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 quarterly period ended September 30, 1996
                                               ------------------
                                       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 1-5442
                                                 ------
                         General Instrument Corporation
                         ------------------------------
             (Exact name of registrant as specified in its charter)

                     Delaware                        13-3575653  
                     --------                        ----------
        (State or other  jurisdiction of            (I.R.S. Employer 
         incorporation or organization)           Identification No.)

               8770 West Bryn Mawr Avenue, Chicago, Illinois 60631
               ---------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (773) 695-1000
                                 --------------
              (Registrant's telephone number, including area code)

    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
   -----     -----
    As of October  31,  1996,  there  were  136,912,701  shares of Common  Stock
outstanding.


<PAGE>
<TABLE>
                                     PART I
                              FINANCIAL INFORMATION

                         GENERAL INSTRUMENT CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                        (In Thousands, Except Share Data)


                                     ASSETS
<CAPTION>

                                                                                                   (Unaudited)
                                                                                                 September 30,          December 31,
                                                                                                     1996                   1995
                                                                                             ------------------  -------------------

Current Assets:
<S>                                                                                                <C>                    <C>    
Cash and cash equivalents ............................................................             $   42,778             $   36,382
Accounts receivable, less allowance for doubtful accounts
     of $15,550 and $14,321, respectively ............................................                416,871                367,672
Inventories ..........................................................................                403,704                281,398
Prepaid expenses and other current assets ............................................                 24,580                 26,992
Deferred income taxes, net of valuation allowance ....................................                 93,634                111,750
                                                                                                   ----------             ----------

     Total current assets ............................................................                981,567                824,194

Property, plant and equipment - net ..................................................                550,170                437,194
Intangibles, less accumulated amortization of $105,993
     and $94,654, respectively .......................................................                135,379                146,646
Excess of cost over fair value of net assets acquired, less
   accumulated amortization of $154,001 and $135,654,
   respectively ......................................................................                833,605                842,954
Investments and other assets .........................................................                 37,126                 27,576
Deferred income taxes, net of valuation allowance ....................................                 48,391                  8,885
Deferred financing costs, less accumulated amortization
   of $27,682 and $28,045, respectively ..............................................                  6,695                 13,309
                                                                                                   ----------             ----------
TOTAL ASSETS .........................................................................             $2,592,933             $2,300,758
                                                                                                   ==========             ==========



See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>

                         GENERAL INSTRUMENT CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                        (In Thousands, Except Share Data)


                      LIABILITIES AND STOCKHOLDERS' EQUITY

<CAPTION>
                                                                                                 (Unaudited)
                                                                                               September 30,            December 31,
                                                                                                    1996                    1995
                                                                                             ------------------  -------------------
Current Liabilities:
<S>                                                                                             <C>                     <C>     
Accounts payable ...................................................................            $   241,453             $   215,761
Accrued interest payable ...........................................................                  9,526                   3,571
Income taxes payable ...............................................................                 11,947                  33,904
Accrued liabilities ................................................................                210,233                 204,874
Current portion of long-term debt ..................................................                  4,310                   4,310
                                                                                                -----------             -----------

     Total current liabilities .....................................................                477,469                 462,420

Deferred income taxes ..............................................................                 20,271                  22,221
Long-term debt .....................................................................                624,310                 738,569
Litigation reserve .................................................................                141,000                       -
Other non-current liabilities ......................................................                139,927                 162,205
                                                                                                -----------             -----------
     Total liabilities .............................................................              1,402,977               1,385,415
                                                                                                -----------             -----------
Commitments and contingencies

Stockholders' equity:
Preferred Stock, $.01 par value; 20,000,000 shares
    authorized; no shares issued                                                                         -                       -
Common Stock, $.01 par value; 400,000,000 shares
    authorized; 137,131,034 and 126,034,911 issued at
    September 30, 1996 and December 31, 1995, respectively .........................                  1,371                   1,260
Additional paid-in capital .........................................................                925,019                 666,190
Retained earnings ..................................................................                271,615                 256,416
                                                                                                -----------             -----------
                                                                                                  1,198,005                 923,866

Less - Treasury stock, at cost, 229,011 shares .....................................                 (7,246)                 (7,246)
       Unearned compensation .......................................................                   (803)                 (1,277)
                                                                                                -----------             -----------

