UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the period ended April 3, 2004
Or
| ¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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 Incorporation) | (I.R.S. Employer Identification No.) | |
| 1303 E. Algonquin Road Schaumburg, Illinois |
60196 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (847) 576-5000
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 ¨
The number of shares outstanding of each of the issuer’s classes of common stock as of the close of business on April 3, 2004:
| Class |
Number of Shares | |
| Common Stock; $3 Par Value | 2,344,190,329 |
| Page | ||||
| Part I Financial Information |
||||
| Item 1 |
Financial Statements |
|||
| 3 | ||||
|
Condensed Consolidated Balance Sheets as of April 3, 2004 (Unaudited) and |
4 | |||
| 5 | ||||
| 6 | ||||
| Notes to Condensed Consolidated Financial Statements (Unaudited) |
7 | |||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 | ||
| Item 3 |
45 | |||
| Item 4 |
47 | |||
| 47 | ||||
| Part II Other Information |
||||
| Item 1 |
48 | |||
| Item 2 |
52 | |||
| Item 3 |
53 | |||
| Item 4 |
53 | |||
| Item 5 |
54 | |||
| Item 6 |
54 | |||
2
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(In millions, except per share amounts)
| Three Months Ended |
||||||||
| April 3, 2004 |
March 29, 2003 |
|||||||
| Net sales |
$ | 8,561 | $ | 6,043 | ||||
| Costs of sales |
5,693 | 4,067 | ||||||
| Gross margin |
2,868 | 1,976 | ||||||
| Selling, general and administrative expenses |
1,144 | 897 | ||||||
| Research and development expenditures |
967 | 947 | ||||||
| Reorganization of businesses |
(20 | ) | 63 | |||||
| Other charges (income) |
(45 | ) | (61 | ) | ||||
| Operating earnings |
822 | 130 | ||||||
| Other income (expense): |
||||||||
| Interest expense, net |
(67 | ) | (93 | ) | ||||
| Gains on sales of investments and businesses |
181 | 279 | ||||||
| Other |
(20 | ) | (59 | ) | ||||
| Total other income |
94 | 127 | ||||||
| Earnings before income taxes |
916 | 257 | ||||||
| Income tax expense |
307 | 88 | ||||||
| Net earnings |
$ | 609 | $ | 169 | ||||
| Earnings per common share |
||||||||
| Basic |
$ | .26 | $ | .07 | ||||
| Diluted |
$ | .25 | $ | .07 | ||||
| Weighted average common shares outstanding |
||||||||
| Basic |
2,337.2 | 2,311.5 | ||||||
| Diluted |
2,487.4 | 2,325.1 | ||||||
| Dividends per share |
$ | .04 | $ | .04 | ||||
See accompanying notes to condensed consolidated financial statements.
3
Motorola, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions, except per share amounts)
| April 3, 2004 |
December 31, 2003 | |||||
| (Unaudited) | ||||||
| Assets | ||||||
| Cash and cash equivalents |
$ | 8,276 | $ | 7,877 | ||
| Short-term investments |
139 | 139 | ||||
| Accounts receivable, net |
4,976 | 4,436 | ||||
| Inventories, net |
2,632 | 2,792 | ||||
| Deferred income taxes |
1,637 | 1,678 | ||||
| Other current assets |
1,108 | 985 | ||||
| Total current assets |
18,768 | 17,907 | ||||
| Property, plant and equipment, net |
4,762 | 5,164 | ||||
| Investments |
3,188 | 3,335 | ||||
| Deferred income taxes |
3,292 | 3,349 | ||||
| Other assets |
2,340 | 2,343 | ||||
| Total assets |
$ | 32,350 | $ | 32,098 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Notes payable and current portion of long-term debt |
$ | 834 | $ | 896 | ||
| Accounts payable |
2,924 | 2,789 | ||||
| Accrued liabilities |
5,850 | 5,748 | ||||
| Total current liabilities |
9,608 | 9,433 | ||||
| Long-term debt |
6,679 | 6,675 | ||||
| Other liabilities |
2,940 | 2,815 | ||||
| Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely company-guaranteed debentures (TOPrS) |
— | 486 | ||||
| Stockholders’ Equity |
||||||
| Preferred stock, $100 par value |
— | — | ||||
| Common stock, $3 par value |
7,033 | 7,017 | ||||
| Additional paid-in capital |
2,421 | 2,362 | ||||
| Retained earnings |
3,618 | 3,103 | ||||
| Non-owner changes to equity |
51 | 207 | ||||
| Total stockholders’ equity |
13,123 | 12,689 | ||||
| Total liabilities and stockholders’ equity |
$ | 32,350 | $ | 32,098 | ||
See accompanying notes to condensed consolidated financial statements.
