摩托罗拉公司1951年年度报告

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Two-Way Communications

Motorola Inc. 4 5 4 5 A U G U S T A B L V D . , C H I C A G O 5 1, I L L I N O I S

The annual meeting will be held on Monday, May 5, 1952. A notice of the meeting, together with a form of proxy and a proxy statement, will be mailed to stockholders on or about April 1 4, 1 952, at which time proxies will be solicited by the management.

of Directors

Paul V. Galvin

Robert W. Galvin

Matthew J. Hickey, Jr. President, Hickey & Company

George R. MacDonald

Daniel E. Noble

Frank J. O'Brien

Walter H. Stellner

Elmer H. Wavering

Transfer Agents Chemical Bank and Trust Co. 65 Broadway, New York 15, New York

Harris Trust and Savings Bank West Monroe Street, Chicago 90, Illin

Officers Paul V. Galvin President

Robert W. Galvin Executive Vice-President

Elmer H. Wavering Vice-Pres. in Charge of Products Division

Frank J. O'Brien Vice-Pres. in Charge of Purchasing

Daniel E. Noble

Vice-Pres. in Charge of Communications and Electronics Division

William H. Kelley Vice-Pres. in Charge of Sales

Edwin P. Vanderwicken Vice-Pres. in Charge of Finance and Treas

Charles E. Green Secretary

Registrars Irving Trust Company One Wall Street, New York 1 5, New York

Continental Illinois National Bank and Trust Company of Chicago 231 South LaSalle St., Chicago 90, Illino

the past 10 years at Motorola Net Investment Net Net Working Net Earnings in Plant and .Sales Earnings Capital Worth Per Share1 Equipment2

1943 78,454,461 1,259,302 1.43 2,854,250 1,345,746 4,405,889

1944 86,946,631 1,448,351 1.65 3,133,942 1,913,486 5,672,512

1945 67,896,597 851,882 .97 4,671,851 1,273,523 6,311,719

1946 23,201,107 656,286 .75 5,862,933 2,464,598 8,733,345

1947 46,679,148 2,510,410 2.85 7,028,844 2,811,211 10,635,345

19483 61,981,442 3,550,347 4.04 11,088,342 3,148,206 13,085^196

1949" 81,803,358 5,280,196 6.00 14,558,505 4,071,987 17,165,391

19504 177,104,669 12,809,247 14.56 21,079,362 5,794,309 26,574,638

1951" 135,285,086 7,289,102 8.29 29,056,342 9,159,487 31,648,532

'Earnings per share of common stock based upon 8 7 9 , 6 0 5 shares

outstanding at December 3 1 , 1 9 5 1 . 2 Net investment after deduction of depreciation reserves.

'Thirteen month period ended December 3 1 , 1 9 4 8 .

'Consolidated information including financial data of wholly-

owned subsidiaries.

President's Report to Stockholders of Motorola

The year 1951 was one of progress for Motorola company to sustain high output. These improvealthough sales and earnings were considerably ments also resulted in better performing sets which lower than those for the previous year. Consoli- were sold at lower prices. I believe the superior dated net sales of $135,285,086 were 24% below design and quality of our television sets, together 1950 sales and net earnings of $7,289,102 were 43% with lower prices and aggressive merchandising under the 1950 figure. 1951 earnings were equal to methods, further strengthened the position of the $8.29 per share of common stock outstanding. company during 1951. In a sense the past year tested the ability of your Communications and electronic equipment sales, company to adjust to an unfavorable market condi- which include electronic equipment for the defense tion which was the reverse, and partly the result, of effort, increased in 1951 over 1950. Development scare buying following the outbreak of war in work and preparation for production of military Korea. This condition did not find the company electronics were important activities but they do unprepared, however, and neither the company nor not reflect in the figures in the way that actual its distributors was affected to the degree which production does. There will be a considerable normally would have been expected. Despite a low increase in military production in 1952. point of sales during midsummer, a comfortable Motorola completed and placed in operation last earning position was maintained each month. year the first large microwave radio communications Actually, for purposes of analysis, the years 1950 system for industrial use. It extends for about 1000 and 1951 are better viewed as a unit than by com- miles, paralleling a major midwest gas pipeline. parison of one with the other. Other similar systems were completed and have Important advances in design of television sets already proved themselves in operation. achieved by our engineering department saved During the year the complete lines of auto, home large amounts of scarce metals and so enabled the and portable radios were redesigned and then

presented to our distributors in February, 1952. These are important segments of our business which, under pressure in recent years for television development and production, have carried on under their own momentum but now justify this special attention.

