摩托罗拉公司1958年年报

annual report 1958

MOTOROLA, INC

MOTOROLA, INC.

x now embracing these five product divisions Consumer Products Division Television; Table, Clock and Portable Radios; High Fidelity and Stereo Phonographs; Car Radios

Communications and Industrial Electronics Division Mobile, Portable and Pocket Two-Way Radio Communication Systems, Microwave Relay Systems, Paging Systems, Selective Calling Devices, Power Voice Speakers and Megaphones, Closed Circuit Television

Automotive Products Division Supplier of Original Equipment Car Radios to Ford Motor Company, Chrysler Corporation, American Motors Company and International Harvester Company

Military Electronics Division Research, Development and Production in Fields Including Radar and Other Electronic Sensing Devices; Missile Electronics; Communications; Data Transmission, Processing and Display; Navigation; Solid State Materials and Devices; Electronic Sub-system Management

Semi-Conductor Product Division Research and Production of High and Medium Power Transistors, Silicon Power Rectifiers, Mesa Transistors, General Purpose Transistors and Zener Diodes

GENERAL OFFICES

4545 AUGUSTA BOULEVARD . CHICAGO 51, ILLINIOS

directors and officers of MOTOROLA Paul V. Galvin Chairman of the Board of Directors

Robert W. Galvin Director, President

Daniel E. Noble Director Executive Vice President Industrial, Semi-Conductor and Military Electronics Divisions

Edward R. Taylor Director Executive Vice President Consumer Products Division

Elmer H. Wavering Director Executive Vice President Automotive Products Division

Matthew J. Hickey, Jr. Director

Frank J. O'Brien Director Vice President, Purchasing

Walter B. Scott Director Vice President, Consumer and Automotive Production

Edwin P. Vanderwicken TRANSFER AGENTS Director Chemical Corn Exchange Bank Vice President, Finance, 30 Broad Street, New York 15, New York Treasurer and Secretary Harris Trust and Savings Bank Joseph A. Chambers 115 West Monroe Street, Chicago 90, Illinois Vice President, Western Area Military Electronics Center REGISTRARS John I. Davis Irving Trust Company Vice President One Wall Street, New York 15, New York Consumer Products Engineering Continental Illinois National Bank and Trust Company of Chicago Sylvester R. Herkes 231 South La Salle Street, Chicago 90, Illinois Vice President Consumer Products Marketing

Arthur L. Reese Vice President, Communications The annual meeting will be held on Monday, May 4, 1959. and Industrial Electronics A notice of the meeting, together with a form of proxy Alex Arnold statement, will be mailed to shareholders on or about A Controller at which time proxies will be sol/cited by the manageme

10 yearfinancialsummary

EARNINGS NET BEFORE TAXES SALES ON INCOME

$81,803,358 $8,585,696

177,104,669 27,368,061

t 135,285,086 14,020,739

I 168,734,653 15,576,165

217,964,074 15,512,489 | 205,226,077 16,523,889

226,653,953 18,740,426

I 227,562,168 16,887,834

s 226,361,190 15,597,031

, 216,590,325 14,931,213

Earnings per share of common st

NET INVESTMENT IN PLANT AND SHAREHOLDER EQUIPMENT EQUITY

$4,071,987 $17,165,391

5,794,309 26,895,638

9,005,880 31,920,882

11,429,532 41,755,780

14,301,004 45,929,419

16,579,531 50,598,747

19,179,992 56,186,590

25,388,866 61,305,080

27,167,597 66,172,446

27,615,287 71,533,020

.

o the shareholders of

ales and earnings

Sales and earnings declined from the previous year in the first three quarters, but in the fourt quarter sales set a new high record for the company. Fourth quarter earnings were well in excess of total earnings for the first three quarters and were surpassed only by the fabulous fourth quarter of 1950 when television reached the peak of its introductory period. Consolidated sales for the full year of 1958 we $216,590,000 which compares with $226,361,000 in 1957.

