ITEM 1. BUSINESS --------
INTRODUCTION - ------------
Microsemi Corporation (the "Company", "Microsemi") was incorporated in Delaware in 1960. Its name was changed from Microsemiconductor Corporation in February 1983. The principal executive offices of the Company are located at 2830 South Fairview Street, Santa Ana, California 92704 and its telephone number is (714) 979-8220. Unless the context otherwise requires, the "Company" and "Microsemi" refer to Microsemi Corporation and its consolidated subsidiaries.
Microsemi is a leading designer, manufacturer and marketer of analog, mixed- signal and discrete semiconductors. The Company's semiconductors manage and regulate power, protect against transient voltage spikes and transmit, receive and amplify signals.
Microsemi products include individual components as well as complete circuit solutions that enhance customer designs by providing battery optimization, reducing size or protecting circuits. Markets the company serves include mobile connectivity, computer/peripherals, telecommunications, medical, industrial/commercial, space/satellite and military.
IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS - ----------------------------------------------------------------------------
This Form 10-K contains certain forward-looking statements that are based on current expectations and involve a number of risks and uncertainties. All of the non-historical information herein is forward-looking. The forward-looking statements included herein and elsewhere in this filing are based on, among other items, current assumptions that the Company will be able to meet its current operating cash and debt service requirements with internally generated funds and its available line of credit, that it will be able to successfully resolve disputes and other business matters as anticipated, that competitive conditions within the semiconductor, integrated circuit and custom diode assembly industries will not change materially or adversely, that the Company will retain existing key personnel, that the Company's forecasts will reasonably anticipate market demand for its products, and that there will be no materially adverse change in the Company's operations or business. Other factors that could cause results to vary materially from current expectations are discussed elsewhere in this Form 10-K, including part I, item 3; and part II, items 5, 7 and 8. Assumptions relating to the foregoing involve judgments that are difficult to predict accurately and are subject to many factors that can materially affect results. Forecasting and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause the Company to alter its forecasts, which may in turn affect the Company's results. In light of the factors that can materially affect the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. Readers are cautioned against undue weight to forward-looking statements.
PRODUCTS - --------
Microsemi Corporation is a global supplier of commercial and high-reliability analog integrated circuits and power and signal discrete semiconductors serving the satellite, telecommunications, computer and peripherals, military/aerospace, industrial/commercial, and medical markets.
The Company's analog and mixed-signal integrated circuit ("IC") products offer light, sound and power management for desktop and mobile computing platforms as well as other power control applications. Power management generally refers to a class of standard linear integrated circuits ("SLICs") which perform voltage regulation and reference in most electronic systems. The definition of power management has broadened in recent years to encompass other devices and modules, often application specific standard products ("ASSPs"), which address particular aspects of power management, such as audio or display related ICs. This business is composed of both a core platform of traditional SLICs, such as low dropout
regulators ("LDOs") and pulse width modulators ("PWMs"), and differentiated ASSPs such as backlight inverters, audio amplification ICs and small computer standard interface ("SCSI") terminators.
Major discrete products are silicon rectifiers, zener diodes, low leakage and high voltage diodes, temperature compensated zener diodes, transistors and a family of subminiature high power transient suppressor diodes. The Company also manufactures discrete semiconductors for commercial applications, such as automatic surge protectors, transient suppressor diodes used for telephone applications and computer switching diodes used in computer systems.
A partial list of applications of the Company's discrete semiconductor products includes: heart pacer transient shock protector diodes (where the Company believes it is the leading supplier in that market), low leakage diodes, transistors used in jet aircraft engines and high performance test equipment, high temperature diodes used in oil drilling sensing elements operating at 200 degrees centigrade, temperature compensated zener or rectifier diodes used in missile systems, power transistors and other electronic systems. The Company's integrated circuit products are used in computer and data storage, lighting, automotive, telecommunications, test instruments, defense and space equipment, high-quality sound reproduction and data transfer.
The Company currently serves a broad group of customers including Motorola, Lockheed-Martin, Giga-Byte Technology, Raytheon, Mitsubishi Electric, Alcatel, Cardiac Pacemaker and Zenitron Corp.
MARKETING - ---------
Microsemi Corporation is a global supplier of power management, power conditioning, transient suppression and RF/Microwave semiconductor products. It serves the satellite, telecommunications, computer and peripherals, military/aerospace, industrial/commercial, and medical markets with high- reliability and commercial analog integrated circuits and power and signal discrete semiconductors.
The Company's products are marketed through domestic electronic component sales representatives and the Company's inside sales force to original equipment manufacturers. The Company also employs industrial distributors to service its customers' needs for standard catalog products. For fiscal year 2000, the Company's domestic sales accounted for approximately 63% of the Company's revenues, of which sales representatives and distributors accounted for approximately 21% and 21%, respectively. The Company has direct sales offices in many metropolitan areas including Los Angeles, Garden Grove, Santa Ana, Phoenix, Denver, Chicago, Minneapolis, Montgomeryville, Boston, Long Island, West Palm Beach, Hong Kong, Singapore and Ireland. Sales to foreign customers, made through the Company's direct domestic sales force and 26 overseas sales representatives and distributors, accounted for approximately 37% of fiscal year 2000 sales.
No one customer accounted for more than 4% of the Company's revenue in fiscal year 2000. However, approximately 21% of the Company's business is to customers whose principal sales are to the U.S. Government.
RESEARCH AND DEVELOPMENT - ------------------------
The Company believes that continuing timely development and introduction of new products are essential to maintaining its competitive position. The Company currently conducts most of its product development effort in-house. The Company also employs outside consultants to assist with product design.
The Company spent approximately $1,532,000, $4,002,000 and $11,196,000, in fiscal years 1998, 1999 and 2000, respectively, for research and development, none of which was customer sponsored.
The principal focus of the Company's research and development activities has been to improve processes and to develop new products that support the growth of its businesses.
MANUFACTURING AND SUPPLIERS - ---------------------------
The Company's principal domestic manufacturing operations are located in Santa Ana and Garden Grove, California; Broomfield, Colorado; Scottsdale, Arizona and Watertown and Lowell, Massachusetts. Each operates its own wafer processing, assembly, testing and screening departments.
The Company's domestic plants manufacture and process all products and assemblies starting from purchased silicon wafers and piece parts. Manufacturing and processing operations are controlled in accordance with military as well as other rigid commercial and industrial specifications.
A major portion of the Company's semiconductor manufacturing effort takes place after the semiconductor is assembled. Parts are tested a number of times, visually screened and environmentally subjected to shock, vibration, "burn in" and electrical tests in order to prove and assure reliability.
The Company purchases silicon wafers, other semiconductor materials and packaging piece parts from domestic and foreign suppliers generally on long-term purchase commitments which are cancelable with 30 to 90 days notice. With the exception of glass sleeves for high reliability diode products and glass to metal sealed parts for computer diode and zener diode products, all materials are available from multiple sources. In the case of sole source items, the Company has never suffered production delays as a result of vendors' inability to supply the parts. The Company believes that it stocks adequate supplies for all materials, based upon backlog, delivery lead time and anticipated new business. In the ordinary course of business, the Company enters into purchase agreements with some of its major suppliers to supply products over periods of up to 18 months.
The Company also purchases a portion of its finished wafers from foundry sources. If a foundry were to terminate its relationship with the Company, or should the Company's supply from a foundry be interrupted or terminated for any reason, such as a natural disaster or another unforeseen event, the Company may not have sufficient time to replace the supply of products manufactured by that foundry.
Certain subcontract suppliers provide packaging and testing for the Company's products necessary to deliver finished products. The Company pays those suppliers for assembled or fully tested products meeting predetermined specifications. After wafer level testing, the silicon wafers are separated into individual dice that are then assembled into packages and tested in accordance with the Company's test procedures.
There can be no assurance that the Company will obtain sufficient supply of product from foundry or subcontract assembly sources to meet customer demand in the future. Obtaining sufficient foundry capacity is particularly difficult during periods of high demand for foundry services, and may become substantially more difficult if the Company's product requirements increase significantly. In addition, because the Company must order products and build inventory substantially in advance of product shipments, there is a risk that the Company will forecast incorrectly and produce excess or insufficient inventories for particular products. This inventory risk is heightened because certain of the Company's key customers place orders with short lead times.
FOREIGN OPERATIONS - ------------------
The Company conducts a portion of its operations outside the United States and its business is subject to risks associated with many factors beyond its control, such as fluctuations in foreign currency rates, instability of foreign economies and governments, and changes in U.S. and foreign laws and policies affecting trade and investment. The Company owns or leases manufacturing and assembling facilities in Ennis, Ireland; Mumbai, India and Hong Kong and is a partner in a joint venture in The People's Republic of China (PRC). No assurance can be made that political and economic factors in such countries will not have material adverse effects on the assets, cash flows and results of operations of the Company.
The Company's Mumbai, India facility assembles a commercial zener diode line to compete in the lower-cost commercial and consumer markets. This plant also performs subcontract coil manufacturing.
The Company's Hong Kong subsidiary, Microsemi (H.K.) Ltd., produces diode products for commercial customers. The Hong Kong subsidiary utilizes diode chips manufactured in the Company's U.S. plants and assembles, tests and finishes the products. The plant is also approved for assembly of certain military specified diodes.
