reserves related to the Iridium project, and changes to those reserves; The effects of, and changes in, laws and regulations, other activities of governments, agencies and similar organizations, including, but not limited to, those affecting frequency, use and availability of spectrum authorizations and licensing; and The costs and other effects of legal and administrative cases and proceedings (whether civil, such as environmental and product-related, or criminal), settlements and investigations, claims, and changes in those items, and developments or assertions by or against Motorola relating to intellectual property rights and intellectual property licenses. Certain portions of Motorola's Proxy Statement for the 1996 annual meeting of stockholders with Management's Discussion and Analysis and Consolidated Financial Statement are incorporated by reference into this Form 10-K. There are additional important factors included therein, including those beginning on page F-10 of the attachment to Motorola's Proxy Statement for the 1996 annual meeting of stockholders, that sometimes have affected, and in the future could affect, Motorola's actual results and could cause Motorola's actual consolidated results during 1996, and beyond, to differ materially from those expressed in any forward-looking statements made by, or on behalf of Motorola. -24- (d) Financial information about foreign and domestic operations and export sales. Domestic export sales to third parties were $3.59 billion in 1995, $2.97 billion in 1994 and $1.83 billion in 1993. Domestic export sales to affiliates were $6.64 billion in 1995, $4.40 billion in 1994 and $3.16 billion in 1993. The remainder of the response to this section of Item 1 is incorporated by reference to Note 7 of the Notes to the Consolidated Financial Statements and the "1995 Compared With 1994 "and "1994 Compared With 1993" sections of Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the attachment to Motorola's Proxy Statement for the 1996 annual meeting of 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, Lake Zurich, Libertyville, Northbrook, Schaumburg and Vernon Hills, Illinois; Elma, New York; Phoenix, Chandler, Scottsdale, Mesa and Tempe, Arizona; Boynton Beach and Plantation, Florida; Atlanta, Georgia; Austin, Ft. Worth and Seguin, Texas; Mount Pleasant, Iowa; Mansfield, Massachusetts; Huntsville, Alabama; Research Triangle Park, North Carolina; 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.) Motorola owns 129 facilities (manufacturing, sales, service and office, 73 of which are located in the United States and 56 of which are located in other countries. Motorola leases 510 such facilities, 298 of which are located in the United States and 212 of which are located in other countries. Motorola generally considers the productive capacity of the plants operated by each of its industry segments adequate and suitable for the -25- 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. Motorola is also adding production capacity for its General Systems Sector. 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 eight cases arising out of alleged groundwater, soil and air pollution in Phoenix and Scottsdale, Arizona. MCINTIRE ET AL. V. MOTOROLA, CAMELHEAD EQUITIES ET AL. V. MOTOROLA ET AL., and FARR V. MOTOROLA are pending in the U.S. District Court for the District of Arizona. BAKER ET AL. V. MOTOROLA ET AL., LOFGREN ET AL. V. MOTOROLA ET AL., BENTANCOURT ET AL. V. MOTOROLA ET AL., FORD ET AL. V. MOTOROLA ET AL. and WILKINS ET AL. V. MOTOROLA ET AL. are pending in the Arizona Superior Court, Maricopa County. The MCINTIRE lawsuit involves approximately 925 plaintiffs (325 personal injury, 125 property damage, and 475 personal injury and property damage) 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. FARR is a personal injury and wrongful death case, filed on November 17, 1995, based on like allegations of environmental contamination. CAMELHEAD EQUITIES, filed on June 1, 1993, is a suit for business losses by four failed real estate development limited partnerships alleging that groundwater contamination caused property damage and the failure of their real estate development. The District Court granted Motorola's motion for summary judgment on September 29, 1995. The plaintiffs' appeal to the United States Court of Appeals for the Ninth Circuit has been stayed pending resolution of plaintiffs' motion for rehearing in the District Court. The BAKER lawsuit, filed on February 11, 1992, is a class action, involving six representative individual named plaintiffs, alleging that Motorola and 28 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. On August 24, -26- 1994, the BAKER court certified two classes, a property damage class consisting of all persons who were residents, property owners or lessees of property which overlies, or is adjacent to, the alleged groundwater pollution, and a medical monitoring class consisting of all persons who resided in Phoenix and/or Scottsdale for more than one year continuously during the years between 1955 and 1989, and who received potable drinking water containing trichloroethylene at a level equal to or exceeding 2.0 parts per billion, on average. The LOFGREN, BENTANCOURT, FORD and WILKINS lawsuits, filed on April 6, 1993, July 16, 1993, June 10, 1994 and July 19, 1995, respectively, have been consolidated. The consolidated cases involve approximately 180 plaintiffs, alleging that Motorola and 31 other defendants contaminated the soil, air and groundwater in the Phoenix/Scottsdale area, causing health problems. All eight 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. Motorola and several of its directors and officers are named defendants in a consolidated alleged class action for alleged violations of Section 10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b-5, KAUFMAN, ET AL. V. MOTOROLA, INC. ET AL., which is pending in the U.S. District Court for the Northern District of Illinois. Plaintiffs maintain that Motorola and the individual defendants committed a fraud on the securities market by artificially inflating the price of Motorola stock. Plaintiffs propose a class period of November 4, 1994 through February 17, 1995, and seek an unspecified amount of damages. A class action, IN RE NEXTEL COMMUNICATIONS SECURITIES LITIGATION, against Nextel Communications, Inc., certain of its officers and directors and Motorola for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, is pending in the United States District Court for the District of New Jersey. The pending complaint, a consolidation of cases previously filed against Nextel, was -27- filed on July 11, 1995 and maintains that the defendants artificially inflated the price of Nextel common stock through a series of alleged misrepresentations and omissions. Plaintiffs propose a class period of July 22, 1993 through January 10, 1995 and seek an unspecified amount of monetary damages. Motorola is a defendant in several cases arising out of the Company's manufacture and sale of portable cellular telephones. VERB, ET AL. V. MOTOROLA, INC., ET AT., Circuit Court of Cook County, Illinois, 93 L 3238, is a purported class action by purchasers of portable cellular phones against the Company and seven other corporate defendants, alleging economic loss; the trial court's dismissal of this matter is on appeal to the Illinois Appellate Court. SCHIFFNER V. MOTOROLA, INC., Circuit Court of Cook County, Illinois, 95 CH 1879, is another economic loss purported class action by purchasers of portable cellular phones. CRIST V. MOTOROLA, INC. ET AL., Circuit Court of Cook County, Illinois, 94 CH 1077, WARD V. MOTOROLA, INC., ET AL., State Court of Fulton County, Georgia, 94 VS 91470, where the trial court's denial of Motorola's motion for summary judgment is on appeal to the Georgia Court of Appeals, WRIGHT V. MOTOROLA, ET. AL., Circuit Court of Cook County, Illinois, 95 LD 4929, KANE, ET. AL., V. MOTOROLA, INC., ET. AL., Circuit Court of Cook County, Illinois, 93 L 15256, RITTMAN, ET. AL. V. MOTOROLA, INC., ET. AL., District Court for Tarrant County, Texas, 348-160584-96, and CHRISTOPHER V. MOTOROLA, INC., United States District court for the Northern District of Ohio, 95 CV 2100, are cases where individuals allege that brain cancer was caused by or aggravated by the use of a cellular telephone. JERALD P. BUSSE, INDIVIDUALLY, AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED V. MOTOROLA, INC., ET. AL., Circuit Court of Cook County, Illinois, Chancery Division, 95 CH 10332, is a purported class action wherein it is alleged that cellular phones have not been proven safe and that the defendants have failed to adequately warn consumers of the alleged dangers of using cellular telephones. PENNSYLVANIA BANCSHARES, INC. ET. AL. V. MOTOROLA, INC., ET. AL., Court of Common Pleas, Montgomery County, Pennsylvania, 9519136, is a purported class action wherein it is alleged that Motorola, Inc. systematically engages in deceptive trade practices, including without limitation, intentionally misrepresenting the quality of certain types of cellular telephones. -28- The information contained in 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 the Consolidated Financial Statements under the caption "Environmental and Legal" contained in the attachment to Motorola's Proxy Statement for the 1996 annual meeting of stockholders is incorporated herein by reference. 