<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended JANUARY 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File Number 1-5609
UNITRODE CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 04-2271186
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7 CONTINENTAL BOULEVARD, MERRIMACK, NEW HAMPSHIRE 03054
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 424-2410
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
COMMON STOCK, PAR VALUE $.01 NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of the
Registrant as of April 9, 1998, was $368,279,035. As of April 9, 1998 there were
24,408,107 shares of the Registrant's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates by reference certain portions of the information
from the Registrant's definitive proxy statement for the Annual Meeting of
Stockholders to be held June 29, 1998.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
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PART I.
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF THE BUSINESS
Unitrode Corporation (the "Company" or "Unitrode") was founded in 1960 and is
incorporated under the laws of Maryland. Since its inception, the Company and
its subsidiaries have designed, manufactured, marketed, and sold electronic
components and sub-systems. After divesting various businesses from 1991 through
1994, Unitrode is now focused on the analog/linear and mixed-signal integrated
circuits business.
On March 2, 1998, the Company announced that it had entered into a definitive
agreement to merge with BENCHMARQ Microelectronics, Inc. ("BENCHMARQ").
BENCHMARQ designs and manufactures integrated circuits and electronic modules
for portable and power-sensitive electronic applications, with focus on battery
management products. BENCHMARQ also produces families of non-volatile static
random access memory modules and controller circuits and real time clock
integrated circuits. Reference is hereby made to Note D to the Company's
consolidated financial statements included in Part II, Item 8 hereof for further
information.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company and its subsidiaries operate within a single industry segment, the
manufacture and sale of semiconductors, and have various product categories
within that one segment.
DESCRIPTION OF THE BUSINESS
GENERAL
The Company currently designs, manufactures, markets and sells a range of
analog/linear and mixed-signal integrated circuits (ICs). This business was
founded in 1981. The Company's products are principally proprietary,
high-performance analog/linear and mixed-signal integrated circuits which are
used in a variety of applications in EDP/computer, telecommunications,
industrial control and instrumentation, defense/aerospace, and automotive
markets. For the most part, the ICs are used either to control switching power
supplies and small electronic motors, or as high-speed interface and
communication circuits between various pieces of electronic equipment.
THE ANALOG/LINEAR INTEGRATED CIRCUIT INDUSTRY
Integrated circuits are the building blocks of all electronic products today and
may be classified as either analog or digital, depending upon the technique used
to process or act upon electronic signals. Digital circuits process binary
(either "on" or "off") signals that are used mostly in computer memory or logic
devices and in micro-processors. Analog circuits process "real world" signals
which measure physical conditions, such as temperature, force, speed, and
pressure, the frequency and wavelength of which vary continuously. Analog
circuits are used to amplify, monitor, condition, or transform these signals or
to interpret these signals for use by digital logic. Advancements in technology
have led to the development of mixed-signal circuits which combine certain types
of analog and digital functions on the same IC in order to reduce space,
increase reliability, and improve performance.
Worldwide merchant sales of analog ICs were estimated at approximately $19.8
billion in calendar year 1997, or approximately 16% of the total integrated
circuit market, according to World Semiconductor Trade Statistics, Inc. The
Company estimates that its served available market, the portion of the market in
which its products directly compete, is about $2.1 billion. The Company's share
of this market is estimated at about 8.5%.
The Company believes that the analog/linear integrated circuit market offers
certain advantages compared to the digital market. The life cycles of products
in the analog integrated circuit market tend to be longer and customer pricing
is less volatile than in the digital market. The capital requirements for
analog/linear IC manufacture are lower than those in the digital IC area. In
addition, foreign competition to date has been less interested in the
analog/linear IC business because the markets are smaller. Unlike products in
the digital market, the value in the product is usually the result of design
innovation utilizing a variety of manufacturing process technologies to address
specific customer applications, many of which are in so-called "niche" markets.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
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PRODUCTS AND MARKETS
Advancements in digital processing, such as requirements for lower power and
higher operating frequencies, are driving innovation in analog/linear circuitry.
Another significant trend in the marketplace is the need to reduce the size and
weight of components, particularly for portable and hand-held applications in
which these features are critical. As a result, more and more functions are
designed onto a single chip, requiring both advancements in design and
improvements in process technology.
The Company's product offerings are comprised of analog ICs for power supply
control, motion control, lighting, power driving, power quality and power
factoring, as well as high-speed and high-power interface applications. Products
are developed as a result of careful market analysis, a close working
relationship with customers, and a thorough understanding of their applications.
As a result, most of the products are based upon proprietary designs and are
considered application specific standard products (ASSPs) because they are
designed for targeted tasks. Some of these products have become standards in the
industry.
The Company's major product categories and their functions are:
POWER MANAGEMENT (about 47% of sales): These circuits are used in switching
power supplies (either AC/DC or DC/DC) to modulate, amplify, or regulate current
or voltages, or to protect other circuitry from irregular, spurious, or
erroneous signals. Examples of such products are current-mode pulse-width
modulators (PWMs), resonant-mode ICs, power factor pre-regulator ICs, phase
shifted PWMs, power driver circuits, hot swap power managers, and battery
charger ICs. Using these advanced control ICs, a customer can design a power
supply that is smaller and more efficient, critical attributes of today's power
supply and other power control applications.
MOTION CONTROL (about 23% of sales): These ICs are designed to control the
position, speed, braking, and power consumption of small, fractional-horsepower
DC electric motors, such as servo, stepper and DC brushless motors. These
products combine logic with the power output required to control varied loads.
Included in this product category are advanced mixed-signal circuits which
combine positioning speed and data acquisition functions for advanced
applications in high-density disk drives.
DATA TRANSMISSION/INTERFACE (about 30% of sales): Interface circuits transfer
data signals between or within (an) electronic system(s). These circuits are
used as drivers or receivers in high-speed data transmission, as well as for
active termination. The Company's largest product line in this family is used
principally to provide active termination for 18 and 9 lines of data
transmission in small computer systems interface (SCSI) applications. Mixing and
matching the 18- and 9-line terminators allow designers flexibility in
terminating wide-SCSI busses with 18 and 27 lines. In fiscal year 1998, the
Company further broadened its technically advanced family of SCSI circuits with
the introduction of low voltage differential SCSI circuits which meet ULTRA II
SCSI requirements.
These products serve a broad range of markets including the EDP/computer,
telecommunications, industrial control and instrumentation, defense/aerospace,
and automotive. The following table identifies the typical user applications by
market:
3
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
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MARKET USER APPLICATION
EDP/Computer Mainframes
Desktop & Notebook PCs
Terminals
Printers
Disk Drives, Tape Drives, & RAIDS
Plotters
Battery Chargers/Monitors
Wireless Data Transmission
Portable Computers
Monitors
Telecommunications Switching Stations
Routers & Hubs
Terminal Servers
Modems/Fax Machines
Cellular Phones
Global Positioning Systems
Battery Chargers/Monitors
Industrial Control HVAC
& Instrumentation Robotics
Utility Equipment
Portable Instruments
Factory Automation
Video Displays
Energy Management
Lighting Systems
Sensors
Defense/Aerospace Satellites
Aircraft Controls
Advanced Weapons
Missile Systems
Displays
Automotive High Intensity Lighting
Airbags
Dashboard Displays
Anti-locking Brake Systems
SALES AND DISTRIBUTION
Unitrode's products are sold worldwide by its sales force and through a network
of independent sales representatives and distributors. The Company has about
9,900 end customers. About 67% of sales are either through its direct sales
force or manufacturer's representatives, and the remaining 33% is through
distribution networks.
The Company has four field sales offices to serve selected geographical areas in
North America and also has agreements with five distributors in North America
who maintain more than 180 branch locations. Field application engineers are
employed to work closely with customers to solve design problems and to
anticipate future product directions.
For the year ended January 31, 1998, export sales represented 64% of sales.
Because most of the Company's export sales are billed and payable in United
States dollars, export sales are generally not directly subject to fluctuating
currency exchange rates. International sales are conducted through five sales
offices, located in England, Germany, Hong Kong, Italy, and Singapore. The
Company also has agreements with distributors or sales representatives for
locations throughout Europe, Asia, Japan, South America, Australia, New Zealand,
and the Middle East.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
The Company warrants its products to be free from defects in material or
manufacture and to conform to its published ratings and characteristics in
effect at the time and place of shipment. The Company also has agreements with
certain distributors which provide for price incentives on selected products,
price protection for inventories held by the distributor at the time of
reductions in published list prices and limited rights of return on unsold
products.
CUSTOMERS
The Company's customer base is comprised of merchant manufacturers, electronics
distributors, and customers with captive manufacturing operations. The captive
manufacturers use the Company's products as integral components in their
equipment and systems. In certain cases, product is sold to a
subcontract-assembly company specified by the captive manufacturer. The merchant
manufacturers typically function as original equipment manufacturers (OEMs) as
well as suppliers of sub-systems to other OEMs. About 55% of sales are to
customers with applications in the electronic data processing (EDP) market and
about 20% are to customers in industrial markets. Revenues from two major
customers, Western Digital Corporation and IBM Corporation, represented 21%,
31%, 25% and 10%, 8%, 7% of total revenues, respectively, in fiscal years 1998,
1997, and 1996. The loss or substantial reduction in sales from either of these
customers would have a material adverse effect upon the Company.
The Company has no material contracts with the United States Government.
BACKLOG
The Company's backlog was approximately $47.6 million on January 31, 1998, all
of which is expected to be shipped within the current fiscal year. Backlog at
January 31, 1997 was approximately $40.6 million. The Company recognizes backlog
as orders for product, from an end customer or distributor, that have a specific
schedule for delivery within the ensuing twelve months. The Company does not
believe that its backlog at any time is necessarily representative of the actual
sales for any succeeding period.
While annual purchase agreements are common in the industry, the Company does
not recognize such agreements as backlog. The ordering practices of many
semiconductor customers have shifted from a practice of placing orders with
delivery dates extending over several months to the practice of placing orders
with shorter delivery dates.
MANUFACTURING
In 1981, the Company purchased a manufacturing facility in Merrimack, New
Hampshire ("Merrimack"), and converted it for IC wafer fabrication. Since that
time, the original building has been expanded several times and upgraded to
satisfy the need for increased capacity and additional process technologies,
including class-10 lithography capability, as well as to meet requirements for
quality and product reliability.
As of January 1998, the Company's major wafer fabrication process technologies
included standard and enhanced bipolar, bipolar-complementary metallic oxide
silicon (BiCMOS), and BiCMOS-double-diffused metallic oxide silicon (BCDMOS).
The majority of the bipolar processing takes place at the Company's Merrimack
facility, and all of the BiCMOS and BCDMOS processing occurs at GMT
Microelectronics Corporation ("GMT"), an independent foundry in which the
Company has a minority investment. (See Note I to the Company's consolidated
financial statements included in Part II, Item 8 hereof). The Company's bipolar
processes are ideal for both precision analog circuits and certain power
management functions. The BiCMOS process is well-suited for high-density linear
designs, especially where speed and lower power consumption are of primary
importance. The BCDMOS process offers all of the advantages of BiCMOS and, with
the addition of lateral DMOS devices, accommodates designs requiring higher
current and voltage. Each of the three major fabrication technologies has
numerous processing options available to enable the product designer to achieve
the optimal product functionality, reliability, and performance.
During fiscal year 1998, the Merrimack wafer fabrication facility produced
approximately 60% of the Company's revenues. The Company also has agreements
with two foundries to supply additional wafers as required, the most significant
of which is an agreement with GMT. The agreement stipulates that as long as the
Company maintains its investment in GMT, a certain percentage of GMT's capacity
will be reserved for the Company.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
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Construction of a new Unitrode 6" BiCMOS wafer fabrication facility in Merrimack
to increase manufacturing capacity and expand process capabilities was completed
in the second quarter of fiscal year 1998. Capital project costs incurred to
date for this wafer fab were approximately $38.8 million. This new facility is
expected to become operational (revenue generating) in the second half of fiscal
year 1999.
Following wafer fabrication and wafer testing, the wafers are cut into die which
are then assembled into circuit packages. As is common in the industry, most of
the assembly is done by various IC assembly vendors located in Asia. The Company
currently believes that adequate assembly capacity exists and that alternative
sources could be obtained, should the need arise, without significant
interruption of the manufacturing process.
The Company performs nearly all of its final testing for reliability and
conformance on its products at its wholly owned subsidiary, Unitrode Electronics
Singapore Pte. Ltd. ("UES"), located in Ayer Rajah, Singapore. The Company
established UES in 1986 and has expanded the facility several times.
RAW MATERIALS
The Company believes that it has adequate sources of raw materials available.
Single crystal silicon is used as a semiconductor material in its integrated
circuits. Shortages in the supply of certain raw materials, including silicon
wafers and plastic molding compounds for packages, have occurred from time to
time. As is typical in the industry, the Company must allow for significant lead
times for certain raw materials. In fiscal year 1996, the Company entered into a
multi-year agreement with a manufacturer of silicon wafers for a guaranteed
wafer supply in order to support the Company's requirements. (See Note J to the
Company's consolidated financial statements included in Part II, Item 8 hereof).
Multiple sources for raw materials are generally maintained. The Company has not
experienced any shortage of energy and none is anticipated.
WORKING CAPITAL
The Company's business does not require working capital in excess of levels that
are considered normal in the industry. Further, it has not been necessary for
the Company to carry significant or unusual amounts of inventory to meet rapid
delivery requirements to customers or to assure itself of a continuous allotment
of raw materials from suppliers. The Company initiates most of its production
based upon its backlog of orders. As is common in the industry, certain
commodity items which are expected by customers to have short lead times are
produced in advance of firm orders.
PRODUCT QUALITY ASSURANCE AND RELIABILITY
The Company is committed to the principles of Total Quality Management (TQM) in
all aspects of its business. The foundation of the Company's TQM is a quality
system which is continuously reviewed and improved. The disciplines of
statistical process control are practiced throughout the Company's manufacturing
operations. Rigorous procedures using cross-functional teams are in place to
qualify fabrication processes and products prior to shipment. The Company also
routinely qualifies suppliers and assembly subcontractors according to
established standards.
In fiscal year 1997, the Company's third-party registrars completed their review
of the Company's two manufacturing facilities (Merrimack and UES) and renewed
the Company's registration to ISO 9001/9002-1994, respectively. The Merrimack
facility has continuously maintained conformance to MIL-STD-883 Class B and
Class S since November 1985. In October of 1997, the Defense Supply
Center-Columbus (DSCC) granted the Company full certification for MIL-PRF-38535.
PATENTS, LICENSES, AND TRADEMARKS
The Company owns a number of patents for product and processing techniques, as
well as certain trademarks relating to its business. The Company also has a
number of patent applications pending review. These patents and trademarks
provide it with some competitive advantage. However, Unitrode's business
prospects are dependent primarily upon the ability of its employees to work
closely with customers and develop and deliver high-quality, reliable products
at competitive prices, rather than on its ability to obtain and defend patents
and trademarks. No patent or trademark related to a particular product is of
material importance to the total business.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
Unitrode continues to receive royalty payments from International Rectifier
Corporation (IRC) as a result of a 1983 exclusive licensing agreement for
certain MOSFET technology which, with the Company's consent and in consideration
of royalty payments, IRC licenses to others. Depending upon the number of
licensees and the uses of the technology, royalty amounts may vary.
RESEARCH & DEVELOPMENT
The Company's development is directed towards new product design and process
technology. At January 31, 1998, 108 employees supported the Company's research
and development efforts. Design engineering offices are located in Merrimack,
New Hampshire; San Jose, California; and Cary, North Carolina.
Research and development expenditures were approximately $17,096,000,
$17,976,000, and $14,674,000 in the years ended January 31, 1998, 1997 and 1996,
respectively.
COMPETITION
The Company competes in the high-performance segment of the analog/linear and
mixed-signal integrated circuit market specifically addressing power management,
motion control, and data transmission/interface applications. Unitrode has a
number of competitors, some of which are substantially larger than the Company,
with significantly greater resources. Unitrode would be adversely affected if
its competitors introduced technologically superior products or offered their
products at prices significantly lower than those of the Company's products. The
major competitive factors include innovative design, product performance, price,
reliability, quality, customer support, and timely delivery. The Company's
ability to compete depends in large part upon the timely introduction of
products that are technologically innovative and which provide cost-effective
solutions for its customers.
SEASONAL ASPECTS
None.
ENVIRONMENTAL REGULATION
The Company expects no material adverse effect upon earnings, capital
expenditures, or its competitive position as a result of compliance with
federal, state, or local provisions which have been enacted or adopted
regulating the discharge of materials to the environment, or otherwise relating
to the protection of the environment (see "Legal Proceedings"). Its facilities
have been designed to comply with government regulations, and the Company
maintains policies and procedures to assure on-going compliance. There can be no
assurance, however, that changes in such regulations will not impose costly
equipment or other requirements on the Company as well as others in the
industry.
EMPLOYEES
As of January 31,1998, the Company had 668 employees of which 152 were employed
outside of the United States. Approximately 435 employees support the
manufacturing process, 78 employees conduct the sales and marketing effort, 108
employees support research and development, and 47 employees provide
administrative support.
Unitrode has never had a labor work stoppage, and no employees are represented
by a labor organization. The Company considers its employee relations to be
good.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Reference is hereby made to Note L to the Company's consolidated financial
statements included in Part II, Item 8 hereof for information about foreign and
domestic operations and export sales.
ITEM 2. PROPERTIES
The Registrant's corporate offices and principal manufacturing facility are
located in Merrimack, New Hampshire. All buildings are well-maintained, suitable
and adequate for the present activities of the Registrant. Information regarding
the principal plants and properties appears below:
<TABLE>
<CAPTION>
Approximate Owned or Lease
facility size leased; land expiration
Location Description (square feet) area owned date
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<S> <C> <C> <C> <C>
Merrimack, New Hampshire Manufacturing; 174,400 Owned; 19.6 acres --
General Office
Ayer Rajah, Singapore Manufacturing; 19,900 Leased 1998/
General Office 2000
San Jose, California General Office 5,900 Leased 2003
Cary, North Carolina General Office 10,400 Leased 2001
Worcester, Massachusetts(1) Manufacturing; 83,000 Owned; 6.0 acres --
General Office
Lexington, Massachusetts(1) General Office 16,000 Leased 1999
Lowell, Massachusetts Land -- Owned; 1.3 acres --
</TABLE>
(1) Facility is leased or sublet to a third party(ies) as of January 31, 1998.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS
The Company is involved in investigation and cleanup under the supervision of
the Maine Department of Environmental Protection of groundwater and soil
contamination at the former Westbrook, Maine wafer fabrication facility of its
former Semiconductor Products Division (the "Division"). Although the facility
was closed in 1989, the Division was sold in 1992 and the Westbrook, Maine real
estate was sold in 1994, the Company has retained responsibility for
environmental remediation at this site. The ultimate cost of cleanup at this
site is difficult to predict given the uncertainties regarding the extent of the
required cleanup, the interpretation of applicable laws and regulations and
alternative cleanup methods. However, based upon the Company's experience at
this site, the Company has established a reserve, taking into account the
probable and reasonably estimable work to be done at this site, which the
Company believes to be adequate.