Dollars per Share EARNINGS PER SH

1 BEFORE INCO TAXES

AFTER INCOM

t

MOTOROLA

Sales of our communications and industrial electronics division continued to increase, military sales were about the same, and sales of car radios to the automobile manufacturers declined. Consumer products sales in the fourth quarter nearly overcame a previous decline, aided by the leading position Motorola attained in the new product line of stereophonic high fidelity phonographs and a substantially improved proportion of industry sales of television sets. Consolidated earnings in 1958, before provision for income taxes, were $14,931,000 compared with $15,597,000 in 1957. After taxes we earned $7,356,000 or $3.80 per share of common stock in 1958 compared with $7,824,000 or $4.04 per share in 1957. Fourth quarter earnings of $2.14 per share compare with $1.28 for the fourth quarter of 1957. The decline in auto radio sales, and the effe of this decline on our semi-conductor operation, combined with lower production of consumer products in the first half of the year and some non-recurring losses on several military production contracts, are the principal reasons for reduced earnings. However, a major expense reduction program had an important offsetting effect as it became fully operative during the

year, and the resurgence in consumer products sales and earnings in the last half also aided.

television

Motorola's new line of television sets, introduced in June, enabled us to gain an increasing proportion of industry sales. It confirmed a regeneration in our consumer products division and provided new and higher standards of performance, reliability, styling and value. As

a measure of reliability, the company now provides a year's warranty on tubes and parts in contrast to the 90-day warranty customary in the industry.

Many new activities have been introduced into the planning, designing, engineering, production and testing of Motorola television to assure a product quality that sets the pace in the industry. Just one instance may be illustra-

tive. Motorola, after exhaustive study, developed much improved specifications for vacuum tubes for use in television sets. To assure that the quality of tubes for Motorola sets reaches these unusual specifications, we purposely damage monthly, in our inspection department, more tubes, and spend more money for those tubes,

than the number of tubes that fail within the warranty period in the sets we sell. Motorola is providing style leadership in tele vision and in 1958 the finest of furniture was added in cooperation with Drexel Furniture Co. who supply cabinets in their superb furniture styles and quality for the top end of the Motorola line.

radios and phonographs

The dramatic story of the year is of the quick rise to a high rate of sales of stereophonic high fidelity phonographs. Motorola introduced its initial line in June. It extended from a fine performing, portable unit to the superbly styled units in Drexel cabinets. Industry figures indica that more than one out of every four stereo units sold last fall was a Motorola. And, at that, our sales were limited by inability to secure additional materials and components to satisfy the demand. Industry sales of table, clock and portable radios declined 6% as compared with 1957, and transistorized, portable sets increased their pro portion of the total. A notable preference developed for FM radios as another evidence of the public appetite for quality performance and classical music. The importation of large numbers of transistorized radios from Japan had an important effect on price competition in portable radios. With major attention on television and stereo, our participation in the radio business suffered but due attention is being focused on this important segment.

automotive division

Sales of car radios to Ford, Chrysler and American Motors naturally declined in the aggregate along with reduced industry production of automobiles. However, sales recovered rapidly in the last half of the year. We continue to cooperate closely with our principal customers in the developments that are occurring in the readaptation of car radio to coming automobile designs. At the same time there is constant progress in the technical design of car radios in themselves.

communications and

industrial electronics Again in 1958 this division of our business reported new records in sales and earnings. It also announced important new products to maintain its pioneering and leading position in the field of mobile and portable two-way radio communications. The MOTRAC line of two-way radio systems is the first complete mobile equipment with fully transistorized receiver and power supply. These units are completely new and improved in design and appearance, are smaller and lighter and have the outstanding feature of using only 15% of the power required by standard equipment. For mobile equipment which depends typically on car or truck batteries for operation, this is a major advantage. MOTRAC, which stands for Motorola Transistorized Advanced Communications, found market acceptance which greatly surpassed our expectations.

Paul V. Galvin, Chairman of the Board of Directors and founder of Motorola, Inc.

Robert W, Galvin, President, shown with (left) Edward R. Taylor, Executive Vice Pres dent, Consumer Products Division and (right) Elmer H. Wavering, Executive Vice President, Automotive Products Division. Photograph taken at the modern Franklin Park, Illinois facilities which are devoted to the manufacture of television receivers and stereophoni phonographs.