FINANCIAL CONDITION At December 31, 1951 the consolidated working capital amounted to 529,056,342, an increase of $7,976,980 over the previous year-end. Current assets were 2.30 times current liabilities at the en of 1951 compared with 1.79 a year earlier. Consolidated net worth increased $5,073,894 during the year. Additional funds were acquired by refinancing in November of the company's note payable to Prudential Insurance Company which resulted in $6,298,000 added working capital. During the year the company purchased a plant containing 204,000 sq. ft. of floor space adjoining its main location in Chicago which, with added facilities and other improvements, resulted in an increase of $3,365,178 in plant and equipment accounts after allowance for depreciation. The company's investment in subsidiary corporations increased about S600,000, largely as the result of formation of a new company in New York City to carry on the distribution of Motorola products there

DIVIDENDS Regular quarterly dividends of 50c per share were paid in 1951 plus a 10% stock dividend paid in January, 1951- In December, 1951 the Directors raised the quarterly dividend to 62V2C per share and

P R E S I D E N T ' S R E P

declared an extra cash dividend of YIVic per share, making a total of $1.00 per share paid in January, 1952. In view of the increasing amount of working capital required and the facilities added in 1951, the Directors were of the opinion that continuation of a conservative dividend policy was in order. At the close of the year there were 3,250 Motorola stockholders. Directors, officers and their immediate families owned directly or beneficially 290,793 shares of Motorola stock.

PROFIT SHARING The primary purpose of Motorola's profit sharing plan is to encourage employees to participate somewhat as partners in this enterprise. Under this plan members share in the profits of the company according to a formula. Thus their interest in the business becomes more than one of mere employment. We believe they consequently derive more real satisfaction from their work as well as share th stockholders interest in the efficient operation of the business. The trust fund serves to build up means for retirement through savings placed in the fund by employees, the sharing in company profits and the income of the fund itself. On December 31, 1951, 5,287 employees were participating in the fund and since its inception in 1947 the fund has grown to a market value of S1O,552,794, made up of about $4,500,000 in government bonds, $1,600,000 in corporate bonds and $1,400,000 in corporation stocks. The balance of the fund was in cash and receivables. At the year-end the fund owned 10,175 shares of Motorola common stock.

O L D E R S O F M O T O R O L A

FUTURE Viewing the prospect of Motorola for 1952, I think it is a reasonable expectancy, in the light of known factors, that we shall have as good and probably a better year than 1951. Total sales volume should be greater, but net profit after taxes cannot increase greatly for the reason that excess profits taxes cut into earnings sharply, leaving only a relatively small amount to accrue to the common stock. Although the outlook is somewhat spotty for sales of certain products and in some territories, radios sold to car manufacturers are probably the only line that will experience an over-all decline in 1952. This will be because car manufacturers are expected to build fewer automobiles. It is probable that the long existing prohibition on construction of new television stations will soon be lifted by the Federal Communications Commission. At the same time we shall probably see the extension of the coaxial cable to important cities including Miami, New Orleans, Oklahoma City, Dallas, Fort Worth and Houston. These developments will result in opening of new markets for sales of television sets. The two major political conventions and campaigns coming in 1952, as well as the improving quality of television entertainment, will further stimulate interest in television. I there fore see 1952 a good year for television sales and we expect to get at least our share of the business. As indicated previously, with complete new lines of home, portable and car radio sets for 1952, we propose to pursue vigorously the merchandising of all these products and expect a marked increase in sales for the year.