The Company's Ennis, Ireland operation manufactures diodes, rectifiers, zeners, thyristors and transistors and supports the other Microsemi operations. This plant is Defense Supply Center Columbus (DSCC) approved by the U.S. government to screen high reliability product to Military Specification Standard MIL-PRF- 19500 and is also European Space Agency qualified. A trading company at this facility services European customers with products from Microsemi U.S. and Asian locations.
SALES TO FOREIGN CUSTOMERS - --------------------------
Sales to foreign customers represented approximately 23%, 35% and 37% of net sales for the 1998, 1999 and 2000 fiscal years, respectively. Foreign sales may be subject to political and economic risks, including financial or political instability, currency fluctuations, changes in the effective price of goods in local currencies, the effect of trade sanctions, embargoes, or changes in import/export regulations, tariffs and freight rates and difficulties in collecting receivables and enforcing contracts generally; any of these factors and other trade policies could adversely affect the Company's sales to foreign customers or the collection of receivables generated from such sales. Many of the Company's customers, including space customers, provide the Company minimal information on future ordering plans. Therefore, fluctuations in backlog can be unpredictable.
ORDER BACKLOG - -------------
The Company's consolidated order backlog at October 1, 2000, for delivery within twelve months, was $87,335,000, as compared to $66,700,000 at October 3, 1999. The Company's backlog at any particular date may not be representative of actual sales for any succeeding period because of various factors, which may include that lead times for the release of purchase orders depend upon the scheduling practices of individual customers, the delivery times of new or non-standard products can be affected by scheduling factors and other manufacturing considerations, the rate of booking new orders can vary significantly from month to month, and the continual possibility of customer changes in delivery schedules or cancellations of orders having an adverse effect on actual sales.
Also, a portion of the Company's sales are to military and aerospace markets which are subject to the business risk of changes in governmental appropriations and changes in national defense policies and priorities. All of the Company's contracts with prime U.S. Government contractors contain customary provisions permitting termination at any time at the convenience of the U.S. Government or the prime contractors upon payment to the Company for costs incurred plus a reasonable profit. Certain contracts are also subject to price re-negotiation in accordance with U.S. Government sole source procurement provisions.
COMPETITION - -----------
The markets in which the Company competes are extremely competitive. The Company expects that competition will increase. The principal factors of competition in the Company's markets include performance, product features, product availability, price, quality, timing of new product introductions and the emergence of new technologies.
The Company competes in the semiconductor market, particularly in the area of high reliability components. The Company has numerous competitors across all of its product lines. In the defense market, the Company believes that it possesses a considerable share of the market. In the commercial/industrial arena, there are numerous competitors such as Motorola, Inc., General Semiconductor, Inc., Texas Instruments, Semtech, Linear Tech, Maxim, Dallas Semiconductor, Vishay, Fairchild Semiconductor and International Rectifier, which are significantly larger and have greater resources and larger market shares than Microsemi. In addition, Microsemi has licensed technology from and to parties, which have, in certain cases, the right to use the technology to develop products competitive with the Company's products. For
instance, in a license and supply agreement with LinFinity Microelectronics, Inc. ("LinFinity"), IMP, Inc. has the right to manufacture, market and sell a line of SCSI products through its own sales force in direct competition with LinFinity. Commercial products are under extreme price pressure due to intense price competition. The market for analog ICs is also intensely competitive. With respect to application-specific data communications devices, the Company's principal competitors are Dallas Semiconductor, IMP, Inc., and Texas Instruments. In the area of integrated circuit products, because the markets are diverse and highly fragmented, the Company expects to encounter different competitors on different products. The Company's principal competitors are expected to include Linear Technology Corporation, IMP, Inc., Maxim Integrated Products, Inc., Analog Devices Inc., Dallas Semiconductor, Micrel, Motorola, National Semiconductor Corporation, Semtech, Texas Instruments and certain European and Asian manufacturers. Due to the increasing demand for analog circuits, the Company expects intensified competition from existing and new competitors. Increased competition could adversely affect Microsemi's financial condition, results of operations or cash flow of the Company.
There can be no assurance that the Company will be able to compete successfully in the future. The Company's ability to compete successfully is dependent upon its response to the entry of new competitors, the average selling prices received for its products, changing technology and customer requirements, development or acquisition of new products, the timing of new product introductions by the Company or its competitors, continued improvement of existing products, changes in overall worldwide market and economic conditions, cost effectiveness, quality, service and market acceptance of the Company's products. Price competition in the industry is intense and may increase, which may have a material adverse effect on the Company's operating results. There can be no assurance that the Company will be able to compete successfully as to price or any of these other factors. There can be no assurance that the Company will have the financial resources, technical expertise or marketing, distribution and support capabilities to compete successfully. The Company's future success will be highly dependent upon the successful development and introduction of new products that are responsive to market needs. There can be no assurance that the Company will be able to successfully develop or market any such products.
CHANGES IN TECHNOLOGY - ---------------------
The semiconductor market is subject to changes in technologies and industry standards. To remain competitive, the Company must continue to devote resources to advance process technologies, to increase product performance, to improve manufacturing yields and to improve the mix between the Company's shipment of military and commercial products and between its high cost and low cost products. There can be no assurance that the Company's competitors will not develop new technologies that are superior to the Company's technology.
PROPRIETARY RIGHTS - ------------------
The Company generally does not rely on patent protection for any aspect of its technology. The Company believes that patents often provide only narrow protection and require public disclosure of information which may otherwise be subject to trade secret protection. The Company's reliance upon protection of some of its technology as "trade secrets" will not necessarily protect the Company from the use by other persons of its technology, or their use of technology that is similar or superior to that which is embodied in the Company's trade secrets. There can be no assurance that others will not be able to independently duplicate or exceed the Company's technology in whole or in part. No assurance can be made that the Company will be able to maintain the confidentiality of the Company's technology, dissemination of which could have an adverse effect on the Company's business. In addition, litigation may be necessary to determine the scope and the validity of the Company's proprietary rights. There can be no assurance that patents held by the Company will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide competitive advantages to the Company.
If the Company's products were found to violate a patent or other right of a third party, the Company's business could be adversely affected. In addition, the laws of certain countries in which the Company's products are or may be developed, manufactured or sold, including Hong Kong, Japan, China, Singapore, Thailand and Taiwan, may not protect the Company's products and intellectual property rights to the same extent as the laws of the United States.
MANUFACTURING RISKS - -------------------
The Company's manufacturing processes are highly complex, require advanced and costly equipment and are continuously being modified in an effort to improve yields and product performance. Minute impurities or other difficulties in the manufacturing process can lower yields. In addition, California and the Pacific Rim are known to contain various earthquake faults. The Company's operations could be materially adversely affected if production at any of its facilities were interrupted for any reason. There can be no assurance that the Company will not experience manufacturing difficulties in the future.
The Company subcontracts a portion of its wafer fabrication to outside foundries. There are a number of foundries which, given appropriate lead times, could meet some of Microsemi's needs. However, the Company can not guarantee that it will be able to meet its customers' required delivery schedules. Because of the unique nature of the manufacturing processes, it would be difficult for Microsemi to arrange for independent suppliers to make wafers in a short period of time. If a fire, natural disaster or any other event prevents Microsemi from operating the factory for more than a few days, the Company's revenue and financial condition could be severely impacted. Microsemi believes that it has sufficient manufacturing capacity to meet its near term plans although prolonged problems with any specific piece of equipment could cause Microsemi to miss its goals.
Microsemi purchases most of its raw materials, including silicon wafers, on a purchase order basis from a limited number of vendors. If any subcontractors or vendors are unable to provide these services or materials in the future, the relationships with Microsemi's customers could be seriously affected and its revenues, financial condition and cash flows could be severely damaged.
After certain wafers are fabricated and tested, they are sent to contract assembly houses to be packaged. Microsemi's integrated circuit products are packaged and tested by a limited number of third party subcontractors in Asian countries. Some of the raw materials included in these operations are obtained from sole source suppliers. Although the Company seeks to reduce its dependence on sole and limited source suppliers both for assembly services and for materials, disruption or financial, operational, production or quality assurance difficulties at any of these sources could occur and cause Microsemi to have severe delivery problems.
EMPLOYEES - ---------
On October 1, 2000, the Company employed 1,827 persons domestically including 185 in engineering, 1,421 in manufacturing, 104 in marketing and 117 in general management and administration. Additionally, 638 persons were employed in the Company's Hong Kong, Mumbai, India, and Ennis, Ireland operations. None of the Company's employees is represented by a labor union. The Company has experienced no work stoppage and believes its employee relations are good.
DEPENDENCE ON KEY PERSONNEL - ---------------------------
The Company's future performance is significantly dependent on the continued active participation of members of its current management. The Company does not have written employment contracts with its employees. Should one or more of the Company's key management employees leave or otherwise become unavailable to the Company, the Company's business and results of operations may be materially adversely affected.
PRODUCT LIABILITY - -----------------
The Company's business exposes it to potential liability risks that are inherent in the manufacturing and marketing of high-reliability electronic components for critical applications. No assurance can be made that the Company's product liability insurance coverage is adequate or that present coverage will continue to be available at acceptable costs, or that a product liability claim would not adversely affect the business or financial condition of the Company.