4
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited)
(In millions)
| Non-Owner Changes To Equity |
|||||||||||||||||||||||
| Common Stock and Additional Paid-In Capital |
Fair Value Adjustment to Available for Sale Securities, Net of Tax |
Foreign Currency Translation Adjustments, Net of Tax |
Other Items, Net of Tax |
Retained Earnings |
Comprehensive Earnings |
||||||||||||||||||
| Balances at December 31, 2003 |
$ | 9,379 | $ | 1,499 | $ | (217 | ) | $ | (1,075 | ) | $ | 3,103 | |||||||||||
| Net earnings |
609 | $ | 609 | ||||||||||||||||||||
| Net unrealized losses on securities (net of tax of $114) |
(183 | ) | (183 | ) | |||||||||||||||||||
| Foreign currency translation adjustments (net of tax of $16) |
(20 | ) | (20 | ) | |||||||||||||||||||
| Issuance of common stock and stock options exercised |
75 | ||||||||||||||||||||||
| Net gains on derivative instruments (net of tax of $27) |
47 | 47 | |||||||||||||||||||||
| Dividends declared ($.04 per share) |
(94 | ) | |||||||||||||||||||||
| Balances at April 3, 2004 |
$ | 9,454 | $ | 1,316 | $ | (237 | ) | $ | (1,028 | ) | $ | 3,618 | $ | 453 | |||||||||
See accompanying notes to condensed consolidated financial statements.
5
Motorola, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In millions)
| Three Months Ended |
||||||||
| April 3, 2004 |
March 29, 2003 |
|||||||
| Operating |
||||||||
| Net earnings |
$ | 609 | $ | 169 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
348 | 433 | ||||||
| Charges for reorganization of businesses and other |
(54 | ) | 45 | |||||
| Gains on sales of investments and businesses, net |
(181 | ) | (279 | ) | ||||
| Deferred income taxes |
168 | 16 | ||||||
| Changes in assets and liabilities, net of effects of acquisitions: |
||||||||
| Accounts receivable |
(544 | ) | 542 | |||||
| Inventories |
157 | 8 | ||||||
| Other current assets |
(121 | ) | 12 | |||||
| Accounts payable and accrued liabilities |
295 | (442 | ) | |||||
| Other assets and liabilities |
181 | (25 | ) | |||||
| Net cash provided by operating activities |
858 | 479 | ||||||
| Investing |
||||||||
| Acquisitions and investments, net |
(42 | ) | (19 | ) | ||||
| Proceeds from sales of investments and businesses |
347 | 346 | ||||||
| Capital expenditures |
(201 | ) | (113 | ) | ||||
| Proceeds from sale of property, plant and equipment |
24 | 26 | ||||||
| Purchases of short-term investments |
— | (18 | ) | |||||
| Net cash provided by investing activities |
128 | 222 | ||||||
| Financing |
||||||||
| Repayment of commercial paper and short-term borrowings |
(32 | ) | (29 | ) | ||||
| Repayment of debt |
(7 | ) | (832 | ) | ||||
| Redemption of TOPrS |
(500 | ) | — | |||||
| Issuance of common stock |
52 | 2 | ||||||
| Payment of dividends |
(94 | ) | (93 | ) | ||||
| Net cash used for financing activities |
(581 | ) | (952 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents |
(6 | ) | 34 | |||||
| Net increase (decrease) in cash and cash equivalents |
399 | (217 | ) | |||||
| Cash and cash equivalents, beginning of period |
7,877 | 6,507 | ||||||
| Cash and cash equivalents, end of period |
$ | 8,276 | $ | 6,290 | ||||
| Cash paid during the period for: |
||||||||
| Interest, net |
$ | 72 | $ | 95 | ||||
| Income taxes, net of refunds |
98 | 108 | ||||||
See accompanying notes to condensed consolidated financial statements.
6
Motorola, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollars in millions, except as noted)