     Total stockholders' equity ....................................................              1,189,956                 915,343
                                                                                                -----------             -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .........................................            $2,592,933              $ 2,300,758
                                                                                                ===========             ===========



See notes to consolidated financial statements.
</TABLE>
<PAGE>

<TABLE>
                         GENERAL INSTRUMENT CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              (Unaudited - In Thousands, Except Share Information)


<CAPTION>

                                                                          Three Months Ended                Nine Months Ended
                                                                             September 30,                     September 30,
                                                                  -----------------------------       ------------------------------
                                                                      1996              1995              1996              1995
                                                                  -----------       -----------       -----------       ------------


<S>                                                               <C>               <C>               <C>               <C>         
NET SALES ..................................................      $   662,122       $   563,251       $ 1,953,072       $ 1,783,606
                                                                  -----------       -----------       -----------       -----------

OPERATING COSTS AND EXPENSES:
    Cost of sales ..........................................          470,033           383,808         1,401,707         1,217,961
    Selling, general and administrative ....................           56,131            55,255           172,205           178,167
    Research and development ...............................           50,049            34,567           152,912           105,342
    Purchased in-process technology ........................                -           139,860                 -           139,860
    Next Level litigation costs ............................                -                 -           141,000                 - 
    Amortization of excess of cost over fair value
       of net assets acquired ..............................            6,247             6,175            18,347            18,526
                                                                  -----------       -----------       -----------       -----------
         Total operating costs and expenses ................          582,460           619,665         1,886,171         1,659,856
                                                                  -----------       -----------       -----------       -----------

OPERATING INCOME (LOSS) ....................................           79,662           (56,414)           66,901           123,750
Other income/(expense), net ................................              401              (510)              142            (1,366)
Interest expense, net ......................................          (11,236)          (11,645)          (34,814)          (37,015)
                                                                  -----------       -----------       -----------       -----------

INCOME (LOSS) BEFORE INCOME TAXES ..........................           68,827           (68,569)           32,229            85,369
Benefit (provision) for income taxes .......................          (26,705)           27,677           (17,030)          (15,154)
                                                                  -----------       -----------       -----------       -----------

NET INCOME (LOSS) ..........................................         $ 42,122         $(40,892)          $ 15,199         $  70,215 
                                                                  ===========       ===========       ===========       ===========



Primary earnings (loss) per share ..........................            $0.31            $(0.33)            $0.12             $0.57 
                                                                  ===========       ===========       ===========       ===========

Fully diluted earnings (loss) per share ....................            $0.30            $(0.33)            $0.12             $0.57 
                                                                  ===========       ===========       ===========       ===========



See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
                         GENERAL INSTRUMENT CORPORATION
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                           (Unaudited - In Thousands)
<CAPTION>                                                      
                                                                                                                                    
                                                                                                                            Total 
                                               Common Stock           Additional                  Common     Unearned       Stock- 
                                        ------------------------       Paid-In       Retained    Stock in     Compen-      holders'
                                           Shares         Amount       Capital       Earnings    Treasury     sation        Equity
                                        ---------      ---------      ---------     ---------   ---------   ---------     ---------

<S>                                       <C>        <C>            <C>           <C>           <C>         <C>         <C>        
BALANCE, DECEMBER 31, 1995 ........       126,035    $     1,260    $   666,190   $   256,416   $  (7,246)  $  (1,277)  $   915,343
Net income for the nine months
  ended September 30, 1996 ........                                                    15,199                                15,199
Exercise of stock options .........           149              2          2,487                                               2,489
Tax benefit from exercise of
  stock options ...................                                         757                                                 757
Amortization of unearned
   compensation ...................                                                                               474           474
Conversion of Convertible Junior
   Subordinated Notes, net ........        10,947            109        255,585                                             255,694

                                      -----------    -----------    -----------   -----------   ---------   ---------   -----------
BALANCE, SEPTEMBER 30, 1996 .......       137,131    $     1,371    $   925,019   $   271,615   $  (7,246)  $    (803)  $ 1,189,956 
                                      ===========    ===========    ===========   ===========   =========   =========   ===========


See notes to consolidated financial statements.
</TABLE>


<PAGE>

<TABLE>
                         GENERAL INSTRUMENT CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Unaudited - In Thousands)