ri A completely new line of products was in- and zener diodes. New devices with improved troduced with the miniaturized, pocket VHF materials, together with advances in circuitry receiver and companion transmitter. These are and components, push the horizon in this revocompact radio receiving and transmitting sets lutionary art still further. that can be carried by authorized persons requir- The marketing effort has been increased, and ing immediate radio communication and can be in mid-year 1959 the semi-conductor division used in conjunction with a two-way mobile radio will occupy a new three-story addition to its system. For example, a foot policeman patrolling present facilities. his beat can be in constant, two-way radio communication with squad cars or police headquarters. Firemen or civilian defense workers, construction workers and many others can military electronics greatly increase their effectiveness by having While sales volume in military electronics was immediate, direct communication available on about the same as the previous year, profits their person. declined primarily as a result of difficulties Further advances were made in the field of encountered in the development of advanced radio traffic light control and the Handie-Talkie equipment under three particular contracts Pager for use in hospitals, hotels and factories. which are now in process of completion. Other recent new products in the fields of Motorola's policy has been to develop and portable two-way radio, selective calling devices maintain a diversified interest in the research, (now being used in aircraft as well as land mobile development and production of electronic produnits), power voice speakers and megaphones, ucts for the government rather than to concenhave gained wider acceptance. Common carrier trate on very large contracts on particular pieces mobile radio, which is two-way radio in vehicles, ii of equipment. Our interest has been in the fully interconnected into land telephone systems, advanced fields of electronics, with particular has taken on increasing importance with the in- emphasis on communications; radar; guidance, troduction of our push-button dialing mobile navigation and surveillance systems; telemetry; radio-telephone system for use with automatic, data processing and display. unattended telephone exchange service. An important contribution to the air defense Many less dramatic developments are also capability of the Navy was made in the form of regular fare for the communications division. a complex data processing and display system For example, it has developed a mechanical for large ships. Important advances in antifrequency filter system as an important compo- submarine warfare were also made. Tracking nent, and it has always been one of the largest and control systems for missiles and drones, and manufacturers of high precision quartz crystals identifying systems using radar were developand of instrument quality tone reeds. The division has also developed a closed circuit television system having applications in industry, government and schools. The microwave department has continued to mature its program and awaits liberalized FCC licensing procedures to make available the advantages of microwave communication to many users who need it. Important applications to date include oil pipeline companies, television broadcasting, electric power companies, railroads and telephone systems.

semiconductor products A redirection and intensification of efforts occurred in Motorola's approach to semi-conductors which includes transistors. Large development costs continued in 1958, leading to important advances in mesa transistors, rectifiers

Seated at the Console unit for Programmed Automatic Test Equipment (PATE) at Motorola's Western Military Electronics Center, Phoenix, Arizona, Daniel E. Noble, Executive Vice President, Industrial, Semi conductor and Military Electronics Divisions. At rear, left to right, Joseph A. Chambers, Vice President and General Manager, Western Military Electronics Center; C. Lester Hogan, General Manager, Semi-Conductor Products Division; H. William Welch, Jr., Assistant Manager, and Director of Research and Development, Military Electronics Division.

At the Company's Merchandise Mart salon, Sylvester R. Herkes, Vice President, Consumer Products Marketing with (seated) John I. Davis, Vice President, Consumer Products Engineering.

Frank J. O'Brien, Vice President, Purchasing and (right) Walter B. Scott, Vice Pres dent, Consumer and Automotive Production. In the background, one of six final assemb lines, each capable of producing 600 television sets per day, at Franklin Park, Illinois.

ments, among many, on which we made important contributions in 1958. About 60% of our military sales in 1958 were under prime contracts.

finances At the end of 1958 consolidated working capital was $54,644,000 compared with $52,215,000 at the 1957 year-end. The current ratio was 2.4 to 1. Net worth was $71,533,000 compared with $66,172,000 a year ago. The increase of $7,700,000 in trade receivables reflects a nearly $12,000,000 increase in December sales over the previous year. This coincided with deferred shipments under three large government contracts beyond the year-end which accounted for about $7 million more working capital requirements than was intended. Bank loans of $9,500,000 were therefore in use at the year-end, but at the end of February wer down to $1.5 million. Particular attention is being given in each division to improving the turnover of working capital. The addition of 86,000 square feet to our semiconductor plant in Phoenix is in process; another building in our long term plan for developing our Franklin Park, Illinois, location planned; and, we have exercised an option to purchase some facilities now under lease on Cicero Avenue in Chicago. It is not contemplated that these facilities will require addi financing. A conservative dividend policy was continue in 1958 in light of the economic adjustment

Arthur L. Reese, Vice President, Communications and Industrial Electronics Division and (left) William S. Wheeler, General Manager, Chicago Military Electronics Center, in one of the new design engineering laboratories at the communications division's headquarters in Chicago.