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 consolidated financial position, liquidity or results of operations 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, 1995, their ages as of December 31, 1995, their current titles and positions held during the last five years: Gary L. Tooker; age 56; Vice Chairman of the Board and Chief Executive Officer since December 1993; President and Acting Chief Executive Officer from October 1993 to December 1993; and President and Chief Operating Officer from January 1990 to October 1993. Christopher B. Galvin; age 45; President and Chief Operating Officer since December 1993; and Senior Executive Vice President and Assistant Chief Operating Officer from January 1990 to December 1993. Robert W. Galvin; age 73; Chairman of the Executive Committee of the Board of Directors since January 1990. -29- Keith J. Bane; age 56; Executive Vice President and Chief Corporate Staff Officer since February 1995; Senior Vice President and Chief Corporate Staff Officer from August 1994 to February 1995; Senior Vice President and Motorola Director of Strategy, Technology and External Relations from October 1993 to August 1994; and Senior Vice President and Motorola Director of Strategy from November 1988 to October 1993. Arnold S. Brenner; age 58; Executive Vice President and General Manager, Japan Group since November 1988. Thomas D. George; age 55; 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. Glenn A. Gienko; age 43; Senior Vice President and Director of Human Resources since June 1995; Corporate Vice President Human Resources, General Systems Sector from February 1994 to June 1995; and Vice President Human Resources, General Systems Sector from June 1990 to February 1994. Merle L. Gilmore; age 47; Executive Vice President, President and General Manager, Land Mobile Products Sector ("LMPS"), since July 1994; Senior Vice President and President and General Manager, LMPS, from June 1994 to July 1994; Senior Vice President and Assistant General Manager, LMPS, from July 1992 to June 1994; Senior Vice President and General Manger, Worldwide Radio Products Group, LMPS, from May 1991 to July 1992; Corporate Vice President and General Manager, Worldwide Radio Products Group, Communications Sector, from January 1991 to May 1991; and Corporate Vice President and General Manager, Portable Products Division, Communications Sector, from April 1989 to January 1991. Robert L. Growney; age 53; 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 -30- and General Manager, Paging and Telepoint Systems Group from January 1991 to September 1992; and Senior Vice President and General Manager, Radio Technologies Group, Communications Sector from May 1989 to January 1991. Carl F. Koenemann; age 57; Executive Vice President and Chief Financial Officer since December 1991; and Senior Vice President and Assistant Chief Financial Officer from May 1990 to December 1991. James A. Norling; age 53; Executive Vice President, and President, Motorola Europe, Middle East and Africa since April 1993; and Executive Vice President, and President and General Manager, Semiconductor Products Sector from December 1989 to April 1993. Edward F. Staiano; age 59; Executive Vice President, and President and General Manager, General Systems Sector since December 1989. Frederick T. Tucker; age 55; Executive Vice President and President and General Manager, Automotive, Energy and Controls Group since September 1992; and Senior Vice President and General Manager, Automotive and Industrial Electronics Group from April 1988 to September 1992. Richard H. Weise; age 60; Senior Vice President, General Counsel and Secretary since November 1985. Mr. Weise relinquished his position as Senior Vice President and General Counsel in February 1996. He will continue as Secretary, however. Richard W. Younts; age 56; 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., Japan 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 will serve as officers of Motorola until the regular meeting of the Board of Directors in May 1996 or until their respective successors shall have been elected. Christopher B. Galvin is a -31- 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 Consolidated Financial Statements contained in the attachment to Motorola's Proxy Statement for the 1996 annual meeting of 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 Consolidated Financial Statements contained in the attachment to Motorola's Proxy Statement for the 1996 annual meeting of stockholders. 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 caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the attachment to Motorola's Proxy Statement for the 1996 annual meeting of 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 -32- 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 Consolidated Financial Statements contained in the attachment to Motorola's Proxy Statement for the 1996 annual meeting of 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 1 through 5 of Motorola's Proxy Statement for the 1996 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 Company" on pages 8 and 9 of Motorola's Proxy Statement for the 1996 annual meeting of stockholders. Item 11: Executive Compensation The response to this Item is incorporated by reference to the information under the caption "Director Compensation" on page 7 of Motorola's Proxy Statement for the 1996 annual meeting of stockholders and "Summary Compensation Table," "Stock Option Grants in 1995," "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values," "Long- -33- Term Incentive Plans - Awards in Last Fiscal Year," "Pension and Supplementary Retirement Plans," and "Termination of Employment and Change in Control Arrangements" on pages 9 through 12 of Motorola's Proxy Statement for the 1996 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 8 and 9 of Motorola's Proxy Statement for the 1996 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 caption "Director Compensation" on page 7 of Motorola's Proxy Statement for the 1996 annual meeting of stockholders. 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 Schedule and Auditors' Report TITLE SCHEDULE ----- -------- Valuation and Qualifying Accounts. . . . . . . .II All schedules omitted are inapplicable or the information required is shown in the Consolidated Financial Statements or notes thereto. -34- The auditors' report of KPMG Peat Marwick LLP with respect to the Financial Statement Schedule is located at page 35. 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") Motorola Long Range Incentive Plan of 1994 Share Option Plan of 1982 Share Option Plan of 1991 Motorola Elected Officers Supplementary Retirement Plan Officers Supplemental Medical Plan Accidental Death and Dismemberment Insurance for MEIP Participants Arrangement for Directors' Fees Retirement Plan for Non-employee Directors Deferred Fee Plan for Outside Directors Officers' Group Life Insurance Policy Consultant Agreement with John F. Mitchell Form of Termination Agreement Policy Protecting Salary and Medical Benefits Insurance Policy for Non-employee Directors Motorola, Inc. Non-Employee Directors' Stock Plan (b) Reports on Form 8-K. Motorola filed no reports on Form 8-K during the last quarter of 1995. (c) Exhibits See Item 14(a)3 above. -35- KPMG PEAT MARWICK LLP INDEPENDENT AUDITORS' REPORT ---------------------------- The Board of Directors and Stockholders of Motorola, Inc.: Under date of January 9, 1996, except for Note 6, which is as of February 16, 1996, we reported on the consolidated balance sheets of Motorola, Inc. and consolidated subsidiaries as of December 31, 1995 and 1994, 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, 1995, as contained in the 1995 proxy statement 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 1995. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedule as listed in Part IV, Item 14(a)2. The financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits. In our opinion, such financial statement schedule, 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 LLP January 9, 1996 Chicago, Illinois -36- Motorola, Inc. and Subsidiaries Schedule II Valuation and Qualifying Accounts Three Years Ended December 31, 1995 (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 - -------------------------------------------------------------------------------------------------------------------------- 1995 - ---- Allowance for doubtful accounts $118 $ 45 --- $ 40 (1) $123 Product and service warranties 283 122 --- 96 (2) 309 1994 - ---- Allowance for doubtful accounts $ 91 $ 48 --- $ 21 (1) $118 Product and service warranties 166 195 --- 78 (2) 283 1993 - ---- Allowance for doubtful accounts $ 69 $ 54 --- $ 32 (1) $ 91 Product and service warranties 117 110 --- 61 (2) 166
(1) Uncollectible accounts written off (2) Warranty claims paid -37- KPMG Peat Marwick LLP 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 (No. 33-62911) of Motorola, Inc. and consolidated subsidiaries of our reports dated January 9, 1996, except for Note 6, which is as of February 16, 1996, relating to the consolidated balance sheets of Motorola, Inc. and consolidated subsidiaries as of December 31, 1995 and 1994, and the related statements of consolidated earnings, stockholders' equity, and cash flows and related financial statement schedule for each of the years in the three-year period ended December 31, 1995, 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, 1995. /s/ KPMG Peat Marwick LLP March 19, 1996 Chicago, Illinois -38- 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 14, 1996 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 below 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 3/14/96 - ------------------------ Executive Officer Gary L. Tooker /S/ CARL F. KOENEMANN Principal Financial 3/6/96 - ------------------------ Officer Carl F. Koenemann /S/ KENNETH J. JOHNSON Principal Accounting 3/12/96 - ------------------------ Officer Kenneth J. Johnson
-39-