In the field of technical communications equipment our prospects are excellent. New uses are being found and recent developments such as microwave radio relay systems are only now proving their value to potential users. The reputation o Motorola for engineering skill and quality of product in these new lines is firmly established. In our opinion much of the potential of microwave is unknown at this time, but we judge future prospects to be very encouraging. With the completion of the initial stages of tooling and preparation for some military production contracts behind us, production will increase and I anticipate that military billings will account for the largest portion of the expected increase in sales of the company in 1952. In the main, we have confined our appraisal of the future to 1952 prospects, but we would be remiss if we did not express an opinion that potentially the electronics industry is among the most promising for future revolutionary developments. We, at Motorola, are fully aware of this prospect and to that end we will continue aggressively to pursue important research and development opportunities. In behalf of Management, it is again a pleasure for me to express sincere thanks to employees, customers, stockholders and suppliers for the confidence and cooperation they gave in making 1951 a successful year for Motorola, Inc.

President For the Board of Directors

CAR RADIO—Motorola's top leadership in car radio continued through 1951. To strengthen our position a new, simplified, custom car radio line has been engineered and developed to allow for greater flexibility in sales and installation. Th series was introduced recently and has been given enthusiastic endorsement.

TELEVISION—Motorola continued to maintain its strong position in the television industry during 1951 by scooping the industry on many new developments.

Among the outstanding features that helped keep Motorola television receivers in a best sell ing position were a new Concentrated Power chassis incorporating a new simplified design, Glare Guard anti-reflection screen, Acoustinator Tone Control, and Area Selector Switch for improved local and distant signal pick-up.

A l l Motorola sets dre easily adapted to Ultra High Frequency reception through the installation of a built-in unit or by using the new Motorola self-contained Strato-tuner which is readily installed by the customer.

CLOCK RADIO—This smartly styled, compact clock radio combination, introduced in 1950, has become extremely popular in the past year and is providing substantial volume. It is featured in three striking colors. The clock radio is equipp with an alarm, an appliance plug and a slumber switch, all operating automatically. Indications that 1952 will prove to be another excellent Motorola clock radio year.

PORTABLE RADIO—In the field of portable radios in 1951, your company featured three models in a wide range of prices, styles and colors. Early in 1952 four new models were introduced which featured streamlined size, durabl cabinets of sturdy plastic or armored steel, and exceptional sensitivity.

TABLE RADIO—During the past year Motorola developed, and early in 1952 introduced, a complete new line of table radios, including an A M - F M receiver with improved sensitivity an finer tone.

With the trend toward smaller radios, emphasi was placed on compact size through new chassis engineering and modern styling with the use of handsome colors on sturdy plastic cabinets.

Motorola The Communications and Electronics Division of Motorola in 1951 moved into a newly acquired building just east of the main plant in Chicago. This new building adds over 200,000 square feet of plant and office space and permits consolidation on an efficient basis of all activities (except military electronics) of this growing division. Principal civilian activities of this division are the design, manufacture and sale of:

1) Two-way mobile radio systems which provide means

of sending and receiving FM radio communications between a dispatching center and mobile units such as police cars and taxis.

2) Microwave radio relay systems. These comprise a series of relay towers spaced at intervals of about 25 miles which, together with transmitting and receiving equipment, provide economical communication over long distances by radio. Pipeline, railroad and industrial companies offer a large potential market for these systems 3) Carrier and control systems which are used for multiple radio communications over a single electric power line. In addition, Motorola furnishes electronic equipment as

a means for metering and controlling remote power distribution functions from a central point. Sales of Motorola two-way mobile radio equipment continued high, the principal purchasers being fire and police departments, taxi-cab companies, construction, public utility, pipeline, railroad and other industries for varied applications including materials handling and production and inventory control. Motorola has maintained its leadership in this expanding business, its sales accounting for well over half of the industry's total in

this field.