<CAPTION>

                                                                                                             Nine Months Ended
                                                                                                               September 30,
                                                                                                   ---------------------------------
                                                                                                        1996              1995
                                                                                                   --------------     --------------
OPERATING ACTIVITIES:
<S>                                                                                                     <C>               <C>
 Net income ....................................................................................        $  15,199         $  70,215
 Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization ..............................................................           92,462            80,795
    Next Level Communications litigation costs, net ............................................           91,650                 -
    Purchased in-process technology, net .......................................................                -            90,000
    Changes in assets and liabilities:
         Accounts receivable ...................................................................          (51,106)          (10,008)
         Inventories ...........................................................................         (126,021)          (92,667)
         Prepaid expenses and other current assets .............................................           (3,047)          (11,593)
         Other non-current assets ..............................................................           (9,551)           (3,418)
         Deferred income taxes .................................................................           29,135            (1,411)
         Accounts payable, income taxes payable and other
           accrued liabilities .................................................................           34,838            69,939
         Other non-current liabilities .........................................................          (22,783)           (4,242)
    Other ......................................................................................              840               230
                                                                                                        ---------         ---------
Net cash provided by operating activities ......................................................           51,616           187,840
                                                                                                        ---------         ---------

INVESTMENT ACTIVITIES:
    Additions to property, plant and equipment .................................................         (167,410)         (102,305)
    Acquistions, net of cash acquired ..........................................................          (29,520)           (2,775)
    Proceeds from sale of assets ...............................................................            4,368                 -
    Investments in other assets ................................................................                -              (906)
                                                                                                        ---------         ---------
Net cash used in investment activities .........................................................         (192,562)         (105,986)
                                                                                                        ---------         ---------

FINANCING ACTIVITIES:
    Costs associated with the issuance of Common Stock and debt ................................             (882)           (1,051)
    Proceeds from the issuance of Flexible Term Notes ..........................................                -            10,800
    Net proceeds from/(repayments of) revolving credit facilities ..............................          154,330           (94,000)
    Redemption of Convertible Junior Subordinated Notes ........................................           (6,440)                -
    Repayment of debt ..........................................................................           (2,155)                -
    Proceeds from stock options ................................................................            2,489            17,294
                                                                                                        ---------         ---------
Net cash provided by/(used in) financing activities ............................................          147,342           (66,957)
                                                                                                        ---------         ---------
Increase in cash and cash equivalents ..........................................................            6,396            14,897
Cash and cash equivalents, beginning of period .................................................           36,382             5,128
                                                                                                        ---------         ---------
Cash and cash equivalents, end of period .......................................................        $  42,778         $  20,025
                                                                                                        =========         =========

See notes to consolidated financial statements.
</TABLE>
<PAGE>

                         GENERAL INSTRUMENT CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                     (In Thousands, Unless Otherwise Noted)

1.  BASIS OF PRESENTATION

The  consolidated  balance  sheet as of  September  30, 1996,  the  consolidated
statements  of operations  for the three and nine month periods ended  September
30, 1996 and 1995, the consolidated  statements of cash flows for the nine month
periods  ended  September  30, 1996 and 1995 and the  consolidated  statement of
stockholders'  equity for the nine month  period  ended  September  30,  1996 of
General Instrument Corporation (the "Company" or "GI") are unaudited and reflect
all  adjustments  of a normal  recurring  nature  which are,  in the  opinion of
management,  necessary for a fair  presentation of the interim period  financial
statements.  There were no adjustments of a non-recurring nature recorded during
the three and nine month periods ended  September 30, 1996 and 1995,  except for
certain items disclosed in the notes to these consolidated financial statements.
These consolidated  financial  statements should be read in conjunction with the
Company's December 31, 1995 consolidated financial statements.

Certain  reclassifications  have  been  made  to the  comparative  prior  period
financial statements to conform to the current period presentation.