Shown above is the new Motrac two-way radio that has ushered in a new era in mobile communications. Newest and most dramatic member of Motorola's "Transistor Research" Line, this unit has a fully transistorized receiver and power supply. It reaches a new peak in reliability and economy of installation and operation for public safety, public utility, transportation and industrial organizations.

This policeman is using new Motorola two-way pocket radio. His efficiency is greatly increased because he is in constant contact with headquarters or nearby patrol cars. These new units are so light and small they can be carried easily on a belt or in a pocket. Their advantages are by no means confined to law enforcement. They are useful in industry, too, for providing personal radio contact wherever needed.

Left to right, Edwin P. Vanderwicken, Vice Presi dent for Finance, Treasurer and Secretary; Ediso J. McGowan, Vice President and General Manager Motorola Finance Corporation; Alex Arnold, Controller; Lewis D. Spencer, General Attorney and Assistant Secretary.

under way and the continued capital needs of the company. Dividends totalling $1.50 per common share were paid in 1958. At the close of the year there were 4,343 Motorola stockholders. Directors, officers and their relatives owned, directly or beneficially, 706,349 shares of Motorola stock.

future The prospects for the year 1959 appear favorable. It seems likely that the company will enjoy a minimum of a 10% increase in sales volume, for^a new record, and a profit increase of greater proportions. Each division of the corporation will contribute to this improvement. Our studied projections of the next few years suggest growth opportunities in every division of the corporation. This will result from (I) expanding markets for present products such as television, stereophonic-high fidelity and twoway radio, (2) new products that are expected to reach the market, such as transistors, solid states devices, new applications of electronics to automobiles, and new weapons systems, (3) expansion in our international operations, and (4) the possible addition of new electronic divisions by acquisition. One of the major outside influences on our long-range growth is government regulations. The first and most important of these is the availability of frequency spectrum in which our electronic gear can operate. This is under the jurisdiction of the Federal Communications Commission, which agency is engaged in major

March 12, 1959

studies of frequency reallocations. We are participating actively in these proceedings and believe that the logic of circumstances will resu in a disposition by the Commission to act favorably on many of the recommendations which we support. In another area, the government attitude toward allowable costs and profit margins in military electronics is under review. In this are we are also actively advocating the proper interest of the electronics industry in hopes tha a more enlightened attitude will prevail in the future to permit adequate rewards and incentives that the industry deserves and that would, in the long run, benefit the country.

The problems of adjusting to the recession that found its low point in early 1958 required an unusual contribution by all Motorolans. We are happy to acknowledge the fine spirit and intelligent action with which the problems were met and are grateful for the loyalty of all employees to our company.

For the Board of Directors,

MOTOROLA, INC. AND CONSOLIDATED SUBSIDIARIES

balance sheets as of December 31, 1958 and 1957

December 31,

ASSETS 1958 1957

Cash $ 6,659,888 $ 6,656,337

Accounts and notes receivable: United States Government 11,962,424 12,240,018

Other trade receivables (less reserve for bad debts— 1958, $823,000; 1957, $753,000) 35,031,700 27,332,457

Other current receivables 558,052 1,106,828

Costs recoverable under United States Government contracts, less progress billings 11,660,723 14,403,634

Inventories—(Note D) 26,666,528 25,323,676

Prepaid expenses 423,890 558,259

TOTAL CURRENT ASSETS $ 92,963,205 $ 87,621,209

Investment in Motorola Finance Corporation, subsidiary not consolidated—at cost plus undistributed earnings (see accompanying balance sheet) 4,941,391 4,209,528

Other assets 2,196,979 2,635,640

Plant, equipment and leasehold improvements—less reserves for depreciation (Note C) 27,615,287 27,167,597

Patents and trademarks—less amortization 184,924 245,323

$127,901,786 $121,879,297

notes to financial statements A—The companies' business under United States Government contracts is subject to price renegotiation. The renegotiation status has been reviewed by the Government for years to and including 1954, and no refund was required. It is believed that no excessive profits were realized in subsequent years which would be required to be refunded under general price renegotiation.

B—In connection with the financing of sales of products to consumers, Motorola, Inc. and consolidated subsidiaries are obligated under repurchase and other agreements with Motorola Finance Corporation and other financing agencies. It is believed that these obligations will have no material effect on the business of the companies.