SIGNATURE TITLE DATE --------- ----- ---- /S/ DAVID R. CLARE Director 3/6/96 - -------------------------- David R. Clare /S/ H. LAURANCE FULLER - -------------------------- Director 3/18/96 H. Laurance Fuller /S/ CHRISTOPHER B. GALVIN Director 3/14/96 - -------------------------- Christopher B. Galvin /S/ ROBERT W. GALVIN Director 3/7/96 - -------------------------- Robert W. Galvin /S/ JOHN T. HICKEY Director 3/7/96 - -------------------------- John T. Hickey /S/ ANNE P. JONES Director 3/2/96 - -------------------------- Anne P. Jones /S/ DONALD R. JONES Director 3/6/96 - -------------------------- Donald R. Jones /S/ JUDY C. LEWENT Director 3/4/96 - -------------------------- Judy C. Lewent -40- SIGNATURE TITLE DATE --------- ----- ---- /S/ WALTER E. MASSEY Director 3/6/96 - -------------------------- Walter E. Massey /S/ JOHN F. MITCHELL Director 3/6/96 - -------------------------- John F. Mitchell /S/ THOMAS J. MURRIN Director 3/2/96 - -------------------------- Thomas J. Murrin /S/ JOHN E. PEPPER, JR. Director 3/6/96 - -------------------------- John E. Pepper, Jr. /S/ SAMUEL C. SCOTT III Director 3/9/96 - -------------------------- Samuel C. Scott III /S/ GARDINER L. TUCKER Director 3/4/96 - -------------------------- Gardiner L. Tucker /S/ WILLIAM J. WEISZ Director 3/7/96 - -------------------------- William J. Weisz /S/ B. KENNETH WEST Director 3/3/96 - -------------------------- B. Kenneth West /S/ JOHN A. WHITE Director 3/1/96 - -------------------------- John A. White
-41- EXHIBIT INDEX EXHIBIT NO. EXHIBIT - ----------- ------- 3(i) Restated Certificate of Incorporation of Motorola, Inc., including Certificate of Designation, Preferences and Rights 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 April 2, 1994). 3(ii) By-Laws of Motorola, Inc., revised as of February 6, 1996. 4.1 Rights Agreement dated November 9, 1988 (incorporated by reference to Exhibit (1) to Motorola's Registration Statement on Form 8-A dated November 15, 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(a) to Motorola's Registration Statement on Form S-3, Registration No. 33-30662). -42- 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. 4.10 Indenture dated as of May 1, 1995 between Motorola, Inc. and Harris Trust and Savings Bank, as Trustee (incorporated by reference to Exhibit 4(d) to Motorola's Registration Statement on Form S-3, Registration No. 33-56055. 4.11 Specimen of 7 1/2% Debentures due May 15, 2025 (incorporated by reference to Exhibit 4(B) to Motorola's Current Report on Form 8-K dated May 15, 1995). 4.12 Specimen of 6 1/2% Debentures due September 1, 2025. -43- EXHIBIT NO. EXHIBIT - ----------- ------- 10.1 Motorola Executive Incentive Plan, as amended through November 23, 1993, including the Long Range Incentive Program (incorporated by reference to Exhibit 10.1 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). 10.2 Motorola Long Range Incentive Plan of 1994 (incorporated by reference to Exhibit 10.2 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1993). 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 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 Resolution Amending Section 4 of the Share Option Plan of 1991, effective August 7, 1995. 10.5 Motorola Elected Officers Supplementary Retirement Plan, as amended through February 6, 1995 (incorporated by reference to Exhibit 10.5 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1994). 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). -44- EXHIBIT NO. EXHIBIT - ----------- ------- 10.8 Arrangement for directors' fees and retirement plan for non-employee directors (description incorporated by reference from page 7 of Motorola's Proxy Statement for the 1996 annual meeting of stockholders). 10.9 Deferred Fee Plan for Outside Directors, as amended February 6, 1996. 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 May 1, 1995 between Motorola, Inc. and John F. Mitchell (incorporated by reference to Exhibit 10 to Motorola's Quarterly Report on Form 10-Q for the quarter ended July 1, 1995). 10.12 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). 10.13 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). 10.14 Insurance policy covering non-employee Directors (incorporated by reference to the description on page 7 of Motorola's Proxy Statement for the 1996 annual meeting of stockholders and to Exhibit 10.16 to Motorola's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). -45- EXHIBIT NO. EXHIBIT - ----------- ------- 10.15 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 and Exhibits 99(a) and 99(b), respectively, to Motorola's Quarterly Report on Form 10-Q for the quarter ended October 1, 1994). 11 Motorola, Inc. and Consolidated Subsidiaries Primary and Fully Diluted Earnings Per Common and Common Equivalent Share. 21 Subsidiaries of Motorola. 23 Consent of KPMG Peat Marwick. See page 37 of the Annual Report on Form 10-K of which this Exhibit Index is a part. 27 Financial Data Schedule (filed only electronically with SEC). EX-3.II 2 EXHIBIT 3(II) Exhibit 3(ii) Revised as of February 6, 1996 MOTOROLA, INC. BYLAWS ARTICLE I OFFICES AND CORPORATE SEAL The registered office of the Corporation required by the Delaware General Corporation Law shall be 1209 Orange Street, Wilmington, Delaware, 19801, and the address of the registered office may be changed from time to time by the Board of Directors. The principal business office of the Corporation shall be located in the Village of Schaumburg, County of Cook, State of Illinois. The Corporation may have such other offices, either within or without the State of Illinois, as the Board of Directors may designate or as the business of the Corporation may require from time to time. The registered office of the Corporation required by the Illinois Business Corporation Act may be, but need not be, the same as its place of business in the State of Illinois, and the address of the registered office may be changed from time to time by the Board of Directors. The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the Corporation and the state of incorporation and the words "Corporate Seal". ARTICLE II BOARD OF DIRECTORS SECTION 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed by, or under the direction of, its Board of Directors. - 2 - SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of the Corporation shall be sixteen (16), or such other number fixed from time to time by the Board of Directors. Each director shall hold office until his successor shall have been elected and qualified, or until his earlier death or resignation. SECTION 3. VACANCIES. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled for the remainder of the unexpired term by the affirmative vote of a majority of the directors then in office although less than a quorum. SECTION 4. COMPENSATION. Directors who also are employees of the Corporation shall not receive any additional compensation for services on the Board of Directors. By resolution of the Board of Directors, a fixed sum may be allowed directors who are not employees of the Corporation for attendance at each regular or special meeting of the Board of Directors or any committee of the Board of Directors, and by resolution of the Board of Directors an additional fixed fee may be allowed directors who are not employees of the Corporation in consideration of other services and continuous interest and study of the affairs of the Corporation. Travel and other expenses actually incurred may be allowed all directors for attendance at each regular or special meeting of the Board of Directors or at any meeting of a committee of the Board of Directors or in connection with their other services to the Corporation. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 5. COMMITTEES OF DIRECTORS. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees. Each committee shall consist of one or more of the directors of the Corporation, as selected by the Board of Directors, and the Board of Directors shall also designate a chairman of each committee and the members of each committee shall designate a person to act as secretary of the committee to keep the minutes of, and serve the notices for, all meetings of the committee and perform such other duties as the committee may direct. Such person may, but need not be a member of the committee. Any such committee, - 3 - to the extent provided in a resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power and authority of the Board of Directors in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation under Section 251 or 252 of the Delaware General Corporation Law, recommending to the shareholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the shareholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation, and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law. Each committee of the Board of Directors may establish its own rules of procedure. Except as otherwise specified in a resolution designating a committee, one-third of the members of a committee shall be necessary to constitute a quorum of that committee for the transaction of business and the act of a majority of committee members present at a meeting at which a quorum is present shall be the act of the committee. SECTION 6. VALIDITY OF CONTRACTS. No contract or other transaction entered into by the Corporation shall be affected by the fact that a director or officer of the Corporation is in any way interested in or connected with any party to such contract or transaction, or himself is a party to such contract or transaction, even though in the case of a director the vote of the director having such interest or connection shall have been necessary to obligate the Corporation upon such contract or transaction; provided, however, that in any such case (i) the material facts of such interest are known or disclosed to the directors or shareholders and the contract or transaction is authorized or approved in good faith by the shareholders or by the Board of Directors or a committee thereof through the affirmative vote of a majority of the disinterested - 4 - directors (even though not a quorum), or (ii) the contract or transaction is fair to the Corporation as of the time it is authorized, approved or ratified by the shareholders, or by the Board of Directors, or by a committee thereof. ARTICLE III SHAREHOLDERS' MEETINGS SECTION 1. PLACE OF MEETINGS. The Board of Directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal business office of the Corporation in the State of Illinois. SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders shall be held on the first Tuesday in the month of May in each year, at the hour of 5:00 o'clock P.M., or at such other day and hour as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the state where the meeting is to be held, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein for the annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as is convenient. SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Chairman of the Board or by the Board of Directors. SECTION 4. VOTING - QUORUM. Each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of any class or classes are enlarged, limited or denied by the Certificate of Incorporation or in the manner therein - 5 - provided. