<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 27, 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 1-5560
------
Alpha Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 04-2302115
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 Sylvan Road, Woburn, Massachusetts 01801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 935-5150
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at January 24, 1999
Common Stock, par value $.25 per share 10,639,535
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Table of Contents
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Page
Part 1 Financial Information
Item 1 - Financial Statements
Consolidated Balance Sheets - December 27, 1998 and
March 29, 1998................................................. 3
Consolidated Statements of Income - Quarters and Nine Months
Ended December 27, 1998 and December 28, 1997.................. 4
Consolidated Statements of Cash Flows - Nine Months Ended
December 27, 1998 and December 28, 1997....................... 5
Notes to Consolidated Financial Statements.................... 6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 8
Item 3 - Quantitative and Qualitative Disclosures About Market Risk... 11
Part 2 Other Information
Item 1 - Legal Proceedings............................................ 11
Item 6 - Exhibits and Reports on Form 8-K............................. 11
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2
<PAGE>
Consolidated Balance Sheets
(In thousands except share and per share amounts)
<TABLE>
<CAPTION>
December 27, March 29,
1998 1998
(unaudited) (audited)
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<S> <C> <C>
Assets
Current assets
Cash and cash equivalents.................... $ 10,433 $ 14,356
Short-term investments (Note 2).............. 12,322 1,493
Accounts receivable.......................... 19,318 18,500
Inventories (Note 3)......................... 8,883 7,941
Prepayments and other current assets......... 2,178 883
--------- ----------
Total current assets....................... 53,134 43,173
--------- ----------
Property, plant and equipment, less accumulated
depreciation and amortization of
$66,630 and $60,824.......................... 37,975 32,664
Other assets................................... 1,258 1,092
--------- ----------
$ 92,367 $ 76,929
========= ==========
Liabilities And Stockholders' Equity
Current liabilities
Current maturities of long-term debt........ $ 1,325 $ 1,876
Current maturities of capital lease
obligations............................... -- 8
Accounts payable............................ 7,228 5,725
Payroll, commissions and related expenses... 6,999 6,724
Other accrued liabilities................... 3,999 2,779
--------- ----------
Total current liabilities................. 19,551 17,112
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Long-term debt................................ 769 1,625
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Other long-term liabilities................... 1,882 2,370
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Commitments and contingencies (Note 6)
Stockholders' equity (Note 7)
Common stock par value $.25 per share:
authorized 30,000,000 shares; issued
10,623,036 and 10,545,167 shares........... 2,655 2,636
Additional paid-in capital................... 57,964 56,758
Retained earnings (accumulated deficit)...... 9,748 (3,214)
Less - Treasury shares 48,580 and 100,195
shares at cost...................... 156 315
Unearned compensation-restricted
stock............................... 46 43
--------- ----------
Total stockholders' equity................. 70,165 55,822
--------- ----------
$ 92,367 $ 76,929
========= ==========
</TABLE>
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The accompanying notes are an integral part of these financial statements.
3
<PAGE>
Consolidated Statements of Income
(Unaudited)
(In thousands except per share data)
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
1998 1997 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales............................ $ 32,489 $ 30,751 $ 92,070 $ 85,027
Cost of sales...................... 18,151 18,928 52,046 53,678
Research and development expenses.. 3,397 2,545 9,310 7,286
Selling and administrative
expenses......................... 5,809 5,684 16,728 16,459
-------- -------- -------- --------
Operating income..................... 5,132 3,594 13,986 7,604
Interest expense..................... (61) (126) (231) (397)
Interest income and other, net....... 231 39 647 138
-------- -------- -------- --------
Income before income taxes........... 5,302 3,507 14,402 7,345
Provision for income taxes........... 530 351 1,440 735
-------- -------- -------- --------
Net income........................... $ 4,772 $ 3,156 $ 12,962 $ 6,610
======== ======== ======== ========
Net income per share diluted......... $ 0.44 $ 0.30 $ 1.20 $ 0.63
======== ======== ======== ========
Net income per share basic........... $ 0.45 $ 0.31 $ 1.23 $ 0.65
======== ======== ======== ========
Weighted average common shares
diluted............................ 10,935 10,641 10,807 10,414
======== ======== ======== ========
Weighted average common shares
basic.............................. 10,557 10,280 10,515 10,136
======== ======== ======== ========