Early in 1951 Motorola placed in operation for the Mid-Valley Pipeline Co. a 1000-mile microwave system and in December another 1000-mile system, this one for the Texas Illinois Natural Gas Pipeline Company, was completed.These are the two largest, operating, industrial microwave systems in the world. Motorola has installed and put into operation more than 21 microwave relay systems, and has the lead position in this field. Power line carrier equipment sales increased as a result of Motorola's superior design which provides more channels of communication over longer distances with less interference than previously were attainable.

Motorola Motorola's Military Electronics Department was formed in the early part of 1951 to handle military business for the company. This department, principally located at our Clybourn Avenue plant in Chicago, has its own purchasing, engineering, production and administrative departments. The entire facilities of this plant, consist of 178,000 square feet, will eventually be devoted to military business. From the standpoint of design and development, production and accounting records, military business is like a new business. Because of the continued

growth of this segment of the business its separation

from other lines appeared desirable.

Motorola's military contracts relate to many types of

electronic equipment. Development contracts, under

which the company undertakes to design and create a

piece of military equipment, are largely handled in the

engineering laboratory in Phoenix, Arizona. Production

is effected at the Clybourn plant in Chicago. The policy

of the company has been to limit its military activities the field of electronics in which its skill and knowledge may be applied efficiently and economically.

While it is impractical to describe the nature of Motorola's military contracts, it can be stated that in the event of war or an accelerated defense program the company would be prepared to produce a large volume of important military equipment. Military production in 1952 is expected to increase to a point where it will become a substantial segment of the business whereas in 1951 development contracts, which result in relatively small dollar income, were the principa military activity. Most government business is done on smaller than normal margins and is then subject to price

redetermination, renegotiation and, of course, taxes. It

therefore tends to dilute the earning power of the

company.

During the last war Motorola was recognized by the

government as an important supplier of equipment.

Technical contributions, such as the development and

production of the now famous Handie-Talkie and

Walkie-Talkie radios, and Motorola's outstanding production record, earned for the company a lasting reputation for quality and performance. Motorola is again eager to make its best contribution to the defense effort.

MS

Merchandising activities for 1951 included a Motorola's advertising program continued successful sales training program, in which through 1951 at the same aggressive pace that 35,000 dealers' personnel participated, and an was set in 1950. At the conclusion of the year, improvement in the service activities in many surveys clearly indicated that Motorola's positerritories. Dealer window and floor displays of tion in the industry had been strengthened and Motorola products were promoted through an its acceptance by the consuming public definitely effective display contest. Dealer identification increased. through the use of outdoor and window signs Campaigns in leading magazines gave Motorshowed further progress; over 5,000 neon signs ola good national coverage. Radio spots were were placed in dealers' stores in 1951. used extensively. During the year the company In 1952 it is planned further to improve the sponsored the Four Star Revue on television, merchandising effort, both through more effecMacArthur's return to Washington and, at the tive promotion and more accurate direction of conclusion of the year, the East-West football that effort. Emphasis will be placed on market game on a coast-to-coast network. forecasting, particularly with respect to such developments as the lifting of the Federal The central theme of the current television Communications Commission "freeze" on new advertising program is "The Picture Tells The stations and the effect of more VHF and UHF Story". Comparison will prove that Motorola stations on the marketing program. TV is best.

During the year a program of plant rearrange- Motorola recognizes that its men and women ment was carried out. The Communications and are the most important factor in the company's Electronics Division was consolidated in its new success and endeavors to give them opportunity building adjoining the main plant in Chicago, for satisfaction in their work. Motorola seeks to except for military production which was build the spirit of an organization in dynamic centered at the Clybourn plant in Chicago. movement with every person doing his best and Further rearrangement to gain efficiency in accommodating himself to others to the end of production in other plants is in progress. achieving a mutual goal. There is personal Motorola - Chicago Co., the company's satisfaction for employees in participating as subsidiary which distributes its products in members of the flexible, hard-hitting, scoring Chicago, moved into a new building constructed team which is the Motorola family. for its purposes on North Pulaski Avenue in Wage and salary rates are equal to the highest Chicago, containing 54,000 sq. ft. of warehouse in the industry and there is a cost of living wage and office space. Motorola-Detroit Co., acquired escalation program, a broad and liberal welfare land in Detroit for later construction. program and a profit sharing plan, all tangible Total plant and office area now exceeds evidence that Motorola is a desirable place to 1,200,000 square feet in Chicago, Quincy, work. Phoenix, New York, Philadelphia and Detroit. At the year-end there were 6,640 employees.