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, except that directors shall be elected by a plurality of the votes of the shares represented at the meeting and entitled to vote on the election of directors, except as otherwise required by Delaware law, the Certificate of Incorporation, or these Bylaws. No matter shall be considered at a meeting of shareholders except upon a motion duly made and seconded. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 5. PROXIES. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after three years from the date of its execution, unless otherwise provided in the proxy. SECTION 6. NOTICE OF MEETINGS. Written notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days (twenty days if the shareholders are to approve a merger or consolidation or a sale, lease or exchange of all or substantially all the Corporation's assets) nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the Chairman of the Board, or the Secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, addressed to the shareholder at his address as it appears on the records of the Corporation, with postage thereon prepaid. - 6 - SECTION 7. VOTING LISTS. The officer or agent having charge of the stock ledger of the Corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each; which list, for a period of ten days prior to such meeting, shall be kept at the place where the meeting is to be held, or at another place within the city where the meeting is to be held, which other place shall be specified in the notice of meeting and the list shall be subject to inspection by any shareholder for any purpose germane to the meeting, at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original stock ledger shall be prima facie evidence as to who are the shareholders entitled to examine such list or ledger or to vote at any meeting of shareholders. SECTION 8. FIXING OF RECORD DATE. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the close of business on the date next preceding the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this - 7 - Section, such determination shall apply to any adjournment thereof; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 9. VOTING OF SHARES BY CERTAIN HOLDERS. Neither treasury shares nor shares of the Corporation held by another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall be entitled to vote or to be counted for quorum purposes. Nothing in this paragraph shall be construed as limiting the right of the Corporation to vote its own stock held by it in a fiduciary capacity. Shares standing in the name of another corporation, domestic or foreign, may be voted in the name of such corporation by any officer thereof or pursuant to any proxy executed in the name of such corporation by any officer of such corporation in the absence of express written notice filed with the Secretary that such officer has no authority to vote such shares. Shares held by an administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a fiduciary may be voted by him, either in person or by proxy. A shareholder whose shares are pledged shall be entitled to vote such shares unless in the transfer by the pledgor on the books of the Corporation the pledgor has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent such stock and vote thereon. SECTION 10. ADVANCE NOTICE OF SHAREHOLDER NOMINATIONS AND PROPOSALS FOR OTHER BUSINESS. Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the shareholders may be made at an annual or special meeting of the shareholders only (a) pursuant to the Corporation's notice with respect to such meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the Corporation who was a shareholder of record on the record date set with respect to such meeting as provided for in Section 8 of Article III, who is -8- entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 10. For nominations or proposals for other business to be properly brought before an annual or special meeting by a shareholder pursuant to clause (c) above, the shareholder must give timely notice thereof in writing to the Secretary of the Corporation and such business must be a proper matter for shareholder action under the Delaware General Corporation Law and a proper matter for consideration at such meeting under the Certificate of Incorporation and these Bylaws. For such notice to be timely, it must be delivered to the Secretary at the principal business office of the Corporation not earlier than the 90th day prior to the date of such meeting and not later than the close of business on the later of (i) the 60th day prior to the date of such meeting or (ii) the 10th day following the day on which public announcement of the date of such meeting is first made. If such shareholder's notice relates to a proposal by such shareholder to nominate one or more persons for election or re-election as a director, it shall set forth all information relating to each such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including, if and to the extent so required, such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected). If such shareholder's notice relates to any other business that the shareholder proposes to bring before the meeting, it shall set forth a brief description of such business, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made. Each such notice shall also set forth as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the Corporation's books, and of such beneficial owner and (ii) the class and number of shares of capital stock of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner. Persons nominated by shareholders to serve as directors of the Corporation who have - 9 - not been nominated in accordance with this Section 10 shall not be eligible to serve as directors. Only such business shall be conducted at an annual or special meeting of shareholders as shall have been brought before the meeting in accordance with this Section 10. The chairman of the meeting shall determine whether a nomination or any business proposed to be transacted by the shareholders has been properly brought before the meeting and, if any proposed nomination or business has not been properly brought before the meeting, the chairman shall declare that such proposed business or nomination shall not be presented for shareholder action at the meeting. For purposes of this Section 10, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service. Notwithstanding any provision in this Section 10 to the contrary, requests for inclusion of proposals in the Corporation's proxy statement made pursuant to Rule 14a-8 under the Exchange Act shall be deemed to have been delivered in a timely manner if delivered in accordance with such Rule. Notwithstanding compliance with the requirements of this Section 10, the chairman presiding at any meeting of the shareholders may, in his sole discretion, refuse to allow a shareholder or shareholder representative to present any proposal which the Corporation would not be required to include in a proxy statement under any rule promulgated by the Securities and Exchange Commission. ARTICLE IV BOARD OF DIRECTORS' MEETINGS SECTION 1. ANNUAL MEETINGS. An annual meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the annual meeting of shareholders. SECTION 2. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Delaware, as the place for holding any special meeting of the Board of Directors called by them. - 10 - SECTION 3. NOTICE. Except as set forth in the next sentence, notice of any special meeting shall be given at least 24 hours prior to the meeting by written notice delivered or given personally (including by phone) or by mail or telegram or other written communication to each director at his business address or residence. If, however, the meeting is called by or at the request of the Chairman of the Board and if the Chairman of the Board decides that unusual and urgent business is to be transacted at the meeting (which decision shall be conclusively demonstrated by his giving notice of the meeting less than 24 hours prior to the meeting), then at least 2 hours' prior notice shall be given. If notice is given by telegram or courier, such notice shall be deemed to be given when the telegram is delivered to the telegraph company or courier company and any personal notice shall be deemed given when given. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting and objects thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. SECTION 4. QUORUM. One-third of the number of directors fixed by, or pursuant to, Section 2 of Article II shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such one-third is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 5. MANNER OF ACTING. