<PAGE> 1
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 July 2, 2000
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 JULY 30, 2000
COMMON STOCK, PAR VALUE $.25 PER SHARE 42,829,398
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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Page
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PART 1 FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets - July 2, 2000 and April 2, 2000.............. 3
Consolidated Statements of Income - Three Months Ended July 2, 2000
and June 27, 1999......................................................... 4
Consolidated Statements of Cash Flows - Three Months Ended
July 2, 2000 and June 27, 1999............................................ 5
Notes to Consolidated Financial Statements................................ 6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................. 10
Item 3 - Quantitative and Qualitative Disclosures About Market Risk.......... 14
PART 2 OTHER INFORMATION
Item 1 - Legal Proceedings................................................... 14
Item 6 - Exhibits and Reports on Form 8-K.................................... 14
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2
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (NOTE 2)
(In thousands except share and per share amounts)
<TABLE>
<CAPTION>
JULY 2, APRIL 2,
2000 2000
(UNAUDITED) (UNAUDITED)
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ASSETS
Current assets
Cash and cash equivalents................................................ $ 27,747 $ 23,219
Short-term investments (Note 3).......................................... 108,483 123,391
Accounts receivable, trade, less allowance for doubtful
accounts of $901 and $796.......................................... 44,439 33,844
Inventories (Note 4)..................................................... 14,209 11,916
Prepayments and other current assets..................................... 1,939 2,583
Prepaid income taxes..................................................... 6,235 1,191
Deferred income taxes.................................................... 7,261 7,261
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Total current assets..................................................... 210,313 203,405
------------ -----------
Property, plant and equipment, less accumulated depreciation and
amortization of $70,612 and $67,042...................................... 81,631 75,520
Other assets................................................................... 2,144 2,099
------------ -----------
$ 294,088 $ 281,024
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt..................................... $ 111 $ 3,011
Accounts payable......................................................... 18,717 20,537
Accrued liabilities:
Payroll, commissions and related expenses.............................. 7,688 8,501
Other accrued liabilities.............................................. 892 999
------------ -----------
Total current liabilities....................................... 27,408 33,048
------------ -----------
Long-term debt........................................................... 285 345
------------ -----------
Other long-term liabilities.................................................... 2,027 2,237
------------ -----------
Deferred income taxes.......................................................... 3,301 3,301
------------ -----------
Commitments and contingencies (Note 7)
Stockholders' equity
Common stock par value $.25 per share: authorized
100,000,000 shares; issued 42,863,623 and 42,576,354 shares............ 10,716 10,644
Additional paid-in capital............................................... 208,772 197,711
Retained earnings........................................................ 41,647 33,806
Less - Treasury shares of 64,786 at cost................................. 68 68
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Total stockholders' equity............................................. 261,067 242,093
------------ -----------
$ 294,088 $ 281,024
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</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (NOTE 2)
(Unaudited)
(In thousands except per share data)
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THREE MONTHS ENDED
JULY 2, JUNE 27,
2000 1999
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Net sales...................................................................... $ 65,688 $ 38,653
Cost of sales................................................................ 36,150 21,656
Research and development expenses............................................ 7,895 5,415
Selling and administrative expenses.......................................... 11,688 6,708
--------- ---------
Operating income............................................................... 9,955 4,874
Interest expense............................................................... (16) (57)
Interest income and other, net................................................. 1,941 369
--------- ---------
Income before income taxes..................................................... 11,880 5,186
Provision for income taxes..................................................... 4,039 1,867
--------- ---------
Net income..................................................................... $ 7,841 $ 3,319
========= =========
Net income per share basic..................................................... $ 0.18 $ 0.09
========= =========
Net income per share diluted................................................... $ 0.18 $ 0.09
========= =========
Weighted average common shares basic........................................... 42,662 36,529
========= =========
Weighted average common shares diluted......................................... 44,786 38,470
========= =========
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</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 2)
(Unaudited)
(In thousands)
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THREE MONTHS ENDED
JULY 2, JUNE 27,
2000 1999
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Cash provided by operations:
Net income..................................................................... $ 7,841 $ 3,319
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization of property, plant and equipment............... 3,570 2,480
Loss on disposal of assets................................................... -- 303
Deferred income taxes........................................................ -- 2,160
Contribution of treasury shares to Savings and Retirement Plan............... -- 250
Amortization of unearned compensation - restricted stock, net................ -- 3
(Decrease) increase in other liabilities and long-term benefits.............. (210) 94
Increase in other assets..................................................... (46) (133)
Changes in operating assets and liabilities:
Accounts receivable ........................................................ (10,595) (1,723)
Inventories................................................................. (2,293) (1,200)
Prepayments and other current assets........................................ (4,400) (1,150)
Accounts payable............................................................ (1,820) (1,255)
Accrued liabilities......................................................... 8,006 (1,328)
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Net cash provided by operations........................................... 53 1,820
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Cash flows from investing activities:
Additions to property, plant and equipment..................................... (9,681) (6,776)
Proceeds from sale of equipment................................................ -- 60
Purchases of short-term investments............................................ (23,726) (54,265)
Maturities of short-term investments........................................... 38,634 8,661
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Net cash provided by (used in) investing activities....................... 5,227 (52,320)
--------- ---------
Cash flows from financing activities:
Payments on long-term debt..................................................... (2,960) (776)
Deferred charges related to long-term debt..................................... 1 21
Proceeds from sale of stock.................................................... -- 109,485
Exercise of stock options and warrants......................................... 2,207 234
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Net cash (used in) provided by financing activities....................... (752) 108,964
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Net increase in cash and cash equivalents........................................ 4,528 58,464
Cash and cash equivalents, beginning of period................................... 23,219 15,063
--------- --------
Cash and cash equivalents, end of period......................................... $ 27,747 $ 73,527
========= ========
[GRAPHIC OMITTED]
Supplemental cash flow disclosures:
Cash paid for income taxes................................................ $ 84 $ 1,649
========= ========
Cash paid for interest.................................................... $ 23 $ 52
========= ========
Supplemental disclosure of non-cash operating activities:
Tax benefit associated with the exercise of stock options.................. $ 8,890 $ --
========= ========
Compensation expense related to stock options.............................. $ 36 $ --
========= ========
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</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
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 ACQUISITION OF NETWORK DEVICE, INC.