</TABLE>
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The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Consolidated Statements Of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
Dec. 27, Dec. 28,
1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net income.......................................... $ 12,962 $ 6,610
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization of property,
plant and equipment............................. 5,806 5,057
Contribution of treasury shares to Savings
and Retirement Plan............................. 707 606
Amortization of unearned compensation -
restricted stock, net........................... 58 30
Decrease in other liabilities and long-term
benefits........................................ (488) (56)
(Increase)decrease in other assets................ (178) 444
Change in assets and liabilities:
Accounts receivable............................. (818) (688)
Inventories..................................... (942) 1,273
Other current assets............................ (1,295) 96
Accounts payable................................ 1,503 (595)
Other accrued liabilities and expenses.......... 1,495 2,612
Repositioning reserve........................... -- (798)
-------- --------
Net cash provided by operations................. 18,810 14,591
-------- --------
Cash flows from investing activities:
Purchases of short-term investments............... (16,908) (843)
Maturities of short-term investments.............. 6,079 2,061
Additions to property, plant and equipment........ (11,117) (7,529)
-------- --------
Net cash used in investing activities........... (21,946) (6,311)
-------- --------
Cash flows from financing activities:
Payments on long-term debt........................ (1,407) (2,547)
Deferred charges related to long-term debt........ 12 13
Payments on capital lease obligations............. (8) (208)
Proceeds from sale of stock....................... 98 66
Exercise of stock options......................... 518 476
-------- --------
Net cash used in financing activities........... (787) (2,200)
-------- --------
Net (decrease) increase in cash and cash equivalents.. (3,923) 6,080
Cash and cash equivalents, beginning of period........ 14,356 5,815
-------- --------
Cash and cash equivalents, end of period.............. $ 10,433 $ 11,895
======== ========
</TABLE>
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The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Notes To Consolidated Financial Statements
(unaudited)
Note 1 Basis of Presentation
The interim financial information included herein is unaudited. In addition, the
financial information does not include all disclosures required under generally
accepted accounting principles because certain note information included in the
Company's annual report to shareholders has been omitted and such information
should be read in conjunction with the prior year's annual report. However, the
financial information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods. The Company considers the
disclosures adequate to make the information presented not misleading.
Note 2 Short-Term Investments
The Company's short-term investments are classified as held-to-maturity. These
investments consist primarily of commercial paper and bonds with original
maturities of more than 90 days. Such short-term investments are carried at
amortized cost, which approximates fair value, due to the short period of time
to maturity. Gains and losses are included in investment income in the period
they are realized.
Note 3 Inventories
December 27, March 29,
Inventories consist of the following (in thousands): 1998 1998
- --------------------------------------------------------------------------------
Raw materials...................................... $ 4,520 $ 3,916
Work-in-process.................................... 2,467 2,259
Finished goods..................................... 1,896 1,766
------- -------
$ 8,883 $ 7,941
======= =======
Note 4 Significant Customer
During the nine months ended December 27, 1998 and December 28, 1997, one
customer accounted for approximately 27% and 24%, respectively, of the Company's
sales.
6
<PAGE>
Notes To Consolidated Financial Statements (continued)
(unaudited)
Note 5 Earnings Per Share
A reconciliation of the weighted average number of shares outstanding used in
the computation of the basic and diluted earnings per share for the quarters and
nine months ended December 27, 1998 and December 28, 1997 is as follows (in
thousands):
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
1998 1997 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average shares (basic)..... 10,557 10,280 10,515 10,136
Effect of dilutive stock options.... 378 361 292 278
------ ------ ------ ------
Weighted average shares (diluted)... 10,935 10,641 10,807 10,414
====== ====== ====== ======
</TABLE>
The net income used in the calculation of basic and diluted earnings per share
agrees with the net income appearing in the financial statements.
Note 6 Commitments and Contingencies
The Company is party to suits and claims arising in the normal course of
business. Management believes these are adequately provided for or will result
in no significant additional liability to the Company.