10

December 31,

LIABILITIES 1958 1957

Notes payable, banks—short term $ 9,500,000 $ 9,000,000 Current maturities of long-term debt 1,004,756 1,005,647 Accounts payable—trade 10,034,733 5,793,250 Accrued taxes 6,597,591 7,683,304 Reserves for product and service warranties 678,853 927,166 Other current liabilities 10,502,833 10,996,010 TOTAL CURRENT LIABILITIES $ 38,318,766 $ 35,405,377 Long-term debt, less current maturities above: Notes payable: Due November 1, 1966, 3% %, with annual prepayment requirements of $500,000 4,000,000 4,500,000 Due July 1, 1972, 3% %, with annual prepayment requirements of $500,000 6,500,000 7,000,000 Due November 1, 1976, 4 % %, with annual prepayment requirements of $500,000 commencing November 1, 1963 7,000,000 7,000,000 Real estate mortgages, principally maturing after 1965. . . 550,000 554,756 Total liabilities $ 56,368,766 $ 54,460,133 $ 1,246,718 DEFERRED INCOME SHAREHOLDERS' EQUITY Capital stock, $3.00 par value—authorized, 3,000,000 $ 5,805,393 shares,- issued and outstanding, 1,935,131 shares $ 5,805,393 9,018,506 Capital surplus 9,018,506 51,348,547 Retained earnings 56,709,121 Total shareholders' equity $ 71,533,020 $ 66,172,446 $127,901,786 $121,879,297

C—The companies' investment in plant, equipment and lease- D—At prior year-ends the companies have consistently valued hold improvements on December 31, 1958 and 1957 was as their inventories at the lower of prime cost (materials and follows: labor) or market value. As of December 31, 1958 the invenDecember 31, tory valuation was increased $907,057 to include certain ele1958 1957 ments of manufacturing overhead; net worth was increased by Land—at cost $ 2,531,231 $ 2,472,582 the same amount by a credit to Retained Earnings, without entering into income determination for the year. If the results Buildings, machinery and equip- of operations for 1958 had been determined on a basis which ment—at cost (less reserves for included manufacturing overhead in the opening and closing depreciation—1958, $10,986,241; inventories, the effect on earnings would have been im1957, $8,842,253) 23,108,113 22,596,005 material. Dies, tools, and leasehold improve- E—Under terms of restrictive covenants contained in longments—at cost, less amortization 1,975,943 2,099,010 term debt agreements, approximately $7,900,000 of Retained Total $27,615,287 $27,167,597 Earnings on December 31, 1958 was available for the payment of cash dividends or acquisitions of the company's stock.

11

MOTOROLA, INC. AND CONSOLIDATED SUBSIDIARIE

statement of consolidated income and retained earnings

Sales

Net income of Motorola Finance Corporation—subsidiary not consolidated

Other income

Total income

Manufacturing and other costs of sales

Selling, service and administrative expenses

Depreciation and amortization of leasehold improvements. .

Contribution to employees' profit-sharing fund Interest and other expenses

Total costs and other expenses

Net income before provision for taxes on income Provision for federal income taxes

Earnings (per common share—1958, $3.80; 1957, $4.04) . .

Retained earnings, beginning of year

Credit for adjustment of inventory valuation (Note D)

Total

Deduct dividends—$1.50 per share

Retained earnings, end of year

See the accompanying notes to f

Year Ended December 31, 1958 1957

$216,590,325 $226,361,190

231,863 209,528

1,273,014 1,326,201

$218,095,202 $227,896,919

$167,839,009 $178,403,747

28,173,818 26,177,101

3,101,868 2,809,715

2,401,376 2,333,463 1,647,918 2,575,862

$203,163,989 $212,299,888

$ 14,931,213 $ 15,597,031 7,575,000 7,772,600

$ 7,356,213 $ 7,824,431

51,348,547 46,426,812

907,057

$ 59,611,817 $ 54,251,243

2,902,696 2,902,696

$ 56,709,121 $ 51,348,547

auditors' report

MOTOROLA FINANCE CORPORATION

balance sheets as of December 31, 1958 and 1957

ASSETS Cash Receivables: Lease and conditional sales contracts (including instalments maturing beyond one year—1958, $10,636,000; 1957, $8,932,000) Notes receivable, distributors—maturing within one year. Total

Less unearned income on lease and conditional sales contracts Net Other assets

LIABILITIES Notes payable, banks—short term Accrued taxes Other current liabilities Total current liabilities