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 6. PRESUMPTION OF ASSENT. A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent is entered in the minutes of the meeting or unless he files his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or - 11 - forwards such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. SECTION 7. ACTION BY DIRECTORS WITHOUT A MEETING. Any action required to be taken at a meeting of directors, or at a meeting of a committee of directors, or any other action which may be taken at a meeting, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the directors or members of the committee thereof entitled to vote with respect to the subject matter thereof and filed with the minutes of proceedings of the Board of Directors or committee and such consent shall have the same force and effect as a unanimous vote. SECTION 8. PARTICIPATION IN A MEETING BY TELEPHONE. Members of the Board of Directors or any committee of directors may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participating in a meeting pursuant to this Section 8 shall constitute presence in person at such meeting. ARTICLE V OFFICERS AND CHAIRMAN OF THE BOARD SECTION 1. NUMBER, ELECTION, APPOINTMENT, REMOVAL, VACANCY. The elected officers of the Corporation shall be one Vice Chairman of the Board and Chief Executive Officer, a President, one or more Vice Presidents, a Chief Financial Officer, a Treasurer, a Secretary and a Controller, each of whom shall be elected by the Board of Directors. The appointed officers of the Corporation shall be one or more Assistant Treasurers and Assistant Secretaries, each of whom shall be appointed by the Vice Chairman and Chief Executive Officer and shall serve at his pleasure. The Board of Directors may designate one or more - 12 - Vice Presidents as Senior Executive Vice President, one or more Vice Presidents as Executive Vice President and one or more Vice Presidents as Senior Vice President. Such other officers as may be necessary, including one or more Vice Chairmen of the Board (in addition to the Vice Chairman of the Board and Chief Executive Officer), one or more Officers of the Board and a Chairman of the Executive Committee may be elected by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary, and the offices of President and Vice President. The elected officers of the Corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient. Each elected officer shall hold office until his successor shall have been duly elected or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Any officer elected by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election shall not of itself create contract rights. A vacancy in any elected office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 2. CHAIRMAN OF THE BOARD OF DIRECTORS. At its first meeting after the annual meeting of shareholders, the Board of Directors shall elect one of its own members to be the Chairman of the Board of Directors ("Chairman of the Board"). The Chairman of the Board shall work with the Board of Directors to define its structure, agenda and activities in order to fulfill its responsibilities and shall work with senior management to help ensure that matters for which management is responsible are appropriately reported to the Board of Directors. He shall preside at all meetings of the shareholders and of the Board of Directors and shall call and prescribe the content of such meetings. The Chairman of the Board shall lead the Board of Directors in its role of assessing the performance of the management of the Corporation. The Chairman of the Board shall also counsel the members of the Chief Executive Office, - 13 - where appropriate, and shall perform such other duties as may be prescribed by the Board of Directors from time to time. The Chairman of the Board may designate one or more other directors to exercise the functions and to have the authority of the Chairman of the Board during the absence or disability of the Chairman of the Board and prior to any action by the Board of Directors to fill any vacancy. The Board of Directors may remove or replace the Chairman of the Board at any time and any vacancy in such position because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 3. THE VICE CHAIRMAN OF THE BOARD OF DIRECTORS AND CHIEF EXECUTIVE OFFICER. The Vice Chairman of the Board of Directors and Chief Executive Officer ("Vice Chairman of the Board and CEO") shall be the senior executive officer of the Corporation and shall in general supervise and control all the business and affairs of the Corporation. He shall direct the policy of the Corporation; and he may delegate powers to any other officer of the Corporation. Except where by law the signature of such other officer is required, the Vice Chairman of the Board and CEO shall possess the same power as such other officer to sign all certificates, contracts and other instruments and documents of the Corporation which may be authorized by the Board of Directors or otherwise, and shall possess the same power as such other officer to take any action authorized by these Bylaws or by the Board of Directors or otherwise. He shall also perform such duties as may be prescribed by the Board of Directors or by the Chairman of the Board of Directors acting for the Board of Directors from time to time. In addition, the Board of Directors may appoint one or more other Vice Chairmen of the Board, who shall not be the Vice Chairman of the Board and CEO, who shall perform such other duties as may be prescribed by the Board of Directors, the Vice Chairman of the Board and CEO and the President from time to time. SECTION 4. THE PRESIDENT. The President, in the absence or disability of the Vice Chairman of the Board and CEO, shall exercise the functions and shall have the authority of the Vice Chairman of the Board and CEO. The President may sign, with the Secretary or other proper officer of the Corporation thereunto authorized by the - 14 - Board of Directors (if the signature of the Secretary or such other officer is required), certificates for shares of the Corporation, any deeds, mortgages, bonds, contracts, and other instruments and documents which may be authorized by the Board of Directors or otherwise, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general, shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time SECTION 5. THE CHAIRMAN OF THE EXECUTIVE COMMITTEE, SENIOR EXECUTIVE VICE PRESIDENTS, EXECUTIVE VICE PRESIDENTS, OFFICERS OF THE BOARD, SENIOR VICE PRESIDENTS AND THE CORPORATE VICE PRESIDENTS. The Chairman of the Executive Committee, Senior Executive Vice Presidents, Executive Vice Presidents, Officers of the Board, Senior Vice Presidents and the Corporate Vice Presidents, in the order designated by the Board of Directors or the Chairman of the Board, shall exercise the functions and shall have the authority of the President during the absence or disability of the President. The Chairman of the Executive Committee, each Senior Executive Vice President, Executive Vice President, Officer of the Board, Senior Vice President and Corporate Vice President shall have such powers as may be designated and shall discharge such duties as may be assigned to him from time to time by the Board of Directors or the Chief Executive Office. In addition to the duties described in the prior sentence, all these elected officers (except the Chairman of the Executive Committee) are authorized to sign and execute all agreements, contracts, leases, bids, proposals, deeds, assignments, powers of attorney, guarantee undertakings, instruments, documents, claims, including claims against the United States of America, and certifications of such claims, in the ordinary course of business of the Corporation, and to redelegate that authority in writing to others; provided, however, that only the Vice Chairman and CEO, the President, the Chief Financial Officer and the Treasurer are authorized to perform those activities set forth in the third sentence of the first paragraph of Article V, Section 7, of these Bylaws. - 15 - SECTION 6. THE SECRETARY. The Secretary shall keep the minutes of all meetings of the Board of Directors and the minutes of all meetings of the shareholders, in books provided by the Corporation for such purpose. He shall attend to giving and serving of all notices of the Corporation whereby meetings of the Board of Directors and shareholders are assembled. He shall provide lists of shareholders and their addresses required to be prepared by the provisions of any present or future statute of the State of Delaware. He may sign, with any other officer, in the name of the Corporation, all contracts and other instruments requiring the seal of the Corporation and may affix the seal thereto. He shall have charge of such books and papers as the Board of Directors may direct. He shall in general perform all of the duties which are incident to the office of secretary of a corporation, subject at all times to the direction and control of the Board of Directors. SECTION 7. THE CHIEF FINANCIAL OFFICER AND THE TREASURER. The Chief Financial Officer shall be the senior financial officer of the Corporation. The Chief Financial Officer, the Vice Chairman and CEO, the President and the Treasurer shall each individually have the power, which may be redelegated in writing, on behalf of the Corporation, to borrow funds and to otherwise incur liabilities, to sell or discount bills, receivables and other instruments and rights, to enter into and deliver repurchase, credit, guarantee, surety, loan, interest rate, currency and other agreements, which may contain covenants restricting the Corporation's ability to take certain actions or require it to take certain actions, to sign and deliver acceptances, notes and other obligations, to buy and sell foreign exchange, whether for current or future delivery, or options on foreign exchange, to purchase, sell, exchange or otherwise deal in stock or other securities, to procure letters of credit, travelers' checks or similar instruments, to open and close accounts with any banking institution or other depository of funds, to sign, manually, by facsimile signature or otherwise, checks, drafts or other orders for the payment of funds (which each such institution is hereby authorized and directed to honor), to issue written, telephonic, electronic