The Company has been notified by responsible state authorities in California
that it is one of a number of "potentially responsible parties" under relevant
state statutes with respect to a former hazardous waste treatment facility in
Escondido, California (the "Site"). The treatment facility was owned and
operated by an entity wholly unrelated to the Company. The Company, along with
other financially viable potentially responsible parties, has entered into a
consent decree with governmental authorities regarding the voluntary payment of
cleanup costs and voluntary cleanup measures with respect to the Site. The
Company has established a reserve which the Company believes to be adequate for
future environmental remediation costs at this Site, based upon the probable and
reasonably estimable work to be done at the Site, the other potentially
responsible parties involved at the Site and the Company's volumetric level of
contribution to the Site which is less than one-half of one percent of the total
volume of waste contributed to the Site by the parties to the consent decree. In
view of the difficulty in quantifying the potential costs or damages arising
from the alleged environmental hazards, it is not possible to determine with
certainty the extent of the Company's potential exposure at the Site. However,
based upon its investigation to date, the Company believes that its exposure
(without giving effect to the joint and several liability provisions referred to
below) would not be material and the Company believes that the reserves
established with respect to these liabilities will be adequate. Further,
although statutes provide that all "potentially responsible parties" may be held
jointly and severally liable for the costs of investigation and remediation of a
site, after consideration of the liabilities of other "potentially responsible
parties" with respect to the Site and their respective levels of financial
responsibility, the Company believes that its liability with respect to the Site
is not material. If any liability on the part of the Company were to be measured
by the ratio of the waste attributable to the Company over the total waste
involved, based on information presently available to the Company, the Company's
aggregate liability with respect to the Site would not be material.
Environmental reserves are reviewed as events and developments warrant and
adjusted to reflect the likelihood of additional environmental expenditures.
Based upon information currently available to the Company, management believes
that any additional aggregate liability to which the Company may be subjected
from all the above-mentioned sites would not be material to future financial
results.
LINEAR TECHNOLOGY CORPORATION LAWSUIT
In June, 1997, Linear Technology Corporation ("LTC") filed a complaint in the
U.S. District Court for the Northern District of California (San Jose Division)
alleging that certain products of the Company and products of four other
defendants infringe an LTC patent. The complaint seeks damages and an injunction
against infringement of the patent. The Company has denied any infringement and
has filed a counterclaim seeking that the patent be declared invalid. The
Company believes that the resolution of this action will not have a materially
adverse effect on the Company's financial condition or results of operations.
OTHER
In addition to the matters described above, from time to time as a normal
incidence of the nature of the Company's business, various claims, charges or
litigation are or may be asserted or commenced against the Company relating to,
among other things, contractual matters, patent disputes, environmental matters
and product liability. While there can be no assurance that the Company will
prevail in all these matters, the Company does not believe that these matters
will have a material adverse effect on the Company's consolidated financial
position or results of operations. However, an adverse resolution of one or more
of such matters could have an adverse effect on the Company's consolidated
results of operations in a quarter in which such matters might be resolved.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's securities holders during
the fourth quarter of the fiscal year ended January 31, 1998.
EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the executive officers of the Company is set forth
below. All officers held office as of January 31, 1998.
NAME, AGE AND POSITION BUSINESS EXPERIENCE DURING PAST FIVE YEARS
Robert J. Richardson - 52 President and Chief Executive Officer
President, Chief Executive (November 1997 to present); Vice
Officer and Director President, New Business Development and
Corporate Marketing of Silicon Valley
Group, Inc. (October 1994 to October
1997); Corporate Vice President and
President of Silicon Valley Group's Track
Systems Division (October 1994 to June
1996); President, SVG Lithography Systems
Inc., Subsidiary of Silicon Valley Group
(June 1992 to October 1994).
Allan R. Campbell - 56 Senior Vice President, General Counsel
Senior Vice President, General and Secretary (June 1994 to present);
Counsel and Secretary Vice President, General Counsel and
Secretary (May 1990 to May 1994).
Robert L. Gable - 67 Chairman (June 1990 to present); Chief
Chairman and Director Executive Officer (June 1990 to November
1997); President (March 1992 to January
1996).
S. Kelley MacDonald - 52 Vice President, Corporate Communications
Vice President, (June 1992 to present); Director of
Corporate Communications Corporate Communications (June 1990 to
May 1992).
Patrick J. Moquin - 49 Vice President, Human Resources (August
Vice President, Human Resources 1995 to present); Senior Director, Human
Resources, Worldwide Field Operations,
Sun Microsystems, Inc. (May 1994 to July
1995); Various senior- level human
resources positions at Sun Microsystems,
Inc. (April 1986 to April 1994).
Cosmo S. Trapani - 59 Executive Vice President and Chief
Executive Vice President and Financial Officer (June 1994 to present);
Chief Financial Officer Vice President, Chief Financial Officer
and Treasurer (August 1990 to May 1994).
There are no family relationships among these officers, nor any arrangement or
understanding between any officer and any other person pursuant to which the
officer was elected.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
To the Company's knowledge, based solely upon the review of copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended January 31, 1998 the Company
complied with all Section 16(a) filing requirements applicable to its officers,
directors and any beneficial owners holding greater than ten percent of its
common stock.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Reference is hereby made to Note M to the Company's consolidated financial
statements included in Part II, Item 8 hereof regarding the Market for the
Registrant's Common Equity and Related Stockholder Matters.
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UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
ITEM 6. SELECTED FINANCIAL DATA
FIVE-YEAR FINANCIAL SUMMARY
Unitrode Corporation and Consolidated Subsidiaries
(in thousands except per share data)
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS (a)
Net revenues $ 177,603 $ 133,526 $ 116,148 $ 95,359 $ 85,994
Gross profit 94,011 70,498 60,983 46,553 38,341
As a % of net revenues 53% 53% 53% 49% 45%
Depreciation and amortization 11,361 11,667 8,998 7,430 5,901
R&D expenses 17,096 17,976 14,674 9,433 8,064
Operating income 41,877 29,087 23,996 9,651 10,949
Royalties 2,886 2,582 2,396 1,722 921
Pretax income 47,811 33,662 27,952 12,522 12,844
Tax provision rate 37% 39% 37% 26% 35%
Net income 30,235 20,677 17,519 9,249 16,448
As a % of net revenues 17% 15% 15% 10% 19%
As a % of beginning stockholders'
equity 26% 22% 21% 11% 24%
- ------------------------------------------------------------------------------------------------------------------------
SHARE DATA (b)
Basic earnings per share $ 1.27 $ .90 $ .76 $ .39 $ .66
Diluted earnings per share 1.21 .87 .74 .37 .64
High and low price 15.88-42.31 7.38-18.50 8.81-16.25 6.75-10.50 4.94-7.63
Closing year-end price 18.13 18.38 13.13 9.32 7.44
Year-end book value 6.56 4.97 4.03 3.47 3.35
Shares used for earnings per share:
Basic 23,806 23,061 22,994 23,952 25,024
Diluted 24,957 23,705 23,814 24,721 25,848
Number of stockholders of record 521 571 652 722 858
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL DATA
Cash/short-term investments $ 65,074 $ 52,012 $ 36,228 $ 30,714 $ 30,756
Total assets 202,039 142,403 118,424 103,304 101,923
Net working capital 73,836 62,583 47,147 37,543 43,378
Current ratio 2.86 3.52 2.95 2.79 3.43
Plant and equipment-net 78,165 41,688 35,289 32,019 29,595
Capital expenditures 45,775 20,853 11,794 15,591 12,573
Stockholders' equity 159,362 115,553 92,417 81,591 84,036
- ------------------------------------------------------------------------------------------------------------------------
PRO FORMA OPERATING RESULTS EXCLUDING
DISPOSED OPERATIONS
Net revenues $ 177,603 $ 133,526 $ 116,148 $ 87,231 $ 64,602
Gross profit 94,011 70,498 60,983 44,589 33,245
As a % of net revenues 53% 53% 53% 51% 51%
Depreciation and amortization 11,361 11,667 8,998 6,525 4,231
R&D expenses 17,096 17,976 14,674 8,766 6,142
Operating income 41,877 29,087 23,996 16,048 12,463
Royalties 2,886 2,582 2,396 1,722 921
Pretax income 47,811 33,662 27,952 18,810 14,247
Tax provision rate 37% 39% 37% 35% 34%
Net income 30,235 20,677 17,519 12,226 9,403
As a % of net revenues 17% 15% 15% 14% 15%
Basic earnings per share 1.27 .90 .76 .51 .38
Diluted earnings per share 1.21 .87 .74 .49 .36
</TABLE>
(a) Earnings per share includes a benefit of $8,100, or $.32 and $.31 per basic
and diluted earnings per share, respectively, for the cumulative effect of
a change in accounting for income taxes on adoption of SFAS 109.
(b) Share and per share data adjusted for a two-for-one stock split and the
adoption of SFAS 128.
12
<PAGE> 13
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FISCAL YEAR 1998 VERSUS FISCAL YEAR 1997
Net revenues for fiscal year 1998 were $177.6 million, an increase of $44.1
million or 33% compared with $133.5 million in fiscal year 1997. Revenues from
power management and interface products increased 57% and 53%, respectively, due
primarily to strength in the first half of the year from the electronic data and
computer peripheral markets. Revenues from motion control products declined 10%
due to reduced demand, particularly in the fourth quarter, from one of the
Company's major customers, a disk drive manufacturer. The decline was
principally due to excess customer inventories, as well as a reduction in the
share of business awarded to the Company by this customer. International
revenues accounted for approximately 64% of total revenues in fiscal year 1998
compared to 69% in fiscal year 1997.
The Company's fourth quarter revenues in fiscal year 1998 were $40.0 million, a
decrease of $8.5 million or 17% compared to revenues in the third quarter.
Revenues from motion control products declined $3.3 million due to a significant
reduction in demand from one of the Company's major customers, a disk drive
manufacturer. Revenues from power management and interface products declined by
$5.2 million principally due to excess inventories at the Company's customers
and distributors. Turns business, orders booked and shipped in the same quarter,
was weak in the fourth quarter.
Gross profit as a percentage of net revenues was essentially unchanged at 53% in
fiscal year 1998 compared with fiscal year 1997.
Research and development expenses were approximately 9.6% of net revenues, or
$17.1 million, compared with 13.5%, or $18.0 million in the prior year. The
decrease in percentage of revenues was principally due to the increased sales
volume. Research and development expenses in fiscal year 1997 included increased
development mask sets and wafer costs incurred in qualifying new BiCMOS products
at an outside foundry. Selling, general and administrative expenses were 16.2%
of net revenues, or $28.7 million, in fiscal year 1998 compared to 17.6%, or
$23.4 million, in fiscal year 1997. The $5.3 million increase in selling,
general and administrative expenses was principally due to variable costs such
as employee incentive compensation and sales commissions.
In fiscal year 1998, the Company recorded $6.3 million in pre-operating expenses
associated with a new 6" BiCMOS wafer fabrication facility in Merrimack, New
Hampshire. The Company expects that pre-operating expenses will total
approximately $8.0 to $9.0 million, with the balance anticipated to be spent
during the first half of fiscal year 1999. Pre-operating costs, which are
incurred prior to the commencement of production, relate primarily to the
qualification of equipment and manufacturing processes to meet design, test, and
reliability specifications, as well as to recruit and train personnel.
Interest income in fiscal year 1998 rose by approximately $783,000 principally
due to the increase in the Company's cash and cash equivalents.
The consolidated effective tax rate for fiscal year 1998 was 36.8% compared to
38.6% in fiscal year 1997. This decrease was due primarily to lower state taxes.
Net income increased 46% from $20.7 million, or $.87 per diluted share, in
fiscal year 1997 to $30.2 million, or $1.21 per diluted share, in fiscal year
1998. The per share amounts are based on the average common and common
equivalent shares outstanding which were adjusted for a two-for-one stock split
that was effective October 6, 1997.
Backlog at January 31, 1998 was $47.6 million compared to $40.6 million at
January 31, 1997. Bookings in fiscal year 1998 were $184 million, an increase of
$48 million, or 35%, from fiscal year 1997. Bookings were strong in the first
half of the fiscal year as a result of demand from customers in the electronic
data and computer peripheral markets. Bookings from customers in these markets
slowed in the second half of the year, and this trend continued in the first
quarter of the new fiscal year.
Subsequent to year-end, the Company announced that based on weaker-than-expected
bookings and rescheduled and canceled orders, it anticipates revenues in the
first quarter ended May 2, 1998 to be about 30% to 35% lower than revenues in
the same period of fiscal year 1998. A significant portion of the decline is
due to continuing weak demand from the Company's largest customer, a disk drive
manufacturer, as well as a reduction in the share of business awarded to the
Company by this customer because of delays in the qualification of the latest
product revision manufactured at an outside foundry. The follow-on revision of
this product is being qualified at a new outside foundry in Asia. The Company
estimates net income to be between $2 million and $3 million before anticipated
pre-tax charges of between $5 million and $7 million. For further information,
see Note P to the Company's consolidated financial statements.
13
<PAGE> 14
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
FISCAL YEAR 1997 VERSUS FISCAL YEAR 1996
Net revenues in fiscal year 1997 were $133.5 million, an increase of $17.4
million or 15% compared with $116.1 million in fiscal year 1996. This increase
was primarily due to the rise in demand for products in the computer peripherals
segment of the electronic data processing markets. International revenues
accounted for approximately 69% of total sales for fiscal year 1997 compared to
67% in fiscal year 1996.
Gross profit as a percentage of net revenues was essentially unchanged at 53%
for fiscal year 1997 compared with fiscal year 1996.
Research and development expenses were approximately 13.5% of net revenues, or
$18.0 million, compared with 12.6%, or $14.7 million in the prior year. This
increase of approximately $3.3 million related primarily to additional product
and process development efforts to support opportunities in the Company's
markets. Research and development expenses also included a charge of $800,000
for writedowns on equipment no longer in use. Selling, general and
administrative expenses decreased to approximately 17.6% of net revenues in
fiscal year 1997 compared to 19.2% in fiscal year 1996. This percentage decrease
was principally due to cost controls and the increased sales volume.
Interest income in fiscal year 1997 rose by approximately $399,000 principally
due to an increase in the Company's cash and cash equivalents.
The consolidated effective tax rate for fiscal year 1997 was 38.6% compared to
37.3% in fiscal year 1996. This increase was due primarily to the absence in
fiscal year 1997 of benefits related to tax credits and deferred tax assets that
were available in fiscal year 1996.
Net income increased 18% from $17.5 million, or $.74 per diluted share, in
fiscal year 1996 to $20.7 million, or $.87 per diluted share, in fiscal year
1997.
Backlog at January 31, 1997 increased approximately 8% to $40.6 million compared
with $37.7 million at January 31, 1996. Backlog improved due to the growth in
the computer peripherals segment of the electronic data processing markets.
FINANCIAL CONDITION
Cash and cash equivalents at January 31, 1998 increased by $13.1 million to
$65.1 million from the beginning of fiscal year 1998. The principal sources of
cash were $48.2 million from operating activities and $10.3 million in proceeds
from exercises of warrants and employee stock options under the Company's stock
option plans; these were offset by $45.8 million in capital expenditures.
Capital spending in fiscal year 1998 totaled approximately $45.8 million, $27.9
million of which was used to complete the construction of the new 6" BiCMOS
wafer fabrication facility and $17.9 million of which was used to support
ongoing operations, primarily for increased testing capacity. The Company plans
to spend approximately $11 to $14 million for capital assets in fiscal year
1999. The Company cancelled its $25 million unused bank agreement in February,
1998 and is currently negotiating a new agreement with another bank. It is
anticipated that the Company's operating cash requirements for fiscal year 1999,
including planned capital expenditures, will be met by internally generated
funds and available cash.
The ratio of current assets to current liabilities was 2.86:1 at January 31,
1998 compared with 3.52:1 at January 31, 1997. Working capital of $73.8 million
at January 31, 1998 increased by $11.3 million from January 31, 1997.
Accounts receivable at January 31, 1998 increased by $8.6 million from January
31, 1997 primarily due to the higher level of sales. Receivable day sales
outstanding increased to 50 days at January 31, 1998 compared to 44 days at
January 31, 1997 as a result of changes in the Company's mix of business.
Accounts payable and other current liabilities at January 31, 1998 increased by
a total of $6.6 million from January 31, 1997, primarily due to obligations for
capital assets and pre-operating costs related to the new 6" wafer fab. Accrued
distributor liabilities increased by $2.2 million over the prior year primarily
due to additional incentive programs and a significant increase in distributor
inventory which resulted in higher accruals for price protection and rights of
return. Accrued employee compensation and benefits increased by $6.5 million
since year-end 1997 primarily due to incentive compensation accruals.
14
<PAGE> 15
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
On November 17, 1997, the Board of Directors of the Company authorized the
repurchase of up to 1,000,000 shares of its common stock, but no shares were
repurchased. On February 28, 1998, the Board of Directors rescinded this unused
authorization.
IMPACT OF THE YEAR 2000 ISSUE
The Company has initiated a complete analysis of all computer-based software and
hardware to ensure Year 2000 compliance. In addition, the Company has begun
replacement of certain business process systems with Year 2000 compliant
software in order to improve reporting and productivity. Formal communications
have been established with all significant vendors to determine the extent to
which the Company could be impacted by third parties' failure to remediate their
own Year 2000 issues. The Company could be negatively impacted if it or a third
party is unsuccessful in properly addressing this issue. The Year 2000 project
expense is not anticipated to be material and is expected to be substantially
completed by the end of 1998.
NEW ACCOUNTING STANDARDS
See Note A in the Company's consolidated financial statements for a discussion
of recently issued accounting standards.
INFLATION
Management has concluded the effect of inflation had no significant impact on
operations.
FACTORS AFFECTING FUTURE RESULTS
The Company's future operating results are difficult to predict and may be
affected by a number of factors including the timely ability to develop and
market new products, competitive pricing pressures, fluctuations in
manufacturing yields, adequate availability of processed silicon wafers from
foundry sources, insufficient or excess manufacturing and test capacity, changes
in product mix, and fluctuating economic conditions in the United States, Asia
and other international markets.