SUBORDINATED DEBT AND NET WORTH Subordinated notes payable to Motorola, Inc.—due 1961 . . Capital stock, $1.00 par value—authorized and issued, 20,000 shares Paid in surplus Retained earnings (net income since inception, March 7,195 Total subordinated debt and net worth

Note—All receivables of Motorola Finance Corporation are and other agreements discussed in Note " B " of Notes

To the Board of Directors and Stockholders of Motorola, Inc.:

We have examined the balance sheet of Motorola, Inc. and consolidated subsidiaries as of December 31, 1958 and the related statement of income and retained earnings for the year then ended, and the balance sheet of Motorola Finance Corporation as of December 31, 1958. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. It was not practicable to attempt to obtain confirmations of certain receivables from the United States Government, but we satisfied ourselves as to their substantial accuracy by means of other auditing procedures.

DECEMBER 31, 1958 1957 $ 4,273,186 $ 1,782,395

$16,082,874 1• $ 13,021,557 5,454,179 •| 3,921,399 $21,537,053 1• $ 16,942,956

$ 2,500,000 11 $ 2,000,000

20,000 11 20,000 1,980,000 1I 1,980,000 441,391 1| 209,528

rchase ments. $ 4,941,391 $23,190,741 1| || $ 4,209,528 $ 16,547,474

In our opinion, the accompanying financial statements present fairly (a) the financial condition of Motorola, Inc. and consolidated subsidiaries as of December 31, 1958 and the results of their operations for the year then ended, and (b) the financial condition of Motorola Finance Corporation as of December 31, 1958, in conformity with generally accepted accounting principles applied on a basis consistent

with that of the preceding year, except for the change (whic we approve) in the basis of valuing the December 31, 1958 inventories, as explained in Note D of Notes to Financial Statements. BAUMANN, FINNEY & Co. Certified Public Account Chicago, Illinois February 20, 1959

14

ONSUMER PRODUCTS DIVISION

rogress that quality built Significant gains were registered in 1958 by the Consumer Products Division, which produces and markets Motorola television receivers, stereo and other high fidelity phonographs, portable, clock and table radios, and Motorola brand car radios.

While industry sales were down sharply in 1958 compared with the preceding year, the

Division materially improved its position with

the major gains coming in television and stereo

high fidelity.

Needless to say all this did not come about

through happenstance. The increased prestige

and acceptance which Motorola has achieved

with consumers and trade alike is the result of

a continuing, long-range program of planned

improvement. However, as gratifying as the

In past years, a special section of the Annu Report has been set aside to report on significant Company undertakings or to describe the functioning of one of Motorola's five di sions. The purpose has been to acquaint you with important aspects of the Company's operations. This year's special section is d voted to the Consumer Products Division. Shown at left are some of the people responsible for this Division's management. 1. Edward R. Taylor, Executive Vice President 2. John I. Davis, Vice President for Engineering 3. Sylvester R. Herkes, Vice President for Marketing 4. Herbert J. Zeller, Director of Styling 5. Garth J. Heisig, Director of Television Engineering 6. Wilbur C. Jackson, Director of Engineering Services 7. C. Fred Parsons, Merchandising Manager 8. C. J. Gentry, Car Radio Sales Manager 9. David H. Kutner, Manager of Distribution 10. K. Warren Snider, Manager of Product Planning 11. Virden E. Scranton, Manager of Product Services 12. William J. Blazek, Manager of Business Services 13. Charles P. Lloyd, Television Sales Manager 14. William E. Laswell, Radio and Phonograph Sales Manager 15. Fred B. Williams, Director of Radio Engineering

Consumer Products Division's progress has been to date, prospects for the future look ev brighter.

what's behind the divisions growth ?

Motorola's position in consumer products is

due in great measure to a fresh marketing con-

cept, backed by a completely integrated engi-

neering and marketing program developed

within the Consumer Products Division.

Basic changes in the demands of the con-

sumer were recognized early at Motorola. The

New Consumer is more quality minded. He

puts quality and value above mere price. He is

willing to pay more to get more. From this there evolved a marketing philosophy which may be summed up in the words: Sell quality . . . not price. All planning, en neering, design and manufacturing are concentrated on one objective: improving performance, reliability, styling and value.