2.  INVENTORIES

  Inventories consist of:
                                    September 30, 1996         December 31, 1995
                                    ------------------         -----------------
     Raw Materials                      $206,161                    $142,573

     Work in Process                      45,556                      38,565

     Finished Goods                      151,987                     100,260
                                       ---------                   ---------

     Inventories                        $403,704                    $281,398
                                       =========                   =========


3. LONG-TERM DEBT

Long-term debt consists of:
                                    September 30, 1996         December 31, 1995
Senior indebtedness:                ------------------         -----------------

     Revolving credit facilities        $337,330                    $183,000

     Taiwan Loan                          52,539                      54,694

     Flexible Term Notes                  10,800                      10,800

Convertible Junior
     Subordinated Notes                  227,951                     494,385
                                       ---------                   ---------

     Total                               628,620                     742,879

     Less current maturities               4,310                       4,310
                                       ---------                   ---------

Long-term debt                          $624,310                    $738,569
                                       =========                   =========

In May 1996,  the Company  issued a notice to redeem $250  million in  principal
amount of its Convertible  Junior  Subordinated  Notes  ("Notes").  Of the Notes
called,  $243.6  million in principal  amount were  converted into the Company's
Common  Stock prior to the  redemption  date,  with the  remaining  $6.4 million
redeemed for cash. Additionally, $16.4 million in principal amount of Notes that
were not called for redemption  were also  converted  into the Company's  Common
Stock during 1996.  These  conversions  resulted in the issuance of 10.9 million
shares of Common Stock.

In  connection  with the Common Stock  conversions,  $4.3 million was charged to
additional paid-in capital for unamortized  deferred financing costs and accrued
but unpaid interest related to the converted Notes.


4. INCOME TAXES

The  provision/(benefit)  for income taxes for the three and nine month  periods
ended  September  30, 1996 and 1995 is based on the  Company's  expected  annual
effective rate,  excluding  one-time  charges.  The provision for the nine month
period  ended  September  30, 1996  includes a $49 million  one-time tax benefit
associated with the costs of the litigation  described in Note 5 below,  and the
provision  for the nine month period  ended  September  30, 1995  includes a $12
million  credit for the  settlement  of certain  tax  matters  and a $50 million
non-cash tax benefit  associated with the write-off of in-process  technology in
connection with the acquisition of Next Level  Communications  during  September
1995.


5. LITIGATION

On  April  10,  1995,   prior  to  the  Company's   acquisition  of  Next  Level
Communications   ("Next  Level")  on  September  27,  1995,  DSC  Communications
Corporation and DSC Technologies Corporation (collectively,  "DSC") brought suit
in Texas state  court  against  Next Level,  Thomas R. Eames and Peter W. Keeler
(the  founders of Next Level and current Next Level  employees).  Next Level and
the individual  defendants  subsequently  removed the case to federal court.  On
March  28,  1996,  a  jury  verdict  was  reached  in  the  case,  entitled  DSC
Communications  Corporation  and DSC  Technologies  Corporation  v.  Next  Level
Communication,  Thomas R. Eames and Peter W.  Keeler,  Case No.  4:95cv96 in the
United  States  District  Court  for the  Eastern  District  of  Texas,  Sherman
Division.  The verdict  stated that Messrs.  Eames and Keeler  breached  certain
employee  agreements  with DSC,  failed to  disclose  and  diverted a  corporate
opportunity  of DSC,  misappropriated  DSC trade  secrets and  conspired to take
certain of the foregoing actions, and that Next Level used or benefited from the
diversion of corporate  opportunity and  misappropriation  of trade secrets.  In
June 1996, the United States  District  Court for the Eastern  District of Texas
entered a final  judgment  against Next Level and the  individual  defendants in
favor of DSC, in a total amount of $136.7 million. In so doing, the court denied
DSC's request to aggregate  amounts awarded by the jury on the various claims so
as to arrive at a total  judgment in excess of $369  million  plus  pre-judgment
interest and  attorney's  fees,  and it also denied  DSC's  request for entry of
permanent  injunctive  relief. In connection with the acquisition of Next Level,
the Company  entered into agreements to indemnify  Messrs.  Eames and Keeler for
any judgment  that may be awarded  against  them in this  matter,  to the extent
permitted by applicable  law. In June 1996, a  non-recurring  pre-tax  charge to
earnings of $141  million was  recorded,  reflecting  the  judgment and costs of
litigation.  Both sides have appealed to the U.S. Court of Appeals for the Fifth
Circuit.  In connection  with its appeal,  Next Level has posted an appeal bond,
staying the enforcement of the final  judgment.  The appeal has been briefed and
oral argument was held on September 30, 1996.