Revenues from two major customers, Western Digital Corporation and IBM
Corporation, represented 21%, 31%, 25% and 10%, 8%, 7% of total revenues,
respectively, in fiscal years 1998, 1997, and 1996. The loss or a substantial
reduction in sales from either of these customers would have a material adverse
effect upon the Company's business.
The semiconductor market historically has been cyclical and subject to
significant economic fluctuations at various times. As a result, orders and
backlog may vary widely from time to time. Because of this and other factors,
there can be no assurance that the Company will not experience material
fluctuations in future operating results on a quarterly or annual basis as a
result of its inability to adjust its manufacturing capacity or its cost
structure to increased or reduced customer demand.
GMT Microelectronics Corporation ("GMT"), a Norristown, Pennsylvania foundry, is
the Company's predominant source for wafers requiring BiCMOS processing which
accounted for approximately 40% of the Company's revenues in fiscal year 1998
compared to 13% of the Company's revenues in fiscal year 1997. This dependence
is expected to continue until the Company's 6" BiCMOS wafer fabrication facility
becomes operational and the qualification of a second foundry source is
completed. There can be no assurance that GMT or any other third-party foundry
will be able to meet the Company's future production requirements. In addition,
the Company has equity and fixed income investments in GMT of $3.5 million at
January 31, 1998. Any material change in the Company's foundry requirements
could negatively impact GMT's operating results and could adversely affect the
valuation of the Company's investment in GMT. For further information, see
Note P to the Company's consolidated financial statements.
Construction of the Company's new 6" BiCMOS wafer fabrication facility was
completed in the second quarter of fiscal year 1998. Capital costs incurred to
date for the wafer fab were approximately $38.8 million. Qualification of
equipment and manufacturing processes is expected to be completed in the first
half of fiscal year 1999. However, there can be no assurance that the new
facility will become operational on time or that the added capacity for BiCMOS
processed wafers and the existing capacity for Bipolar processed wafers will
match demand for its products. Delays in the qualification of manufacturing
processes to make the wafer fabrication facility operational could significantly
increase pre-operating costs. In addition, any constraints in manufacturing or
testing capacity could adversely affect the business of the Company's
15
<PAGE> 16
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
customers and cause them to seek alternative sources for the products currently
obtained from the Company. Once operational, the Company's additional capacity
will also result in additional charges to cost of goods sold, such as
depreciation, and if processed wafer production is not ramped up successfully or
if revenues do not increase to offset these additional expenses, the Company's
future operating results could be adversely affected. Meanwhile, other
semiconductor manufacturers are also expanding or planning to expand their
production capacity over the next several years. There can be no assurance that
the expansion by the Company and its competitors will not lead to overcapacity
in the industry, which could lead to price erosion that could adversely affect
the Company's operating results.
PROPOSED MERGER
On March 2, 1998, the Company announced that it had entered into a definitive
agreement to merge with BENCHMARQ Microelectronics, Inc. ("BENCHMARQ"). Under
the terms of the proposed transaction, BENCHMARQ stockholders will receive one
share of Unitrode Corporation common stock for each share of BENCHMARQ common
stock outstanding, subject to adjustment under certain conditions. As of
December 31, 1997, BENCHMARQ had approximately 7 million shares issued and
outstanding. The transaction is intended to be accounted for as a "Pooling of
Interests" and is subject to several conditions, including the approval of the
stockholders of both companies. The transaction is expected to close in the
second quarter of fiscal year 1999. As a "Pooling of Interests", upon completion
of the transaction, the historical results of BENCHMARQ will be combined with
those of the Company.
FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a new
"safe harbor" for forward-looking statements so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those discussed in the statement. The Company desires to
take advantage of the new "safe harbor" provisions of the Act. Certain
information contained herein, particularly the information appearing under the
headings "Business," "Results of Operations," "Financial Condition", and
"Factors Affecting Future Results" are forward-looking. Information regarding
certain important factors that could cause actual results of operations or
outcomes of other events to differ materially from any such forward-looking
statement appears together with such statement, and/or elsewhere herein.
16
<PAGE> 17
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BALANCE SHEETS
Unitrode Corporation and Consolidated Subsidiaries
(in thousands)
<TABLE>
<CAPTION>
January 31 1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 65,074 $ 52,012
Accounts receivable, net of allowance of
$460 in 1998 and $383 in 1997 24,507 15,864
Inventories 13,042 10,950
Notes receivable 709 905
Deferred income taxes 7,886 3,322
Prepaid expenses and other current assets 2,373 4,410
-------- --------
Total current assets 113,591 87,463
-------- --------
Property, plant and equipment, at cost:
Land 1,836 1,836
Buildings and improvements 13,448 9,487
Machinery and equipment 82,323 72,479
Construction in progress 42,961 9,923
-------- --------
140,568 93,725
Less: accumulated depreciation 62,403 52,037
-------- --------
Property, plant and equipment, net 78,165 41,688
-------- --------
Other assets and deferred charges 4,255 5,755
Restricted cash and investments 1,180 812
Notes and other receivables, net of unamortized
discount of $32 in 1998 and $55 in 1997 2,828 3,514
Deferred income taxes 324 1,191
Excess of cost over net assets acquired,
less accumulated amortization of $2,394
in 1998 and $2,110 in 1997 1,696 1,980
-------- --------
Total assets $202,039 $142,403
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 18
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
BALANCE SHEETS
Unitrode Corporation and Consolidated Subsidiaries
(in thousands except per share data)
<TABLE>
<CAPTION>
January 31 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,231 $ 8,768
Income taxes payable 3,944 4,346
Accrued employee compensation and benefits 10,916 4,416
Accrued distributor liability 3,291 1,079
Other current liabilities 7,373 6,271
-------- --------
Total current liabilities 39,755 24,880
-------- --------
Deferred income taxes 1,791 1,151
Other long-term liabilities 1,131 819
-------- --------
Total liabilities 42,677 26,850
-------- --------
Commitments and contingent liabilities (Note J)
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized - 1,000,000 shares, none issued
Common stock, $.01 par value at January 31, 1998
and $.20 par value at January 31, 1997;
Authorized - 60,000,000 shares
Issued - 24,310,682 in 1998
and 23,265,596 in 1997 243 2,327
Additional paid-in capital 45,089 28,102
Retained earnings 115,163 85,255
-------- --------
160,495 115,684
Less:
Deferred compensation 1,133 131
-------- --------
Total stockholders' equity 159,362 115,553
-------- --------
Total liabilities and stockholders' equity $202,039 $142,403
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 19
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
Unitrode Corporation and Consolidated Subsidiaries
(in thousands except per share data)
<TABLE>
<CAPTION>
Years ended January 31 1998 1997 1996
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenues $177,603 $133,526 $116,148
Cost of revenues 83,592 63,028 55,165
-------- -------- --------
Gross profit 94,011 70,498 60,983
-------- -------- --------
Operating expenses:
Research and development 17,096 17,976 14,674
Selling, general and administrative 28,749 23,435 22,313
New fab pre-operating expenses 6,289 -- --
-------- -------- --------
Total operating expenses 52,134 41,411 36,987
-------- -------- --------
Income from operations 41,877 29,087 23,996
-------- -------- --------
Other income (expense):
Royalty income 2,886 2,582 2,396
Interest income 2,864 2,081 1,682
Interest expense (95) (96) (85)
Non-operating income (expense), net 279 8 (37)
-------- -------- --------
Total other income 5,934 4,575 3,956
-------- -------- --------
Income before income tax provision 47,811 33,662 27,952
Income tax provision 17,576 12,985 10,433
-------- -------- --------
Net income $ 30,235 $ 20,677 $ 17,519
======== ======== ========
Basic earnings per share $ 1.27 $ .90 $ .76
======== ======== ========
Diluted earnings per share $ 1.21 $ .87 $ .74
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 20
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
Unitrode Corporation and Consolidated Subsidiaries
(in thousands)
<TABLE>
<CAPTION>
Years ended January 31 1998 1997 1996
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 30,235 $ 20,677 $ 17,519
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 11,361 11,667 8,998
Writedown of assets 1,105 1,302 78
Deferred compensation 203 126 206
Deferred income taxes (3,057) (488) 996
Other, net 264 (338) 217
(Increase) decrease in assets:
Accounts receivable (8,843) 2,050 (4,358)
Inventories (2,092) (979) (2,655)
Prepaid expenses and other current assets 213 (129) (830)
Other assets and deferred charges 277 105 (1,050)
Increase (decrease) in liabilities:
Accounts payable 5,463 367 1,408
Income taxes payable 2,968 2,996 308
Accrued employee compensation and benefits 6,500 (3,379) 2,913
Accrued distributor liability 2,212 342 539
Other current and long-term liabilities 1,414 1,374 906
-------- -------- --------
Total adjustments 17,988 15,016 7,676
-------- -------- --------
Net cash provided by operating activities 48,223 35,693 25,195
-------- -------- --------
Cash flows from investing activities:
Property, plant and equipment and deposits (45,775) (20,853) (11,794)
Repayment of notes receivable 905 831 866
Proceeds on sale of assets and investments 107 362 1,485
Restricted cash and investments (368) (375) (437)
Maturities of short-term investments -- 4,345 14,201
Purchases of short-term investments -- (4,370) (1,290)
Other, net (31) (1,513) (550)
-------- -------- --------
Net cash provided (used) by investing activities (45,162) (21,573) 2,481
-------- -------- --------
Cash flows from financing activities:
Repayment of debt -- -- (300)
Purchase of common stock (274) (350) (10,025)
Proceeds from exercise of stock options and warrants 10,275 2,014 1,125
-------- -------- --------
Net cash provided (used) by financing activities 10,001 1,664 (9,200)
-------- -------- --------
Net increase in cash and cash equivalents 13,062 15,784 18,476
Cash and cash equivalents at beginning of year 52,012 36,228 17,752
-------- -------- --------
Cash and cash equivalents at end of year $ 65,074 $ 52,012 $ 36,228
======== ======== ========
Supplemental information:
Interest paid $ 95 $ 91 $ 98
Income taxes paid, net of tax refunds 17,677 11,125 9,131
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE> 21
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
STATEMENTS OF STOCKHOLDERS' EQUITY
Unitrode Corporation and Consolidated Subsidiaries
(in thousands except share amounts)
<TABLE>
<CAPTION>
Additional Total
Common Paid-in Retained Deferred Stockholders'
Stock Capital Earnings Compensation Equity
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 31, 1995 $ 2,356 $25,670 $ 54,068 $ (504) $ 81,590
Net income 17,519 17,519
Acquisition of common stock (102) (3,175) (6,748) (10,025)
Issuance of stock warrants 1,500 1,500
Exercise of stock options 40 1,085 1,125
Income tax benefit related to stock plans 502 502
Amortization of deferred compensation 206 206
- -----------------------------------------------------------------------------------------------------------------
Balance, January 31, 1996 2,294 25,582 64,839 (298) 92,417
Net income 20,677 20,677
Acquisition of common stock (3) (86) (261) (350)
Exercise of stock options 37 1,996 2,033
Income tax benefit related to stock plans 650 650
Forfeiture of restricted stock (1) (40) 41 --
Amortization of deferred compensation 126 126
- -----------------------------------------------------------------------------------------------------------------
Balance, January 31, 1997 2,327 28,102 85,255 (131) 115,553
Net income 30,235 30,235
Acquisition of common stock (2) (66) (206) (274)
Exercise of stock warrants 44 6,191 6,235
Exercise of stock options 54 3,986 4,040
Income tax benefit related to stock plans 3,370 3,370
Amortization of deferred compensation 203 203
Reduction in par value (2,302) 2,302 --
Two-for-one stock split 121 (121) --
Grant of restricted stock 1 1,204 (1,205) --
- -----------------------------------------------------------------------------------------------------------------
Balance, January 31, 1998 $ 243 $45,089 $115,163 $ (1,133) $159,362
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE> 22
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Unitrode Corporation and Consolidated Subsidiaries
(dollars in thousands except per share data)
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of all domestic and foreign subsidiaries. All material intercompany
transactions are eliminated. The accounts of certain immaterial foreign
subsidiaries are included on the basis of fiscal years ending in December.
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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION: The Company recognizes revenue at the time of shipment. A
portion of the Company's sales are made to certain distributors under
arrangements which provide for price incentives on selected products, price
protection for inventories held by the distributor at the time of reductions in
published list prices and limited rights of return on unsold product. The
Company records a distributor liability reserve for price adjustments and
estimated sales returns.
TRANSLATION OF FOREIGN CURRENCIES: The accounts of foreign subsidiaries have
been translated using the U.S. dollar as the functional currency. Monetary and
non-monetary asset and liability accounts have been translated at the exchange
rate in effect at each year end and historical rates, respectively. Income and
expense accounts are translated at average monthly rates, except for
depreciation, which is translated at historical rates. Exchange gains and losses
are included in other income (expense).
INCOME TAXES: The provision for income taxes is computed on the pretax income of
the consolidated subsidiaries located within each taxing country based on the
current tax law. Deferred taxes result from the future tax consequences
associated with temporary differences between the amount of assets and
liabilities recorded for tax and financial accounting purposes.
EARNINGS PER SHARE: In February, 1997, the Financial Accounting Standards Board
issued SFAS No. 128, "Earnings per Share", which requires the presentation of
basic and diluted earnings per share. Basic earnings per share excludes dilutive
securities such as stock options and is computed by dividing net income by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share is computed similarly to the existing rules for primary
diluted earnings per share. The Company has adopted SFAS No. 128 as of January
31, 1998 and has restated all prior period earnings per share data presented.
The following table sets forth the computation of basic and diluted earnings per
share.
<TABLE>
<CAPTION>
Years ended January 31 1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 30,235 $ 20,677 $ 17,519
=========== =========== ===========
Basic weighted average shares outstanding 23,806,156 23,060,750 22,994,358
Effect of dilutive securities-stock options 1,066,977 644,380 819,844
Effect of dilutive securities-stock warrants 83,903 -- --
----------- ----------- -----------
Diluted weighted average shares outstanding 24,957,036 23,705,130 23,814,202
=========== =========== ===========
Basic earnings per share $ 1.27 $ .90 $ .76
=========== =========== ===========
Diluted earnings per share $ 1.21 $ .87 $ .74
=========== =========== ===========
</TABLE>
Options to purchase 53,700, 966,400 and 526,000 shares of common stock at prices
ranging from $29.53 to $40.36, $12.72 to $15.47 and $13.28 to $15.47 were
outstanding as of January 31, 1998, 1997 and 1996, respectively, but not
included in
22
<PAGE> 23
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
the computation of diluted earnings per share because the options' exercise
prices were greater than the average market price of the common shares as of
such dates and, therefore, would be anti-dilutive under the treasury stock
method.
CASH EQUIVALENTS: The Company considers highly liquid investments in debt
securities purchased within three months of their maturity date to be cash
equivalents. Cash equivalents are classified as held to maturity and valued at
amortized cost, which approximates fair market value.
INVENTORIES: Inventories are stated at average cost, but not in excess of net
realizable value.
PROPERTY, PLANT AND EQUIPMENT: Depreciation of plant and equipment is computed
using the straight-line method over the expected useful lives of the assets.
When properties are retired or otherwise disposed of, the related cost and
accumulated depreciation are removed from the accounts, and any resulting gain
or loss is reflected in the statements of operations.
INTANGIBLE ASSETS: The excess cost over net assets acquired is amortized over
periods not to exceed 12 years. Patents, copyrights, trademarks, and other
intangible assets are amortized over their estimated useful lives.
STOCKHOLDERS' EQUITY: Pursuant to Maryland law, any shares of common stock
reacquired by the Company constitute unissued shares.
FORWARD FOREIGN EXCHANGE CONTRACTS: The Company enters into forward foreign
exchange contracts principally as a hedge against trade receivables and firm
orders in its backlog denominated in foreign currencies. Realized and unrealized
gains and losses on these contracts are included in net income and offset the
foreign exchange gains or losses on the hedged trade receivables. At January 31,
1998, the Company had contracts of varying maturities to sell foreign currencies
of 1.3 million German marks, 2.3 million French francs, and 0.4 million British
pounds, totaling approximately $1,700. At January 31, 1997 the Company had
contracts of varying maturities to sell foreign currencies of 0.8 million German
marks, 1.5 million French francs, and 0.2 million British pounds, totaling
approximately $1,100.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The Company has used a variety of methods
and assumptions to estimate the fair value of the Company's financial
instruments. The carrying amounts for cash and cash equivalents, accounts
receivable, and accounts payable approximate fair value because of the short
maturity of these instruments. Forward foreign exchange contracts are valued
based on quoted market prices of comparable contracts. The carrying amount of
the Company's notes receivable approximate fair value based upon comparable
credit risks and the interest rates which incorporate such risks. It was not
practicable to estimate the fair value of the Company's investment in an
untraded closely held foundry, GMT Microelectronics Corporation ("GMT"). This
investment is valued at original cost.
NEW ACCOUNTING STANDARDS: In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income", which establishes standards for reporting and display of
comprehensive income and its components (revenue, expenses, gains, and losses)
in a full set of general purpose financial statements. This standard is
effective for the Company's fiscal year ending January 31, 1999, and will have
no impact on the Company's financial condition or results of operations.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information", which changes the way public companies
report information about operating segments. SFAS No. 131, which is based on the
management approach to segment reporting, establishes requirements to report
selected segment information quarterly and to report entity-wide disclosures
about products and services, major customers, and the material countries in
which the entity holds assets and reports revenue. Management is currently
evaluating the effects of this change on its reporting of segment information.
The Company will adopt SFAS No. 131 for its fiscal year ending January 31, 1999.
CONCENTRATION OF CREDIT RISK: Financial instruments which subject the Company to
concentrations of credit risk consist principally of cash equivalents and trade
accounts receivable. The Company invests cash equivalents in high-quality debt
securities. Credit exposure to any one entity is limited by Company policy. No
losses have been experienced on such investments as of January 31, 1998. The
Company's trade accounts receivables are primarily from sales to customers in
the EDP/computer and industrial markets. The Company's ten largest customers
accounted for approximately 60%, 58%
23
<PAGE> 24
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
and 54% of sales in fiscal years 1998, 1997 and 1996, respectively, and
approximately 58% and 60% of accounts receivable at January 31, 1998 and 1997.