CHANGE OF CONTROL PROVISIONS - ----------------------------
The Company's Certificate of Incorporation, Bylaws, Shareholder Rights Plan and certain employment compensation plans contain provisions that make it more difficult for a third party to acquire, or that may discourage a third party from attempting to acquire control of the Company. In addition, as a Delaware corporation, the Company is subject to the restrictions imposed under Section 203 of the Delaware General Corporation Law, which may deter the Company from engaging in certain change of control transactions with certain of its stockholders under certain circumstances.
ENVIRONMENTAL REGULATION - ------------------------
While the Company believes that it has the environmental permits necessary to conduct its business and that its operations conform to present environmental regulations, increased public attention has been focused on the environmental impact of semiconductor operations. The Company, in the conduct of its manufacturing operations, has handled and does handle materials that are considered hazardous, toxic or volatile under federal, state and local laws and, therefore, is subject to regulations related to their use, storage, discharge and disposal. No assurance can be made that the risk of accidental release of such materials can be completely eliminated. In addition, the Company operates or owns facilities located on or near real property that formerly might have been used in ways that involved such materials. In the event of a violation of environmental laws, the Company could be held liable for damages and the costs of remediation, and, along with the rest of the semiconductor industry, is subject to variable interpretations and governmental priorities concerning environmental laws and regulations. Environmental statutes have been interpreted to provide for joint and several liability and strict liability regardless of actual fault. There can be no assurance that the Company and its subsidiaries will not be required to incur costs to comply with, or that the operations, business, or financial condition of the Company will not be adversely affected by current or future environmental laws or regulations. (See "Legal Proceedings")
RISKS RELATED TO ACQUISITIONS - ------------------------------
The Company's strategy to increase its revenue and the markets it serves has included and may continue to include acquisition of complementary businesses. In and prior to fiscal year 2000, the Company has consummated acquisitions of businesses and product lines and may continue to make acquisitions. There can be no assurance that the Company will be able to identify, acquire or manage such companies or products or successfully integrate such operations into those of the Company without encountering unanticipated costs, liabilities, obligations, delays or other problems. The Company may compete for acquisition and expansion opportunities with companies that have greater resources than the Company. There can be no assurance that suitable acquisition candidates will be available or that acquisitions will be obtainable on terms acceptable to the Company.
ITEM 2.
ITEM 2. PROPERTIES ----------
The Company's headquarters are located in a building complex located in Santa Ana, California. This complex contains general offices, engineering and manufacturing space. The Company owns office, engineering and production facilities in Santa Ana and Garden Grove, California; Broomfield, Colorado; Watertown, Massachusetts; Montgomeryville, Pennsylvania; Riviera Beach, Florida; Ennis, Ireland; Mumbai, India; and Hong Kong and leases office, engineering and production facilities in Carlsbad and Los Angeles, California; Scottsdale, Arizona and Lawrence and Lowell, Massachusetts. As described in Note 7 to the Consolidated Financial Statements, the acquisition of land, buildings and additions in Santa Ana were accomplished through the issuance of Industrial Development Bonds. Deeds of trust on the related properties were granted as security for the bonds.
The Company believes that its existing facilities are well-maintained and in good operating condition and that they are adequate for its immediately foreseeable business needs.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS -----------------
In Broomfield, Colorado, the owner of a property located adjacent to the manufacturing facility owned by a subsidiary of the Company notified the subsidiary and other parties, claiming that contaminants migrated to his property, thereby diminishing its value. In August 1995, the subsidiary, together with the former owners of the manufacturing facility, agreed to settle the claim and to indemnify the owner of the adjacent property from remediation costs. Although TCE and other contaminants previously used at the facility are present in soil and groundwater on the subsidiary's property, the Company vigorously contests any assertion that the subsidiary is the cause of the contamination. In November 1998, the Company signed an agreement with three former owners of this facility whereby the former owners 1) reimbursed the Company for $530,000 of past costs, 2) assume responsibility for 90% of all future clean-up costs, and 3) indemnify and protect the Company against any and all third-party claims relating to the contamination of the property. An Integrated Corrective Action Plan has been submitted to the State of Colorado. State and local agencies in Colorado are reviewing current data and considering study and cleanup options, and it is not yet possible to predict costs for remediation.
On July 31, 2000, Lemelson Medical, Education & Research Foundation, Limited Partnership, filed a first amended complaint in the United Stated District Court for the District of Arizona alleging that numerous corporations, including the Company, have infringed upon certain of the plaintiff's patents. The plaintiff is seeking compensatory damages, treble damages, injunctive relief and attorney's fees. The plaintiff does not specify an amount of any damages claimed. The action, as it relates to the Company, is in its preliminary stages.
On October 31, 2000, Mitel Semiconductor, Inc. filed a complaint in the Orange County Superior Court against the Company and two of its employees. The plaintiff alleges that the Company and former employees of plaintiff utilized alleged confidential information to interfere with the plaintiff's relationship with certain of its employees, and that the Company and the other defendants misappropriated plaintiff's alleged trade secrets to unfairly compete. The plaintiff sought an award of compensatory damages, disgorgement of profits, exemplary damages and a preliminary and permanent injunction. The action is in its preliminary stages.
On November 28, 2000, Mil-Plus Components, Inc., filed a complaint against the Company in the United States District Court for the Eastern District of New York alleging that the Company violated the anti-trust laws of the United States and the state of New York in connection with a termination of plaintiff as a distributor. The plaintiff also alleges a breach of contract by the Company and that the Company made false oral representations to the plaintiff to the effect that it would not be terminated as a distributor. In its complaint, the plaintiff alleges damages of 50 million dollars, treble damages, exemplary damages and attorney's fees. The action is in its preliminary stages.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ---------------------------------------------------
None.
PART II -------
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS --------------------------------------------------------------------
(a) Market Information ------------------
The Company's Common Stock is traded on the NASDAQ National Market under the symbol MSCC. The following table sets forth the high and low closing prices at which the Company's Common Stock traded as reported on the NASDAQ National Market.
HIGH LOW ---- --- Fiscal Year ended October 3, 1999
1st Quarter $ 12 5/8 $ 7 3/8 2nd Quarter 12 3/4 7 3rd Quarter 9 7/8 7 1/4 4th Quarter 10 3/16 7 1/16
HIGH LOW ---- --- Fiscal Year ended October 1, 2000
1st Quarter $ 8 7/8 $ 6 11/16 2nd Quarter 48 8 7/16 3rd Quarter 34 1/16 18 11/16 4th Quarter 42 1/4 27 15/16
POSSIBLE VOLATILITY OF STOCK PRICES -----------------------------------
The market prices of securities issued by technology companies, including the Company, have been volatile. The securities of many technology companies have experienced extreme price and volume fluctuations, which have often been not necessarily related to the companies' respective operating performances. Quarter to quarter variations in operating results, changes in earnings estimates by analysts, announcements of technological innovations or new products, announcements of major contract awards, events involving other companies in the industry and other events or factors may have a significant impact on the market price of the Company's Common Stock.
(b) Approximate Number of Common Equity Security Holders ----------------------------------------------------
Approximate Number of Record Holders Title of Class (as of October 1, 2000) --------------- ----------------------- Common Stock, $.20 Par Value 417 (1)
(1) The number of stockholders of record treats all of the beneficial holders of shares held in one "nominee" or "street name" as a unit.
(c) Dividends ---------
The Company has not paid dividends in the last five years and has no current plans to do so.
ITEM 6.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA ------------------------------------
In fiscal years 1999 and 2000, $4,002,000 and $11,196,000 of Research and Development was included in operating expenses. Research and Development of $1,020,000, $1,161,000 and $1,532,000 for fiscal years 1996, 1997 and 1998 has been reclassified from cost of sales to operating expenses accordingly.
The selected financial data should be read in conjunction with the Consolidated Financial Statements and Notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-K.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS ---------------------
See Part I, Item 1, under "Important Factors Related to Forward-Looking Statements and Associated Risks", and the factors discussed in Part I, Items 1 and 3, and Part II, Item 5.
RESULTS OF OPERATIONS FOR FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 2000 - -----------------------------------------------------------------------
Net sales increased $62.5 million from $185.1 for fiscal year 1999 to $247.6 million for fiscal year 2000. The increase was attributed primarily to higher sales of power management and RF/microwave products to the mobile connectivity, telecommunications, computer/peripheral and space/satellite markets. The Company acquired LinFinity Microelectronics, Inc. ("LinFinity") and Microsemi Microwave Products ("MMP") in April and June of 1999, respectively. The Company sold certain assets of the Micro Commercial Components division ("MCC") in June 2000. LinFinity and MMP collectively had revenues of $27.3 million and $80.8 million in fiscal years 1999 and 2000, respectively. MCC had revenues of $16.0 million and $12.4 million in fiscal years 1999 and 2000, respectively.
Gross profit increased $29.0 million from $40.9 million for fiscal year 1999 to $69.9 million for fiscal year 2000. As a percentage of sales, gross profit was 22.1% for fiscal year 1999, compared to 28.3% for fiscal year 2000. The increase was due to higher capacity utilization and an increase in shipments of higher margin power management, TVS, RF/microwave and space/satellite products. Gross profit included $8.5 million and $32.8 million for LinFinity and MMP and $1.5 million and $1.0 million for MCC for fiscal years 1999 and 2000, respectively.