6. ASSET ACQUISITIONS

In May 1996, the Company's  CommScope,  Inc.  subsidiary  acquired the assets of
Teledyne, Inc.'s Thermatics unit, a high performance wire and cable manufacturer
specializing  in high  temperature  cables,  for a net  purchase  price of $17.8
million.  CommScope  integrated  the  Thermatics  unit  into its  Network  Cable
operations which manufacture  coaxial,  multiconductor and fiber optic cable for
the local area network and other markets.

In June 1996,  the Company  acquired the assets of the  Magnitude(R)  MPEG-2/DVB
product family of Compression Labs Inc. for a purchase price of $11.7 million in
cash and the  assumption  of $2  million  in  liabilities.  The  Magnitude  line
consists of modular  video and audio  encoders  and decoders for the delivery of
entertainment  and  information  services  over cable,  satellite  and telephone
networks, including direct to home.

Both acquisitions were accounted for as purchases and, accordingly, the acquired
assets and  liabilities  were recorded at their estimated fair value at the date
of acquisition.


7. COMMITMENTS AND CONTINGENCIES

In August 1996, the Company entered into a seven-year  operating lease agreement
for two administrative  facilities.  The total cost of the facilities covered by
this lease  agreement  is  limited to $115  million.  The lease  provides  for a
substantial  residual value guarantee  (approximately  83% of the total cost) by
the Company at the end of the lease term.


<PAGE>


                         GENERAL INSTRUMENT CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (DOLLARS IN MILLIONS)

NET SALES
---------
Net sales for the three month period ended  September  30, 1996 ("Third  Quarter
1996") were $662 compared to $563 for the three month period ended September 30,
1995 ("Third Quarter 1995"),  an increase of $99, or 18%. Net sales for the nine
month period  ended  September  30, 1996 were $1,953  compared to $1,784 for the
nine month period ended  September  30, 1995,  an increase of $169,  or 10%. The
increase  in net sales for the three  and nine  month  periods  relate to higher
sales in the Broadband Communications segment.

Broadband  Communications  sales were $577 and $1,670 in Third  Quarter 1996 and
for the nine month period ended  September 30, 1996,  respectively,  compared to
$454 and $1,472 for the comparable 1995 periods. Worldwide terrestrial broadband
sales of $441 and $1,250 in Third  Quarter  1996 and for the nine  month  period
ended  September  30,  1996,  respectively,  increased  35%  and  26%  from  the
comparable 1995 periods  primarily as a result of increased U.S. sales volume of
GI's latest  generation  CFT-2200  advanced analog set-top  terminals and global
sales  volume of  mature  analog  addressable  set-top  terminals,  distribution
electronics and CommScope cables.  These sales reflect the continued  commitment
of  domestic  cable  television  operators  to  deployment  of  state of the art
addressable  systems and enhanced  services and the continued  deployment of new
cable television  systems in international  markets.  International  terrestrial
broadband  sales  increased  52% and 32% in Third  Quarter 1996 and for the nine
month period ended  September 30, 1996,  respectively,  over the comparable 1995
periods and represented 35% and 33% of worldwide  terrestrial broadband sales in
Third  Quarter  1996 and for the nine month  period  ended  September  30, 1996,
respectively,  compared  to 31% in both the  prior-year  periods.  Additionally,
terrestrial  broadband  sales in Third Quarter 1996 increased from Third Quarter
1995 due to first-time sales of GI's new DCT-1000 MPEG-2 digital cable terminals
and SURFboard cable modems.  Worldwide satellite broadband sales increased $9 to
$136 in Third  Quarter  1996 due to  higher  sales  volumes  of  MPEG-2  digital
satellite systems,  partially offset by lower sales volume of VideoCipher RS(TM)
analog  satellite  modules  and  receivers  for  C-band  customers  and  digital
satellite  consumer  receivers  to  PRIMESTAR   partners.   Worldwide  satellite
broadband sales for the nine month period ended September 30, 1996 decreased $62
from the comparable 1995 period to $420 due to lower sales volume of VideoCipher
RS(TM) analog  satellite  modules and receivers and digital  satellite  consumer
receivers,  partially offset by higher sales volumes of MPEG-2 digital satellite
systems.