Responsibility for achieving this goal rest with many different individuals and groups

performing an astonishing variety of functions within the Consumer Products Division. Let's

take a look at some of them now and see how they work and what the results of their closel coordinated operations have been.

the product planning group

Exercising broad responsibility for everything from the original product idea to the ultimate

sale to the consumer, the Product Planning Group is made up of all the key people in the

Division including Marketing Research, Prod-

uct Service, Product Planning, Merchandising, Distribution and Sales. This group plans lines for each of the Division's product categories. It decides on such matters as design, styling, pricing, introductory dates for new models and the establishment of schedules for meeting those dates. Once these schedules are established, the group coordinates the efforts of engineering, production and marketing to insure that each new product is ready for delivery to the Sales Department as specified. The Product Planning Group works closely with engineering on product ideas, combining the findings of market and consumer research with actual experiences that develop in the field. Out of this partnership have come many accomplishments that have set new standards for ferent groups within the Consumer Products the industry. For example: Division. Reliable industry figures now place Motorola first in stereo high fidelity sales by a TUBE SENTRY wide margin. Developed and perfected by Motorola, this 4-WAFER CASCODE TUNER device eliminates three out of four TV service calls. It does this by protecting tubes from the More sensitive than tuners customarily used, sudden heavy surge of current that occurs when Motorola's 4-wafer tuner brings in pictures the set is first turned on. Tube Sentry has en- with life-like sharpness, even in fringe areas. abled Motorola TV to offer a full year warranty It picks up signals at greater distances and also on all parts instead of the usual industry ninety has greater selectivity which reduces interferday warranty. ence and "snow."

STEREO HIGH FIDELITY Moving decisively at the strategic moment, Motorola was able to capture solid leadership in this increasingly important field in just a few months. This swift, large-scale move into a new field was possible only because of the smooth cooperation and aggressive action of many dif-

Typical of the division's product planning meetings is this shirtsleeves marketing session of the radio group. Representatives of all groups in the division's engineering and marketing structure participate in such meetings in which free exchange and analysis of ideas is the rule.

16

Motorola model SK13 Stereophonic Console. This unit, with dual channel amplifier and six Motorola Golden Voice speakers, epit mizes the quality engineering and craftsmanship that have made Motorola the leader in stereophonic sales.

VOLUMATIC CAR RADIO A major advance in car radio engineering, this exclusive Motorola feature eliminates the need to reset the volume level when changing stations and also keeps volume constant wherever there is a signal, even among tall buildings and under viaducts.

product service

Another important factor in the growth of the Consumer Products Division is the Product Service Group.

In a sense, it can be described as the watch-

dog of Motorola quality, reliability and performance. This group's responsibilities begin in the initial "idea" stage of product development.

It works to insure that every product is designed for the easiest, most inexpensive servicing possible. It provides factory training and technical bulletins for distributor and dealer service personnel. It has instituted a replacement parts and accessories program to make genuine Motorola components available everywhere. Product Service carries on a constant check of all consumer products at every stage. For

•^j^UI^'

example, its Product Quality Committee meets weekly to review, analyze and recommend action on product experiences and problems reported from the field. Its Consumer Acceptance Group daily takes products at random from the shipping docks and inspects them from the customers' point of view. Any flaws or defects, any objections the customer could possibly have, are studied and evaluated. This group has authority to stop production on any line if it deems such action necessary.

The programs and activities conducted by Product Service to safeguard Motorola quality have led to many important developments

including:

GOLDEN M TUBES

Not satisfied with the standard tubes customarily used in television sets, Motorola engineered and developed the most exacting specifications known in the industry. These exclusi Motorola Golden M Tubes have greatly reduced service calls and increased customer sat faction. Actual dealer service records show Motorola TV is the most trouble-free line they handle. Warranty costs have been sharply cut.