Selling and general and administrative expenses increased $10.0 million from $28.4 million for fiscal year 1999 to $38.4 million for fiscal year 2000. The increase was primarily due to higher sales volume. Selling and general and administrative expenses included $4.3 million and $10.7 million for LinFinity and MMP and $1.3 million and $0.8 million for MCC for fiscal years 1999 and 2000, respectively.
Research and development expense increased $7.2 million from $4.0 million for fiscal year 1999 to $11.2 million for fiscal year 2000. This increase reflected Microsemi's continuing investment to develop new power management and RF products for the high-growth markets.
Acquired in-process research and development of $2.0 million and $2.5 million were related to the acquisitions of LinFinity in April 1999 and Micro WaveSys in March 2000, respectively.
Interest expense increased $0.2 million from $3.1 million for fiscal year 1999 to $3.3 million in fiscal year 2000, due to increase in borrowings to finance the acquisitions in fiscal year 1999. These loans were paid off with proceeds from the sale of Microsemi's common stock in June 2000.
The effective income tax rates of 23% and 33% for fiscal years 1999 and 2000, respectively, were the combined results of taxes computed on foreign and domestic income. The increase in the fiscal year 2000 effective tax rate was primarily attributable to the effects of permanent differences in fiscal year 2000 on a higher pre-tax income base as compared to fiscal year 1999.
RESULTS OF OPERATIONS FOR FISCAL YEAR 1998 COMPARED TO FISCAL YEAR 1999 - -----------------------------------------------------------------------
Net sales increased $20.4 million from $164.7 million for fiscal year 1998, to $185.1 million for fiscal year 1999. The total revenues included $27.3 million generated by LinFinity and MMP in fiscal year 1999. Excluding sales from LinFinity and MMP, sales for fiscal year 1999 decreased $6.9 million compared to fiscal year 1998. During fiscal 1999, the demand for commercial space products was lower than prior years; however, the decrease was partially offset by an increase in other commercial products.
Gross profit decreased $6.4 million from $47.3 million for fiscal year 1998 to $40.9 million for fiscal year 1999. Gross profit in fiscal year 1999 included $8.5 million from the LinFinity and MMP divisions. As a percentage of sales, gross profit decreased from 28.7% for fiscal year 1998 to 22.1% for fiscal year 1999. The decrease was due to change of product sales mix, with lower sales of commercial space products,
which typically have higher margins than other commercial products, the effects of pricing pressure and lower utilization of plant capacity. Gross profit was also adversely affected by a $6.0 million inventory charge to cost of sales. The charge was made because of reductions in estimates of utilization and realizable value of certain inventories resulted from recent changes in market conditions and customer requirements. Microsemi experienced heightened competition and commercialization of its military business, lower demands for its commercial satellite products and recent initiatives by satellite customers to use lower cost parts in their programs.
Operating expenses increased $9.0 million to $35.8 million for fiscal year 1999 compared to fiscal year 1998. The increase was primarily due to the addition of the LinFinity and MMP divisions and two design centers located in San Jose and San Diego, California. The increase was also due in part to the charge for acquired in-process research and development of $2.0 million, which was related to the LinFinity acquisition in April 1999.
Interest expense increased $1.0 million from $2.1 million in fiscal year 1998 to $3.1 million for fiscal year 1999, due to the acquisitions of LinFinity and MMP.
The effective income tax rates of 38% and 23% for fiscal years 1998 and 1999, respectively, were the combined results of taxes computed on foreign and domestic income. The decrease in the fiscal year 1999 effective tax rate was primarily attributable to changes in the proportion of income earned within various taxing jurisdictions and the tax rates applicable to such taxing jurisdictions.
CAPITAL RESOURCES & LIQUIDITY - -----------------------------
Cash provided by operating activities was $12.6 million, $16.1 million and $35.8 million for fiscal years 1998, 1999 and 2000, respectively. The increase in cash provided by operating activities in 1999 compared to 1998 was primarily attributable to changes in earnings and inventories. The increase in cash provided by operating activities in 2000 compared to 1999 was primarily attributable to changes in earnings, depreciation and amortization, deferred income taxes, accounts receivable and accrued liabilities.
Net cash used by investing activities was $15.6 million, $40.3 million and $9.8 million in 1998, 1999 and 2000, respectively. The increase in fiscal year 1999, compared to fiscal year 1998, was primarily due to the acquisitions of LinFinity and MMP. The decrease in fiscal year 2000, compared to fiscal year 1999, was primarily due to lower payments for acquisitions.
Net cash provided by financing activities was $6.7 million and $22.3 million for fiscal years 1998 and 1999, respectively. Net cash used for financing activities in 2000 was $3.1 million. The net cash provided by financing activities in fiscal years 1998 and 1999 was proceeds from the bank loans used to finance acquisitions; partially offset by payments on the Company's debt. Net cash used for financing activities in fiscal 2000 was primarily due to payments on the Company's debt, partially offset by proceeds from the sale of the Company's common stock.
Microsemi's operations in fiscal year 2000 were funded with internally generated funds and borrowings under a revolving line of credit, which expires in March 2003 and from the sale of the Company's common stock in June 2000. Under this line of credit, the Company can borrow up to $30.0 million. As of October 1, 2000, there were no funds borrowed under this credit facility. At October 1, 2000, Microsemi had $30.5 million in cash, cash equivalents and short-term marketable securities.
The Company has no significant capital commitments.
Based upon information currently available, management believes that Microsemi can meet its current operating cash and debt service requirements with internally generated funds together with its available borrowings.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -------------------------------------------
MICROSEMI CORPORATION AND SUBSIDIARIES
-----------------------------
Financial statement schedules not listed above are either omitted because they are not applicable or the required information is shown in the consolidated financial statements or in the notes thereto.
Report of Independent Accountants
To the Board of Directors and Stockholders of Microsemi Corporation:
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Microsemi Corporation and its subsidiaries at October 1, 2000 and October 3, 1999, and the results of their operations and their cash flows for each of the three fiscal years in the period ended October 1, 2000 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Orange County, California November 28, 2000
MICROSEMI CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (amounts in 000's)
The accompanying notes are an integral part of these statements.
MICROSEMI CORPORATION AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS For each of the three fiscal years in the period ended October 1, 2000 (amounts in 000's, except earnings per share)
The accompanying notes are an integral part of these statements.
MICROSEMI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For each of the three fiscal years in the period ended October 1, 2000 (amounts in 000's)
The accompanying notes are an integral part of these statements.
MICROSEMI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For each of the three fiscal years in the period ended October 1, 2000 (amounts in 000's)
The accompanying notes are an integral part of these statements.
MICROSEMI CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business - -----------------------
Microsemi Corporation is a global supplier of commercial and high-reliability analog integrated circuits and power and signal discrete semiconductors serving the satellite, telecommunications, computer and peripherals, military/aerospace, industrial/commercial, and medical markets.
Fiscal Year - -----------
The Company reports results of operations on the basis of fifty-two and fifty- three week periods. The Company's 2000 fiscal year ended on October 1, 2000 and consisted of fifty-two weeks. Fiscal years 1998 and 1999 consisted of fifty-two weeks and fifty-three weeks, respectively.
Principles of Consolidation - ---------------------------
The consolidated financial statements include the accounts of Microsemi Corporation and its wholly/majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated.
Use of Estimates - ----------------
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the respective reporting periods. Actual results could differ from those estimates.
Fair Value of Financial Instruments - -----------------------------------
The carrying values of cash, cash equivalents, accounts receivable, accounts payable, accrued liabilities, notes payable and certain other current assets and certain other long-term assets approximate their fair values because of the short maturity of these instruments. The carrying values of the Company's long- term debt at October 3, 1999 and October 1, 2000 approximate fair value based upon the current rate offered to the Company for obligations of the same remaining maturities.
Concentration of Credit Risk and Foreign Sales - ----------------------------------------------
The Company is potentially subject to concentrations of credit risk consisting principally of trade accounts receivable. Concentrations of credit risk exist because the Company relies on a significant portion of customers whose principal sales are to the U.S. Government. In addition, sales to foreign customers represented approximately 23%, 35% and 37% of net sales for fiscal years 1998, 1999 and 2000, respectively. These sales were principally to customers in Europe and Asia. The Company maintains reserves for potential credit losses and such losses have been within management's expectations.
Cash and Cash Equivalents - -------------------------
The Company considers all short-term, highly liquid investments with maturities of three months or less at date of acquisition to be cash equivalents.
Investments - -----------
The Company's investments in certain unconsolidated affiliates are stated at the lower of cost or estimated net realizable value.
Inventories - -----------
Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out method, except for cost of inventories at the Scottsdale, Arizona subsidiary, whose cost is determined using the last-in, first-out method (see Note 2).
Property and Equipment - ----------------------
Property and equipment are stated at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the lease terms or the estimated useful lives. Maintenance and repairs are charged to expense as incurred and the costs of additions and betterments that increase the useful lives of the assets are capitalized. It is the Company's policy to evaluate the carrying value of its operating assets when certain events arise and to recognize impairments when the future undiscounted net operating cash flows from the life of the assets are less than carrying values.