The Company's largest customer, Western Digital, represented approximately 21%,
31% and 25% of sales in fiscal years 1998, 1997 and 1996, respectively and 20%
and 31% of accounts receivable at January 31, 1998 and 1997. In addition, IBM
Corporation accounted for approximately 10%, 8% and 7% of sales in fiscal years
1998, 1997 and 1996, respectively and 12% and 9% of accounts receivable at
January 31, 1998 and 1997. The Company does not require collateral and has not
historically experienced significant credit losses related to receivables from
individual customers or groups of customers in any particular industry or
geographic area.
RECLASSIFICATIONS: Certain amounts for fiscal years 1996 and 1997 have been
reclassified to conform with presentation of similar amounts in fiscal year
1998.
NOTE B CASH EQUIVALENTS
Cash equivalents consisted of the following:
<TABLE>
<CAPTION>
January 31 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Cash equivalents:
Tax-exempt municipal securities $14,775 $21,200
Taxable municipal securities 42,250 3,700
------- -------
$57,025 $24,900
======= =======
NOTE C NOTES AND OTHER RECEIVABLES
Notes and other receivables consisted of the following:
<CAPTION>
January 31 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Microsemi Corporation 5% collaterized subordinated promissory
notes, monthly payments through July 1, 2002 $ 2,109 $ 2,517
Microsemi Corporation 5% subordinated promissory note,
quarterly payments through June 30, 1999 300 500
Microsemi Corporation other receivables, annual payments
through June 30, 1999, net of unamortized discount
of $32 in 1998 and $55 in 1997 128 185
SMC Acquisition Corporation unsecured note at prime plus
2%, payable quarterly through September 30, 1997 -- 217
GMT Microelectronics Corporation 11.75%
subordinated debenture, due January 9, 2002 1,191 1,125
GMT Microelectronics Corporation secured promissory note
at prime, due July 1, 1998 80 80
Reserve allowance (271) (205)
------- -------
3,537 4,419
Less: current maturities 709 905
------- -------
Long-term notes and other receivables $ 2,828 $ 3,514
======= =======
</TABLE>
24
<PAGE> 25
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
NOTE D PROPOSED MERGER
On March 2, 1998, the Company announced that it had entered into a definitive
agreement to merge with BENCHMARQ Microelectronics, Inc. ("BENCHMARQ"). Under
the terms of the proposed transaction, BENCHMARQ Shareholders will receive one
share of Unitrode Corporation ("Unitrode") Common Stock for each share of
BENCHMARQ Common Stock outstanding, subject to adjustment under certain
conditions. As of December 31, 1997, BENCHMARQ had approximately 7 million
shares issued and outstanding. The transaction is intended to be accounted for
as a "Pooling of Interests" and is subject to several conditions, including the
approval of the stockholders of both companies. The transaction is expected to
close in the second quarter of fiscal year 1999. As a "Pooling of Interests",
upon completion of the transaction, the historical results of BENCHMARQ will be
combined with those of the Company.
NOTE E INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
January 31 1998 1997
----------------------------------------------
<S> <C> <C>
Raw materials $ 1,276 $ 1,282
Work in process 8,774 6,303
Finished goods 2,992 3,365
------- -------
Total inventory $13,042 $10,950
======= =======
</TABLE>
NOTE F BORROWING ARRANGEMENTS
On October 20, 1995, the Company entered into a three-year, $25,000 domestic
revolving credit agreement with a bank. Pursuant to the agreement, interest
rates on the amounts borrowed are at the Bank's prime rate. There were no
borrowings under this agreement. The Company canceled its $25,000 unused credit
agreement in February, 1998 and is currently negotiating a new agreement with
another bank.
NOTE G LEASES
Rental expenses incurred for operating leases amounted to $1,174, $999 and $700
for the years ended January 31, 1998, 1997 and 1996, respectively. These leases
are principally for the rental of office and manufacturing space. Many of the
leases contain renewal options and some provide for the payment of a
proportionate share of maintenance, insurance and taxes in addition to the
minimum annual rentals.
At January 31, 1998, the future minimum payments under all leases with
terms greater than one year are as follows:
<TABLE>
<CAPTION>
Operating
Fiscal Year Leases
----------------------------------------------
<S> <C>
1999 $1,114
2000 715
2001 434
2002 287
2003 202
Thereafter 35
------
Total minimum lease payments $2,787
======
</TABLE>
The Company has a non-cancelable sublease agreement to rent its Lexington office
facilities to a third party which expires July 31, 1999. The Company collected
rent payments of $275 in fiscal year 1998 and has a commitment from the
sublessee to receive $419 in future rental payments which will offset the
Company's future minimum lease payments of $518. At January 31, 1998, the
Company's reserve for future minimum lease payments on its Lexington office
lease was $99.
25
<PAGE> 26
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
NOTE H STOCK OPTIONS AND RESTRICTED STOCK
The Company's stock option plans provide for the granting of options to
qualified employees and non-employee directors to purchase the Company's stock
at the fair market value on the date of grant. These options become exercisable
as designated in the grant, not exceeding four years, and may expire up to ten
years from the date of grant.
Options exercisable at January 31, 1998 were 1,314,000 as compared with
1,325,000 and 1,116,000 for fiscal years 1997 and 1996, respectively. The
average exercise price for options exercisable at January 31, 1998 was $9.98 as
compared with $7.66 and $5.23 for fiscal years 1997 and 1996, respectively.
There were 2,180,000, 1,167,000 and 1,557,000 shares available at January 31,
1998, 1997 and 1996, respectively, for future grants of options. The Company
increased the number of shares available for grant under one of its plans by
2,000,000 shares in June 1995 and 2,000,000 shares in June 1997.
Under its Restricted Stock and Cash Bonus Plans, the Company may award shares of
restricted common stock to key executives. Subject to certain conditions, the
restrictions lapse in five equal annual installments, beginning one year from
the date of the award. Upon lapse of the restrictions, the Company pays the
participant a cash bonus to help defray the related personal income taxes. The
cash bonus is the lesser of the amount required to defray the federal income tax
at the maximum marginal tax rate then in effect, or 200% of the fair market
value of the shares at the date of the original award. There may be up to five
such cash bonuses, but the maximum aggregate cash bonus payable over the five
years is the fair market value of the shares on the date of the grant. Upon
termination of employment, the key executive must remit to the Company all
shares still subject to the restrictions. No shares were available for grant at
January 31, 1998, 1997 and 1996 for future awards under these restricted stock
plans. Cash bonus payments under the Plans were $138, $154 and $247 for fiscal
years 1998, 1997 and 1996, respectively.
Amortization of deferred compensation for restricted stock grants was $203, $126
and $206 for fiscal years 1998, 1997 and 1996, respectively. In November 1997,
50,000 shares of restricted stock were awarded to the newly elected Chief
Executive Officer of the Company. Such stock was not covered by the Company's
Restricted Stock and Cash Bonus Plan. The fair market value at the date of the
award was charged to stockholders' equity as unamortized deferred compensation,
which totaled $1,205. This amount will be amortized over the next four years in
which the restrictions lapse, beginning from the date of the award.
26
<PAGE> 27
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
The following table summarizes stock option and restricted stock transactions
for the three years ended January 31:
<TABLE>
<CAPTION>
Stock Option Plans
------------------------------------------------- Restricted
Weighted Average Stock Plans
Shares Price Range Exercise Price Shares
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at January 31, 1995 1,798,824 $ 1.78-$11.44 $ 4.98 150,000
Granted 1,212,700 10.31- 15.47 12.48 --
Terminated (32,022) 2.38- 11.44 10.19 --
Exercised/Released (396,496) 1.78- 10.31 2.84 (66,000)
--------- ------------- ------ -------
Outstanding at January 31, 1996 2,583,006 $ 2.38-$15.47 $ 8.76 84,000
Granted 496,400 9.38- 14.25 14.01 --
Terminated (117,100) 7.69- 15.47 11.90 (8,000)
Exercised/Released (370,850) 2.38- 15.47 5.43 (44,000)
--------- ------------- ------ -------
Outstanding at January 31, 1997 2,591,456 $ 2.38-$15.47 $10.10 32,000
Granted 1,037,000 17.06- 40.36 24.35 50,000
Terminated (39,550) 10.31- 29.53 18.13 --
Exercised/Released (569,856) 2.38- 15.47 7.09 (16,000)
--------- ------------- ------ -------
Outstanding at January 31, 1998 3,019,050 $ 2.38-$40.36 $15.46 66,000
========= ============= ====== =======
</TABLE>
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 requires that companies either recognize
compensation expense for grants of stock, stock options and other equity
instruments based on fair value, or provide pro forma disclosure of net income
and earnings per share in the notes to the financial statements. The Company
adopted the disclosure provisions of SFAS No. 123 in fiscal year 1997 and has
applied APB Opinion No. 25 and related Interpretations in accounting for its
plans.
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions:
<TABLE>
<CAPTION>
January 31 1998 1997 1996
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average fair value of options $9.69 $5.09 $4.22
Options granted 1,037,000 496,400 1,212,700
Assumptions:
Risk-free interest rate 6% 7% 6%
Expected volatility 36% 32% 32%
Expected life of grants 4.6 years 4.4 years 4.4 years
Dividend yield None None None
<CAPTION>
Options Outstanding Options Exercisable
----------------------------------------- -------------------------
Weighted
Weighted Average Weighted
Number Average Remaining Number Average
Range of Outstanding Exercise Contractual Exercisable Exercise
Exercise Prices at 1/31/98 Price Life (in years) at 1/31/98 Price
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 2.38 - $ 3.22 123,450 $ 3.11 3.9 123,450 $ 3.11
3.69 - 5.50 117,000 4.86 4.4 117,000 4.86
5.81 - 8.31 358,900 7.57 6.2 358,900 7.57
9.38 - 13.78 807,500 11.72 7.5 401,975 11.38
14.25 - 18.50 604,500 14.77 8.1 296,850 15.11
24.06 - 40.36 1,007,700 24.42 9.6 16,000 24.06
--------------- --------- ------ --- --------- -------
$ 2.38 - $40.36 3,019,050 $15.46 7.9 1,314,175 $ 9.98
=============== ========= ====== === ========= =======
</TABLE>
27
<PAGE> 28
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
Had compensation costs for the Company's stock option plans been determined on
the fair market value at the grant dates for such awards, the Company's net
income and earnings per share would approximate the pro forma amounts below:
<TABLE>
<CAPTION>
Years ended January 31 1998 1997 1996
-------------------------------------------------------------------
<S> <C> <C> <C>
Net income:
As reported $30,235 $20,677 $17,519
Pro forma $28,431 $19,280 $16,918
Earnings per share:
Basic:
As reported $ 1.27 $ .90 $ .76
Pro forma $ 1.19 $ .84 $ .74
Diluted:
As reported $ 1.21 $ .87 $ .74
Pro forma $ 1.14 $ .82 $ .71
</TABLE>
The effects of applying SFAS No.123 for the purpose of providing pro forma
disclosures may not be indicative of the effects on reported earnings and
earnings per share for future years, as the pro forma disclosures include the
effects of only those awards granted after January 31, 1995.
NOTE I OTHER ASSETS AND DEFERRED CHARGES
Other assets and deferred charges consisted of the following:
<TABLE>
<CAPTION>
January 31 1998 1997
-------------------------------------------------------------------
<S> <C> <C>
Investments $2,500 $2,500
Property for sale 2,711 3,609
Deposits 242 625
Other 117 169
Valuation allowance (1,315) (1,148)
------ ------
Total $4,255 $5,755
====== ======
</TABLE>
On January 9, 1995, the Company entered into an agreement with GMT
Microelectronics Corporation ("GMT"), a Norristown, Pennsylvania foundry, to
supply processed silicon wafers. As part of the agreement, the Company invested
$2,000 in GMT as follows: $1,000 in exchange for one million shares or an
approximate 4% interest in GMT's common stock, and a $1,000, 11.75% subordinated
debenture due January 9, 2002. On February 28, 1996, the Company invested an
additional $1,500 in GMT, 5% ten-year redeemable preferred stock. Preferred
shares may be redeemed quarterly by GMT if certain wafer yields exceed specified
levels as defined in a wafer production agreement with the Company.
At January 31, 1998, "Property for sale" consists of land and a building in
Worcester, Massachusetts which is currently occupied by the acquirers of the
Company's former Micro Networks Division under a multi-year lease. The Company
is actively seeking a buyer for the property and a valuation allowance has been
established to writedown the property to its estimated fair market value. An
expected disposal date is unknown at this time.
NOTE J COMMITMENTS AND CONTINGENT LIABILITIES
ENVIRONMENTAL MATTERS
The Company is involved in investigation and cleanup under the supervision of
the Maine Department of Environmental Protection of groundwater and soil
contamination at the former Westbrook, Maine wafer fabrication facility of its
former Semiconductor Products Division. The Company has also been notified by
responsible state authorities in California that it is one of a number of
"potentially responsible parties" under relevant state statutes with respect to
a former hazardous waste treatment facility in Escondido, California.
28
<PAGE> 29
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
The Company has established environmental reserves which it believes to be
adequate. These reserves are reviewed as events and developments warrant and
adjusted to reflect the likelihood of additional environmental expenditures.
Based upon information currently available to the Company, management believes
that any additional aggregate liability to which the Company may be subjected
from the above-mentioned sites would not be material to future financial
results.
OTHER LEGAL MATTERS
In June, 1997, Linear Technology Corporation ("LTC") filed a complaint in the
U.S. District Court for the Northern District of California (San Jose Division)
alleging that certain products of the Company and products of four other
defendants infringe an LTC patent. The complaint seeks damages and an injunction
against infringement of the patent. The Company has denied any infringement and
has filed a counterclaim seeking that the patent be declared invalid. The
Company believes that the resolution of this action will not have a materially
adverse effect on the Company's financial condition or results of operations.
From time to time as a normal incidence of the nature of the Company's business,
various claims, charges or litigation are or may be asserted or commenced
against the Company relating to, among other things, contractual matters, patent
disputes, environmental matters and product liability. While there can be no
assurance that the Company will prevail in all these matters, the Company does
not believe that these matters will have a material adverse effect on the
Company's consolidated financial position or results of operations. However, an
adverse resolution of one or more of such matters could have an adverse effect
on the Company's consolidated results of operations in a quarter in which such
matters might be resolved.
COMMITMENTS
In fiscal year 1996, the Company entered into a supply agreement with a
manufacturer of silicon wafers. Under this agreement, the Company made a $1,000
deposit in advance of production to guarantee certain quantities of silicon
wafers starting in fiscal year 1997. The advance payment will be repaid to the
Company in the form of credits against the price of silicon wafers purchased
from this manufacturer, based upon the monthly allocations in the contract. At
January 31, 1998, the deposit was $600.
The Company has entered into change-of-control agreements with certain key
executives which grant these officers the right to receive up to twice their
annual salaries and bonuses plus continuation of certain benefits following a
change of control in the Company and termination of these officers.
NOTE K INCOME TAXES
Income before income taxes for domestic and foreign operations was as follows:
<TABLE>
<CAPTION>
Years ended January 31 1998 1997 1996
----------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $44,409 $31,344 $24,748
Foreign 3,402 2,318 3,204
------- ------- -------
Total $47,811 $33,662 $27,952
======= ======= =======
</TABLE>
29
<PAGE> 30
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
Income tax provision (benefit) is composed of the following:
<TABLE>
<CAPTION>
Years ended January 31 1998 1997 1996
---------------------------------------------------------------------------
<S> <C> <C> <C>
Currently payable:
Federal $ 17,721 $ 10,499 $ 7,159
State 2,170 1,603 1,124
Foreign 742 1,234 1,156
-------- -------- --------
Total current 20,633 13,336 9,439
-------- -------- --------
Deferred:
Federal (3,261) (211) 342
State (436) (86) (73)
Foreign 640 (54) 725
-------- -------- --------
Total deferred (3,057) (351) 994
-------- -------- --------
Total income tax provision $ 17,576 $ 12,985 $ 10,433
======== ======== ========
The approximate tax effect of each significant type of temporary difference and
carryforward was as follows:
<CAPTION>
January 31 1998 1997
--------------------------------------------------------------------
<S> <C> <C>
Net deferred tax assets:
Current:
Inventories $ 1,381 $ 362
Deferred compensation and
fringe benefit accruals 2,498 629
Distributor and other reserves 3,874 2,464
Other 133 (133)
------- -------
7,886 3,322
------- -------
Non-current:
Property, plant and equipment (575) 691
Other 471 191
Deferred compensation 428 309
------- -------
324 1,191
------- -------
Net deferred tax liabilities:
Non-current:
Property, plant and equipment (1,791) (1,151)
------- -------
Total net deferred tax assets $ 6,419 $ 3,362
======= =======
</TABLE>
Based on the Company's history of taxable income and projections of future
earnings, management believes that it is more likely than not that sufficient
taxable income will be generated in the foreseeable future to realize the
deferred tax assets.
The Company does not provide for income taxes that may be due upon the
remittance of the earnings of its foreign subsidiaries as the Company intends to
indefinitely reinvest such earnings outside of the United States. As of January
31, 1998, such earnings approximated $7,100 and the related unrecognized
deferred tax liability approximated $2,300.
The differences between the effective tax rates and the applicable U.S. federal
statutory tax rates were as follows:
<TABLE>
<CAPTION>
Years ended January 31 1998 1997 1996
------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal statutory tax rate 35.0% 35.0% 35.0%
State taxes, net of federal tax benefit 2.1 3.7 2.4
Tax effect of foreign operations -- 0.1
Other, net (0.3) (0.1) (0.2)
---- ---- ----
36.8% 38.6% 37.3%
==== ==== ====
</TABLE>
30
<PAGE> 31
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
NOTE L INDUSTRY SEGMENT/INTERNATIONAL OPERATIONS
The Company and its subsidiaries operate within a single industry segment - the
manufacture and sale of semiconductors. Its products are sold throughout
the world into the EDP/computer, telecommunications, industrial controls and
instrumentation, defense/aerospace, and automotive markets.
The Company's products are sold worldwide by its sales force and through a
network of independent sales representatives and distributors. Sales and
marketing outside the United States are conducted principally through sales
subsidiaries and by direct export sales from the United States. Data on the
Company's U.S. export sales to unaffiliated customers, based on geographic
location, is presented below.