Note 7 Subsequent Event
On January 28, 1999, the Company's Board of Directors declared a 3-for-2 stock
split of the outstanding shares of the Company's common stock. The stock split
will be payable on February 18, 1999 to shareholders of record as of February 8,
1999. Shareholders will receive one additional share of the Company's common
stock for every two shares held on the record date. The Company will pay cash in
lieu of fractional shares. The data for the third quarters ended December 27,
1998 and December 28, 1997, respectively, if restated to reflect the stock
split, are basic net income per share of $0.30 and $0.20; diluted net income per
share of $0.29 and $0.20; basic weighted average shares of 15.8 million and 15.4
million and diluted weighted average shares of 16.4 million and 16.0 million.
The data for the nine months ended December 27, 1998 and December 28, 1997,
respectively, if restated to reflect the stock split, are basic net income per
share of $0.82 and $0.43; diluted net income per share of $0.80 and $0.42; basic
weighted average shares of 15.8 million and 15.2 million and diluted weighted
average shares of 16.2 million and 15.6 million.
7
<PAGE>
PART I - ITEM 2
Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
Results of Operations
Sales for the first nine months of fiscal 1999 totaled $92.1 million compared
with sales of $85.0 million for the same period last year. Sales for the third
quarter of fiscal 1999 totaled $32.5 million compared with $30.8 million for the
comparable period last year. New orders received for the first nine months of
fiscal 1999 were $90.1 million, compared with $88.9 million for the same period
last year. The increase in sales and orders continues to be the result of higher
sales volumes due to increased demand for wireless products. The sales growth
for the third quarter was fueled by shipments of new digital handsets. During
the third quarter, the Company also received orders for two new product areas--
a wireless personal digital assistant and an upcoming home wireless networking
system. The Company's Wireless Semiconductor sector had sales of $46.3 million
while the Application Specific Products (ASP) sector had sales of $27.5 million
and the Ceramic Products sector had sales of $18.3 million for the first nine
months of fiscal 1999. For the third quarter of fiscal 1999, these groups
reported sales of $17.9 million for the Wireless Semiconductor sector, $7.7
million for the ASP sector and $6.9 million for the Ceramic Products sector.
Deliveries to one customer represented approximately 27% of the Company's total
sales for the first nine months of fiscal 1999 compared with 24% for the
comparable period last year.
Gross profit for the first nine months of fiscal 1999 totaled $40.0 million or
43.5% of sales compared with $31.3 million or 36.9% of sales for the comparable
period last year. Gross profit for the third quarter was $14.3 million or 44.1%
of sales compared with $11.8 million or 38.4% of sales for the same period last
year. Gross margins continue to increase quarter over quarter primarily as a
result of improved operating efficiencies in all three business sectors,
particularly in the Wireless Semiconductor sector which continued to leverage
capacity, improve yields and reduce material costs. The Wireless Semiconductor
sector reported gross margins of 42.8% while ASP reported gross margins of 51.9%
and the Ceramic Products sector reported gross margins of 32.7% for the first
nine months of fiscal 1999. Gross margins for the third quarter of fiscal 1999
were 45.1% for the Wireless Semiconductor sector, 49.2% for the ASP sector and
36.0% for the Ceramic Products sector.
Research and development expenses for the first nine months of fiscal 1999 were
$9.3 million or 10% of sales compared with $7.3 million or 9% of sales for the
same period last year. For the third quarter of fiscal 1999, research and
development expenses increased 34% to $3.4 million as compared with the same
quarter last year. The increased research and development is due mainly to the
development of processes and applications in the Wireless Semiconductor Products
group. These high volume products are targeted at the rapidly-growing wireless
markets with over 75% of the Company's total research and development
expenditures supporting this dynamic sector. The Company is strongly committed
to continuing its investment in the GaAs IC and high volume wireless products to
better serve its targeted markets, particularly as it continues to introduce new
products that its key customers need.
Selling and administrative expenses totaled $16.7 million or 18.2% of sales for
the first nine months of fiscal 1999 compared with $16.5 million or 19.4% of
sales for the same period last year. For the third quarter ended December 27,
1998, selling and administrative expenses increased slightly to $5.8 million or
17.9% of sales, as compared to $5.7 million or 18.5% of sales for the comparable
quarter last year. The year-to-date and third quarter increases in selling and
administrative expenses relate primarily to selling and marketing activities
consisting mainly of increased sales commissions related to higher sales
volumes. Overall, selling and administrative expenses for the nine months and
third quarter of fiscal 1999 declined as a percentage of sales compared with the
comparable periods last year due to continued efforts to control administrative
costs.