Intangible Assets - -----------------
Intangible assets, arising principally from differences between the cost of acquired companies and the underlying values at dates of acquisition (goodwill), are amortized on a straight-line basis over periods not exceeding ten years. It is the Company's policy to periodically evaluate the carrying value of its intangible assets, including goodwill, when certain events arise and to recognize impairments when the estimated future undiscounted net operating cash flows from the use of the assets are less than their carrying values.
Revenue Recognition - -------------------
Revenue is recognized at the time of product shipment. The Company, under specific conditions, permits its customers to return or exchange products. A provision for estimated sales returns is recorded concurrently with the recognition of revenue, based on historical experiences.
Research and Development - ------------------------
The Company expenses the cost of research and development as incurred. Research and development expenses principally comprise payroll and related costs and the cost of prototypes.
Stock-Based Compensation - ------------------------
The Company accounts for its stock based compensation plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. The disclosures required under Statement of Financial Accounting Standards No. 123, "Accounting for Stock-based Compensation" ("SFAS 123"), have been included in Note 8.
Income Taxes - ------------
Deferred tax assets and liabilities are recorded for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, all expected future events, including enactment of changes in tax laws or rates are considered. A valuation allowance is provided for deferred tax assets when it is more likely than not that such assets will not be realized through future operations.
Preferred Stock - ---------------
The Company's certificate of incorporation authorizes the board of directors to issue up to 1,000,000 shares of preferred stock and to designate the rights and terms of any such issuances. The Company has not issued any preferred stock.
Earnings Per Share - ------------------
Basic earnings per share have been computed based upon the weighted average number of common shares outstanding during the respective periods. Diluted earnings per share have been computed, when the result is dilutive, using the treasury stock method for stock options outstanding during the respective periods and based upon the assumption that the convertible subordinated debentures had been converted into common stock as of the beginning of the respective periods, with a corresponding increase in net income to reflect a reduction in related interest expense, net of applicable taxes.
Earnings per share for each of the three fiscal years in the period ended October 1, 2000 were calculated as follows:
There were approximately 442,000, 631,000 and 26,000 options in 1998, 1999 and 2000, respectively, that were not included in the computation of diluted EPS because the exercise price was greater than the average market price of the common stock, thereby resulting in an antidilutive effect.
Comprehensive Income - --------------------
Comprehensive income is defined as the change in equity (net assets) of a business enterprise during the period from transactions and other events and circumstances from non-owner sources. Comprehensive income consists of net income and the change in the cumulative foreign currency translation adjustment. Accumulated other comprehensive loss consists of the change in the cumulative translation adjustment. Total comprehensive income for fiscal years 1998, 1999 and 2000 was $11,153,000, $1,449,000 and $8,166,000, respectively.
Segment Information - -------------------
The Company uses the management approach for segment disclosure, which designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company's reportable segments.
Recently Issued Accounting Pronouncements - -----------------------------------------
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued, which establishes new standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The Company will be required to adopt SFAS No. 133 in fiscal 2001. Management has not completed its assessment as to whether the adoption of the new statement will have a material impact on the consolidated results of operations or financial position of the Company.
In December 1999, the Securities and Exchange Commission (the "SEC") released Staff Accounting Bulletin ("SAB") No. 101, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. The Company is required to be in conformity with the provisions of SAB 101 no later than fourth quarter 2000. The Company is continuing to assess the impact of SAB 101.
Reclassifications - -----------------
Certain reclassifications have been made to the fiscal years 1998 and 1999 balances to conform with the fiscal year 2000 presentation.
2. INVENTORIES
Inventories are summarized as follows:
The Company uses the first-in, first-out ("FIFO") method to account for its inventories, except at its Microsemi, Scottsdale subsidiary. Inventories in the amount of $7,499,000 at Microsemi, Scottsdale are stated at cost under the last- in, first-out ("LIFO") method. Had the FIFO method been used, total inventories would have been approximately $615,000 lower at September 27, 1998, $19,000 higher at October 3, 1999 and $53,000 higher at October 1, 2000 and would have had the effect of decreasing gross profit by $642,000 in fiscal year 1998 and increasing gross profit by $634,000 and $34,000 in fiscal years 1999 and 2000, respectively.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
Depreciation expense was $4,765,000, $7,423,000 and $9,802,000 in fiscal years 1998, 1999 and 2000, respectively.
At October 1, 2000, land and buildings located at the Santa Ana, California manufacturing and headquarters facility were pledged to the City of Santa Ana under the provisions of the loan agreement with the Santa Ana Industrial Development Authority. The land and buildings in Watertown, Massachusetts and in Ennis, Ireland are pledged to Unitrode Corporation under the provisions of the related acquisition agreement. The building and land in Riviera Beach, Florida are pledged to the former owner and a bank under the provisions of the related acquisition and loan agreements.
4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET, AND OTHER ASSETS
October 3, October 1, 1999 2000 ---------- ---------- (amounts in 000's)
Goodwill and other intangible assets, net $ 12,218 $ 22,559 ========== ==========
Accumulated amortization for goodwill and other intangible assets amounted to $4,434,000 and $3,937,000 as of October 3, 1999 and October 1, 2000, respectively. Amortization expense for fiscal years 1998, 1999 and 2000 was $393,000, $1,231,000 and $2,143,000, respectively.
Other assets consisted of the following: October 3, October 1, 1999 2000 ---------- ---------- (amounts in 000's)
Investments in unconsolidated affiliates $ 2,126 $ 194 Deferred financing expenses, net 693 211 Cash surrender value of life insurance 467 514 Notes receivable 2,229 1,650 Property held for sale 2,075 734 Others 251 336 ---------- ---------- $ 7,841 $ 3,639 ========== ==========
Accumulated amortization for deferred financing expenses amounted to $1,048,000 and $1,064,000 as of October 3, 1999 and October 1, 2000, respectively. Amortization expense for fiscal years 1998, 1999 and 2000 was $123,000, $164,000 and $216,000, respectively.
5. ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
October 3, October 1, 1999 2000 ---------- ---------- (amounts in 000's)
Payroll and payroll taxes $ 1,720 $ 1,829 Vacation, sick and other fringes 4,923 4,749 Profit sharing 1,688 7,032 Accrued interest 2,387 2,235 Other accrued expenses 6,574 8,147 ---------- ---------- $ 17,292 $ 23,992 ========== ==========
6. INCOME TAXES
Pretax income from continuing operations was taxed under the following jurisdictions:
For each of the three fiscal years in the period ended October 1, 2000 ------------------------------------------------ 1998 1999 2000 -------------- ------------ ------------ (amounts in 000's)
Domestic $ 14,010 $ 547 $ 10,761 Foreign 4,251 1,394 1,488 -------------- ------------ ------------ Total $ 18,261 $ 1,941 $ 12,249 ============== ============ ============
The provision for income taxes consisted of the following components:
For each of the three fiscal years in the period ended October 1, 2000 --------------------------------------------- 1998 1999 2000 ------------ ----------- ----------- (amounts in 000's) Current: Federal $ 4,320 $ 1,986 $ 3,960 State 918 301 620 Foreign 490 250 223 Deferred 1,211 (2,095) (761) ------------ ----------- ----------- $ 6,939 $ 442 $ 4,042 ============ =========== ===========
The tax effected deferred tax assets (liabilities) comprise the following:
October 3, 1999 October 1, 2000 --------------- --------------- (amounts in 000's)
Accounts receivable $ 720 $ 1,842 Inventories 4,946 2,171 Other assets 1,506 1,314 Fixed asset bases 931 932 Accrued employee benefit expenses 1,371 3,645 Accrued other expenses 1,393 2,913 Amortization of intangible assets 690 1,807 --------------- --------------- Gross deferred tax assets 11,557 14,624 --------------- ---------------
Inventory bases (1,491) (1,491) Depreciation (1,922) (2,053) --------------- --------------- Gross deferred tax liabilities (3,413) (3,544) --------------- --------------- $ 8,144 $ 11,080 =============== ===============
The following is a reconciliation of income tax computed at the federal statutory rate to the Company's actual tax expense:
No provision has been made for future U.S. income taxes on the undistributed earnings of foreign operations since they have been, for the most part, indefinitely reinvested in these operations. Determination of the amount of unrecognized deferred tax liability for temporary differences related to the undistributed earnings of the Company's foreign operations is not practicable. At the end of fiscal year 2000, the undistributed earnings aggregated approximately $20,459,000.
7. DEBT
Long-term debt consisted of:
Long-term debt maturities, including the current portion, during the next five fiscal years are as follows (amounts in 000's):
2001 $ 1,230 2002 3,567 2003 202 2004 212 2005 3,822 Thereafter 1,848 --------- $ 10,881 =========
A $4,150,000 Industrial Revenue Bond was issued in November 1975 through the City of Broomfield, Colorado and carried an interest rate of 7.875% per annum. This bond was paid in full on May 1, 2000.
A $6,500,000 Industrial Development Revenue Bond was originally issued in April 1985, through the City of Santa Ana, California for the construction of improvements and new facilities at the Company's Santa Ana plant. $4,100,000 of this loan remained outstanding at October 1, 2000. It was remarketed in 1995 and carries an average interest rate of 6.75% per annum. The terms of the bond require principal payments of $100,000 annually from 2000 to 2004 and $3,700,000 in 2005. A $4,466,000 letter of credit is carried by a bank to guarantee the repayment of this bond. There are no compensating balance requirements. An annual commitment fee of 2% is charged on this letter of credit. In addition, the agreement contains covenants regarding net worth and working capital. The Company was in compliance with the aforementioned covenants at October 1, 2000.