<TABLE>
<CAPTION>
Years ended January 31 1998 1997 1996
---------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. EXPORT SALES:
Far East $ 79,032 $68,219 $54,575
Europe 28,865 19,093 18,606
ROW 5,968 5,430 4,824
-------- ------- -------
Total $113,865 $92,742 $78,005
======== ======= =======
<CAPTION>
NOTE M SELECTED QUARTERLY DATA (UNAUDITED)
(a)
Fiscal Year 1998 Quarters First Second Third Fourth Year
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenues $40,840 $48,178 $48,538 $40,047 $177,603
Gross profit 21,694 25,554 25,720 21,043 94,011
Net income 6,586 8,118 8,850 6,681 30,235
Basic earnings per share (b) .28 .35 .37 .28 1.27
Diluted earnings per share (b) .27 .33 .35 .27 1.21
Stock prices:
High 21.13 30.38 42.31 29.81 42.31
Low 15.88 20.94 21.00 15.94 15.88
Fiscal Year 1997 Quarters First Second Third Fourth Year
- ----------------------------------------------------------------------------------------------------
Net revenues $34,221 $30,008 $32,075 $37,222 $133,526
Gross profit 18,205 15,906 16,845 19,542 70,498
Net income 5,261 4,708 4,985 5,723 20,677
Basic earnings per share .23 .20 .22 .25 .90
Diluted earnings per share .22 .20 .21 .24 .87
Stock prices:
High 14.06 15.38 11.94 18.50 18.50
Low 11.69 7.38 8.50 11.75 7.38
</TABLE>
(a) The results of the fourth quarter of fiscal year 1998 include a
year-to-date $2,500 reduction in incentive compensation due to performance
below Company targets.
(b) The sum of the quarterly earnings per share does not equal the annual
amount reported, as per share amounts are calculated independently and are
based on the weighted average shares outstanding for each period.
The Company did not declare any cash dividends during fiscal years 1998 and
1997. The Company's common stock is listed on the New York Stock Exchange.
NOTE N EMPLOYEE BENEFIT PLANS
The Company contributes to the Unitrode Corporation Profit Sharing/401(k)
Savings Plan (the "Plan") which covers all active U.S. employees with at least
three months of service. Under the profit sharing component of the Plan, Company
31
<PAGE> 32
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
contributions are made at the discretion of the Board of Directors. The amounts
charged to operations were $2,294, $1,348, and $1,915 for the years ended
January 31, 1998, 1997 and 1996, respectively.
Also, the Company matches 50% of employee contributions up to 4% of compensation
under the 401(k) savings component of the Plan. The Plan was amended in fiscal
year 1998 to increase the Company match on employee contributions from 2% of
compensation to 4% of compensation. Company contributions charged to operations
were $270, $206 and $160 for the years ended January 31, 1998, 1997 and 1996,
respectively.
The Company established a deferred incentive compensation plan for selected
engineers in fiscal year 1995. Plan assets consists of restricted cash and
investments which are held in trust until individual payments are required.
NOTE O STOCKHOLDERS' EQUITY
On September 29, 1997, the stockholders approved an increase in the authorized
common stock to 60,000,000 shares in order to permit, among other things, a
two-for-one stock split of the Company's common stock. The record date of the
stock split was October 6, 1997 with a distribution date of October 14, 1997.
All share and per share information (including share repurchases and warrant
exercises) in the consolidated financial statements have been restated to
reflect the stock split.
On November 21, 1995, the Company issued 495,766 warrants to purchase Unitrode
Common Stock as final settlement of a class action lawsuit. The warrants were
determined to have a value of $1.5 million at the time of issuance and are
combined with additional paid-in-capital on the Company's balance sheet. Each
warrant entitled the holder to purchase one share of Unitrode Common Stock at a
price of $14.23 per share. These warrants expired on August 21, 1997. Upon
expiration, the Company received $6.2 million in proceeds from the exercise of
438,068 warrants.
On April 30, 1990, the Company's Board of Directors adopted a Shareholder Rights
Plan (the "Plan") and declared a special dividend of one right for each share of
the Company's common stock outstanding at the close of business on May 14, 1990.
Each right, when exercisable upon the occurrence of certain events, entitles the
registered holder to purchase from the Company a unit consisting of one-one
hundredth of a share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $.01 per share, at a purchase price of $15.00 per Unit. Upon
the occurrence of certain further events, such as the acquisition of 20% or more
of the Company's common stock by a person or group or the designation of a
person or group as an Adverse Person by the Company's Board of Directors, a
holder of a Unit (except holders who are Acquiring Persons or Adverse Persons,
as defined in the Plan) will be entitled to receive common stock of the Company
having a market value equal to twice the exercise price. Also, if the Company is
acquired in a merger in which the Company is not the surviving corporation, or
there is a sale of 50% or more of the Company's assets or earning power, each
Unit (except Units held by Acquiring Persons or Adverse Persons) may receive
common stock of the acquiring company having a value equal to twice the exercise
price of the right. In general, the Company may redeem the rights at $.01 per
right at any time until 10 days following public announcement that a 20%
position has been acquired in the Company (which period may be extended at any
time while the rights are still redeemable). So long as the rights are not
separately transferable, the Company will issue one right with each new share of
common stock issued. The total number of rights outstanding at January 31, 1998
was 24,310,682.
NOTE P SUBSEQUENT EVENT
On April 7, 1998, the Company announced that it would record estimated pre-tax
charges of between $5,000 and $7,000 in the first quarter of fiscal year 1999.
These charges will be used for the re-alignment of wafer fabrication
capabilities to reflect the decline in demand for 4" bipolar wafers and the
conversion from 5" BiCMOS to 6" BiCMOS wafers, the writedown of inventory,
equipment and investments, and other costs also required to size the business to
a reduced level of demand. In addition, the Company will record as incurred,
charges associated with the pending merger with BENCHMARQ.
32
<PAGE> 33
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
REPORT OF MANAGEMENT
The management of Unitrode Corporation is responsible for the preparation of the
consolidated financial statements in accordance with generally accepted
accounting principles and for the integrity and objectivity of all the financial
data included in this annual report. In preparing the financial statements,
management makes informed judgments and estimates as to the expected effects of
events and transactions currently being reported.
To meet this responsibility, the Company maintains a system of internal
accounting controls to provide reasonable assurance that assets are safeguarded,
and that transactions are properly executed and recorded. The system includes
policies and procedures, and reviews by officers of the Company.
The Board of Directors, through its Audit Committee, is responsible for
determining that management fulfills its responsibility with respect to the
Company's financial statements and the system of internal accounting controls.
The Audit Committee is composed solely of outside directors. The Committee meets
periodically and, when appropriate, separately with representatives of the
independent accountants and officers of the Company to monitor the activities of
each.
Coopers & Lybrand L.L.P., the independent accountants, have been selected by the
Board of Directors to examine the Company's financial statements. Their report
appears herein.
Cosmo S. Trapani Robert J. Richardson
Executive Vice President President and Chief Executive Officer
and Chief Financial Officer
33
<PAGE> 34
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Unitrode Corporation:
We have audited the consolidated financial statements and the financial
statement schedule of Unitrode Corporation and Consolidated Subsidiaries listed
in Item 14(a) of this Form 10-K. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Unitrode
Corporation and Consolidated Subsidiaries as of January 31, 1998 and 1997, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended January 31, 1998 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 2, 1998,
except for Note P,
as to which the date
is April 7, 1998
34
<PAGE> 35
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is hereby incorporated by reference from the
Registrant's definitive proxy statement for the Annual Meeting of Stockholders
to be held June 29, 1998.
Information regarding executive officers is included in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is hereby incorporated by reference from the
Registrant's definitive proxy statement for the Annual Meeting of Stockholders
to be held June 29, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is hereby incorporated by reference from the
Registrant's definitive proxy statement for the Annual Meeting of Stockholders
to be held June 29, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS AND SCHEDULES PAGE
- ---------------------------------- ----
Report of Independent Accountants 34
(a)1. Financial Statements:
Balance Sheets as of January 31, 1998
and 1997 17-18
Statements of Operations for the Years
Ended January 31, 1998, 1997 and 1996 19
Statements of Cash Flows for the Years
Ended January 31, 1998, 1997 and 1996 20
Statements of Stockholders' Equity for
the Years Ended January 31, 1998, 1997
and 1996 21
Notes to Financial Statements 22-32
35
<PAGE> 36
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
(a)2. Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts 40
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or the notes thereto.
Individual financial statements of the Registrant have been omitted because
consolidated financial statements of the Registrant and all of its subsidiaries
are furnished.
(a) 3. List of Exhibits: The exhibits listed below are filed as a part of this
report.
Executive Compensation Plans and Arrangements:
10A Unitrode Corporation 1983 Stock Option Plan, adopted
June 6, 1983, as amended (filed as Exhibit 4F to the
Registration Statement on Form S-8 for the Registrant
(Registration No. 33-12353) and incorporated herein by
reference).
10B Unitrode Corporation 1984 Restricted Stock and Cash
Bonus Plan (filed as Exhibit 4E to the Registration
Statement on Form S-8 for the Registrant (Registration
No. 33-12353) and incorporated herein by reference).
10C Unitrode Corporation Amended and Restated 1986
Non-Employee Director Option Plan adopted January, 1986
and amended February, 1992 (filed as Exhibit 4 to the
Registration Statement on Form S-8 for the Registrant
(Registration No. 33-54544) and incorporated herein by
reference).
10D Forms of Change of Control Employment Agreements (filed
as Exhibit 10K to the Annual Report on Form 10-K filed
by the Registrant for the fiscal year ended January 31,
1991 and incorporated herein by reference).
10E Unitrode Corporation 1992 Employee Stock Option Plan,
adopted February 1992 (filed as Exhibit 4 to the
Registration Statement on Form S-8 for the Registrant
(Registration No. 33-54542) and incorporated herein by
reference).
10F Amendments to the Unitrode Corporation 1992 Employee
Stock Option Plan, adopted April, 1995 (filed as Exhibit
10H to the Annual Report on Form 10-K filed by the
Registrant for the fiscal year ended January 31, 1995,
and Exhibit 4.5 to the Registration Statement on Form
S-8 for the Registrant (Registration No. 333-00107) and
incorporated herein by reference).
10G Amendment to the Unitrode Corporation 1992 Employee
Stock Option Plan, adopted March 17, 1997 (filed as
Exhibit 10H to the Annual Report on Form 10-K filed by
the Registrant for the fiscal year ended January 31,
1997 and incorporated herein by reference).
10H Unitrode Corporation Fiscal Year 1998 Supplementary
Compensation Programs (filed as Exhibit 10I to the
Annual Report on Form 10-K filed by the Registrant for
the fiscal year ended January 31, 1997 and incorporated
herein by reference).
10I Restricted Stock Award Agreement dated as of August 9,
1993 between Unitrode Corporation and Robert L. Gable
(filed as Exhibit 10J to the Annual Report on Form 10-K
filed by the Registrant for the fiscal year ended
January 31, 1997 and incorporated herein by reference).
36
<PAGE> 37
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
10J Amendments to the Unitrode 1992 Employee Stock Option
Plan, adopted August 5, 1997, and March 23, 1998.
10K Unitrode Fiscal Year 1999 Supplementary Compensation
Programs.
10L Restricted Stock Award Agreement dated as of November
11, 1997 between Unitrode Corporation and Robert J.
Richardson
Other Exhibits:
3A Articles of Restatement of the Charter of the Registrant
and Articles of Amendment to the Charter of the
Registrant previously filed and incorporated by
reference to Exhibit 3A to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January
31, 1989.
3B Articles Supplementary to the Charter of the Registrant,
previously filed and incorporated by reference to
Exhibits 3(A)(1) and (6) to the Registrant's current
Report on Form 8-K filed May 4, 1990.
3C Articles of Amendment to the Charter of the Company,
previously filed and incorporated by reference to
Exhibit 3B for the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1992.
3D Articles of Amendment to the Charter of the Company
adopted by the Board of Directors on August 12, 1997,
approved by the stockholders of the Company on September
29, 1997 and filed with the Maryland Department of
Assessments and taxation on October 6, 1997.
3E Amended and Restated By-laws of the Company, as amended
and restated March 23, 1998.
10M Rights Agreement dated as of May 2, 1990 between the
Company and The First National Bank of Boston as Rights
Agreement (filed as Exhibit 1 to the Company's
Registration Statement on Form 8-A dated May 3, 1990,
and incorporated herein by reference).
10N Agreement between Micro USPD, Inc. and Unitrode
Corporation dated May 28, 1992 (filed as Exhibit 10L to
the Annual Report on Form 10-K filed by the Company for
the fiscal year ended January 31, 1993, and incorporated
herein by reference).
10O First Amendment, dated as of April 30, 1993, to the
Rights Agreement, dated as of May 2, 1990, between the
Company and The First National Bank of Boston, as Rights
Agreement (filed as Exhibit 1 to Form 8-A/A, Amendment
to Registration Statement on Form 8-A, dated May 26,
1993, and incorporated herein by reference).
10P Agreement among Natel Engineering Company, Inc.,
Unitrode Corporation and Powercube Corporation dated
June 23, 1994 (filed as Exhibit 2 to Form 8-K dated June
23, 1994, and incorporated herein by reference).
10Q Agreement between SMC Acquisition Corporation and
Unitrode Corporation dated October 11, 1994 (filed as
Exhibit 2 to Form 8-K dated October 12, 1994, and
incorporated herein by reference).
10R Credit Agreement dated as of October 20, 1995 between
Unitrode Corporation and BayBank (filed as Exhibit 10N
to the Annual Report on Form 10-K filed by the Company
for the fiscal year ended January 31, 1996, and
incorporated herein by reference).
10S Warrant Agreement between Unitrode Corporation and the
First National Bank of Boston (filed as Exhibit 1 to
Registration Statement on Form 8-A dated November 2,
1995, and
37
<PAGE> 38
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
incorporated herein by reference).
10T Agreement and Plan of Merger, dated as of March 2, 1998
by and among Unitrode Corporation, Merrimack
Corporation, and BENCHMARQ Microelectronics, Inc.;
including ten annexes thereto (filed as Exhibit 2.1 to
Form 8-K filed by the Registrant on March 4, 1998 and
incorporated herein by reference).
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
27 Financial Data Schedules.
(b) Reports on Form 8-K:
On November 18, 1997, the Registrant filed a report on Form 8-K reporting the
appointment of Robert J. Richardson as President and Chief Executive Officer and
a Director of the Registrant, succeeding Robert L. Gable, who continues as
Chairman of the Board of Directors of the Registrant, and also succeeding Edward
H. Browder, who resigned as President and a Director. The Registrant also
reported that its Board of Directors had authorized the repurchase of up to one
million shares of its Common Stock on the open market. This share repurchase
authorization was rescinded on February 28, 1998.
On February 28, 1998, the Registrant filed a report on Form 8-K announcing that
it had entered into a definitive agreement to merge with BENCHMARQ
Microelectronics, Inc. ("BENCHMARQ"). Under the terms of the proposed
transaction, BENCHMARQ stockholders will receive one share of Unitrode
Corporation common stock for each share of BENCHMARQ common stock outstanding,
subject to adjustment under certain conditions. The transaction is intended to
be accounted for as a "Pooling of Interests" and is subject to several
conditions, including the approval of the stockholders of both companies. The
transaction is expected to close in the second quarter of fiscal year 1999. As a
"Pooling of Interests", upon completion of the transaction, the historical
results of BENCHMARQ will be combined with those of the Company.
38
<PAGE> 39
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
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.
UNITRODE CORPORATION
(Registrant)
April 29, 1998 By: /s/ Robert J. Richardson
- ----------------------------- --------------------------------
Date Robert J. Richardson, President,
Chief Executive Officer and
Director (Principal Executive
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
April 29, 1998 /s/ Peter A. Brooke
- ----------------------------- --------------------------------
Date Peter A. Brooke, Director
April 29, 1998 /s/ Robert L. Gable
- ----------------------------- --------------------------------
Date Robert L. Gable, Chairman and
Director
April 29, 1998 /s/ Kenneth Hecht
- ----------------------------- --------------------------------
Date Kenneth Hecht, Director
April 29, 1998 /s/ Louis E. Lataif
- ----------------------------- --------------------------------
Date Louis E. Lataif, Director
April 29, 1998 /s/ Robert J. Richardson
- ----------------------------- --------------------------------
Date Robert J. Richardson, President,
Chief Executive Officer and
Director (Principal Executive
Officer)
April 29, 1998 /s/ Cosmo S. Trapani
- ----------------------------- --------------------------------
Date Cosmo S. Trapani, Executive Vice
President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
April 29, 1998 /s/ James T. Vanderslice
- ----------------------------- --------------------------------
Date James T. Vanderslice, Director
39
<PAGE> 40
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
Unitrode Corporation and Consolidated Subsidiaries
FOR THE YEARS ENDED JANUARY 31, 1998, 1997 AND 1996
(in thousands)
<TABLE>
<CAPTION>
Additions
Balance at charged to Net Balance
beginning costs and Additions at end
Description of period expenses (Deductions) of period
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
1998 $ 383 $ 200 $(123) $ 460
====== ====== ===== ======
1997 $ 368 $ -- $ 15 $ 383
====== ====== ===== ======
1996 $ 297 $ 200 $(129) $ 368
====== ====== ===== ======
INVENTORY RESERVES
1998 $1,014 $2,425 $(271) $3,168
====== ====== ===== ======
1997 $ 733 $1,159 $(878) $1,014
====== ====== ===== ======
1996 $1,219 $ 25 $(511) $ 733
====== ====== ===== ======
</TABLE>
40
<PAGE> 1
EXHIBIT 3D
UNITRODE CORPORATION
ARTICLES OF AMENDMENT
THIS IS TO CERTIFY THAT:
FIRST: The charter of Unitrode Corporation, a Maryland corporation (the
"Corporation"), is hereby amended by deleting the first sentence of Article
Fourth in its entirety and substituting in lieu thereof the following new
sentence to read as follows:
"FOURTH: The total number of shares of all classes of
stock which the Corporation has authority to issue is
61,000,000 shares, divided into 1,000,000 shares of Preferred
Stock, with a par value of $.01 each, of which 300,000 shares
are shares of Series A Junior Participating Preferred Stock,
with a par value of $.01 each, and 60,000,000 shares of Common
Stock, with a par value of $.01 each. The aggregate par value
of all shares of stock having par value is $610,000."
SECOND: The amendment to the charter of the Corporation as hereinabove
set forth has been duly advised by the Board of Directors and approved by the
stockholders of the Corporation as required by law.
THIRD: The total number of shares of stock which the Corporation had
authority to issue immediately prior to this amendment was 31,000,000 shares of
stock, consisting of 700,000 shares of Preferred Stock, $1.00 par value per
share, 300,000 shares of Series A Junior Participating Preferred Stock, $1.00
par value per share, and 30,000,000 shares of Common Stock, $.20 par value per
share, having an aggregate par value of $7,000,000.