Interest expense for the first nine months and third quarter of fiscal 1999
decreased $166 thousand and $65 thousand respectively over the comparable
periods last year due to a decline in borrowings. Interest income for the first
nine months and quarter ended December 27, 1998 increased $509 thousand and $192
thousand, respectively, over the comparable periods last year since cash, cash
equivalents and short-term investments increased $6.9 million primarily from
cash generated from operations.
8
<PAGE>
The Company's effective tax rate for the first nine months of fiscal 1999 was
10%. This rate differed from statutory rates primarily as a result of the
utilization of net operating loss carryforwards. At December 27, 1998, the
Company had available net operating loss carryforwards of approximately $12
million which expire commencing in 2004.
For the first nine months of fiscal 1999, the Company reported net income of
$13.0 million or $1.20 per share diluted compared with net income of $6.6
million or $0.63 per share diluted for the comparable period last year. For the
third quarter of fiscal 1999, the Company reported net income of $4.8 million or
$0.44 per share diluted compared with net income of $3.2 million or $0.30 per
share diluted for the same period last year. These results represent 96% and 51%
increases in net income for the first nine months and the third quarter of
fiscal 1999, respectively, over the same periods last year.
Financial Condition
At December 27, 1998, working capital totaled $33.6 million and included $22.8
million in cash, cash equivalents, and short-term investments, compared with
$26.1 million of working capital at the end of fiscal 1998. Operations generated
$18.8 million of cash principally from net income and depreciation. Uses of cash
included $11.1 million for capital expenditures and $1.4 million for the
repayment of long-term debt. The Company continued its investment in capital
expenditures particularly for the semiconductor gallium arsenide (GaAs) wafer
fab operation and the IC and discrete semiconductor assembly and test areas, as
well as for improved manufacturing capabilities at the ceramics manufacturing
facility. The Company remains strongly committed to adding the required capacity
needed to service the wireless markets as demand continues to grow. During the
first nine months of fiscal 1999, the Company incurred capital expenditures of
$11.1 million of which $8.9 million related to the Wireless Semiconductor
Products sector. These expenditures primarily related to the expansion of the
GaAs fab which is expected to cost $18 million in total and be completed during
the first quarter of fiscal 2000. This expansion is expected to significantly
increase capacity.
The Company expects to generate sufficient cash from operations to fund the
necessary projected levels of growth. With cash, cash equivalents, and short-
term investments of $22.8 million, a $7.5 million line of credit and a $7.5
million equipment line of credit currently available, the Company believes it
has adequate funds to support its current operating needs.
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income" and No. 131, "Disclosure about Segments of an Enterprise and Related
Information", which are effective for fiscal years beginning after December 15,
1997. The Company has complied with SFAS No. 130 and determined there was no
effect on the Company's consolidated financial statements, and the Company is
currently evaluating the effects of SFAS No. 131.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
establishes accounting and reporting standards for derivatives and hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments at fair
value. SFAS No. 133 is effective for fiscal years beginning after June 15, 1999.
The AICPA issued Statement of Position ("SOP") 98-1, "Accounting for Costs of
Computer Software Developed or Obtained for Internal Use" during fiscal 1998.
SOP 98-1 requires that companies capitalize certain internal-use software costs
upon meeting certain criteria. This SOP is effective for fiscal years beginning
after December 15, 1998.
The Company is currently evaluating SFAS No.133 and SOP 98-1 and has not yet
determined their impact on the Company's consolidated financial statements.
9
<PAGE>
Year 2000
The Year 2000 issue relates to the inability of certain computer software
programs to properly recognize and process date-sensitive information relative
to the Year 2000 and beyond. To address this issue, the Company has initiated a
company-wide Year 2000 project under the direction of senior management.
The Company has evaluated its products and has determined that its current and
past products are not date-sensitive. The Company does not expect Year 2000
exposure for products sold.
The Company has completed a comprehensive inventory of its internal information
systems. Over the last several years, the Company has invested in new computer
hardware and software to improve its business operations. All such systems were
required to be Year 2000 compliant as a condition of purchase. The Company has
developed a plan for testing critical information systems to ensure compliance.