Power  Semiconductor  sales decreased 23% to $85 in Third Quarter 1996 and 9% to
$283 for the nine month period ended  September  30, 1996,  over the  comparable
1995 periods due to the slowdown in the overall  semiconductor industry as PSD's
OEM customers and distributors  continue to align their  inventories with future
needs.  International  Power  Semiconductor sales represented 74% and 71% of the
division's  worldwide  sales in Third Quarter 1996 and for the nine month period
ended September 30, 1996,  respectively,  compared to 74% in both the prior-year
periods.


GROSS PROFIT (NET SALES LESS COST OF SALES)
-------------------------------------------
Gross profit  increased  $13, or 7%, to $192 in Third  Quarter 1996 from $179 in
Third  Quarter  1995,  and was 29.0% of sales in Third  Quarter 1996 compared to
31.9% of sales in Third  Quarter  1995.  Gross profit  decreased  $14, or 3%, to
$551,  and was 28.2% of sales,  for the nine month  period ended  September  30,
1996, compared to 31.7% in the comparable 1995 period.

The  decreased  gross profit  margin  resulted  from a shift in product mix from
higher margin  VideoCipher  RS(TM) analog satellite receiver consumer modules to
the Company's new advanced analog and digital television system products,  which
initially carry lower margins, and lower Power Semiconductor sales.

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
--------------------------------------------
Selling,  general and  administrative  ("SG&A") expense was $56 in Third Quarter
1996,  compared to $55 in Third Quarter  1995,  and decreased $6, or 3%, to $172
for the nine month  period ended  September  30, 1996 from the  comparable  1995
period.  As a percentage  of sales,  SG&A  decreased to 9% in both Third Quarter
1996 and the nine  month  period  ended  September  30,  1996,  from 10% for the
comparable 1995 periods.

SG&A base spending in Third  Quarter  1996,  and for the nine month period ended
September  30,  1996,  was greater  than in the  comparable  1995 periods as the
Company targeted new growth opportunities, including the marketing of Next Level
Communications'  broadband access systems to telephone companies for interactive
digital  video,  voice and data services,  and increased its sales force,  field
support and marketing activities to take advantage of continued increased growth
opportunities  in  international  cable and satellite  television  and worldwide
telecommunications  markets.  In addition,  SG&A  expense in Third  Quarter 1995
included a $7  restructuring  charge for the direct  costs  associated  with the
reorganization of the Company's Communications Division and the consolidation of
the Company's  corporate  headquarters  into one location.  SG&A expense for the
nine month  period  ended  September  30,  1995 also  included  $14 related to a
national advertising campaign to support sales of C-band satellite systems which
was not incurred in 1996.


RESEARCH AND DEVELOPMENT
------------------------
Research and development  ("R&D") expense was $50 in Third Quarter 1996 and $153
for the nine month period ended September 30, 1996, compared to $35 and $105 for
the  comparable  1995  periods.  R&D expense  increased  to 8% of sales in Third
Quarter 1996 and for the nine month period ended September 30, 1996, from 6% for
the comparable 1995 periods. The increased level of spending reflects:  on-going
cost-reduction  programs;  continued  development of  next-generation  products,
including cable modems and telephone  company access products through Next Level
Communications,   as  well  as  the   modification  of  existing   products  for
international  markets;  continued  development of enhanced  addressable  analog
terminals  and  advanced  digital  systems  for cable and  satellite  television
distribution;  and  product  development  and  international  expansion  through
strategic  alliances.  The Company's  research and development  expenditures are
expected to approximate $200 to $210 for the year ending December 31, 1996.


PURCHASED IN-PROCESS TECHNOLOGY
-------------------------------
In  connection   with  the   completion  of  the   acquisition   of  Next  Level
Communications  in September 1995, the Company recorded a pre-tax charge of $140
for  purchased  in-process   technology  which  had  not  reached  technological
feasibility and had no future  alternative use. Further  development  activities
primarily include employee related costs for design,  prototype  development and
testing.


NEXT LEVEL LITIGATION COSTS
---------------------------
In June 1996, the Company  recorded a one-time pre-tax charge of $141 reflecting
the judgment and costs of litigation in the DSC  Communications  Corporation and
DSC Technologies  Corporation v. Next Level  Communication,  Thomas R. Eames and
Peter W. Keeler case  subsequent to the entry of a final  judgment by the United
States  District  Court for the  Eastern  District  of Texas.  See Note 5 to the
attached September 30, 1996 consolidated financial statements.