FOURTH: The total number of shares of stock which the Corporation has
authority to issue, pursuant to the charter of the Corporation as hereby
amended, is 61,000,000 shares, consisting of 1,000,000 shares of Preferred
Stock, $.01 par value per share, of which 300,000 shares are shares of Series A
Junior Participating Preferred Stock, with a par value of $.01 each, and
60,000,000 shares of Common Stock, $.01 par value per share, having an aggregate
par value of $610,000.
FIFTH: The undersigned President acknowledges these Articles of
Amendment to be the corporate act of the Corporation and as to all matters or
facts required to be verified under oath, the undersigned President acknowledges
that to the best of his knowledge, information and belief, these matters and
facts are true in all material respects and that this statement is made under
the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be signed in its name and on its behalf by its President and
attested to by its Secretary on this 29th day of September, 1997.
ATTEST UNITRODE CORPORATION
/s/ Allan R. Campbell /s/ Edward H. Browder
- -------------------------- ------------------------------
Allan R. Campbell Edward H. Browder
Secretary President
<PAGE> 1
EXHIBIT 3E
AMENDED AND RE-STATED
BY-LAWS
OF
UNITRODE CORPORATION
A
MARYLAND CORPORATION
(As adopted by the Board of Directors
at a meeting held November 30, 1988
and amended at meetings held
April 30, 1990, June 5, 1990,
February 25, 1991 and
March 23, 1998.)
<PAGE> 2
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I RESIDENT AGENT AND OFFICERS 1
ARTICLE II DIRECTORS AND OFFICERS 2
Section 1 Function of Directors 2
Section 2 Number of Directors 2
Section 3 Qualification of Directors 2
Section 4 Election and Tenure of Directors 2
Section 5 Directors Holding Over 3
Section 6 Removal of Director 3
Section 7 Vacancy on Board 4
Section 8 Action by Directors 4
Section 9 Meetings of Directors 5
Section 10 Executive and Other Committees 6
Section 11 Officers 6
Section 12 Election, Tenure and Removal of Officers 7
Section 13 Powers and Duties of Officers and Agents 7
Section 14 Holding More Than One Office 10
ARTICLE III STOCKHOLDERS 10
Section 1 Annual Meeting 10
Section 2 Special Meeting 10
Section 3 Place of Meeting 11
Section 4 Notice of Meeting, Waiver of Notice 11
Section 5 Quorum; Voting 12
Section 6 General Right to Vote; Proxies 12
Section 7 Voting by Certain Holders of Stock 13
Section 8 Voting of Stock Held by Corporation 14
Section 9 Record Date and Closing of Transfer Books 15
Section 10 Voting Rights of Certain Control Shares 16
Section 11 Nominations and Stockholder Business 16
ARTICLE IV STOCK 19
Section 1 Stock Ledger 19
Section 2 Issuance of Stock Certificate 20
Section 3 Contents of Stock Certificate 20
Section 4 Signature and Seal on Certificates of Stock 21
Section 5 Lost Stock Certificate 21
Section 6 Issuance of Stock and Convertible Securities 21
Section 7 Preemptive Rights 21
ARTICLE V DIVIDENDS 22
ARTICLE VI BOOKS AND RECORDS 22
ii
<PAGE> 3
ARTICLE VII INDEMNIFICATION 23
ARTICLE VIII GENDER 24
ARTICLE IX AMENDMENTS TO BY-LAWS 24
iii
<PAGE> 4
BY-LAWS
OF
UNITRODE CORPORATION
ARTICLE I
RESIDENT AGENT AND OFFICES
Unitrode Corporation (the "Corporation") shall have: (1) A principal
office in the State of Maryland; and (2) At least one resident agent who shall
be either: (i) A citizen of the state of Maryland who resides there; or (ii) A
Maryland corporation. The Corporation may designate or change its resident agent
or principal office by resolution of its Board of Directors which authorizes the
designation or change. Until changed by the Board of Directors in accordance
with the provisions of this Article, the principal office of the Corporation in
the state of Maryland shall be in the City of Baltimore. The Corporation may
have such other office or offices in such other place or places of business as
the business of the Corporation may require and as the Board of Directors from
time to time may determine. The original or a certified copy of these by-laws,
including any amendments to them, shall be kept at the Corporation's principal
office in the State of Maryland.
1
<PAGE> 5
ARTICLE II
DIRECTORS AND OFFICERS
Section 1. FUNCTION OF DIRECTORS
(a) MANAGEMENT. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors.
(b) POWER OF BOARD. All powers of the Corporation may be exercised by or
under authority of the Board of Directors except as conferred on or reserved to
the stockholders by law or by the charter or by-laws of the Corporation.
Section 2. NUMBER OF DIRECTORS
(a) MINIMUM NUMBER. The Corporation shall have at least three directors at
all times.
(b) CHARTER PROVISION. Subject to the provisions of subsection (a) of this
section, the Corporation shall have the number of Directors provided in its
charter until changed by these by-laws.
(c) BY-LAWS PROVISION. Subject to the provisions of subsection (a) of this
section, a majority of the entire Board of Directors may increase or decrease
the number of directors set by the charter or these by-laws, but the action may
not affect the tenure of office of any director, and the Board of Directors may
not increase the number of directors to more than fifteen, nor decrease it to
less than three.
Section 3. QUALIFICATIONS OF DIRECTORS
A director need not be a stockholder in the Corporation.
Section 4. ELECTION AND TENURE OF DIRECTORS
(a) ELECTION OF DIRECTORS; TENURE. The directors shall be divided into
three classes, each class to be as nearly equal in number as possible. The term
of office of directors of the first class shall expire at the annual meeting of
stockholders to be held in
2
<PAGE> 6
1985; the term of office of directors of the second class shall expire at the
annual meeting of stockholders to be held in 1986; and the term of office of
directors of the third class shall expire at the annual meeting of stockholders
to be held in 1987. At each annual meeting of stockholders, commencing at the
annual meeting to be held in 1985, the successors to the class of directors
whose term shall then expire shall be elected to hold office for a term expiring
at the third succeeding annual meeting. In all cases, the term of office of
directors shall continue until their respective successors are elected and
qualify. In the event of any increase in the number of directors, the additional
directors shall be classified so that all classes of directors have as nearly
equal numbers of directors as may be possible. In the event of any decrease in
the number of directors, all classes of directors shall be decreased equally as
nearly as may be possible.
(b) MANNER OF VOTING; REQUIRED VOTES. Each share of stock may be voted for
as many individuals as there are directors to be elected and for whose election
the share is entitled to be voted. Except as otherwise provided in the charter
or these by-laws of the Corporation, no director shall be elected unless he
receives the affirmative vote of not less than an absolute majority of all the
votes of the holders of capital stock entitled to vote for the election of such
director.
Section 5. DIRECTORS HOLDING OVER
In case of failure to elect directors at the designated time, the directors
holding over shall continue to manage the business and affairs of the
Corporation until their successors are elected and qualify.
Section 6. REMOVAL OF DIRECTOR
The stockholders may remove any director, with or without cause, in the
manner and with the vote required by the charter of the Corporation.
3
<PAGE> 7
Section 7. VACANCY ON BOARD
The stockholders may elect a successor to fill a vacancy on the Board of
Directors which results from the removal of a director in the manner and with
the vote required by this Section 7. The affirmative vote of not less than an
absolute majority of all the votes of the holders of capital stock entitled to
be cast for the election of such director shall be necessary to elect a
successor to fill a vacancy on the Board of Directors which results from the
removal of a director who has been removed with cause. The affirmative vote of
not less than two-thirds of all the votes of the holders of capital stock
entitled to vote for the election of such director shall be necessary to elect a
successor to fill a vacancy on the Board of Directors which results from the
removal of a director who has been removed from office without cause. A majority
of the remaining directors, whether or not sufficient to constitute a quorum,
may fill a vacancy on the Board of Directors which results from any cause except
an increase in the number of directors. A majority of the entire Board of
Directors may fill a vacancy which results from an increase in the number of
directors. A director elected by the Board of Directors to fill a vacancy shall
serve until the next annual meeting of stockholders and until his successor is
elected and qualifies. A director elected by the stockholders to fill a vacancy
which results from the removal of a director shall serve for the balance of the
term of the removed director.
Section 8. ACTION BY DIRECTORS
(a) MAJORITY RULE. Unless the laws of the State of Maryland, the charter
of the Corporation or these by-laws require a greater proportion, the action of
a majority of the directors present at a meeting at which a quorum is present
shall be the action of the Board of Directors.
(b) QUORUM. A majority of the entire Board of Directors shall constitute a
quorum for the transaction of business.
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(c) INFORMAL ACTION BY DIRECTORS. Any action required or permitted to be
taken at a meeting of the Board of Directors or of a committee of the Board may
be taken without a meeting, if a unanimous written consent which sets forth the
action is: (1) Signed by each member of the Board or committee; and (2) Filed
with the minutes of proceedings of the Board or committee.
Section 9. MEETINGS OF DIRECTORS
(a) PLACE OF MEETING. A regular or special meeting of the Board of
Directors may be held at any place in or out of the State of Maryland.
(b) NOTICE OF MEETING. Notice of each meeting of the Board of Directors
shall be given: (1) By written notice mailed to each director at least three
days before the meeting; (2) By telegram dispatched to each director at least
one day before the meeting; or (3) By direct telephone communication with each
director at least one day before the meeting. Any form of such notice need not
state the business to be transacted at or the purpose of any regular or special
meeting of the Board of Directors.
(c) WAIVER OF NOTICE. Whenever notice of the time, place, or purpose of a
meeting of the Board of Directors or a committee of the Board is required, each
person who is entitled to the notice waives notice if he: (1) Before or after
the meeting signs a waiver of the notice which is filed with the records of the
meeting; or (2) Is present at the meeting.
(d) TELEPHONE MEETINGS. Members of the Board of Directors or a committee
of the Board may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.
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Section 10. EXECUTIVE AND OTHER COMMITTEES
(a) BOARD MAY APPOINT. The Board of Directors may: (1) Appoint from among
its members an executive committee and other committees composed of two or more
directors; and (2) Delegate to these committees any of the powers of the Board
of Directors except the power to: (i) declare dividends or distributions on
stock; (ii) issue stock other than as provided in subsection (b) of this
section; (iii) recommend to the stockholders any action which requires
stockholder approval; (iv) amend these by-laws; or (v) approve any merger or
share exchange which does not require stockholder approval.
(b) If the Board of Directors has given general authorization for the
issuance of stock, a committee of the Board, in accordance with a general
formula or method specified by the Board by resolution or by adoption of a stock
option or other plan, may fix the terms on which any stock may be issued,
including all terms and conditions required or permitted to be established or
authorized by the Board of Directors under ss.ss.2-203 and 2-208 of Title 2 of
the Maryland General Corporation Law.
(c) APPOINTMENT OF SUBSTITUTE MEMBER. The members of a committee present
at any meeting, whether or not they constitute a quorum, may appoint a director
to act in the place of an absent member.
Section 11. OFFICERS
(a) The Corporation shall have the following officers: (1) A president;
(2) A secretary; and (3) A treasurer.
(b) In addition to the required officers, the Corporation may have a
chairman of the Board of Directors; one or more vice chairmen of the Board of
Directors; one or more vice presidents, with such additional designations before
or following such title as to seniority and/or functional responsibilities as
the Board shall determine; a vice president-
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finance; one or more assistant secretaries and assistant treasurers; and such
additional officers, with such titles, all as the Board of Directors shall
determine.
Section 12. ELECTION, TENURE, AND REMOVAL OF OFFICERS
(a) ELECTION. The Board of Directors shall elect all officers.
(b) TENURE. Each officer shall serve for one year and until his successor
is elected and qualifies.
(c) REMOVAL. (1) If the Board of Directors in its judgment finds that the
best interests of the Corporation will be served, it may remove any officer or
agent of the Corporation. (2) The removal of an officer or agent shall not
prejudice any of his contract rights.
(d) BOARD MAY FILL VACANCY. The Board of Directors may fill a vacancy
which occurs in any office.
Section 13. POWERS AND DUTIES OF OFFICERS AND AGENTS
(a) IN GENERAL. An officer or agent of the Corporation shall have the
authority and shall perform the duties in the management of the assets and
affairs of the Corporation as are: (1) Incident to such office or provided in
these by-laws; and (2) Determined from time to time by resolution by the Board
of Directors not inconsistent with these by-laws.
(b) DUTIES OF THE CHAIRMAN OF THE BOARD. If there is a chairman of the
Board of Directors, he shall be the chief executive officer of the Corporation,
and he shall make his counsel available to the other officers of the
Corporation, and shall have such other duties and powers as may from time to
time be conferred on him by the directors. He shall preside at all meetings of
the directors at which he is present, and at all meetings of the stockholders,
unless he shall delegate the authority to do so to the president. He may sign
and execute all authorized bonds, contracts, or other obligations in the name of
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the Corporation, and with the secretary or assistant secretary, may sign all
certificates for shares of the capital stock of the Corporation.1
(c) DUTIES OF THE VICE CHAIRMAN. If there is a vice chairman of the Board
of Directors, he shall have such duties and powers as are conferred on him by
the Board of Directors.
(d) DUTIES OF THE PRESIDENT. In the absence of the chairman of the Board,
if there be one, the president shall preside at all meetings of the directors at
which he is present and at the direction of the chairman of the Board of
Directors or in his absence, at any meeting of the stockholders. The president
may sign and execute all authorized bonds, contracts or other obligations in the
name of the Corporation and, with the secretary or an assistant secretary, may
sign all certificates for shares of the capital stock of the Corporation. He
shall have such other duties and powers as may from time to time be assigned to
him by the Board of Directors.(1)
(e) DUTIES OF THE VICE PRESIDENTS. The Board of Directors may designate
vice presidents as executive vice presidents, senior vice presidents or vice
presidents with or without additional designations before such title, and with
such additional designations following such title as to seniority and/or
functional responsibilities, and may assign to them such powers and duties, as
the Board may deem appropriate. In the absence of the chairman of the Board, if
there be one, and of the president, the Board of Directors may designate one of
the vice presidents to perform their duties while such absence continues.
(f) DUTIES OF THE SECRETARY. The secretary shall (1) Keep the minutes of
all meetings of the stockholders and of the Board of Directors and of any
committees of the Board; (2) Attend to the giving of all notices of the
Corporation which may be required;
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(1) Amended at a meeting of the Board of Directors held June 5, 1990.
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(3) Affix the seal of the Corporation to all contracts and other documents
executed by the proper corporate officer or officers as may be necessary or
desirable; (4) Subject to such provision as may be made by the Board of
Directors for the appointment of a transfer agent and registrar, have charge of
the stock certificate books, transfer books and stock ledgers, and such other
books and papers as the Board of Directors may from time to time direct; and (5)
In General, perform all the duties incident to the office of secretary of a
corporation. The secretary or an assistant secretary shall countersign all
certificates of the stock of the Corporation.
(g) DUTIES OF THE ASSISTANT SECRETARIES. The assistant secretary or
assistant secretaries shall assist the secretary in the performance of his
duties and shall perform such other incidental work of a like character as may
be assigned to him or to them by the Board of Directors. Any assistant secretary
may countersign all certificates of stock of the Corporation.
(h) DUTIES OF THE TREASURER. The treasurer shall have general charge and
supervision of the finances, investments, securities, accounts receivable and
accounts payable, and contracts of the Corporation. He shall have custody of all
the funds and securities of the Corporation which may come into his possession.
He shall perform all acts incident to the position of treasurer of a
corporation, subject to the control of the Board of Directors.
(i) DUTIES OF THE ASSISTANT TREASURERS. The assistant treasurer or
assistant treasurers shall assist the treasurer in the performance of his duties
and shall perform such other incidental work of a like character as may be
assigned to him by the Board of Directors.
(j) DUTIES OF THE VICE PRESIDENT-FINANCE. The vice president-Finance, if
there be one, shall be the chief financial officer of the Corporation and shall
keep the Board of Directors fully informed of the Corporation's financial
condition.
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Section 14. HOLDING MORE THAN ONE OFFICE
(a) PERMITTED. A person may hold more than one office in the Corporation
but may not serve concurrently as both president and vice president of the
Corporation.
(b) EXECUTION OF DOCUMENTS. A person who holds more than one office in the
Corporation may not act in more than one capacity to execute, acknowledge, or
verify an instrument required by law to be executed, acknowledged, or verified
by more than one officer.
ARTICLE III
STOCKHOLDERS
Section 1. ANNUAL MEETING
(a) MEETING REQUIRED. The Corporation shall hold an annual meeting of its
stockholders to elect directors and transact any other business within its
powers.
(b) TIME OF MEETING. The meeting shall be held on a date within the
thirty-one day period beginning with the first day of June and ending with the
first day of July in each year, set by the Board of Directors.(2)
(c) BUSINESS WHICH MAY BE CONSIDERED. Except as the laws of the State of
Maryland provide otherwise, any business may be considered at an annual meeting
without the purpose of the meeting having been specified in the notice.
(d) FAILURE TO HOLD MEETING. The failure to hold an annual meeting shall
not invalidate the Corporation's existence or affect any otherwise valid
corporate act.
Section 2. SPECIAL MEETING
(a) CALLED BY PRESIDENT, BOARD, OR CERTAIN OTHER OFFICERS. A special
meeting of the stockholders of the Corporation may be called by: (1) The
president; (2) The Board
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(2) Amended at a meeting of the Board of Directors held March 23, 1998
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of Directors; or (3) The chairman of the Board, any executive vice president or
any senior vice president.
(b) CALLED BY STOCKHOLDERS. (1) Except as provided in subsection (c) of
this section, the secretary of the Corporation shall call a special meeting of
the stockholders on the written request of stockholders entitled to cast at
least 25 percent of all the votes entitled to be cast at the meeting. (2) A
request for a special meeting shall state the purpose of the meeting and the
matters proposed to be acted on at it. (3) The secretary shall: (i) inform the
stockholders who make the request of the reasonably estimated cost of preparing
and mailing a notice of the meeting; and (ii) on payment of these costs to the
Corporation, notify each stockholder entitled to notice of the meeting.
(c) WHEN MEETING NEED NOT BE CALLED. Unless requested by stockholders
entitled to cast a majority of all the votes entitled to be cast at the meeting,
a special meeting need not be called to consider any matter which is
substantially the same as a matter voted on at any special meeting of the
stockholders held during the preceding 12 months.
Section 3. PLACE OF MEETING
Meetings of stockholders shall be held at such place in the City of Boston,
Massachusetts or the Town of Lexington, Massachusetts or at any other place in
the United States, as is set by the Board of Directors.
Section 4. NOTICE OF MEETING; WAIVER OF NOTICE
(a) SECRETARY TO GIVE NOTICE. Not less than ten nor more than 90 days
before each stockholders' meeting, the secretary of the Corporation shall give
written notice of the meeting to: (1) Each stockholder entitled to vote at the
meeting; and (2) Each other stockholder entitled to notice of the meeting.