This testing is expected to be completed by April 1999.
The Company has also completed a comprehensive inventory of its equipment and
facilities. The Company has developed a plan for testing critical items to
ensure that they are compliant. Testing is expected to be completed by
April 1999.
Upon completion of the testing of systems, facilities, and equipment, the
Company will formulate contingency plans to handle the most reasonably likely
worst-case scenarios.
The Company has begun formal communication with significant suppliers,
customers, financial institutions, and other third parties with which the
Company has a material relationship in order to determine whether those entities
have adequate plans in place to ensure their Year 2000 preparedness. The Company
has not yet completed its assessment of its exposure to risks relating to the
Year 2000 issues of those entities with which it has a material relationship.
This assessment and the development of a plan for testing critical items will be
completed by April 1999. Upon completion of this assessment, the Company will
formulate contingency plans to handle the most reasonably likely worst-case
scenarios.
Although the Company believes its planning efforts are adequate to address its
Year 2000 compliance concerns, there can be no assurances that the Company will
not experience unanticipated negative consequences or material costs caused by
undetected errors or defects in the technology used in its internal systems or
that third parties upon which the Company relies will be compliant in a timely
manner and will not have any material effect on the Company.
Other Matters
Safe Harbor Statement - Except for the historical information contained herein,
this Form 10-Q contains forward-looking statements that are inherently subject
to risks and uncertainties. The Company's results could differ materially based
on various factors, including without limitation: cancellation or deferral of
customer orders, difficulties in the timely development and market acceptance of
new products, market developments that vary from the current public expectations
concerning the growth of wireless communications, difficulties in manufacturing
new or existing products in sufficient quantity or quality, increased
competitive pressures, decreasing selling prices for the Company's products, or
changes in economic conditions. Further information on factors that could affect
the Company's financial results is included in the Company's periodic reports
filed with the S.E.C., including the most recent Form 10-K for the fiscal year
ended March 29, 1998 and any subsequent Form 10-Qs.
10
<PAGE>
PART I
Item 3 Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of changes in the value of a short-term
investment and a financial instrument caused by fluctuations in investment
prices and interest rates.
The Company handles market risks in accordance with established policies. The
Company's risk-management activities include "forward-looking statements" that
involve risk and uncertainties. Actual results could differ materially from
those projected in the forward-looking statements.
Investment Price Risk
The fair value of the Company's short-term investment portfolio at December 27,
1998, approximated carrying value due to its short-term duration. Market risk,
estimated as the potential decrease in fair value resulting from a hypothetical
10% decrease in interest rates for the issues contained in the investment
portfolio, is considered not to be material because of the short-term nature of
the investments.
Interest Rate Risk
The carrying value of the Company's long-term debt, including current
maturities, was $2.1 million at December 27, 1998. Due to the nature of the debt
instruments, management has determined that the fair value was not materially
different from the quarter-end carrying value.
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
The Company does not have any material pending legal proceedings other than
routine litigation incidental to its business.
The Company has been notified by federal and state environmental agencies of its
potential liability with respect to the Spectron, Inc. Superfund site in Elkton,
Maryland. Several hundred other companies have also been notified about their
potential liability regarding this site. The Company continues to deny that it
has any responsibility with respect to this site other than as a de minimis
party. Management is of the opinion that the outcome of the aforementioned
environmental matter will not have a material effect on the Company's operations
or financial position.
Item 6 Exhibits And Reports On Form 8-K
(a) Exhibits
(3) Certificate of Incorporation and By-laws.
(a) Restated Certificate of Incorporation (Filed as
Exhibit 3 (a) to Registration Statement on Form S-3
(Registration No. 33-63857))*.
(b) Amended and restated By-laws of the Corporation dated
April 30, 1992 (Filed as Exhibit 3(b) to the Annual Report
on Form 10-K for the year ended March 29, 1992)*.
(4) Instruments defining rights of security holders, including
indentures.
(a) Specimen Certificate of Common Stock (Filed as Exhibit 4(a)
to Registration Statement on Form S-3 (Registration
No. 33-63857))*.
