General Instrument Reports Strong Third Quarter Results - Company Financial Information

Cambridge Telcom Report, Nov 1, 1999

General Instrument Corporation (NYSE: GIC) has announced record third quarter results in orders, revenues, gross profit, operating margin and earnings per share for the quarter ended September 30, 1999. Earnings per share for the quarter were $0.26, before a one-time charge related to a previously announced arbitration ruling. Third quarter earnings per share represents an 18% increase from $0.22 per share in the prior year.

Net income for the quarter, before the one-time charge, grew 24% to $48.9 million, compared to net income of $39.4 million in the prior year. On a reported basis, which includes the impact of the $43 million one-time charge, net income for the quarter was $22.3 million.

Operating income for the third quarter of 1999 was $71.9 million, before the one-time charge, compared to $60.8 million for the same period last year. Operating margin for the quarter, before the one-time charge, increased to 13.2% compared to 11.7% in the third quarter of 1998.

Revenues for the quarter were $544 million compared to $518 million in the prior year. Year-over-year revenue growth was driven by interactive digital cable TV systems, transmission networks and high-speed data product sales, partially offset by anticipated declines in shipments of analog and satellite products. Excluding revenues related to the sale of products to PRIMESTAR , Inc. from the prior year period, revenues for the quarter grew approximately 15%.

Orders of $594 million for the quarter represent a record for any quarter. The Company's backlog of $706 million on September 30, 1999, compares to $632 million in the prior year period and also represents a record for any quarter.

During the quarter, General Instrument generated $95 million in cash from operations. The Company remained debt-free throughout the quarter and the cash balance on September 30, 1999 was $448 million.

"General Instrument has now delivered seven consecutive quarters of strong financial performance from orders to earnings per share. These consistent results reflect the collective talent of the entire General Instrument organization," said Edward D. Breen, Chairman and CEO. "I am proud of our accomplishments to date and I look forward to continue leading this successful organization as we leverage Motorola's global presence, financial and manufacturing resources, technical capabilities and powerful brand, once the proposed merger is finalized."

GENERAL INSTRUMENT AND MOTOROLA TO MERGE On September 15, 1999, General Instrument and Motorola Inc. (NYSE: MOT) announced a definitive agreement for the merger of the two companies. The merger will bring together a shared vision of providing converged Internet, telecommunications and entertainment services. Under the merger agreement, which is subject to customary regulatory and stockholder approvals, each share of General Instrument will be exchanged for 0.575 shares of Motorola.

On October 8, 1999, Motorola Inc. and General Instrument filed a preliminary proxy statement/prospectus with the Securities and Exchange Commission including detailed information about the merger. Both companies have filed their pre-merger notification forms with the U.S. Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice in compliance with the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

"GI is undertaking with Motorola the steps necessary to complete the merger process as soon as possible," said Breen. "Motorola's global leadership in integrated communications solutions, high-speed cable data and telephony systems will complement General Instrument's leadership in end-to- end broadband access solutions. The combination of GI and Motorola brings together the mix of systems and capabilities that broadband operators need to implement their converged network strategies."

DCT-5000 VOLUME SHIPMENTS BEGIN During the quarter, General Instrument shipped approximately 800,000 interactive digital set-top terminals, an increase of more than 35% relative to the 580,000 units shipped during the third quarter of 1998. Volume shipments of the more advanced DCT-5000 terminals began during the quarter.

Built around a 167MHz RISC processor, 32 bit/3D graphics platform and DOCSIS 1.1 based modem, the DCT-5000 is an advanced digital interactive set- top terminal that will be capable of Internet Protocol telephony, high-speed data and advanced interactive services. "The roll-out of the DCT-5000 , the first true convergence platform, represents a key milestone for the entire industry," said Breen. "I am very pleased with the way our organization has executed on this critically important project."

During the quarter, GI also launched more than 100 interactive digital headend systems including recently announced launches with Televisa's Cablevision S.A. de C.V. in Mexico City, Cogeco Cable in Quebec and Ontario, and Shaw Cable in Western Canada. From the time of product introduction in late 1996 through the third quarter of 1999, General Instrument has shipped more than 5.1 million interactive digital set-top terminals and launched more than 950 interactive digital headend systems.