In June 1997, the Company entered into a $2,700,000 equipment loan agreement, providing for monthly principal payments through July 2002 of $45,000 plus interest at 5.93% per annum. $990,000 of this loan remained outstanding at October 1, 2000. This loan is secured by the related equipment.
In September 1997, the Company issued and assumed notes payable of $2,370,000 related to the PPC acquisition. These notes are payable to the former owners, bear an interest rate of 7%, and are due in monthly installments of principal and interest over various periods through September 2009. $1,585,000 of these notes remained outstanding at October 1, 2000. One of these notes is secured by the related acquired building.
In April 1999, the Company obtained a new credit agreement with its banks, which included a term loan of $30,000,000 and a revolving line of credit of $30,000,000 to finance the acquisition of LinFinity Microelectronics, Inc. ("LinFinity"), a subsidiary of Symmetricom, Inc., and to pay off the existing term loan and the revolving line of credit. The $30,000,000 term loan, of which $28,000,000 was outstanding at October 3, 1999, was paid in full in June 2000.
Concurrent with the new term loan, the Company obtained a new $30,000,000 revolving line of credit, which expires in March 2003. This line of credit replaced its then-existing $15,000,000 credit line. The new line of credit is secured by substantially all of the assets of the Company. It bears interest at the bank's prime rate plus .75% to 1.5% per annum or, at the Company's option, at the Eurodollar rate plus 1.75% to 2.5% per annum. The interest rate is determined by the ratio of total funded debt to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"). The terms of the revolving line of credit contain covenants regarding net worth and working capital and restrict payment of cash dividends or share repurchases. The Company was in compliance with these covenants at October 1, 2000. As of October 1, 2000, there were no funds borrowed under this credit facility. At October 1, 2000, $25,742,000 was available under the line of credit.
In February 2000, the Company issued a note payable of $2,500,000 related to the Micro WaveSys, Inc. ("MWS") acquisition, due on February 14, 2002. This note is payable to Infinesse Corporation, bearing an interest rate of 7% per annum. Interest is payable quarterly. The note holder has the option of converting it into common stock of the Company at $15 per share on or before February 14, 2002.
Other debts consist of various loans bearing interest at ranges from 5% to 9.75% and require periodic principal payments through September 2014. At October 1, 2000, totals of $1,706,000 remained outstanding for these loans.
The Company occupies a building in Santa Ana, California, which is under a long- term capital lease obligation. Future annual payments, included in other long- term liabilities at October 1, 2000, due under this capital lease obligation are as follows (amounts in 000's):
Fiscal year ending ------------------
2001 $ 279 2002 279 2003 279 2004 279 2005 279 Thereafter 6,591 ------- Total minimum lease payments 7,986 Less imputed interest (4,848) Present value of capitalized lease obligation $ 3,138 =======
The building under this capital lease obligation is reflected in property and equipment, net.
8. STOCK OPTIONS AND EMPLOYEE BENEFIT PLANS
Stock Options - -------------
Under the terms of an incentive stock option plan adopted in fiscal year 1982 and amended in fiscal year 1985, nontransferable options to purchase common stock may be granted to certain key employees. The Company reserved 750,000 shares for issuance under the terms of the plan. The options may be exercised within ten years from the date they are granted, subject to early termination upon death or cessation of employment, and are exercisable in installments determined by the Board of Directors. For certain significant shareholders, the exercise period is limited to five years and the exercise price is higher.
In December 1986, the Board of Directors adopted another incentive stock option plan (the "1987 Plan"), which reserved an additional 750,000 shares of common stock for issuance. The 1987 Plan was approved by the shareholders in February 1987 and is for the purpose of securing for the Company and its shareholders the benefits arising from stock ownership by selected officers, directors and other key executives and management employees. The plan provides for the grant by the Company of stock options, stock appreciation rights, shares of common stock or cash. As of October 1, 2000, the Company only granted options under the 1987 Plan. The options may be exercised within ten years from the date they are granted, subject to early termination upon death or cessation of employment, and are exercisable in installments determined by the Board of Directors. For certain significant shareholders, the exercise period is limited to five years and the exercise price is higher.
At their annual meeting on February 25, 1994, the shareholders approved several amendments to the 1987 Plan which 1) extend its termination date to December 15, 2000; 2) increase initially from 750,000 to 850,000 the number of shares available for grants; 3) increase on the first day of each fiscal year, the number of shares available for grant in increments of 2% of the Company's issued and outstanding shares of common stock; 4) set a limit on the number of options or shares which may be granted to any one individual in any year; 5) eliminate limitations on the Board of Directors' designating one or more committees of any size or composition to administer the 1987 Plan; and 6) provide for automatic grants of stock options to non-employee directors.
At their annual meeting on February 29, 2000, the shareholders approved several amendments to the 1987 Plan which: 1) extend its termination date to December 15, 2009; 2) increase initially by 530,400 the number of shares available for grants; 3) increase on the first day of each fiscal year, the number of shares available for grant in increments of 4% of the Company's issued and outstanding shares of common stock; and 4) add flexibility of grants to non-employees directors and other non-employees.
Activity and price information regarding the plans are as follows:
Stock options exercisable were 263,590, 453,240 and 374,225 at September 27, 1998, October 3, 1999, and October 1, 2000, respectively, at weighted average exercise prices of $7.24, $10.40, and $12.16, respectively. Remaining shares available for grant at September 27, 1998, October 3, 1999 and October 1, 2000 under the plans were 308,000, 203,000, and 150,000, respectively. All options were granted at the fair market value of the Company's shares of common stock on the date of grant.
The following table summarizes information about stock options outstanding and exercisable at October 1, 2000:
For purpose of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting periods. The SFAS 123 method of accounting was not applied to options granted prior to fiscal 1996. The Company's pro forma information is as follows, for fiscal years 1998, 1999 and 2000:
Fiscal Years Ended ---------------------------------------- 1998 1999 2000 -------- -------- -------- (amounts in 000's) Net income: As reported $ 11,322 $ 1,499 $ 8,207 Pro forma $ 10,404 $ 553 $ 6,049
Basic earnings per share: As reported $ 1.05 $ 0.13 $ 0.68 Pro forma $ 0.97 $ 0.05 $ 0.50
Diluted earnings per share: As reported $ 0.98 $ 0.13 $ 0.66 Pro forma $ 0.90 $ 0.05 $ 0.48
The fair value of each stock option grant was estimated pursuant to SFAS 123 on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
1998 1999 2000 ------ ------ ------ Risk free interest rate 5.55% 4.94% 5.90% Expected dividend yield None None None Expected lives 5 years 5 years 5 years Expected volatility 76.4% 67.0% 70.0%
The weighted average grant date fair values of options granted during fiscal years 1998, 1999 and 2000 were $15.84, $10.06 and $20.10, respectively.
Employee Benefit Plans - ----------------------
The Microsemi Corporation Profit Sharing Plan, adopted by the Board of Directors in fiscal year 1984, covers substantially all full-time employees who meet certain minimum employment requirements and provides for current bonuses based upon the Company's earnings. Annual contributions to the plan are determined by the Board of Directors. Total charges to income were $2,509,000, $1,745,000 and $5,678,000 in fiscal years 1998, 1999 and 2000, respectively.
401(k) Plan - -----------
The Company sponsors a 401(k) Savings Plan whereby participating employees may elect to contribute up to 15% of their eligible wages. The Company is committed to match 50% of employee contributions, not exceeding 3% of the employee's wages. The Company contributed $1,005,000, $1,148,000 and $1,415,000 to this plan during fiscal years 1998, 1999 and 2000, respectively.
Supplemental Retirement Plan - ----------------------------
In fiscal year 1994, the Company adopted a supplemental retirement plan, which provides certain long-term employees with retirement benefits based upon a certain percentage of the employees' salaries. Included in other long-term liabilities at October 3, 1999 and October 1, 2000 were $1,327,000 and $1,351,000, respectively, related to the Company's estimated liability under the plan.
9. COMMITMENTS AND CONTINGENCIES
The Company occupies premises and leases equipment under operating lease agreements expiring through 2029. Aggregate future minimum rental payments under these leases are (amounts in 000's):
Fiscal Year Ending ------------------ 2001 $ 1,729 2002 1,701 2003 1,595 2004 1,596 2005 1,597 Thereafter 9,963 -------- $ 18,181 ========
Lease expense charged to income was $411,000 in fiscal year 1998, $712,000 in fiscal year 1999, and $1,235,000 in fiscal year 2000. The aforementioned amounts are net of sublease income amounting to $557,000, $514,000 and $328,000 in fiscal years 1998, 1999 and 2000, respectively.