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(b) CONTENTS OF NOTICE. The notice shall state: (1) The time and place of
the meeting; and (2) The purpose of the meeting, if: (i) the meeting is a
special meeting; or (ii) notice of the purpose is required by any other
provision of the laws of the State of Maryland.
(c) DELIVERY OF NOTICE. For purposes of this section, notice is given to a
stockholder when it is: (1) Personally delivered to him; (2) Left at his
residence or usual place of business; or (3) Mailed to him at his address as it
appears on the records of the Corporation.
(d) WAIVER OF NOTICE. Whenever notice of the time, place, or purpose of a
meeting of the stockholders is required, each person who is entitled to the
notice waives notice if he: (1) Before or after the meeting signs a waiver of
the notice which is filed with the records of stockholders meetings; or (2) Is
present at the meeting in person or by proxy.
Section 5. QUORUM; VOTING
Unless the laws of the State of Maryland or the charter of the Corporation
provides otherwise, at a meeting of stockholders: (1) The presence in person or
by proxy of stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting shall constitute a quorum; and (2) A majority of all
the votes cast at a meeting at which a quorum is present shall be sufficient to
approve any matter which properly comes before the meeting.
Section 6. GENERAL RIGHT TO VOTE; PROXIES
(a) EACH SHARE ENTITLED TO ONE VOTE. Unless the charter provides for a
greater or lesser number of votes per share or limits or denies voting rights,
each outstanding share of stock, regardless of class, shall be entitled to one
vote on each matter submitted to a vote at a meeting of stockholders. However, a
share shall not be entitled to vote if any installment payment on it is overdue
and unpaid.
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(b) MANNER OF VOTING; PROXIES. (1) A stockholder may vote the stock he
owns of record either: (i) in person; or (ii) by written proxy signed by the
stockholder, or by his duly authorized attorney in fact. (2) Unless a proxy
provides otherwise, it shall not be valid more than 11 months after its date.
(3) Unless otherwise agreed in writing, the holder of record of stock which
actually belongs to another shall issue a proxy to vote the stock to the actual
owner on his demand.
Section 7. VOTING BY CERTAIN HOLDERS OF STOCK
(a) STOCK HELD BY FIDUCIARY. (1) A fiduciary may vote, either in person or
by proxy, stock registered in his name as fiduciary. (2) A fiduciary may vote,
either in person or by proxy, stock registered in the name of another person on
proof of the fact that legal title to the stock has devolved on him in a
fiduciary capacity and that he is qualified to act in that capacity.
(b) STOCK HELD BY PLEDGEE. A stockholder of record who pledges his shares
may vote them, but, as between the pledgor and pledgee, this subsection shall
not affect the validity of any agreement between them as to the giving of
proxies or the exercise of voting rights.
(c) JOINTLY HELD STOCK. (1) If stock is registered in the names of two or
more persons, whether as fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety, or otherwise, or if two or more
persons have the same fiduciary relationship with respect to the same stock,
unless the secretary of the Corporation is given written notice to the contrary
and is furnished with a copy of the instrument on order which so provides, their
acts with respect to voting have the effects provided in this subsection. (2) If
only one votes, his vote binds all, and if more than one vote, the vote of the
majority binds all. (3) If more than one vote and the vote is evenly split on
any particular matter: (i) each faction may vote the stock in question
proportionally; or (ii) any person voting the stock or any beneficiary may apply
to a court
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of competent jurisdiction to appoint an additional person to act with the
persons voting the stock and the stock shall then be voted as determined by a
majority of those persons and the person appointed by the court. (4) If the
instrument or order given to the secretary of the Corporation shows that the
interests are unequal, a majority or even split for the purpose of this
subsection is a majority or even split in interest.
Section 8. VOTING OF STOCK HELD BY CORPORATION
(a) WHO MAY VOTE. Stock registered in the name of a corporation, if
entitled to be voted, may be voted by the president, a vice president, the vice
president-finance, if there be one, the treasurer, or a proxy appointed by any
of them, unless another person appointed to vote the stock under a by-law or a
resolution of the Board of Directors presents a certified copy of the by-law or
resolution, in which case he may vote the stock. Such officer shall have full
power and authority to execute proxies, waivers of notice or consents of
stockholders in lieu of a meeting on behalf of the Corporation, and as its
representative to attend and to act and to vote at any meetings of stockholders
of any corporation in which the Corporation may hold stock and at any such
meeting shall possess and exercise any and all the rights and powers incident to
the ownership of such stock and which, as the owner thereof, the Corporation
might have possessed and exercised in person.
(b) WHEN STOCK MAY NOT BE VOTED. (1) Shares of the Corporation's own stock
owned directly or indirectly by it may not be voted at any meeting and may not
be counted in determining the total number of outstanding shares entitled to be
voted at any given time unless they are held by it in a fiduciary capacity, in
which case they may be voted and shall be counted in determining the total
number of outstanding shares at any given time. (2) Shares of its own stock are
considered owned directly by the Corporation if owned by another corporation in
which the Corporation owns shares entitled to cast a majority of all the votes
entitled to be cast of all shares outstanding and entitled to vote.
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Section 9. RECORD DATE AND CLOSING OF TRANSFER BOOKS
(a) DIRECTORS MAY SET. The Board of Directors may set a record date or
direct that the stock transfer books be closed for a stated period for the
purpose of making any proper determination with respect to stockholders,
including which stockholders are entitled to: (1) Notice of a meeting; (2) Vote
at a meeting; (3) Receive a dividend; or (4) Be allotted other rights.
(b) LIMITATIONS. As set by the Board of Directors: (1) The record date may
not be prior to the close of business on the day the record date is fixed.
Except as otherwise provided in this section, the record date shall be not more
than 90 days before the date on which the action requiring the determination
will be taken; (2) The transfer books may not be closed for a period longer than
20 days; and (3) In the case of a meeting of stockholders, the record date or
the closing of the transfer books shall be at least ten days before the date of
the meeting.
(c) EFFECT OF FAILURE TO SET DATES. If a record date is not set and the
stock transfer books are not closed: (1) The record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be the later of: (i) the close of business on the day on which notice of the
meeting is mailed; or (ii) the thirtieth day before the meeting; and (2) The
record date for determining stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be the close of business on the day
on which the resolution of the Board of Directors declaring the dividend or
allotment of rights is adopted. But the payment or allotment may not be made
more than 60 days after the date on which the resolution is adopted.
(d) ADJOURNMENT. A meeting of stockholders convened on the date for which
it was called may be adjourned from time to time without further notice to a
date not more than 120 days after the original date.
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Section 10. VOTING RIGHTS OF CERTAIN CONTROL SHARES
So long as this Section 10 shall not have been modified or repealed, Subtitle 7
of Title 3 of the General Corporation Law of Maryland shall not apply to the
voting rights of share of stock of the Corporation and all acquisitions of
shares of stock of the Corporation by existing or future shareholders are exempt
from such Subtitle 7.(3)
Section 11. NOMINATIONS AND STOCKHOLDER BUSINESS
(a) ANNUAL MEETINGS OF STOCKHOLDERS. (1) Nominations of persons for
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by or
at the direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of notice
provided for in this Section 11(a), who is entitled to vote at the meeting and
who complied with the notice procedures set forth in this Section 11(a).
(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1)
of this Section 11, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 60 days
from such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting or the tenth day following the day on which public announcement
of the
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(3) Added at a meeting of the Board of Directors held April 30, 1990
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date of such meeting is first made. Such stockholder's notice shall set forth
(i) as to each person whom the stockholder proposes to nominate for election or
re-election as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); (ii) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made, (x) the name
and address of such stockholder, as they appear on the Corporation's books, and
of such beneficial owner and (y) the class and number of shares of stock of the
Corporation which are owned beneficially and of record by such stockholder and
such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(a)(2) of this Section 11 to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by the
Corporation at least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this Section 11(a)
shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the Corporation not later than the close of
business on
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the tenth day following the day on which such public announcement is first made
by the Corporation.
(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation" notice of meeting (i) by or at the direction of the Board of
Directors or (ii) provided that the Board of Directors has determined that
directors shall be elected at such special meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this Section 11(b), who is entitled to vote at the meeting and
who complied with the notice procedures set forth in this Section 11(b). In the
event the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board, any such stockholder may nominate a
person or persons (as the case may be) for election to such position(s) as
specified in the Corporation's notice of meeting, if the stockholder's notice
required by paragraph (a)(2) of this Section 11(b) shall be delivered to the
Secretary at the principal executive offices of the Corporation not earlier than
the 90th day prior to such special meeting and not later than the close of
business on the later of the 60th day prior to such special meeting or the tenth
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.
(c) GENERAL. (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 11 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 11. The presiding officer of the meeting shall have
the power and duty to
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determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this Section 11
and, if any proposed nominations or business is not in compliance with this
Section 11, to declare that such defective nomination or proposal be
disregarded.
(2) For purposes of this Section 11, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Sections 13,
14 and 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 11, a
stockholder shall also comply with all applicable requirements of state law and
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 11. Nothing in this Section 11 shall be deemed
to affect any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.(4)
ARTICLE IV
STOCK
Section 1. STOCK LEDGER
(a) CONTENTS. The Corporation shall maintain a stock ledger which
contains: (1) The name and address of each stockholder; and (2) The number of
shares of stock of each class which the stockholder holds.
(b) FORM. The stock ledger may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection.
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(4) Added at a meeting of the Board of Directors held February 25, 1991
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(c) LOCATION OF LEDGER. The original or a duplicate of the stock ledger
shall be kept at the office of the Corporation's transfer agent and registrar of
its stock in the Commonwealth of Massachusetts.
Section 2. ISSUANCE OF STOCK CERTIFICATE
(a) STOCKHOLDER ENTITLED TO CERTIFICATE. Except as provided in subsection
(b) of this section, each stockholder shall be entitled to stock certificates
which represent and certify the shares of stock he holds in the Corporation.
(b) WHEN CERTIFICATE MAY NOT BE ISSUED. No stock certificate shall be
issued until the stock represented by it is fully paid, except in the case of
stock purchased under a plan, agreement, or transaction as provided by Section
2-207 of Title 2 of the Maryland General Corporation Law.
Section 3. CONTENTS OF STOCK CERTIFICATE
(a) REPRESENTATION OF STOCK HELD. Each stock certificate shall include on
its face: (1) The name of the Corporation; (2) The name of the stockholder or
other person to whom it is issued; and (3) The class of stock and number of
shares it represents.
(b) PREFERENCES, LIMITATIONS, AND RIGHTS. If the Corporation has authority
to issue stock of more than one class, the stock certificate shall contain on
its face or back a full statement or summary of: (1) The designations and any
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the stock of each class which the Corporation is authorized to
issue; and 92) If the Corporation is authorized to issue any preferred or
special class in series: (I) the differences in the relative rights and
preferences between the shares of each series to the extent they have been set;
and (II) the authority of the Board of Directors to set the relative rights and
preferences of subsequent series.
(c) ALTERNATIVE STATEMENT. Instead of a full statement or summary of the
information required by subsection (b) of this section the certificate may state
that the
20
<PAGE> 24
Corporation will furnish a full statement of the required information to any
stockholder on request and without charge.
Section 4. SIGNATURE AND SEAL ON CERTIFICATES OF STOCK
Each stock certificate shall be signed by the president, a vice-president,
or the chairman of the board and countersigned by the secretary, the assistant
secretary, the treasurer, or an assistant treasurer. Each certificate which
represents any stock: (1) May be sealed with the actual seal or facsimile of it
or in any other form; and (2) The signatures may be either manual or facsimile
signatures. A certificate described in this section shall be valid and may be
issued whether or not an officer who signed it is still an officer when it is
issued.
Section 5. LOST STOCK CERTIFICATE
The Board of Directors may determine the conditions for issuing a new stock
certificate in place of one which is alleged to have been lost, stolen, or
destroyed. In its discretion, the Board may require the owner of the certificate
to give bond, with sufficient surety, to indemnify the Corporation against any
loss or claim arising as a result of the issuance of a new certificate.
Section 6. ISSUANCE OF STOCK AND CONVERTIBLE SECURITIES
Before the issuance of stock or convertible securities, the Board of
Directors shall adopt a resolution which: (1) Authorizes the issuance; (2) Sets
the minimum price or value of consideration for the stock or convertible
securities or a formula for its determination; and (3) Fairly describes any
consideration other than money and states: (I) its actual value as determined by
the Board of Directors; or (II) that the Board of Directors has determined that
the actual value is or will be not less than a certain sum.
Section 7. PREEMPTIVE RIGHTS
No stockholder shall have any preemptive rights.
21
<PAGE> 25
ARTICLE V
DIVIDENDS
If declared by its Board of Directors and unless contrary to a restriction
contained in its charter, the Corporation may pay dividends on its shares in
cash, property, or its own stock, subject to the provisions of Section 2-309 of
Title 2 of the Maryland General Corporation Law.
ARTICLE VI
BOOKS AND RECORDS
(a) RECORDS OF ACCOUNTS AND MINUTES TO BE CORRECT AND COMPLETE. The
Corporation shall keep correct and complete: (1) Books and records of its
accounts and transactions; and (2) Minutes of the proceedings of its
stockholders and Board of Directors and of any executive or other committee when
exercising any of the powers of the Board of Directors.
(b) FORM OF RECORDS AND MINUTES. (1) The books and records of the
Corporation may be in written form or in any other form which can be converted
within a reasonable time into written form for visual inspection. (2) Minutes
shall be recorded in written form but may be maintained in the form of a
reproduction.
(c) CAPITAL ACCOUNT; REQUIRED RECORDS. The Corporation shall keep its
books in a manner which shows: (1) The amount and nature of the money or other
consideration it receives for the stock which it issues, including: (I) the
number of shares of stock of each class issued for the consideration; and (II)
the stated capital attributable to the issued shares of stock of each class; and
(2) The amount and nature of the money or other consideration it receives for
the convertible securities which it issues.
22
<PAGE> 26
(d) ANNUAL STATEMENT OF AFFAIRS. The president or treasurer of the
Corporation shall prepare annually a full and correct statement of the affairs
of the Corporation, to include a balance sheet and a financial statement of
operations for the preceding fiscal year. The statement of affairs shall be
submitted at the annual meeting of stockholders and, within 20 days after the
meeting, placed on file at the Corporation's principal office in the State of
Maryland.
ARTICLE VII
INDEMNIFICATION
To the maximum extent permitted by Maryland law in effect from time to
time, the Corporation shall indemnify, and shall pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to, (i) any individual
who is a present or former director or officer of the Corporation or (ii) any
individual who, while a director of the Corporation and at the request of the
Corporation, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee of such corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. The Corporation may, with the
approval of its Board of Directors, provide such indemnification and advancement
of expenses to a person who served a predecessor of the Corporation in any of
the capacities described in (i) or (ii) above and to any employee or agent of
the Corporation or a predecessor of the Corporation.
Neither the amendment nor repeal of this section, nor the adoption or
amendment of any other provision of the by-laws or charter of the Corporation
inconsistent with this section, shall apply to or affect in any respect the
applicability of
23
<PAGE> 27
the preceding paragraph with respect to any act or failure to act which occurred
prior to such amendment, repeal or adoption.(5)
ARTICLE VIII
GENDER
References to the masculine in these by-laws shall include the feminine
where appropriate.
ARTICLE IX
AMENDMENTS TO BY-LAWS
The power to adopt, alter, and repeal these by-laws shall be vested in the
Board of Directors. Such power shall be exercised only by a majority of the
entire Board of Directors then in office.
As adopted by the Board of Directors on November 30, 1988, and amended
April 30, 1990, June 5, 1990, February 25, 1991, and with respect to Article
VII, effective on June 4, 1991, and March 23, 1998.
/s/ Allan R. Campbell
----------------------------
Allan R. Campbell, Secretary
- ----------
(5) Added at a meeting of the Board of Directors held February 25, 1991,
effective June 4, 1991
24
<PAGE> 1
EXHIBIT 10J
AMENDMENT No. 3
to the
UNITRODE CORPORATION
1992 EMPLOYEE STOCK OPTION PLAN
The Unitrode Corporation 1992 Employee Stock Option Plan (the "Plan") is hereby
amended in accordance with the provisions of Section 10 of the Plan, by the
Board of Directors, as follows:
1. Section 5 of the Plan is amended by deleting subsection (d) in its
entirety and substituting the following new subsection (d) in lieu
thereof:
"(d) LIMITATION ON NUMBER OF OPTIONS AND SARS GRANTED IN ANY
FISCAL YEAR.
The number of options and SARs that may be granted to an
individual employee during any fiscal year shall be limited
to 100,000; provided, however, that such limitation shall
not apply to the Chief Executive Officer of the Corporation,
who may be granted an unlimited number of options and SARs
in any fiscal year."
2. Section 7(c) of the Plan is amended by deleting subsection (4) in its
entirety and adding new subsections (4) and (5) as follows:
"(4) At the expiration of a period after the date of Retirement
of the Recipient from the employ of Unitrode Corporation of
(i) two years in the case of non-qualified stock options and
SARs; and (ii) ninety days in the case of incentive stock
options. For the purposes of this Plan, the term
"Retirement" shall mean the date upon which the Recipient
leaves the employ of the Corporation on or after such
Recipient's "Normal Retirement Date" or "Early Retirement
Date" as such terms are defined in the Corporation's Profit
Sharing/401(k) Savings Plan. This subsection 7(c)(4), as
amended, shall apply prospectively only to stock options and
SARs granted under the Plan on August 5, 1997 and subsequent
thereto. All stock options and SARs granted prior to August
5, 1997 shall be subject to Section 7(c) as such section was
in effect prior to August 5, 1997.
<PAGE> 2
"(5) At the expiration of 60 days after the Recipient's
employment is terminated, if the Recipient's employment is
terminated for any other reason than death, retirement,
disability, or for cause."
3. This Amendment is effective on the date set forth below. Except as set
forth above, the Plan shall remain unchanged.
UNITRODE CORPORATION
/s/ Allan R. Campbell
----------------------------------
Allan R. Campbell
Secretary
Dated: August 5, 1997
<PAGE> 3
AMENDMENT No. 4
to the
UNITRODE CORPORATION
1992 EMPLOYEE STOCK OPTION PLAN
The Unitrode Corporation 1992 Employee Stock Option Plan (the "Plan") is hereby
amended in accordance with the provisions of Section 10 of the Plan, by the
Board of Directors, as follows:
1. Section 2 of the Plan is amended by increasing the aggregate number of
shares of the Common Stock, par value $.01 per share, of the
Corporation available for issuance upon exercise of options or stock
appreciation rights granted under the Plan from 6,000,000 to
7,000,000.