11
<PAGE>
(b) Frederick County Industrial Development Revenue Bond, Deed
of Trust, Loan Agreement and Guaranty and Indemnification
Agreement dated June 17, 1982 (Filed as Exhibit 4(g) to the
Registration Statement on Form S-8 filed July 29, 1982)*. Bond
and Loan Document Modification Agreement dated December 9,
1993 (Filed as Exhibit 4(c) to the Quarterly Report on Form
10-Q for the quarter ended December 26, 1993)*.
(c) Loan and Security Agreement dated December 15, 1993 between
Trans-Tech, Inc., and County Commissioners of Frederick County
(Filed as Exhibit 4(h) to the Quarterly Report on Form 10-Q
for the quarter ended July 3, 1994)*.
(d) Amended and restated Credit Agreement dated October 1, 1997
between Alpha Industries, Inc., and Trans-Tech, Inc. and Fleet
Bank of Massachusetts and Silicon Valley Bank (Filed as
Exhibit 4(f) to the Quarterly Report on Form 10-Q for the
quarter ended December 28, 1997)*.
(10) Material Contracts.
(a) Alpha Industries, Inc., 1986 Long-Term Incentive Plan as
amended (Filed as Exhibit 10(a) to the Quarterly Report on
Form 10-Q for the quarter ended October 2, 1994)*. (1)
(b) Alpha Industries, Inc., Employee Stock Purchase Plan as
amended October 22, 1992 (Filed as Exhibit 10(b) to the Annual
Report on Form 10-K for the fiscal year ended March 28, 1993)*
and amended August 22, 1995 (Filed as Exhibit 10(b) to the
Annual Report on Form 10-K for the fiscal year ended March 31,
1996)*. (1)
(c) SERP Trust Agreement between the Registrant and the First
National Bank of Boston as Trustee dated April 8, 1991 (Filed
as Exhibit 10(c) to the Annual Report on Form 10-K for the
fiscal year ended March 31, 1991)*. (1)
(d) Alpha Industries, Inc., Long-Term Compensation Plan dated
September 24, 1990 (Filed as Exhibit 10(i) to the Annual
Report on Form 10-K for the fiscal year ended March 29,
1992)*; amended March 28, 1991 (Filed as Exhibit 10 (a) to the
Quarterly Report on Form 10-Q for the quarter ended June 27,
1993)* and as further amended October 27, 1994 (Filed as
Exhibit 10(f) to the Annual Report on Form 10-K for the fiscal
year ended April 2, 1995)*. (1)
(e) Severance Agreement dated January 13, 1997 between the
Registrant and Thomas C. Leonard (Filed as Exhibit 10(f) to
the Annual Report on Form 10-K for the fiscal year ended March
30, 1997)*. (1)
(f) Severance Agreement dated May 20, 1997 between the
Registrant and David J. Aldrich (Filed as Exhibit 10(g) to the
Annual Report on Form 10-K for the fiscal year ended March 30,
1997)*. (1)
(g) Severance Agreement dated January 14, 1997 between the
Registrant and Richard Langman (Filed as Exhibit 10(h) to the
Annual Report on Form 10-K for the fiscal year ended March 30,
1997)*. (1)
(h) Consulting Agreement dated August 13, 1992 between the
Registrant and Sidney Topol (Filed as Exhibit 10(p) to the
Annual Report on Form 10-K for the fiscal year ended April 3,
1994)*.(1)
(i) Master Lease Agreement between Comdisco, Inc. and the
Registrant dated September 16, 1994 (Filed as Exhibit 10(q) to
the Quarterly Report on Form 10-Q for the quarter ended
October 2, 1994)*.
(j) Alpha Industries, Inc., 1994 Non-Qualified Stock Option
Plan for Non-Employee Directors (Filed as Exhibit 10(r) to
the Quarterly Report on Form 10-Q for the quarter ended
October 2, 1994)*.(1)
(k) Alpha Industries Executive Compensation Plan dated
January 1, 1995 and Trust for the Alpha Industries Executive
Compensation Plan dated January 3, 1995 (Filed as Exhibit
10(p) to the Annual Report on Form 10-K for the fiscal year
ended April 2, 1995)*.(1)
(l) Alpha Industries, Inc. Savings and Retirement 401(k) Plan
dated July 1, 1996 (Filed as Exhibit 10(n) to the Annual
Report on Form 10-K for the fiscal year ended March 30,
1997)*.