or oral instructions for the transfer of funds by wire or other electronic means or otherwise, to enter into agreements or - 16 - documents with any banking or financial institution with respect to any services, including, without limitation, electronic services, and to do all things in connection with any of these as any of them sees fit. The Chief Financial Officer, the Vice Chairman and CEO, the President and the Treasurer shall each individually also have the power, which may be redelegated in writing, on behalf of the Corporation, to guarantee, or to act as surety with respect to, any of the obligations of any entity of which any of the outstanding stock or securities is owned, directly or indirectly by the Corporation. In addition, the Chief Financial Officer, as well as each of the Vice Chairman of the Board and CEO, the President and the Treasurer, shall individually have the authority to vote all shares or securities in any entity directly or indirectly owned by the Corporation and to redelegate that authority in writing to others. The Treasurer shall have the custody of all of the funds and securities of the Corporation. He shall be empowered to endorse on behalf of the Corporation all checks, notes or other obligations and evidences of the payment of money, payable to the Corporation or coming into his possession, and shall deposit the funds arising therefrom, together with all other funds of the Corporation, coming into his possession, in such banks as may be selected as the depositories of the Corporation, or properly care for them in such other manner as the Board of Directors may direct. All checks and other instruments drawn on or payable out of the funds of the Corporation and all bills, notes or other evidence of indebtedness shall be signed by such officers and employees as the Board of Directors may designate. Whenever required by the Board of Directors so to do, he shall exhibit a complete and true statement of property in his possession, custody or control. He shall provide for the entry regularly, in records belonging to the Corporation, a full and accurate account of all money received and paid on account of the Corporation, together with all other business transactions. He shall, at all reasonable times within the hours of business, exhibit his records and accounts to any director. He shall perform all duties which are incident to the office of treasurer of a corporation, subject, however, at all times to the direction and control of the Board of Directors. If the Board of Directors shall so require, he shall give bond, in - 17 - such sum and with such securities as the Board of Directors may direct, for the faithful performance of his duties and for the safe custody of the funds and property of the Corporation coming into his possession. SECTION 8. THE CONTROLLER. The Controller shall be the Chief Accounting Officer of the Corporation and shall: (a) keep, or cause to be kept, correct and complete books and records of account, including full and accurate accounts of receipt and disbursements in books belonging to the Corporation; and (b) in general, perform all duties incident to the office of Controller and such other duties as from time to time may be assigned to him by the Chairman of the Board or by the Board of Directors. In addition, the Controller, the Chief Financial Officer and the Treasurer shall each individually be authorized to sign powers of attorney on behalf of the Corporation and to appoint agents and attorneys to represent the Corporation in dealings before or with the Bureau of Customs. SECTION 9. STATUTORY DUTIES. Each respective officer shall discharge any and every duty, appertaining to his respective office, which is imposed on such officer by the provisions of any present or future statute of the State of Delaware. SECTION 10. DELEGATION OF DUTIES. In case of the absence of any officer of the Corporation, the Chairman of the Board or the Board of Directors may delegate, for the time being, the duties of such officer to any other officer or to any director. SECTION 11. SALARIES. The salaries of the officers and the Chairman of the Board shall be fixed from time to time by the Board of Directors unless such authority has been delegated by the Board of Directors, in which case, salaries shall be fixed by the person, persons or committee to whom authority has been delegated, subject to any limitations which may be contained in the resolution delegating such authority. No officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the Corporation. SECTION 12. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Vice Chairman of the Board and CEO may appoint, from time to time, as he may see fit, and may (but shall not be required to) fix the compensation of, one or more Assistant Treasurers and - 18 - Assistant Secretaries, each of whom shall hold office during the pleasure of the Vice Chairman of the Board and CEO, and shall perform such duties as he may assign. ARTICLE VI CERTIFICATES FOR SHARES AND THEIR TRANSFER SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of the Corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the Vice Chairman of the Board and CEO or President, and by the Treasurer or the Secretary. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock ledger of the Corporation. SECTION 2. TRANSFER OF CERTIFICATE. Transfer of shares of the Corporation shall be made only upon the records of the Transfer Agent appointed for this purpose, by the owner in person or by the legal representative of such owner and, upon such transfer being made, the old certificates shall be surrendered to the Transfer Agent who shall cancel the same and thereupon issue a new certificate or certificates therefor. Whenever a transfer is made for collateral security, and not absolutely, the fact shall be so expressed in the recording of the transfer. SECTION 3. TRANSFER AGENT AND REGISTRAR. The Board of Directors may appoint a transfer agent and registrar of transfers and thereafter may require all stock certificates to bear the signature of such transfer agent and such registrar of transfers. The signature of either the transfer agent or the registrar, but not both, may be a facsimile. - 19 - SECTION 4. REGISTERED HOLDER. The Corporation shall be entitled to treat the registered holder of any shares as the absolute owner thereof and, accordingly, shall not be bound to recognize any equitable or other claim thereto, or interest therein, on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the statutes of the State of Delaware. SECTION 5. RULES OF TRANSFER. The Board of Directors also shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration of the certificates for the shares of the Corporation. SECTION 6. LOST CERTIFICATES. Any person claiming a certificate for shares of this Corporation to be lost or destroyed, shall make affidavit of the fact and lodge the same with the Secretary of the Corporation, accompanied by a signed application for a new certificate. Such person shall give to the Corporation, to the extent deemed necessary by the Secretary or Treasurer, a bond of indemnity with one or more sureties satisfactory to the Secretary, and in an amount which, in his judgment, shall be sufficient to save the Corporation from loss, and thereupon the proper officer or officers may cause to be issued a new certificate of like tenor with the one alleged to be lost or destroyed. But the Secretary may recommend to the Board of Directors that it refuse the issuance of such new certificate in the event that the applicable provisions of the Uniform Commercial Code are not met. ARTICLE VII CONTRACTS, LOANS, CHECKS AND DEPOSITS SECTION 1. CONTRACTS. The Board of Directors may authorize, by these Bylaws or any resolution, any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. SECTION 2. LOANS. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by - 20 - these Bylaws or a resolution of the Board of Directors. Such authority may be general or confined to specific instances. SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, agent or agents, of the Corporation and in such manner as shall from time to time be determined by these Bylaws or a resolution of the Board of Directors. SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may select. ARTICLE VIII BOOKS AND RECORDS SECTION 1. LOCATION. Complete books and records of account together with minutes of the proceedings of the meetings of the shareholders and Board of Directors shall be kept. A record of shareholders, giving the names and addresses of all shareholders, and the number and class of the shares held by each, shall be kept by the Corporation at its registered office or principal place of business in the State of Illinois or at the office of a Transfer Agent or Registrar. ARTICLE IX NOTICES SECTION 1. MANNER OF NOTICE. Whenever, under the provisions of the Certificate of Incorporation or of the Bylaws of the Corporation or of the statutes of the State of Delaware, notice is required to be given to a shareholder, to a director or to an officer, it shall not be construed to mean personal notice, unless expressly stated so to be. And any notice so required (other than notice by publication) may be given in writing by depositing the same in the United States mail, postage prepaid, directed to the shareholder, director or officer, at his, or her, address as the same appears on the records of the Corporation, and the time when the same is mailed shall be deemed the time of the giving of such notice. - 21 - SECTION 2. WAIVER OF NOTICE. Any shareholder, director or officer may, in writing, waive the giving and the mailing of any notice required to be given or mailed either by and under the statutes of the State of Delaware or by and under the Bylaws. ARTICLE X FISCAL YEAR SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall begin on the 1st day of January and terminate on the 31st day of December. ARTICLE