Motorola Inc. A N D S U S I D I A R I E S

DECEMBER 31 1951 1950 Current Assets: Cash $ 8,527,985 $11,289,747 United States Government obligations—short term, at cost 5,976,180 3,995,920 Accounts receivable (less reserve for uncollectible accounts— 12,091,412 1951, $215,000; 1950, $202,500) 11,541,614 289,567 Other current receivables 1,431,242 19,822,645 Inventories 23,600,510 Prepaid expenses 366,555 413,952

TOTAL CURRENT ASSETS $51,444,086 $47,903,243

Consolidated Current Liabilities: Notes payable (by subsidiaries) $ 485,227 $ 145,742 Accounts payable and sundry accruals 1 1,785,288 10,391,366 Accrued taxes 8,348,673 15,016,115

Statement Dividend payable Reserves for product warranties TOTAL CURRENT LIABILITIES 879,605 888,951 $22,387,744 400,000 870,658 $26,823,881

WORKING CAPITAL (excess of current assets over current liabilities) $29,056,342 $21,079,362

of Deferred items applicable to future periods Sundry assets Equipment leased to others—less depreciation 401,196 276,396 444,762 529,733 275,338 259,665 Plant and equipment—less depreciation 9,159,487 5,794,309 Patents and trademarks—less amortization 92,841 81,767

Financial TOTAL WORKING CAPITAL AND OTHER ASSETS $39,431,024 $28,020,174

Long-term debt less (in 1950) current prepayment requirements. . . 7,750,000 1,395,000 Excess of assets over liabilities $31,681,024 $26,625,174 Deduct deferred television service and warranty income 32,492 50,536

Condition STOCKHOLDERS' EQUITY $31,648,532 $26,574,638

Stockholders' Equity Represented By: Capital stock—$3 par value; 1951, 879,605 shares; 1950, 800,000 shares $ 2,638,815 $ 2,400,000

Paid-in surplus 4,1 73,2 1 7 1,227,832

Earned surplus 24,836,500 22,946,806

Total $31,648,532 $26,574,638

Motorola Inc. A N D S U B S I D I A R I E S

CONSOLIDATED STATEMENT OF INCOME AND EXPENSE

YEARS ENDED DECEMBER 31 1951 1950

Sales $1 35,285,086 $177,104,669 Other income 559,443 736,147

Total income $ 1 35,844,529 $177,840,816

Deduct: Manufacturing and other costs of sales $101,488,878 $129,659,612

Consolidated Selling, service and administrative expenses Contribution to employees' profit-sharing fund Provision for federal and state taxes on income 16,473,029 2,938,449 7,400,1 28 18,823,521 2,295,901 13,890,323 Other expenses 254,943 362,212

Statements Total deductions $1 28,555,427 $165,031,569

Net income $ 7,289,102 $ 12,809,247

CONSOLIDATED STATEMENT

ot Income OF SURPLUS

YEARS ENDED DECEMBER 31 1951 1950 Paid-in Earned Paid-in Earned Surplus Surplus Surplus Surplus

and Expense Balances, beginning of year Net income for the year. Total $1,227,832

$1,227,832 $22,946,806 7,289,102 $30,235,908 $

$ 1,227,832

1,227,832 $ 13,537,559 12,809,247 $ 26,346,806

Cash dividends declared: $2.50 per share, 1951; $4.25 per share, 1950 $ 2,199,013 $ 3,400,000

Stock dividend—10%:

and Surplus 79,605 shares at $40.00 per share (fractional shares paid in cash, $16,195) Excess of value fixed by the directors 3,200,395

over par value $2,945,385* Total $2,945,385* $ 5,399,408 — $ 3,400,000 Balances, end of year $4,173,217 $24,836,500 $ 1,227,832 $ 22,946,806 * Addition