12
<PAGE>
(m) Severance Agreement dated September 4, 1998 between the
Registrant and Paul E. Vincent (Filed as Exhibit 10(n) to the
Quarterly Report on Form 10-Q for the quarter ended September
27, 1998)*. (1)
(n) Change in Control Agreement between the Registrant and
James C. Nemiah dated September 25, 1998 (Filed as Exhibit
10(o) to the Quarterly Report on Form 10-Q for the quarter
ended September 27, 1998)*. (1)
(o) Lease Agreement between MIE Properties, Inc. and Trans-Tech,
Inc. (Filed as Exhibit 10(r) to the Quarterly Report on Form
10-Q for the quarter ended September 29, 1996)*.
(p) Alpha Industries, Inc., 1997 Non-Qualified Stock Option
Plan for Non-Employee Directors (Filed as Exhibit 10(r) to the
Annual Report on Form 10-K for the fiscal year ended March 29,
1998)*.(1)
(q) Alpha Industries, Inc. 1996 Long-Term Incentive Plan (Filed
as Exhibit 99 to Registration Statement on Form S-8 filed
January 22, 1999)*.(1)
(r) Severance Agreement dated December 11, 1998 between the
Registrant and Jean-Pierre Gillard.(1)
(11) Statement re computation of per share earnings**.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed with the Securities and
Exchange Commission during the fiscal quarter ended December
27, 1998.
- ---------------------
*Not filed herewith. In accordance with Rule 12b-32 promulgated pursuant to the
Securities Exchange Act of 1934, as amended, reference is hereby made to
documents previously filed with the Commission, which are incorporated herein.
**Reference is made to Note 5 of the notes to Consolidated Financial Statements
on Page 7 of this Quarterly Report on Form 10-Q, which Note 5 is hereby
incorporated by reference herein.
(1) Management Contracts.
13
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 5, 1999
----------------
Alpha Industries, Inc. and Subsidiaries
---------------------------------------
Registrant
/s/ Thomas C. Leonard
---------------------------
Thomas C. Leonard
Chief Executive Officer
President
/s/ Paul E. Vincent
---------------------------
Paul E. Vincent
Chief Financial Officer
Principal Financial Officer
Principal Accounting Officer
14
<PAGE>
EXHIBIT 10(R)
December 11, 1998
Jean Pierre Gillard
Alpha Industries, Inc.
20 Sylvan Road
Woburn, MA 01801
Re: Severance Agreement
Dear J.P.:
This letter is to confirm the severance arrangements that we have offered to you
as a Vice President of Alpha Industries, Inc. ("Alpha").
1. If: (i) a Change in Control occurs while you are employed by Alpha, and (ii)
your employment with Alpha is voluntarily or involuntarily terminated within two
(2) years thereafter, then: (a) Alpha will pay you two (2) years of salary
continuation (and any bonus guaranteed or earned prior to the date of
termination) in accordance with the terms and conditions of this letter, and (b)
all Alpha stock options then outstanding and held by you, whether or not by
their terms then exercisable, will, subject to their other terms and conditions,
become immediately exercisable and remain exercisable for a period of ninety
(90) days after the date of employment termination.
2. A "Change in Control" will be deemed to have occurred if the Continuing
Directors of Alpha shall have ceased for any reason to constitute a majority of
the Board of Directors of Alpha. For this purpose, a "Continuing Director" will
include any member of the Board of Directors of Alpha as of the date of this
letter and any person nominated for election to the Board of Directors of Alpha
by a majority of the then Continuing Directors.
3. If, at any time, (i) your employment with Alpha is involuntarily terminated
without Cause, or (ii) you resign voluntarily within 30 days after a reduction
in your salary or benefits (other than a reduction applicable generally to the
officers of Alpha and other than a reduction in the number of stock options
granted to you in any year), then: (a) Alpha will pay you two (2) years of
salary continuation (at the rate in effect before any salary reduction), and any
bonus guaranteed or earned prior to the date of termination, in accordance with
the terms and conditions of this letter, and (b) all Alpha stock options then
outstanding and held by you, whether or not by their terms then exercisable,
will, subject to their other terms and conditions, become immediately
exercisable and remain exercisable for a period of ninety (90) days after the
date of employment termination.