In Broomfield, Colorado, the owner of a property located adjacent to a manufacturing facility owned by a subsidiary of the Company had notified the subsidiary and other parties, claiming that contaminants migrated to his property, thereby diminishing its value. In August 1995, the subsidiary, together with former owners of the manufacturing facility, agreed to settle the claim and to indemnify the owner of the adjacent property for remediation costs. Although TCE and other contaminants previously used at the facility are present in soil and groundwater on the subsidiary's property, the Company vigorously contests any assertion that the subsidiary is the cause of the contamination. In November 1998, the Company signed an agreement with three former owners of this facility whereby the former owners 1) reimbursed the Company for $530,000 of past costs, 2) will assume responsibility for 90% of all future clean-up costs, and 3) indemnify and protect the Company against any and all third-party claims relating to the contamination of the facility. An Integrated Corrective Action Plan has been submitted to the State of Colorado. State and local agencies in Colorado are reviewing current data and considering study and cleanup options, and it is not yet possible to predict costs for remediation. In the opinion of management, the final outcome of the Broomfield, Colorado environmental matter will not have a material adverse effect on the Company's financial position or results of operations.
The Company is involved in various pending litigations arising out of the normal conduct of its business, including those relating to commercial transactions, contracts, and environmental matters. In the opinion of management, the final outcome of these matters will not have a material adverse effect on the Company's financial position, results of operations, or cash flow.
10. ACQUISITION AND DISPOSITION
In February 2000, Microsemi acquired certain assets of the HBT Business Products Group (now called Micro WaveSys, Inc.) of Infinesse Corporation ("Infinesse"). This business specializes in RF components utilizing III-V Compounds (primarily Gallium Arsenide and Indium Gallium Phosphide), and SiGe semiconductors for advanced cellular, PCS and 3G, BlueTooth, and 5.7 GHz LAN applications. The cost of this acquisition was approximately $15,110,000, which was funded with cash, debt, shares of Microsemi's common stock, and the issuance of a note convertible into shares of Microsemi's common stock. The acquisition was accounted for under the purchase method of accounting, and goodwill resulting from this acquisition was approximately $9,860,000. Microsemi's consolidated results of operations include those of Micro WaveSys since the date of acquisition. Micro WaveSys has 1,000 authorized shares, of which, Microsemi owns 800 shares, Infinesse or its assignees own 100 shares, and 100 shares are reserved for future option grants.
The costs of the acquisition were allocated to the assets acquired and liabilities assumed based on their estimated fair values to the extent of the aggregate purchase price. Portions of the purchase price were allocated to certain intangible assets such as completed technology, assembled workforce, and in-process research and development ("IPR&D"). The allocation of the purchase price to these intangible assets was based on an independent valuation report. The amount of the purchase price allocated to IPR&D was determined by estimating the stage of completion of each IPR&D project at the date of acquisition, estimating cash flows resulting from the future release of products employing these technologies, and discounting the net cash flows back to their present values. At the date of acquisition, technological feasibility of the IPR&D projects had not been reached and the technology had no alternative future uses without further development. Accordingly, Microsemi expensed the portion of the purchase price allocated to IPR&D of $2,510,000, in accordance with generally accepted accounting principles, in the quarter ended April 2, 2000.
The IPR&D comprises a number of individual technological development efforts, focusing on the discovery of new, technologically advanced knowledge and more complete solutions to customers' needs, the conceptual formulation and design of possible alternatives, as well as the testing of process and product cost improvements. Specifically, these technologies included efforts regarding Microsemi's strategy of expanding product offerings into the high growth wireless, broadband, and the analog and mixed signal IC sectors.
The weighted average stage of completion for all projects, in the aggregate, was approximately 60% as of the acquisition date. As of that date, the estimated remaining costs to bring the projects under development to technological feasibility are over $500,000. Upon completion, cash flows from sales of products incorporating those technologies were estimated to commence in the year 2000. Revenues forecasted in each period were reduced by related expenses, capital expenditures, and the cost of working capital. The discount rate applied to the net cash flows was 28%, which reflected the level of risk associated with the particular technologies and the current return on investment requirements of the market.
As discussed above, a portion of the costs of acquisition was allocated to completed technology and assembled workforce. The total allocation approximated $2,490,000 for these intangible assets.
Pro forma results as if the acquisition had taken place in the prior year would not be materially different from the Company's reported results.
In June 2000, the Company sold certain assets of its Micro Commercial Components division at book values for $3,000,000. As of October 1, 2000, the Company received $2,702,000. The balance was paid in full in October 2000.
11. SEGMENT INFORMATION
The Company's reportable operating segments are based on geographic location, and the measure of segment profit is income from operations. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
The Company operates predominantly in a single industry segment as a manufacturer of discrete semiconductors. Geographic areas in which the Company operates include the United States, Ireland, Hong Kong, and India. Intergeographic sales primarily represent intercompany sales which are accounted for based on established sales prices between the related companies and are eliminated in consolidation.
Financial information by geographic segments is as follows:
12. STATEMENT OF CASH FLOWS
13. UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
Selected quarterly financial data are as follows:
For the quarter ended October 3, 1999, the Company recorded a $5,951,000 charge to cost of sales. The charge was recorded because of reductions in estimates of utilization and realizable value of certain inventories resulting from recent changes in market conditions and customer requirements.
MICROSEMI CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (amounts in 000's)
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III --------
Items 10, 11, 12 and 13 are omitted since the Registrant intends to file a definitive proxy statement with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of Registrant's fiscal year ended October 1, 2000. The information required by those items is set forth in that certain proxy statement and such information is incorporated by reference in this Form 10-K.
PART IV -------
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. ----------------------------------------------------------------
(a) 1. Financial Statements. See Index under Item 8.
2. Financial Statement Schedules. See Index under Item 8.
3. Exhibits:
The exhibits which are filed with this report are listed in the Exhibit Index.
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the fourth quarter of fiscal year 2000.
SIGNATURES - ----------
Pursuant to the requirements of Section 13 or 15(d) 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.
MICROSEMI CORPORATION
By /s/ DAVID R. SONKSEN -------------------- David R. Sonksen Executive Vice President and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer and duly authorized to sign on behalf of the Registrant)
Dated: December 19, 2000
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Philip Frey, Jr. and David R. Sonksen, or either of them, his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, to sign the report on Form 10-K and any or all amendments thereto and to file the same, with all exhibits thereto, and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in- fact, or his substitute or substitutes, may do or cause to be done by virtue hereof in any and all capacities.
Pursuant to the requirements of Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ----
/s/PHILIP FREY, JR. Chairman of the Board December 19, 2000 - ---------------------- Philip Frey, Jr.
/s/JAMES J. PETERSON President and December 19, 2000 - ---------------------- James J. Peterson Chief Executive Officer
/s/DAVID R. SONKSEN Executive Vice President, December 19, 2000 - ---------------------- David R. Sonksen Chief Financial Officer Treasurer and Secretary (principal financial and accounting officer)
/s/BRAD DAVIDSON Director December 19, 2000 - ---------------------- Brad Davidson
/s/H.K. DESAI Director December 18, 2000 - ---------------------- H.K. Desai
/s/MARTIN H. JURICK Director December 19, 2000 - ---------------------- Martin H. Jurick
/s/ROBERT B. PHINIZY Director December 18, 2000 - ---------------------- Robert B. Phinizy
/s/JOSEPH M. SCHEER Director December 18, 2000 - ---------------------- Joseph M. Scheer
Exhibits.