XI EMERGENCY BYLAWS The Emergency Bylaws provided in this Article XI shall be operative upon (a) the declaration of a civil defense emergency by the President of the United States or by concurrent resolution of the Congress of the United States pursuant to Title 50, Appendix, Section 2291 of the United States Code, or any amendment thereof, or (b) upon a proclamation of a civil defense emergency by the Governor of the State of Illinois which relates to an attack or imminent attack on the United States or any of its possessions. Such Emergency Bylaws, or any amendments to these Bylaws adopted during such emergency, shall cease to be effective and shall be suspended upon any proclamation by the President of the United States, or the passage by the Congress of a concurrent resolution, or any declaration by the Governor of Illinois that such civil defense emergency no longer exists. SECTION 1. BOARD OF DIRECTORS' MEETINGS. During any such emergency, any meeting of the Board of Directors may be called by any officer of the Corporation or by any director. Notice shall be given by such person or by any officer of the Corporation. The notice shall specify the place of the meeting, which shall be at the head office of the Corporation at the time if feasible, and otherwise, any other place specified in the notice. The notice shall also specify the time of the meeting. Notice may be given only to such of the directors as it may be feasible to reach at the time and by such means as may be feasible at the time, including publication or radio. If given by mail, messenger, telephone, or telegram, the notice shall be addressed to the director at his - 22 - residence or business address, or such other place as the person giving the notice shall deem most suitable. Notice shall be similarly given, to the extent feasible in the judgment of the person giving the notice, to the other directors. Notice shall be given at least two days before the meeting, if feasible in the judgment of the person giving the notice, and otherwise on any shorter time he may deem necessary. SECTION 2. CHANGE OF HEAD OFFICE. The Board of Directors, during any such emergency may, effective in the emergency, change the head office or designate several alternative head offices, or regional offices or authorize the officers to do so. ARTICLE XII DIRECTOR EMERITUS SECTION 1. DIRECTOR EMERITUS. The Board of Directors may at any time and from time to time award to former members of the Board of Directors in recognition of their past distinguished service and contribution rendered to the Corporation the honorary title "Director Emeritus." The award of this title shall not constitute an election or appointment to the Board of Directors, nor to any office of the Corporation, nor the bestowal of any duties, responsibilities or privileges associated therewith; and accordingly no "Director Emeritus" shall be deemed a "Director" as that term is used in these Bylaws. The title "Director Emeritus" shall carry no compensation, and holders thereof shall not attend any meetings of the Board of Directors or committees of the Board of Directors, except by written invitation, nor shall they be specially privy to any confidential information arising from such meeting. ARTICLE XIII AMENDMENT OF BYLAWS SECTION 1. AMENDMENT OF BYLAWS. These Bylaws may be altered, amended or repealed and new Bylaws may be adopted at any meeting of the Board of Directors by a majority vote of the directors present at the meeting. EX-4.12 3 EXHIBIT 4.12 Exhibit 4.12 No. R-1 $150,000,000 CUSIP 620076 AK 5 MOTOROLA, INC. 6 1/2% Debenture due September 1, 2025 If the registered owner of this Debenture (as indicated below) is The Depository Trust Company (the "Depositary") or a nominee of the Depositary, this Debenture is a global Debenture and the following legend is applicable: Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO., or such other name as requested by an authorized representative of The Depository Trust Company, and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL because the registered owner hereof, CEDE & CO., has an interest herein. If the registered owner of this Debenture (as indicated below) is the Depositary or a nominee of the Depositary, this Debenture is a global Debenture and the following legend is applicable except as specified on the reverse hereof: THIS GLOBAL DEBENTURE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR OF THE DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR. MOTOROLA, INC. a corporation duly organized and validly existing under the laws of the State of Delaware (hereinafter called the "Company"), for value received, hereby promises to pay to CEDE & CO. or registered assigns the principal sum of One Hundred and Fifty Million Dollars on September 1, 2025, and to pay interest thereon from September 1, 1995 or from the most recent interest Payment Date to which interest has been paid or duly provided for, semi-annually on March 1 and September 1 in each year, commencing March 1, 1996, at the rate of 6 1/2% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture hereinafter referred to, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the February 15 and August 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof to be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of and interest on this Security will be made at the office or agency of the Company maintained for that purpose in Chicago, Illinois, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this 2 Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. Dated: September 1, 1995 Authenticated: September 1, 1995 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within- mentioned Indenture. HARRIS TRUST AND SAVINGS BANK, MOTOROLA, INC. as Trustee By: __________________________ By: ____________________________ Authorized Officer Title: Attest: By: ____________________________ Title: 3 (Reverse) MOTOROLA, INC. 6 1/2% Debenture due September 1, 2025 This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of May 1, 1995 (herein called the "Indenture"), between the Company and Harris Trust and Savings Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to $400,000,000. The Securities may not be redeemed at the option of the Company prior to maturity, and do not provide for any sinking fund. This Security may be redeemed on September 1, 2005, at the option of the Holder, at 100% of its principal amount, together with accrued interest to September 1, 2005 (the "Purchase Price"). In order for a Holder to exercise this option, the Company must receive at its office or agency in New York, New York, during the period beginning on July 1, 2005 and ending at 5:00 PM (New York City time) on August 1, 2005 (or, if August 1, 2005 is not a Business Day, the next succeeding Business Day), (i) this Security with the form below entitled "Option to Require Redemption on September 1, 2005" duly completed, or (ii) a telegram, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or a trust company in the United States of America setting forth the name, address and telephone number of the Holder of this Security, the principal amount of this Security, the amount of this Security to be redeemed, a statement that the Option to Require Redemption on September 1, 2005 is being exercised thereby and a guarantee that this Security to be redeemed (with the form below entitled 4 "Option to Require Redemption on September 1, 2005" duly completed) will be received at such office or agency of the Company not later than five Business Days after the date of such telegram, facsimile transmission or letter, and this Security (with the form below entitled "Option to Require Redemption on September 1, 2005" duly completed) must be received at such office or agency of the Company by such fifth Business Day. Any such notice received by the Company during the period beginning July 1, 2005 and ending at 5:00 PM (New York City time) on August 1, 2005 (or, if August 1, 2005 is not a Business Day, the next succeeding Business Day) shall be irrevocable. No transfer or exchange of this Security (or, in the event that this Security is to be redeemed in part, such portion of this Security to be redeemed) will be permitted after such notice is received by the Company. The redemption option may be exercised by the Holder for less than the entire principal amount of this Security, provided the principal amount that is to be redeemed is equal to $1,000 or any integral multiple thereof. All questions as to the validity, eligibility (including time and receipt) and acceptance of this Security for redemption will be determined by the Company, whose determination will be final and binding. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of 66-2/3% in the aggregate principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder 5 and upon all future Holders of this Security and of any Security issued upon the registration or transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency herein prescribed. As provided in the Indenture and subject to certain limitations therein and herein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein and herein set forth. Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the 6 Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Unless the context otherwise requires, all terms used in this Security which are not defined herein shall have the meanings assigned to them in the Indenture. EX-10.4 4 EXHIBIT 10.4 Exhibit 10.4 Resolution Amending Section 4 of Share Option Plan of 1991 RESOLVED, that, the Share Option Plan of 1991 is hereby amended by adding the following sentence at the end of the first paragraph of Section 4: "The Committee may, in its discretion, delegate to members of the Committee and/or one or more elected officers of the Company the authority to grant options to key employees who are not subject to Section 16 of the 1934 Act." EX-10.9 5 EXHIBIT 10.9 Exhibit 10.9 Motorola, Inc. Deferred Fee Plan for Outside Directors As Amended February 6, 1996 1. Purpose: The purpose of the Motorola, Inc. Deferred Fee Plan For Outside Directors (the "Plan") is to permit Directors who are not regular employees of Motorola, Inc. ("Motorola") to elect to defer receipt of all or a portion of the Compensation they receive for services as a member of Motorola's Board of Directors. 