NET INTEREST EXPENSE
--------------------
Net  interest  expense was $11 in Third  Quarter 1996 and $35 for the nine month
period ended September 30, 1996, compared to $12 and $37 for the comparable 1995
periods.

<PAGE>

INCOME TAXES
------------
Income  tax  expense  was $27 in Third  Quarter  1996 and $66 for the nine month
period ended  September 30, 1996,  after  excluding the $49 one-time tax benefit
associated with the Next Level  litigation  costs in June 1996,  compared to $22
and $77 in Third  Quarter  1995 and the nine month period  ended  September  30,
1995, respectively, after excluding the $50 one-time tax benefit associated with
the write-off of purchased  in-process  technology in September 1995 and the $12
credit related to the settlement of certain tax matters during the first quarter
of 1995.  Excluding these tax adjustments and the related pre-tax  charges,  the
effective  tax  rate was 39% in Third  Quarter  1996 and 38% for the nine  month
period ended September 30, 1996,  compared to 31% and 34% in the comparable 1995
periods. The lower effective tax rates in 1995 primarily reflect the utilization
of certain foreign tax credits.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
At September 30, 1996, working capital was $504 compared to $362 at December 31,
1995.  The working  capital  increase  of $142 was due  primarily  to  inventory
build-up to support business growth and the introduction of new products.  Based
on current  levels of order  input and  backlog,  as well as  significant  sales
agreements not yet reflected in order and backlog levels,  the Company  believes
that working capital levels are appropriate to support future operations.  There
can be no assurance,  however,  that future  industry  specific  developments or
general   economic   trends  will  not  alter  the  Company's   working  capital
requirements.

At September  30, 1996,  the Company had  borrowings of $337 under its revolving
credit  facilities,  and  available  credit of $310 under these  facilities.  In
August 1996, the Company  amended and restated the senior bank credit  agreement
of GI Delaware (as further  amended and  restated,  the "Credit  Agreement")  to
lower  its  interest  costs  and  commitment  fees,  increase  available  credit
commitments  and obtain  greater  operating  flexibility  with less  restrictive
financial  and operating  covenants.  The Credit  Agreement  provides for a $650
unsecured  Revolving  Credit Facility and matures on December 31, 2001.  Amounts
outstanding  under  this  facility  are  classified  as  long-term  based on the
Company's  intent and ability to maintain these loans on a long-term  basis. The
Credit  Agreement   contains  financial  and  operating   covenants,   including
limitations on contingent  obligations and liens and requires the maintenance of
certain  financial  ratios.  None of the  restrictions  contained  in the Credit
Agreement  are  expected  to have a  significant  effect on the  ability  of the
Company to operate.  At September 30, 1996,  the Company was in compliance  with
all financial and operating covenants.

During the nine month period ended September 30, 1996, the Company invested $167
in equipment  and  facilities.  These capital  expenditures  were used to expand
capacity to meet increased current and anticipated future demands for analog and
digital  products,  coaxial cable and rectifiers.  Capital  expenditures for the
year ending December 31, 1996 are expected to approximate $210 to $220.

At September 30, 1996, the Company had $43 of cash and cash  equivalents on hand
compared to $36 at December 31, 1995.  At September  30, 1996,  long-term  debt,
including current maturities, was $629 compared to $743 at December 31, 1995. In
1996,  the Company  strengthened  its balance  sheet and enhanced its  financial
flexibility  through the conversion of $260 million of its 5% Convertible Junior
Subordinated Notes into Common Stock.

The  Company's  principal  sources  of  liquidity  are  cash  flow  provided  by
operations and borrowings  under its revolving  credit  facilities.  The Company
believes that, based upon its analysis of its consolidated  financial  position,
its cash flow during the past 12 months and the expected  results of  operations
in the future,  operating  cash flow and  available  funding under its revolving
credit facilities will be adequate to fund operations,  research and development
expenditures,  capital expenditures and debt service for the next 12 months. The
Company  intends to repay its remaining  indebtedness  primarily  with cash flow
from  operations.  There can be no  assurance,  however,  that  future  industry
specific  developments or general  economic trends will not adversely affect the
Company's operations or its ability to meet its cash requirements.


