How much revenue and net income did Motorola report for 1996?

This excerpt does not include those figures. Motorola incorporates its Five-Year Financial Summary, Consolidated Financial Statements, and MD&A by reference from an attachment to its 1997 proxy statement. Investors should consult that attachment, or the Financial Data Schedule (Exhibit 27), for revenue, net earnings, and other financial results.

Why did backlog decline in 1996, and is that a warning sign?

Total backlog fell about 5% to $7.59 billion. The decline is concentrated in Semiconductor Products, where backlog dropped from $3.25 billion to $2.32 billion. Management attributes this partly to weaker market demand and partly to customers adopting schedule-sharing and just-in-time ordering, which lowers reported backlog even when underlying demand holds steady. Investors should weigh this against the cyclical nature of semiconductors and the company's commentary that it is exiting military business and investing in new capacity.

What is the biggest financial risk tied to the Iridium project?

Motorola has guaranteed $750 million of Iridium LLC's bank financing, and it is prime contractor on the satellite system. Iridium LLC's ability to raise additional funds is uncertain, and its failure to pay under the contracts or the loss of those contracts could materially affect Motorola's results. The company also says that much of its subcontracting remains binding even if Iridium LLC cannot pay, so Motorola could bear costs it cannot recover.

Are the pending lawsuits a serious threat to Motorola?

Management says the ultimate outcome of the matters described, including the Arizona contamination suits, securities class actions, and cellular health-related product suits, is not expected to have a material adverse effect on the company's financial position, liquidity, or results of operations. The suits seek unspecified or substantial damages, however, and some claims, such as the Arizona class actions, involve many plaintiffs, so their eventual cost is hard to quantify from this filing alone.

MSI 10-K FY1996 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 25, 1997. Cited figures are marked; the original filing is the authoritative source.

Motorola, Inc.'s 10-K for fiscal 1996 describes a diversified electronics company with about 139,000 employees, operating through segments that include cellular infrastructure and subscriber products, semiconductors, land mobile radio, messaging and media, automotive and industrial components, and space and systems (including the Iridium satellite program).

The company reported $2.39 billion^a in internal R&D spending in 1996, up from $2.20 billion in 1995, plus $758 million of customer-funded research. Aggregate backlog fell to $7.59 billion at year-end 1996 from $7.99 billion, driven mainly by a sharp drop in Semiconductor Products backlog ($2.32 billion versus $3.25 billion), which management attributed partly to customers shifting to schedule-sharing and just-in-time ordering rather than purely weaker demand. The non-affiliate market value of roughly $39.2 billion at a $68.375 share price, with about 594 million shares outstanding, indicates the scale of the equity.

The filing's most significant risk disclosure concerns Iridium. The Space and Systems Technology Group is prime contractor for the Iridium LLC satellite system, and Motorola has guaranteed $750 million^b of Iridium LLC's bank financing. Iridium LLC needed additional funding to keep making payments to Motorola, which delayed bookings in 1996, and there is no assurance it will secure the financing.

Motorola also faces a range of litigation, including Phoenix and Scottsdale groundwater and soil contamination suits, securities class actions (Kaufman and Nextel), and multiple suits alleging cellular phones cause health harms. Management states that none of these matters is expected to have a material adverse effect on the company's financial position. Important limitations: this excerpt incorporates key financial data, including the income statement, balance sheet, cash flows, segment financials, and MD&A, by reference to an attachment to the 1997 proxy statement.

Revenue, net earnings, margins, and cash flow are therefore not reported in the text provided and should be verified against the full filing. Leadership also changed at the start of 1997, with Christopher B.

Galvin becoming Chief Executive Officer and Gary L. Tooker becoming Chairman.

02—Key points

Key Highlights

Scale and workforce: approximately 139,000 employees at December 31, 1996, with roughly 594 million common shares outstanding and a non-affiliate market value of about $39.2 billion at $68.375 per share as of January 31, 1997.
Total backlog declined to $7.59 billion at December 31, 1996 from $7.99 billion in 1995. Management says about 99% is expected to ship in 1997, though it is a forward-looking estimate.
Semiconductor backlog fell sharply to $2.32 billion from $3.25 billion, reflecting weaker market conditions and customers moving to schedule-sharing and just-in-time inventory models. The segment also exited its military business in 1996.
R&D investment rose to $2.39 billion in 1996 (from $2.20 billion in 1995), plus $758 million of customer-sponsored research. The company holds 8,420 U.S. patents and 8,298 foreign counterparts and was granted 1,225 U.S. patents in 1996.
Iridium exposure is material: Motorola guarantees $750 million of Iridium LLC's bank financing, and Iridium LLC's funding shortfall delayed 1996 bookings on the space system contract. Success depends on Iridium LLC raising additional capital.
Government dependence is modest: U.S. government sales were about 2.9% of 1996 total sales and revenues, though the Space and Systems group is more concentrated in government work and faces a shrinking defense budget.
Litigation is broad but management does not expect a material adverse effect. Matters include Arizona groundwater contamination suits, securities class actions tied to cellular inventory disclosure and Nextel, and several product-liability suits alleging cellular phone health risks.

03—Questions

Frequently Asked Questions

How much revenue and net income did Motorola report for 1996?
This excerpt does not include those figures. Motorola incorporates its Five-Year Financial Summary, Consolidated Financial Statements, and MD&A by reference from an attachment to its 1997 proxy statement. Investors should consult that attachment, or the Financial Data Schedule (Exhibit 27), for revenue, net earnings, and other financial results.
Why did backlog decline in 1996, and is that a warning sign?
Total backlog fell about 5% to $7.59 billion. The decline is concentrated in Semiconductor Products, where backlog dropped from $3.25 billion to $2.32 billion. Management attributes this partly to weaker market demand and partly to customers adopting schedule-sharing and just-in-time ordering, which lowers reported backlog even when underlying demand holds steady. Investors should weigh this against the cyclical nature of semiconductors and the company's commentary that it is exiting military business and investing in new capacity.
What is the biggest financial risk tied to the Iridium project?
Motorola has guaranteed $750 million of Iridium LLC's bank financing, and it is prime contractor on the satellite system. Iridium LLC's ability to raise additional funds is uncertain, and its failure to pay under the contracts or the loss of those contracts could materially affect Motorola's results. The company also says that much of its subcontracting remains binding even if Iridium LLC cannot pay, so Motorola could bear costs it cannot recover.
Are the pending lawsuits a serious threat to Motorola?
Management says the ultimate outcome of the matters described, including the Arizona contamination suits, securities class actions, and cellular health-related product suits, is not expected to have a material adverse effect on the company's financial position, liquidity, or results of operations. The suits seek unspecified or substantial damages, however, and some claims, such as the Arizona class actions, involve many plaintiffs, so their eventual cost is hard to quantify from this filing alone.

04—Continue

← View all 10-K filings