2. Definitions: (a) The term "Company" shall mean Motorola, a Delaware corporation, and all of its subsidiaries. (b) The term "Board" shall mean the Board of Directors of Motorola. (c) The term "Director" shall mean a person (a) who is serving as a member of the Board and (b) who is not a regular employee of the Company or its subsidiaries. (d) The term "Beneficiary" shall mean such individual(s) or such executor or trustee(s) of a trust as may be designated by a Director pursuant to paragraph 4(c) of Section 4 hereof. (e) The term "Compensation" shall mean all cash remuneration, payable to a Director for services to the Company as a Director other than reimbursement for expenses, and shall include retainer fees for service on the Board, fees for serving as chairman of a committee of the Board, fees for attendance at meetings of the Board and any committees thereof, payments for work performed in connection with service on a committee of the Board or at the request of the Board, any committee thereof or a member of the Chief Executive Office of Motorola and any other kind or category of fees or payments which may be put into effect in the future. 2 3. Participation: A Director may elect on or before December 31st of any year to defer for succeeding calendar years the receipt of all or a specified dollar amount or percentage of his/her Compensation for one or more category(ies) of Compensation. An election to defer the receipt of Compensation continues for succeeding years unless the Director provides the Company with written notice filed with the Company on or before December 31st of a year for which an election is in effect that for succeeding years he/she elects to terminate his/her election or to modify his/her election by either changing the dollar amount or percentage of Compensation and/or category(ies) of Compensation to be deferred, changing the designated beneficiary(ies) or by changing the manner in which deferred Compensation is to be paid to him/her at the end of the deferral period. 4. Method of Deferment: Compensation, the receipt of which a Director has elected to defer, shall be treated in the following manner: (a) The Company shall accrue such deferred Compensation to a separate memorandum account on its books in the name of the electing Director. The memorandum account shall be credited with interest as of the last day of each of the Company's fiscal quarters. The amount of such interest shall be one-fourth of the annual discount rate of ninety-day United States Treasury bills issued during the week in which the last business day of the Company's fiscal quarter happens to fall. (b) Commencing with the first day of the month of the calendar year immediately following the year in which the Director has ceased to be a Director, has become disabled or has attained the age designated on his/her Election to Defer Director's Compensation, whichever date(s) the Director selected at the time of making his/her deferral election, the Company shall pay the Director his/her deferred Director's Compensation and interest which has accumulated thereon. The Company shall make the payment in either a lump-sum or in annual installments over a period not exceeding ten years, whichever method of payment the Director selected at the time of making his/her deferral election. The Company may, in its 3 discretion, accelerate the date upon which payment(s) to the Director shall begin. (c) Upon the death of a Director prior to distribution of the entire amount accrued to his/her account, any such undistributed amount shall be paid in a lump sum to the Director's estate, to a trust or to such Beneficiary or Beneficiaries as the Director shall have previously designated in writing. Each Director who elects to defer the receipt of Compensation pursuant to this Plan may designate upon such form or instrument as may be provided for that purpose, a Beneficiary or Beneficiaries who are to receive payments pursuant to this Section 4(c). If the Director has not designated a Beneficiary in writing or if there shall be no Beneficiary designated or in existence at the time of the Director's death, any undistributed amount shall be paid to the Director's estate. (d) If a Director or his/her Beneficiary who is entitled to receive payments under the Plan is a minor, or is ill, or is disabled due to any cause which in the judgment of the Company renders him/her unable to apply such amount to his/her own best interest and advantage, the Company may, in its discretion, pay all or part of the amount in one or a combination of the following ways as the Company may determine to be for the individual's best interest: (i) directly to him/her; (ii) to his/her legal or natural guardian or the conservator of his/her estate; (iii)to any person having his/her care or custody; or (iv) directly for his/her care, support or education. Such payment shall completely discharge all of the Company's obligations under the Plan. (e) Amounts which a Director has deferred and any interest which has accumulated thereon shall constitute an unfunded general obligation of the Company until such time(s) as they are paid. 4 5. Nonassignability: No Director or Beneficiary shall have any power to commute, encumber, sell or otherwise dispose of the rights provided herein and such rights shall not be subject to anticipation, alienation, assignment, pledge or charge. 6. Amendment or Termination: This Plan may be amended by the Board at any time and from time to time provided that no such amendment shall result in changing the provisions of paragraph 4(a) of Section 4 hereof. Paragraphs 4(b) and 4(c) of Section 4 hereof can be amended only to change the date after retirement upon which payments to a Director or Beneficiary shall commence and the time, or times, at which such payments shall be made. This Plan may be terminated by the Board at any time, except that such termination shall have no effect on deferred Compensation and interest thereon which have accrued to the account of any Director at the time of termination. EX-11 6 EXHIBIT 11 Exhibit 11 Motorola, Inc. and Consolidated Subsidiaries Primary and Fully Diluted Earnings Per Common and Common Equivalent Share (In millions, except per share amounts)
FOR THE YEARS ENDED -------------------------------- Dec. 31, Dec. 31, 1995 1994 -------------------------------- Net Income $ 1,781 $ 1,560 Add: Interest on Zero coupon notes due 2009 and 2013, net of tax and effect of executive incentive and employee profit sharing plans 7 12 ------- ------- Adjusted net income $ 1,788 $ 1,572 EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE - PRIMARY: - ------------------------------------- Weighted average common shares outstanding 589.7 564.9 Common equivalent shares: Stock options 12.8 13.4 Zero coupon notes due 2009 and 2013 7.2 13.4 ------- ------- Common and common equivalent shares-primary (in millions) 609.7 591.7 ------- ------- Net earnings per share - primary $ 2.93 $ 2.66 ------- ------- ------- ------- EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE - FULLY DILUTED: - ------------------------------------------ Weighted average common shares outstanding 589.7 564.9 Common equivalent shares: Stock options 12.9 14.4 Zero coupon notes due 2009 and 2013 7.2 13.4 ------- ------- Common and common equivalent shares-fully diluted (in millions) 609.8 592.7 ------- ------- Net earnings per share - fully diluted $ 2.93 $ 2.65 ------- ------- ------- -------
EX-21 7 EXHIBIT 21 Exhibit 21 MOTOROLA, INC. LISTING OF COMBINED AND MAJOR SUBSIDIARIES 12/31/95 Motorola International Capital Corporation Delaware Motorola International Development Corporation Delaware Embarc Communications Services, Inc. Nevada Motorola Foreign Sales Corporation U.S. Virgin Islands Motorola Credit Corporation Delaware Nippon Motorola Limited Japan Motorola G.m.b.H. Germany Motorola Limited England Motorola Asia Limited Hong Kong Motorola Korea Limited Korea Motorola Canada Limited Canada Motorola Israel Limited Israel Motorola Semiconducteurs S.A. France Motorola Malaysia Sdn. Bhd. Malaysia Motorola de Mexico, S.A. Mexico Motorola Electronics Taiwan, Limited Taiwan Motorola Electronics Pte. Limited Singapore Motorola Semiconductor Hong Kong Limited Hong Kong Motorola Semiconductor Sdn. Bhd. Malaysia Motorola Electronics Sdn. Bhd. Malaysia Motorola Lighting, Inc. Delaware Motorola S.A. France Motorola S.p.A. Italy Motorola A.B. Sweden Motorola Australia Proprietary Limited Australia Motorola Espana S.A. Spain Motorola Philippines, Inc. Philippines Motorola Communications Israel Limited Israel Telcel S.A. Spain Motorola Electronic G.m.b.H. Germany Motorola A/S Denmark Motorola (China) Electronics Ltd. China Motorola Electronique Automobile S.A. France Motorola B.V. Holland Motorola China Holdings Limited Hong Kong Motorola Ardis, Inc. Delaware Motorola de Puerto Rico, Inc. Delaware EX-27 8 EXHIBIT 27
5 The schedule contains summary financial information extracted from the Consolidated Balance Sheet as of December 31, 1995 and the Statement of Consolidated Earnings for the year ended December 31, 1995 and is qualified in its entirety by reference to such financial statements. 1,000,000 12-MOS DEC-31-1995 JAN-01-1995 DEC-31-1995 725 350 4,204 123 3,528 10,510 17,466 8,110 22,801 7,793 1,949 0 0 1,774 9,274 22,801 27,037 0 17,545 22,187 1,919 0 149 2,782 1,001 0 0 0 0 1,781 2.93 2.93 Total Cost Includes Cost of Goods Sold and Selling, General, and Administrative Expense. Other Expense Includes Depreciation Expense.
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