Notes to Financial Statements Inventories are valued at the lower of cost or market, on a first-in first-out basis. The inventories on December 3 1 , 1 951 and 1950 are detailed as follows:

1951 1950 Finished stock $ 3,402,244 $ 3,416,294 Government contracts in process. 5,230,774 830,778 Other work in process 563,560 758,437 Raw materials and supplies 14,403,932 14,817,136 Total $23,600,510 $19,822,645

Plant and equipment on December 3 1 , 1951 and 1950, at cost, are detailed as JS follows: 1951 1950 Buildings and equipment — less depreciation $ 8,101,858 $ 5,134,936 Dies — less amortization 464,575 252,788 Land 593,054 406,585 Total $ 9,159,487 $ 5,794,309

Depreciation included in costs and expenses (including amortization of emergency facilities), for the year ended December 3 1 , 1951, totaled $521,320.

The company is defendant in a lawsuit brought by a former distributor, in which the plaintiff alleges damages of $1,320,000, with a request for trebling. In the opinion of company counsel, there is only a remote, if any, possibility that the company will be held liable in any amount.

On December 3 1 , 1951, long-term debt consisted of the following: 3 % % promissory note, due November 1, 1966 (fixed annual sinking fund payment requirements of $500,000 commencing January 1, 1953) $ 7,500,000 Real estate mortgage of subsidiary, 4 % , due August 15, 1966 250,000

Total $ 7,750,000

In accordance with restrictive terms of the loan agreement for the 3 % % promissory note, earned surplus of the parent company in the amount of approximately $2,555,000 was available on December 3 1 , 1951 for the payment of cash dividends or repurchase of the company's stock.

On December 3 1 , 1951 the company was contingently liable with respect to notes receivable discounted in the amount of approximately $255,000.

The federal income and excess profits tax returns of the company and its subsidiaries for fiscal years subsequent to December 3 1 , 1949 are subject to review by the Treasury Department.

The company's business under Government contracts is subject to price renegotiation, in accordance with federal statute. No provision has been made in the accounts for renegotiation refund, as the amount thereof (if any) is presently indeterminable.

What Happens to the Motorola Sales Dollar We Received From sale of our products . Other income Total

We Paid Far

Materials $ 78,100,025 Manufacturing, Selling and other expenses 1 5,499,620 Taxes 8,1 18,858 Salaries and wages of employees Future benefits to employees through the profit sharing fund These items total 23,898,475

2,938,449 $ 1 28,555,427

MATERIALS 53c

.$135,285,086 559,443 .$135,844,529

Leaving for Stockholders and reinvestment in company $ 7,289,1 02

Reinvested in company for future growth. $5,073,894 I Distributed to stockholders fo use of their money $2,21 5,208

Auditor's Report BAUMANN, FINNEY& CO. Certified Public Accountants 208 SOUTH LASALLE STREET

CHICAGO 4, ILLINOIS

Board of Directors, Motorola, Inc.

We have made examinations, for the year ended December 31, 1951, of the accounts of MOTOROLA, INC. (an Illinois corporation) and its subsidiaries, all wholly owned.

Our examinations were directed primarily to the verification of the financial condition of the companies on December 31, 1951, and included a general review of the income and expense accounts, but without a detailed audit of the transactions for the year; they were made in accordance with generally accepted auditing standards applicable in the circumstances, and comprised such tests of the accounting records and supporting evidence and such other auditing procedures as we considered necessary.

In our opinion the accompanying balance sheet and related statements of income and expense and surplus, as footnoted, present fairly the consolidated financial position of Motorola, Inc, and its subsidiaries on December 31, 1951 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

BAUMANN, FINNEY & CO.

Chicago, Illinois March 5, 1952.

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Motorola Inc.

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1 are four of Motorola's sixteen facturing, warehousing, sales and laboratory buildings.

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Motorola Inc. C H I C A G O 5 1, I L L I N O I S