Motorola achieved another important "first" with HIGH VOLTAGE TRANSFORMER the introduction of television cabinets by Drexel Furniture Co. Shown at right, Motorola television The extremely high voltages required for clear, model 21K108 with companion stereophonic phonobright TV pictures created many service prob- graph. Both units feature superb contemporary cabinetry styled to match Drexel's distinctive Declalems in transformers. To help end these prob- ration group. lems, Motorola developed a new layer-wound transformer that has longer life and reliability. The year also saw an extension of Motorola's GOLDEN M CHASSIS Local Impact program in which individual Embodying Tube Sentry, Golden M Tubes, markets are saturated with newspaper, billHigh Voltage Transformer and other advanced board and television advertising for results in features, this Motorola horizontal, hand-wired depth. Concentrated in periods when Motorola chassis is today recognized as the best perform- does 80% of its volume in consumer products, ing, most reliable television chassis on the this program has attracted a high level of market. It delivers 20,000 volts of picture dealer tie-in activities. power, is easy to service, and assures longer National brand-building advertising was incomponent life through cooler operation. creased substantially, too, with a dominant schedule of advertisements in the Saturday Evening Post supported by schedules in other merchandising leading consumer magazines. Noteworthy among the selling ideas and In the Consumer Products Division, direct re- tools that were sparked by the Merchandising sponsibility for Advertising, Sales Promotion, Group is the exclusive Merchandising Mart. Sales Training and Customer Relations lies Nearest thing to an automatic vending mawith the Merchandising Group. chine, the Merchandising Mart makes it simple A number of policies and programs in effect for dealers to put up effective mass displays of during the past year contributed to the success all Motorola consumer products. of the Division's concept of sales through The Merchandising Group was also responemphasis on quality. sible for a strategic product move with imporFor example, in local market advertising, ef- tant long-term possibilities: use of Drexel cabifectiveness was improved through greater use nets for television and stereo. of completely integrated promotions. In each market, newspaper advertisements, window and in-store displays were all closely coordinated for maximum impact.

Every possible precaution is taken to assure customers the utmost in quality and reliability at Motorola. Here undergoing rigorous inspection by the Consumer Acceptance Group are representative models taken from the assembly lines.

18

This union of Motorola quality and Drexel styling has already produced results beyond our fondest expectations. One has been to substantially increase the average selling price of television and stereo sets. Another, to place Motorola products in a larger number of prestige furniture and department stores in all part of the country.

distribution

The perpetual mission of the Distribution Group is to study and strengthen the Consumer Products Division's channels of distribution. Founded on the belief that the independent distributor is the key to effective operation in

today's market, this group carries on a continuing sales improvement program for distributors. Administered through 21 Regional Managers, this program provides specific plans and methods for every phase of the distributor's business: buying, selling, financing, advertisin merchandising and personnel. In addition, the Distribution Group also maintains a program for testing and evaluating new channels for getting the Division's products to market. Also operating within the Distribution Group is Market Research. This organization gathers and evaluates the facts which guide the making of the Division's basic marketing decisions. It develops short and long range sales projections and inventory forecasts for every model

in Motorola's consumer lines. Some of the results of its work have been the smoothing out of production and the minimizing of inventory and liquidations, with consequent important economies.

national sales managers The Consumer Products Division has three National Sales Managers, one each for television, stereo high fidelity and radio, and Motorola brand car radios. Broadly speaking, their function is to execute the Division's sales and merchandising programs in the field. This they do by working closely with distributor personnel and the Division's 21 regional men. Actually, that is only one of their responsibilities. Each of these men is responsible for coordinating all internal and external factors that have a bearing on the development of the programs supporting their products. These factors are legion and demand constant attention. To name just a f e w . . . product development, pricing, product availability, promotions, competitive practices, inventory controls, sales forecasting and sales analysis . . . all essential to

w

An architectural sketch schedule

success in today's sharply competitive market. The success of their programs may be measured by the fact that the Consumer Products Division has just had its greatest final quarter in four years! Sales projections for the first quarter of 1959 indicate new peaks in several product lines.

a look forward

With today's consumer upgrading his tastes and attaching more importance to value, Motorola's Consumer Products Division finds itself in a very desirable and strategic position. Never before has the outlook for growth been brighter. Motorola's recognition as the leader in the field of stereo high fidelity is indicative of thin to come. The public has rediscovered the importance and beauty of sound. The Division has in the offing a series of new developments that hold great promise for maintaining and extending Motorola's leadership in this field as well as in others. With people, products and programs dedicated to quality and reliability, the Division is on the move at a pace difficult to match.

he Company's new multi-floor administration buildin completion during I960 in Franklin Park, Illinois.

Plants and Laboratories CHICAGO, ILLINOIS FRANKLIN PARK, ILLINOIS QUINCY, ILLINOIS ARCADE, NEW YORK PHOENIX, ARIZONA RIVERSIDE, CALIFORNIA

reliability is engineered into every Motorola product

MOTOROLA, INC. CHICAGO 51, ILLINOIS • 30 years of leadership in electronics exclusively