EXHIBIT INDEX
Sequential Exhibit Page Number Description Number
2.1 The Agreement and Plan of Merger among the Company, Micro BKC Acquisition Corp. and BKC Semiconductors Incorporated, dated January 21, 1998, was filed with Form 8-K on June 1, 1998 under the same exhibit number and is incorporated herein by this reference (33)
2.2 Agreement and Plan of Reorganization, dated as of February 10, 1999, among the Company, Micro-LinFinity Acquisition Corporation, LinFinity Microelectronics, Inc. and Symmetricom, Inc., incorporated by reference to the same numbered exhibit to the Company's Form 8-K filed with the Securities and Exchange Commission on April 29, 1999 (34)
2.3 Asset Purchase Agreement, dated as of February 15, 2000 between Microsemi Corporation and Infinesse Corporation, incorporated by reference to the same numbered exhibit to the Company's Form 8-K filed with the Securities and Exchange Commission on March 15, 2000 (36)
3 Restated Certificate of Incorporation and Bylaws of the Registrant (1)
4 Form of Indenture, including form of 5 7/8% Convertible Subordinated Debenture due 2012 (2)
4.1 Subordinated Convertible Note Purchase Agreement dated June 26, 1992 among the Registrant and the Purchasers named therein and Exhibit A hereto, a form of Subordinated Convertible Note (29)
10.1 1984 Incentive Stock Option Plan (as amended December 13, 1984) (3)
10.2 Form of Incentive Stock Option Agreement pursuant to 1984 Incentive Stock Option Plan (3)
10.3 Form of Stock Option Agreement, dated October 17, 1985, between the Registrant and members of the Registrant's Board of Directors (1)
10.5 Credit Agreement between the Registrant and Security Pacific National Bank, dated as of September 3, 1984, and First Amendment to Credit Agreement dated as of May 1, 1985 (1)
10.6 Lease dated June 29, 1982 between Ulrich Layher and MSC Phoenix, Inc. (1)
10.11 1986 Nonqualified Stock Option Plan of the Registrant (Exhibit 10.9) (5)
10.13 The Registrant's 1987 Stock Plan (6)
10.14 Indenture dated as of February 1, 1985, and related Loan Agreement and Reimbursement Agreement both dated as of February 1, 1985, relating to the Industrial Revenue Bonds issued to finance additions to the Santa Ana facility of the Registrant (2)
10.15 Stock Sale Agreement, dated November 12, 1987 between Coors Porcelain Company and the Registrant, relating to the acquisition of Coors Components, Inc. (7)
10.16 Press Release distributed by the Registrant on November 12, 1987, announcing the acquisition of Coors Components, Inc. (7)
10.29 Subscription Agreement dated July 24, 1987 between the Registrant and Diodes Incorporated for the subscription of 800,000 shares of Diodes Incorporated (8)
10.32 Agreement of Purchase and Sale of Stock dated April 6, 1988, between General Microcircuits, Inc. and the Registrant relating to the purchase of all of the outstanding stock of General Microcircuits (9)
10.37 Stock Purchase Agreement dated as of February 17, 1989 by and between Avnet, Inc., a New York corporation, and Salem Scientific, Inc., a Microsemi Company, a Delaware corporation and a wholly- owned subsidiary of the Registrant (10)
10.48 First Amendment and Forbearance to the Registrant's Second Amended and Restated Credit Agreement dated as of November 1, 1990 (15)
10.49 Confirmation dated December 10, 1990 from Security Pacific National Bank concerning the extension of the Registrant's line of credit and standby letters of credit to February 1, 1991 (15)
10.52 Assignment and Assumption Agreement dated September 23, 1991 by and among Dynamic Circuits, Inc., a California corporation ("Dynamic"), Surface Mounted Technology Corporation, a California corporation ("SMTC") and the Registrant, pertaining to Dynamic's purchase from SMTC of the SMTC assets, together with the following supplemental documentation: (a) Letter of Intent dated August 14, 1991 (and Addendum thereto); (b) Equipment Lease Agreement; (c) Promissory Note; and (d) Security Agreement (16)
10.54 Asset Purchase Agreement dated May 28, 1992 between Micro USPD, Inc., a Delaware corporation and wholly-owned subsidiary of the Registrant ("Micro USPD"), and Unitrode Corporation, a Maryland corporation ("Unitrode") (17)
10.55 Irish Acquisition Agreement dated July 2, 1992 among Unitrode Ireland, Ltd., an Irish corporation and wholly-owned subsidiary of Unitrode; Unitrode B.V., a Dutch corporation and wholly-owned subsidiary of Unitrode; and Micro (Bermuda), Ltd., a Bermudian corporation and wholly-owned subsidiary of the Registrant ("Micro Bermuda") (18)
10.56 Dutch Acquisition Agreement dated July 2, 1992 among Unitrode Europe B.V., a Dutch corporation and wholly-owned subsidiary of Unitrode; Unitrode; and MicroBermuda (19)
10.64 Promissory Note dated December 21, 1992 made by the Registrant and payable to Norman Wechsler in the original principal amount of $150,000 and extension letter agreement dated April 23, 1993 (21)
10.65 Waiver and First Amendment to Reimbursement Agreement dated as of January 8, 1993 between the Registrant and Bank of America NT&SA with respect to the Reimbursement Agreement (See Exhibit 10.14) dated as of February 1, 1988 (21)
10.66 Senior Note Purchase Agreement dated March 25, 1993 between the Registrant and Norman Wechsler, including as an exhibit thereto the form of Senior Promissory Note dated March 25, 1993 (21)
10.69 Letter dated August 31, 1993 from Unitrode to the Registrant providing for amendments with respect to the Asset Purchase Agreement (See Exhibit 10.54) dated May 28, 1992 between Micro USPD and Unitrode excluding exhibits as follows (22):
Amendments to Promissory Notes dated as of September 3, 1993 between Micro USPD and Unitrode and the respective Promissory Notes dated July 2, 1992 attached as exhibits thereto
10.73 Amendment to the Registrant's 1987 Stock Plan. (25)
10.74 Executive Compensation Plans and Arrangements (26).
10.75 Bill of Sales and Purchase agreement between Telcom Universal Inc. And Microsemi Corporation (6)
10.76 Supplement to financing documents (Indenture of Trust and Loan agreement) relating to Industrial Development Authority of the City of Santa Ana, 1985 Industrial Development Revenue Bonds Microsemi Corporation Project) dated as of January 15, 1995. (26)
10.77 Amendments of the 1987 Microsemi Corporation Stock Plan. Adopted on May 16, 1995. (27)
10.78 Motorola-Microsemi PowerMite Technology Agreement. Portions omitted from this Exhibit have been separately filed with the Commission pursuant to a request for confidential treatment. (28)
10.79 Revolving Line of Credit Agreement Between Microsemi Corporation and Imperial Bank. (29)
10.80 Purchase agreement dated as of between SGS-Thomson Microelectronics, Inc. and Microsemi RF Products, Inc., formerly known as Micro Acquisition Corp., a Delaware Corporation and a wholly owned subsidiary of the Company.(30)
10.81 Retirement agreement with Dr. Jiri Sandera (31)
10.82 Change of Control Agreement with Mr. Philip Frey, Jr. (32)
10.83 Change of Control Agreement with Mr. David R. Sonksen. (32)
10.84 Supplemental Executive Retirement Plan (32)
10.85 Credit Agreement, dated as of April 2, 1999, among the Company, the Lenders from time to time party thereto and Canadian Imperial Bank of Commerce, as Agent (35)
21 List of Subsidiaries
23.1 Consent of Independent Accountants (form S-3)
23.2 Consent of Independent Accountants (form S-8)
27 Financial data schedule.
99.1 Information under heading "Risk Factors" in the Form 424B4 Prospectus as filed by the Company with the Securities and Exchange Commission on June 1, 2000 is incorporated herein by this reference (37)
(1) Filed in Registration Statement (No. 33-3845) and incorporated herein by this reference.
(2) Filed in Registration Statement (No. 33-11967) and incorporated herein by this reference.
(3) Filed with the Registrant's S-8 dated January 27, 1986 and incorporated herein by this reference.
(6) Incorporated by reference form Exhibit A to the Registrant's definitive Proxy Statement dated January 19, 1987.
(7) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 8-K filed with the Commission on or about December 23, 1987.
(9) Incorporated by reference to the indicated Exhibit to the Registrant's Annual Report on Form 10-K filed with the Commission for the fiscal year ended October 2, 1988.
(10) Incorporated by reference to Exhibit 10.33 to the Registrant's Current Report on Form 8-K, as amended, as filed with Commission on or about
(15) Incorporated by reference to the indicated Exhibit to the Registrant's Annual Report on Form 10-K filed with the Commission for the fiscal year ended September 30, 1990.
(16) Incorporated by reference to the indicated Exhibit to the Registrant's Annual Report on Form 10-K filed with the Commission for the fiscal year ended September 29, 1991.
(17) Incorporated by reference to Exhibit 2.1 to the Registrant's Form 8 Amendment No. 1, as filed with the Commission on September 8, 1992, to its Current Report on Form 8-K dated July 2, 1992.
(18) Incorporated by reference to Exhibit 2.2 to the Registrant's Form 8 Amendment No. 1, as filed with the Commission on September 8, 1992, to its Current Report on Form 8-K dated July 2, 1992.
(19) Incorporated by reference to Exhibit 2.3 to the Registrant's Form 8 Amendment No. 1, as filed with the Commission on September 8, 1992, to its Current Report on Form 8-K dated July 2, 1992.
(21) Incorporated by reference to the indicated Exhibit to the Registrant's Quarterly Report on Form 10-Q filed with the Commission for the fiscal quarter ended July 4, 1993.
(22) Incorporated by reference to the indicated Exhibit to the Registrant's Annual Report on Form 10-K filed with the Commission for the fiscal year ended October 3, 1993.
(23) Incorporated by reference to the indicated Exhibit to the Registrant's Quarterly Report on Form 10-Q filed with the Commission for the fiscal quarter ended April 3, 1994.
(24) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 8-K, as filed with the Commission dated June 8, 1994.
(25) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 10-K as filed with the Commission for the fiscal year ended October 2, 1994.
(26) Incorporated by reference to the indicated Exhibit to the Registrant's Quarterly Report on Form 10-Q filed with the Commission for the fiscal quarter ended April 2, 1995
(27) Incorporated by reference to the indicated Exhibit to the Registrant's Quarterly Report on Form 10-Q filed with the Commission for the fiscal quarter ended July 2, 1995.
(28) Incorporated by reference to the indicated Exhibit to the Registrant's Quarterly Report on Form 10-Q filed with the Commission for the fiscal quarter ended March 31, 1996.
(29) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 8-K, as filed with the Commission dated June 26, 1992.
(30) Incorporated by reference to the indicated Exhibit to the Registrant's Quarterly Report on Form 10-Q filed with the Commission for the fiscal quarter ended December 29, 1996.
(31) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 10-K filed with the Commission for the fiscal year ended September 28, 1997.
(32) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 10-Q filed with the Commission for the fiscal quarter ended December 28, 1997.
(33) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 10-Q filed with the Commission for the fiscal quarter ended June 28, 1998.
(34) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 10-Q filed with the Commission for the fiscal quarter ended April 4, 1999.
(35) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 10-Q filed with the Commission for the fiscal quarter ended July 4, 1999.
(36) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 10-Q filed with the Commission for the fiscal quarter ended April 2, 2000.
(37) Incorporated by reference to the indicated Exhibit to the Registrant's Current Report on Form 10-Q filed with the Commission for the fiscal quarter ended July 2, 2000.