2. This Amendment, adopted on the date set forth below, which shall be
the effective date (the "Effective Date"), is subject to approval and
ratification by the stockholders of the Corporation at the 1998 Annual
Meeting of Stockholders, or any adjournment or postponement thereof.
In the event that this Amendment is not approved and ratified by the
stockholders within one year of the Effective Date, the Amendment
shall be null and void.
UNITRODE CORPORATION
/s/ Allan R. Campbell
----------------------------------
Allan R. Campbell
Secretary
Dated: March 23, 1998
<PAGE> 1
EXHIBIT 10K
UNITRODE CORPORATION
FY99 GUIDELINES FOR WAGE/SALARY ADMINISTRATION,
PROFIT-SHARING & SUPPLEMENTARY COMPENSATION PROGRAMS
STATEMENT OF POLICY
It is Unitrode's policy to recognize the contribution of its employees through
various compensation and benefits programs which are based upon equity and
individual performance. These programs are administered without regard to race,
religion, color, sex, sexual orientation or preference, age, national origin, or
disability.
I. WAGE/SALARY ADMINISTRATION
Wage/Salary guidelines are developed annually by the Vice President, Human
Resources with the approval of the CEO and are designed to keep Unitrode's
wage/salary structure competitive with wage/salaries paid for similar work under
similar conditions. Compensation relating to all officers of the Company is
approved by the Executive Compensation Committee of the Board of Directors and
the Board of Directors of the Company. (Senior officers include the CEO and the
Vice Presidents who report directly to the CEO.)
GUIDELINES FOR FY99:
As a result of the most recent market analysis using industry and regional data,
Unitrode established a Focal Review budget for FY99 consisting of 4.5% merit
and 0.7% promotion/adjustment, for a total of 5.2%. This budget will be in
effect for all U.S.-based categories of employees.
The calculation of 5.2% will be based on the actual reported payroll base
(excluding overtime, bonuses and fringe benefits, and adjusting for any layoffs)
from the previous fiscal year (for the twelve months ending January 31, 1998).
The following conditions also apply:
1. Any increases (whether merit or merit-plus-promotion) greater than 10%
must be approved by the CEO;
2. Any increase which raises an employee's salary to or above $100,000
must be approved by the CEO.
<PAGE> 2
3. Any newly hired employee or newly created position with a proposed
annual salary of $100,000 or above must be approved by the CEO prior
to the offer being made or before the position is created.
4. Any senior officer's salary change must first be approved by the CEO
and then by the Executive Compensation Committee of the Board of
Directors.
NOTE: SENIOR OFFICERS ARE DEFINED AS THE CEO AND VICE PRESIDENTS WHO
REPORT DIRECTLY TO THE CEO.
5. All compensation changes, regardless of amount or percentage of
change, must have three approval signatures - the employee's
supervisor, the supervisor's supervisor, and a Human Resources
Representative. (In the case of senior officers, the Vice President,
Human Resources, will authorize on behalf of HR.)
6. The Annual Operating Plan (AOP) for FY99 should be prepared using
these wage/salary guidelines; and,
7. The Vice President-Human Resources is responsible for ensuring that
the conditions of these guidelines are followed.
II. PROFIT SHARING/401(k) SAVINGS PLAN
PURPOSE
Unitrode's Profit Sharing/401(k) Savings Plan (the "Plan"), as stated in the
Summary Plan Description for the Plan, is designed to reward long and loyal
service by providing eligible employees with retirement benefits and to offer
them an opportunity to contribute a portion of their wages/salary before taxes
are charged on those contributed amounts.
ELIGIBILITY
Employees are eligible to participate in the Plan during the next open
enrollment after completing three months of continuous service. (Enrollment
occurs during the first month of each calendar quarter.) In order to receive a
discretionary contribution a participant must be an employee as of December 31
of the fiscal year for which the contribution is made. (For further details as
to eligibility, please consult the Plan document.)
ADMINISTRATION AND CONTRIBUTION(S)
1. The Plan is a defined contribution plan and is administered in compliance
with the Plan document. Unitrode matches all employee contributions up to a
maximum of 4% of wages/ salary at a rate of $.50 for each dollar
contributed. A qualified participant may contribute up to 15% of his/her
wages/salary, except certain highly compensated
<PAGE> 3
employees, in accordance with IRS regulations, whose contributions are
limited to a lesser percentage determined annually by the Retirement
Committee, in order for the Plan to qualify as nondiscriminatory by the
IRS.
2. In addition, the Board of Directors, at its sole discretion, may make an
annual Profit Sharing contribution to eligible participants based on a
percentage of eligible wages (up to $160,000, in accordance with IRS
regulations). The Profit Sharing contribution is also subject to
anti-discriminatory regulations as required under ERISA. Final awards as
determined by the application of the attached matrix are subject to
discrimination testing prior to the actual award.
ACCRUAL GUIDELINES
1. All employer matching contributions, as well as estimated profit sharing
awards, should be incorporated into the AOP.
2. All employer matching contributions to Unitrode's 401(k) Savings Plan are
to be accrued in accordance with the provisions of the Plan and expensed on
a monthly basis.
3. All operations should accrue monthly/quarterly for Profit Sharing:
a) At a percentage of eligible wages as determined by the AOP or the
latest forecast.
b) The ratio of accrual for bonuses and profit sharing should be
maintained as indicated in the proposed payment schedule.
c) The profit sharing accrual must be included in the Company's profit
margin and reported earnings per share.
d) At the discretion of the CEO, profit sharing may be accrued even if
the Company is operating at minimal profitability.
AWARDS
At year-end, Unitrode senior management will review the accrued profit sharing
contribution along with the Company's financial results and will make a
recommendation to the Board of Directors for action. If no profit sharing
contribution is to be recommended, then bonuses, except those as approved
specifically by the CEO, will not be awarded. All contributions are subject to
discrimination testing and other applicable IRS regulations.
<PAGE> 4
1. The Board of Directors will take action upon the recommendation after
the fiscal year-end results are determined and audited by the
Company's independent auditors.
2. All awards as voted by the Board of Directors will be granted in
compliance with the Plan provisions.
III. MANAGEMENT BONUS PROGRAM
PURPOSE
The purpose of Unitrode's Management Bonus Program is to reward those key
employees who are identified by a Corporate Senior Officer (the CEO and his
direct reports) as responsible for driving the business objectives of the
Corporation.
ELIGIBILITY
Participation in the Management Bonus Program is limited to those key
contributors who are recommended for the program by the appropriate Senior
Officer, approved by the Board of Directors, and who:
1. Are active employees on the day of the award or were active employees
on the last day of the fiscal year but who terminated employment
before the day of the award due to death, disability, involuntary
termination (except termination for cause as defined in Corporate
Policy 2-4, Subsection III-D) or retirement.
- Retirement, for the purposes of eligibility for bonus
distribution, will be defined as follows: A participant in the
management bonus program who has attained the age of at least 55
years which would entitle that person to receive early retirement
recognition.
1. Have been identified as participants at the time of the approval of
the AOP or at the time of employment (or promotion).
- To be eligible, a newly hired employee must be an employee for at
least three months prior to the end of the fiscal year on January
31. For any participant who has been employed for less than one
year, such employee's award shall be prorated from the date of
eligibility.
1. Are NOT eligible for a sales commission program; and
2. Are approved for participation by the CEO.
<PAGE> 5
Note: Any employee who transfers out of the Management Bonus Plan during the
course of the year will be given pro-rata credit for the time in the plan. In
addition, he/she will be given pro-rata credit for remaining time in the "all
other employees" plan unless ineligible as a result of #3 above.
ACCRUAL
1. Bonuses, including officers' bonuses, should be incorporated into the AOP,
approved by the CEO, and accrued for throughout the year with appropriate
adjustment for realistic expectation of individual achievement of
performance objectives (e.g., if individual objectives are challenging, on
average each eligible employee might be expected to achieve about 80% of
his/her individual objectives which, in turn, determine 50% of the bonus
award.)
2. Bonus accruals should be reversed if necessary to preserve the profit
margin of the AOP and within the guidelines established below, to maintain
an appropriate ratio to the profit sharing accrual.
IMPLEMENTATION
1. The financial objectives defined in the AOP will be assigned a Profit
Sharing/Bonus target A through H by the CEO which will guide the Company in
designing its program and establishing the appropriate accrual for the
Management Bonus Program
2. Once the Bonus Plan is approved by the CEO and the Board of Directors, the
appropriate Senior Officer should establish objectives for each qualified
employee
AWARDS
1. Bonuses for FY99 will be distributed as follows:
a) A total of 28% of a participant's bonus will be based on the
achievement of quarterly EPS targets. The achievement of these
quarterly targets will be considered "all or nothing" and will not be
subject to extrapolation. The potential "Payout" will be combined with
1.b and 1.c on or about March FY00.
b) A total of 36% of a participant's bonus will be based on the
achievement of Unitrode's annual EPS achievement.
c) A total of 36% of a participant's bonus will be based on the
achievement of a clear set of objectives which are agreed upon by the
supervising senior officer, the employee, the employee's supervisor,
and the VP of Human Resources,
Note: the objectives must be agreed upon by these individuals in February
FY99 and the resulting score must be authorized by theses same individuals
on the following February FY00 upon completion of FY99.
<PAGE> 6
2. The amount of the award will be determined as a percentage of the
participant's annual base salary at the time the award is paid out.
VI. BONUS PROGRAM -- ALL OTHER EMPLOYEES
PURPOSE
Based on the performance of the corporation, the Company may make cash awards
for FY99. The purpose of this bonus program is to reward those employees who
are not participants in the Management Bonus Program for their contribution to
the overall success of Unitrode's performance objectives and goals in a fiscal
year.
ELIGIBILITY
Participation in this program is limited to employees who are not participants
in the Management Bonus Plan and:
1. Have been employees for at least three months prior to the end of the
fiscal year on January 31; and
2. Are active employees on the day of the award or were active employees on
the last day of the fiscal year, but who terminated employment before the
day of the award due to death, disability, involuntary termination (with
the exception of termination for cause), or retirement. See Section III-1.
Employees with less than 12 months' participation will be prorated from the
date of eligibility as stated above.
Note; the Design Engineering Incentive Plan operates in addition to the "All
Other Employees Plan."
<PAGE> 1
EXHIBIT 10L
November 11, 1997
Mr. Robert J. Richardson
15401 Shannon Road
Los Gatos, CA 95032
Dear Mr. Richardson:
This letter shall serve as the Restricted Stock Award Agreement (the
"Agreement") between you and Unitrode Corporation (the "Corporation"). In
consideration of services to be rendered by you to the Corporation, the Board of
Directors of the Corporation has determined to award to you 50,000 shares (the
"Shares") of the common stock of the Corporation. The award is effective as of
November 11, 1997 (the "Award Date").
This award is made upon the terms, conditions, restrictions and other provisions
of the Agreement set forth herein, as follows:
1. RESTRICTIONS AND LOAN
(a) During the period of four years after the Award Date, you shall not
sell, exchange, transfer, pledge, hypothecate or otherwise dispose of
the Shares awarded to you except for Shares which have become vested,
as hereinafter provided, and except that title to certain Shares which
have not vested may pass on your death to your personal
representative, (as hereinafter provided), provided such Shares shall
otherwise remain subject to all of the provisions of this Section.
(b) Shares shall vest over said four-year period upon the satisfaction by
you of the condition that you continue to be employed by the
Corporation or any subsidiary as of each vesting date.
<PAGE> 2
(c) On each anniversary of the Award Date during said four-year period, if
you are employed by the Corporation or any subsidiary, (i) 18,000
shares will vest on the first anniversary of the Award Date; (ii)
12,000 shares will vest on the second anniversary of the Award Date;
(iii) 12,000 shares will vest on the third anniversary of the Award
<PAGE> 3
ROBERT J. RICHARDSON
NOVEMBER 11, 1997/2
Date; and (vi) 8,000 shares will vest on the fourth anniversary of the
Award Date.
Any shares that do not become vested hereunder shall be forfeited and
conveyed to the Corporation.
(d) The Corporation will, at its option, either (i) file a Registration
statement for the Shares on Form S-3 prior to the vesting of the
shares or (ii) if the Shares are not freely tradable pursuant to an
exemption from Registration (such as Rule 144) under the Securities
Act of 1933) at the time of vesting, loan you an amount equal to your
tax obligation attributable to vesting of the Shares. The loan will
bear interest at the prime rate then in effect, with the principal
payable 90 days from the time that the shares become freely tradable,
either through registration or a valid exemption from registration.
(e) If you should die or become totally disabled prior to the expiration
of said five-year period, all of the Shares awarded to you which have
not yet become vested shall be forfeited and conveyed to the
Corporation except for that number of such Shares which would have
become vested on the next anniversary of the Award Date, if you had
not died or become disabled. Such number of Shares shall then become
vested.
(f) Notwithstanding any other provision of this Section or of any other
Sections of this Agreement, all Shares awarded hereunder which have
not yet become vested or been forfeited to the Corporation shall
become vested in the event of a "change of control" of the Corporation
(as such term is defined in a certain letter agreement of this same
date between you and the Corporation relating to severance benefits in
the event of a change of control).
2. PROVISIONS RELATING TO SECURITIES ACT
(a) Shares shall be recorded in your name on the stock and transfer
records of the Corporation as soon as practicable
<PAGE> 4
ROBERT J. RICHARDSON
NOVEMBER 11, 1997/3
following the Award Date; provided, however, that if at any time the
Board of Directors of the Corporation shall determine that the listing
upon any securities exchange or the registration or qualification
under any federal or state law of the Shares to be awarded, or the
consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of or in connection with the award of such
Shares, registration on the stock and transfer records and delivery of
stock certificates may be delayed until such listing, registration,
qualification, consent or approval shall have been effected or
obtained, free of any conditions not acceptable to the Board of
Directors.
(b) Delivery of Shares shall be made from shares of authorized but
unissued common stock of the Corporation.
3. DEPOSIT OF SHARES IN BOOK ACCOUNT
In light of the restrictions imposed by this Agreement, certificates of
stock representing Shares awarded under the Plan shall bear a legend to the
effect that the Shares represented thereby may not be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of except in
accordance with the terms of this Agreement and the transfer agent for the
common stock of the Corporation shall be so instructed. Further, Shares
shall be held in book account in your name at the transfer agent for the
Corporation until vesting occurs, and you shall execute a stock power or
other instrument of transfer, appropriately endorsed in blank with
signatures guaranteed, and deliver such stock power to the Secretary of the
Corporation. During the period while the Shares are held in book account,
you, as the registered holder of such Shares, shall be entitled to vote the
same and to receive all dividends declared thereon.
4. LISTING OF STOCK
<PAGE> 5
ROBERT J. RICHARDSON
NOVEMBER 11, 1997/3
So long as the common stock of the Corporation is listed on the New York
Stock Exchange, the Corporation shall take any necessary steps so that the
Shares awarded to you are listed by the Exchange or will be so listed upon
notice of issuance.
5. NO CONTRACTUAL RIGHT TO PARTICIPATE AND NO RIGHT TO CONTINUED EMPLOYMENT
Nothing herein shall be deemed to give you or your legal representatives or
assigns, or any other person claiming under or through you, any contractual
or other right to participate in the benefits of this Agreement. Nothing
herein and no action or or award hereunder shall be construed to constitute
or be evidence of any agreement or understanding, express or implied, on
the part of the Corporation to employ or retain you in its employ for any
specific period of time.
6. TRANSFERABILITY
Except as otherwise specifically provided herein, no right or interest
hereunder shall be assignable or transferable, in whole or in part, either
directly or by operation of law or otherwise including, but not by way of
limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or
in any other manner (except devolution by death); and no such right or
interest shall be subject to any obligation or liability of yours.
Would you please sign and return the enclosed copy of this letter to evidence
your acceptance of the award and your agreement to the terms and conditions
contained herein.
UNITRODE CORPORATION
/s/ Allan R. Campbell
-----------------------------
<PAGE> 6
Allan R. Campbell
Senior Vice President,
General Counsel & Secretary
AGREED AND ACCEPTED:
/s/ Robert J. Richardson
- -----------------------------
Robert J. Richardson
Date: November 11, 1997
<PAGE> 1
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
EXHIBIT 21
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
All operating subsidiaries of the Registrant as of January 31, 1998 (except
subsidiaries which considered in the aggregate do not constitute a significant
subsidiary) were as follows:
<TABLE>
<CAPTION>
% of Voting
Jurisdiction of Securities
Name of Subsidiary Incorporation Owned
- ------------------ ------------- ----------
<S> <C> <C>
Unitrode B.V. Netherlands 100%
Unitrode Electronics Asia Ltd. Hong Kong 100%
Unitrode Electronics GmbH West Germany 100%
Unitrode Electronics (Singapore) Pte. Ltd. Singapore 100%
Unitrode S.r.l. Italy 100%
Unitrode U.K. Limited United Kingdom 100%
</TABLE>
41
<PAGE> 1
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
EXHIBIT 23
UNITRODE CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of Unitrode Corporation and Consolidated Subsidiaries on Form S-8 (File Nos.
33-12353, 33-54542, 33-54544, 333-00107 and 333-35339) and Form S-3 (File No.
333-17123) and related prospectuses of our report dated March 2, 1998, except
for Note P, as to which the date is April 7, 1998, on our audits of the
consolidated financial statements and financial statement schedule of Unitrode
Corporation and Consolidated Subsidiaries as of January 31, 1998 and 1997 and
for each of the three years in the period ended January 31, 1998, which report
is included in this Annual Report on Form 10-K.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
April 28, 1998
42
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> JAN-31-1998
<EXCHANGE-RATE> 1
<CASH> 65,074
<SECURITIES> 0
<RECEIVABLES> 24,967
<ALLOWANCES> 460
<INVENTORY> 13,042
<CURRENT-ASSETS> 113,591
<PP&E> 140,568
<DEPRECIATION> 62,403
<TOTAL-ASSETS> 202,039
<CURRENT-LIABILITIES> 39,755
<BONDS> 0
0
0
<COMMON> 243
<OTHER-SE> 159,119
<TOTAL-LIABILITY-AND-EQUITY> 202,039
<SALES> 177,603
<TOTAL-REVENUES> 177,603
<CGS> 83,592
<TOTAL-COSTS> 83,592
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 200
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 47,811
<INCOME-TAX> 17,576
<INCOME-CONTINUING> 30,235
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,235
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.21
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
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