4. "Cause" will mean: (a) deliberate dishonesty detrimental to the best
interests of Alpha or any subsidiary, or (b) conduct constituting moral
turpitude, or (c) willful disloyalty to Alpha, or (d) refusal or failure to obey
the directions of the CEO of Alpha, or (e) incompetent performance or
substantial or continuing inattention to or neglect of duties and
responsibilities assigned to you.
<PAGE>
5. Salary continuation payments under this letter will: (a) be made at the same
rate as you were receiving on the date of employment termination; (b) be paid in
equal periodic installments at such intervals as Alpha shall generally pay its
officers, and (c) be reduced by the amount of any compensation that you receive
from any person for services rendered during the salary continuation period.
Notwithstanding the foregoing, you will not receive any salary continuation
payments for any period in which you fail to actively seek gainful employment.
6. During the term of your employment with Alpha and for the first twelve (12)
months after the date on which your employment with Alpha is voluntarily or
involuntarily terminated (the "Noncompete Period"), you will not, directly or
indirectly, whether as owner, partner, shareholder, director, consultant, agent,
employee, or otherwise, or through any person, engage in any employment,
consulting or other activity which competes with the business of Alpha or any
subsidiary or affiliate of Alpha (collectively, the "Company"). You acknowledge
and agree that your direct or indirect participation in the conduct of such
competing business alone or with any person will materially impair the business
and prospects of Alpha. During the Noncompete Period, you will not (i) attempt
to hire any director, officer, employee or agent of the Company, (ii) assist in
such hiring by any other person, (iii) encourage any person to terminate his or
her employment or business relationship with the Company, (iv) encourage any
customer or supplier of the Company to terminate its relationship with the
Company, or (v) obtain, or assist in obtaining, for your own benefit (other than
indirectly as an employee of the Company) any customer of the Company. If any of
the restrictions provided for in this Section 6 are adjudicated to be
excessively broad as to scope, geographic area, time or otherwise, said
restriction shall be reduced to the extent necessary to make the restriction
reasonable and shall be binding on you as so reduced. Any provisions of this
Section 6 not so reduced shall remain in full force and effect. It is understood
that during the Noncompete Period, you will make yourself available to the
Company for consultation on behalf of the Company, upon reasonable request and
at a reasonable rate of compensation and at reasonable times in light of any
commitment you may have to a new employer. You understand and acknowledge that
the Company's remedies at law for breach of any of the restrictions in this
Section are inadequate and that any such breach will cause irreparable harm to
the Company. You therefore agree that in addition and as a supplement to such
other rights and remedies as may exist in the Company's favor, the Company may
apply to any court having jurisdiction to enforce the specific performance of
the restrictions in this Section, and may apply for injunctive relief against
any act which would violate those restrictions.
Please sign both copies of this letter and return one to me. If you have any
questions, please feel free to call me or Jim Nemiah.
Sincerely, | AGREED TO:
|
|
|
| --------------------------
|
Thomas C. Leonard | Date:
President and CEO | ---------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ALPHA INDUSTRIES, INC. AND SUBSIDIARIES AS OF AND FOR
THE NINE MONTHS ENDED DECEMBER 27, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-28-1999
<PERIOD-START> MAR-30-1998
<PERIOD-END> DEC-27-1998
<CASH> 10,433
<SECURITIES> 12,322
<RECEIVABLES> 19,961
<ALLOWANCES> 643
<INVENTORY> 8,883
<CURRENT-ASSETS> 53,134
<PP&E> 104,605
<DEPRECIATION> 66,630
<TOTAL-ASSETS> 92,367
<CURRENT-LIABILITIES> 19,551
<BONDS> 769
0
0
<COMMON> 2,655
<OTHER-SE> 67,510
<TOTAL-LIABILITY-AND-EQUITY> 92,367
<SALES> 92,070
<TOTAL-REVENUES> 92,070
<CGS> 52,046
<TOTAL-COSTS> 78,084
<OTHER-EXPENSES> (15)
<LOSS-PROVISION> 170
<INTEREST-EXPENSE> (401)
<INCOME-PRETAX> 14,402
<INCOME-TAX> 1,440
<INCOME-CONTINUING> 12,962
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,962
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.20
</TABLE>