<PAGE>


                                     PART II

                                OTHER INFORMATION

Item 1.   Legal Proceedings
          -----------------
        Between  October 10 and October 27, 1995,  five  purported  class action
        complaints  were  filed in the  United  States  District  Court  for the
        Eastern  District  of  Pennsylvania  and seven  purported  class  action
        complaints  were  filed in the  United  States  District  Court  for the
        Northern  District of Illinois.  These complaints name as defendants the
        Company,  certain  officers  and  directors  of the Company and, in some
        cases,  Forstmann  Little & Co.  Plaintiffs  allege that the  defendants
        violated  federal  securities  laws  by,  among  other  things,   making
        misrepresentations  and omitting  material  facts in  statements  to the
        public,  thereby  allegedly  causing  the  Company's  stock  price to be
        artificially inflated.  Plaintiffs seek, among other things, unspecified
        monetary  damages  and  attorneys'  fees and  costs,  on  behalf  of all
        shareholders  who purchased  shares  during  various  periods  generally
        extending from March 21, 1995 through October 18, 1995.

        On October 24, 1995, a purported  derivative  complaint on behalf of the
        Company was filed in the United  States  District  Court for the Eastern
        District of  Pennsylvania by Seymour Lazar against each of the Company's
        current directors,  a former executive officer,  Forstmann Little & Co.,
        Forstmann Little & Co.  Subordinated  Debt and Equity  Management Buyout
        Partnership-IV   ("MBO-IV")   and  Instrument   Partners.   The  conduct
        complained of generally related to the same matters alleged in the class
        actions  described above and to the sale by directors Daniel F. Akerson,
        John Seely Brown, J. Tracy O'Rourke and Robert S. Strauss, as well as by
        MBO-IV,  Instrument  Partners and a former  officer of the  Company,  of
        shares of the Company's stock while they were allegedly in possession of
        material  non-public  information.  Plaintiff seeks, among other things,
        unspecified monetary damages and attorneys' fees and costs.

        On February 9, 1996, a complaint was filed in the United States District
        Court for the Northern  District of  California  captioned BKP Partners,
        L.P. et al. v. General Instrument Corporation, NLC Acquisition Corp. and
        Next Level Communications,  Inc. Plaintiffs,  who are some of the former
        holders of preferred  stock of Next Level,  allege,  among other things,
        that  the  defendants   violated  federal   securities  laws  by  making
        misrepresentations  and omissions and breached  fiduciary duties to Next
        Level in connection  with the  acquisition  by the Company of Next Level
        Communications  in September 1995.  Plaintiffs seek, among other things,
        unspecified  compensatory  and punitive  damages and attorneys' fees and
        costs.

        On  February  20,  1996,  an order was issued by the  Judicial  Panel on
        Multidistrict  Litigation  transferring the class and derivative actions
        described  above to the United  States  District  Court for the Northern
        District  of  Illinois.  On June 5,  1996,  an order  was  issued by the
        Judicial Panel on Multidistrict Litigation transferring the BKP Partners
        action to the same  court.  On August 5, 1996,  a  consolidated  amended
        class action complaint and an amended derivative complaint were filed in
        that court,  in essence  restating the foregoing  claims.  On October 2,
        1996,  an amended  complaint  was filed in the BKP Partners  action,  in
        essence restating the foregoing claims.

        See  also  Note  5 to  the  attached  September  30,  1996  consolidated
        financial statements.


Item 6.   Exhibits and Reports on Form 8-K
          --------------------------------
        (a)  Exhibits
             --------
             Exhibit 11 - Computation of Earnings Per Share

             Exhibit 99 - Forward-Looking Information

        (b)  Report on Form 8-K
             ------------------
        No  reports on Form 8-K were  filed by the  Registrant  during the three
        month period ended September 30, 1996.


<PAGE>


                                   SIGNATURE
                                   ---------
Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                                  GENERAL INSTRUMENT CORPORATION

November 14, 1996                                 /s/Paul J. Berzenski
-----------------                                 ------------------------------
Date                                              Paul J. Berzenski
                                                  Vice President and Controller 
                                                  Signing both in his capacity  
                                                  as Vice President on behalf of
                                                  the Registrant and as Chief
                                                  Accounting  Officer  of the
                                                  Registrant


<PAGE>