On April 24, 2000, the Company completed its acquisition of privately-held
Network Device, Inc. ("NDI") of Sunnyvale, California. Approximately 2.67
million shares of common stock were exchanged for all outstanding shares of NDI.
Approximately 185,000 shares of Company stock were issued for the conversion of
NDI stock options into Company options.
The acquisition has been accounted for as a pooling-of-interests and
accordingly, the prior period consolidated financial statements and related
notes included herein have been restated to include the combined results of
operations, financial position and cash flows of NDI.
Prior to the merger, NDI's fiscal year ended on September 30. In recording the
business combination. NDI's prior period financial statements have been
restated to conform with the Company's year end.
The following information presents certain income statement data of the
separate companies for the prior period reflected:
THREE MONTHS ENDED
JUNE 27, 1999
------------------
(in thousands)
Net sales:
Alpha Industries, Inc. ........................... $38,605
Network Device, Inc. ............................. 140
Adjustments/Eliminations ......................... (92)
-------
$38,653
=======
Net income (loss):
Alpha Industries, Inc. ........................... $ 4,389
Network Device, Inc. ............................. (1,672)
Adjustments/Eliminations ......................... 602
-------
$ 3,319
=======
The effects of conforming NDI's accounting policies to those of the Company
were not material.
6
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTE 3 SHORT-TERM INVESTMENTS
The Company's short-term investments are classified as held-to-maturity. These
investments consist primarily of commercial paper and securities issued by
various federal agencies and corporations 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 4 INVENTORIES
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JULY 2, APRIL 2,
Inventories consist of the following: 2000 2000
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(in thousands)
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Raw materials...................................................... $ 4,801 $ 3,473
Work-in-process.................................................... 8,240 7,397
Finished goods..................................................... 1,168 1,046
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$ 14,209 $ 11,916
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NOTE 5 SEGMENT INFORMATION
The Company is organized into three reportable segments as follows:
WIRELESS SEMICONDUCTOR PRODUCTS:
The Wireless Semiconductor segment designs and manufactures gallium arsenide
integrated circuits and other discrete semiconductors for the global market for
wireless telephone handsets and broadband data applications.
CERAMIC PRODUCTS:
The Ceramics segment designs and manufactures technical ceramic and magnetic
products for wireless telephony infrastructure and other wireless markets.
APPLICATION SPECIFIC PRODUCTS:
The Application Specific segment designs and manufactures a broad range of
gallium arsenide and silicon devices and components for broadband data and
satellite communications markets.
7
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
The table below presents selected financial data by business segment for the
periods indicated.
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THREE MONTHS ENDED
-------------------------------------
JULY 2, JUNE 27,
2000 1999
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(in thousands)
Sales
-----
Wireless Semiconductor Products.................................. $ 44,509 $ 24,046
Ceramic Products................................................. 12,728 8,022
Application Specific Products.................................... 8,451 6,585
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$ 65,688 $ 38,653
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Operating Income
----------------
Wireless Semiconductor Products.................................. $ 6,779 $ 2,286
Ceramic Products................................................. 2,077 898
Application Specific Products.................................... 2,885 1,690
One-Time Acquisition Closing Costs............................... (1,786) --
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$ 9,955 $ 4,874
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</TABLE>
<TABLE>
<CAPTION>
JULY 2, APRIL 2,
2000 2000
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(in thousands)
<S> <C> <C>
Total Assets
------------
Wireless Semiconductor Products.................................. $ 101,874 $ 84,073
Ceramic Products................................................. 27,866 25,892
Application Specific Products.................................... 11,943 11,682
Corporate........................................................ 152,405 159,377
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$ 294,088 $ 281,024
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SIGNIFICANT CUSTOMERS
During the three months ended July 2, 2000, two customers accounted for
approximately 32% and 14%, respectively, of the Company's total sales. During
the three months ended June 27, 1999, one customer accounted for approximately
32% of the Company's total sales.
8
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTE 6 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 three months
ended July 2, 2000 and June 27, 1999 is as follows:
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JULY 2, JUNE 27,
2000 1999
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(in thousands)
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Weighted average shares (basic).................................. 42,662 36,529
Effect of dilutive stock options................................. 2,124 1,941
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Weighted average shares (diluted)................................ 44,786 38,470
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NOTE 7 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.
9
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table shows our statement of operations data as a percentage of
sales for the periods indicated. All data represented in the table has been
restated to reflect the Company's April 24, 2000 acquisition of Network Device,
Inc., which was accounted for as a pooling-of-interests:
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Three Months Ended
July 2, June 27,
2000 1999
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Sales................................................................ 100.0% 100.0%
Cost of sales ....................................................... 55.0 56.0
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Gross margin......................................................... 45.0 44.0
Research and development expenses.................................... 12.0 14.0
Selling and administrative expenses.................................. 17.8 17.4
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Operating income..................................................... 15.2 12.6
Other income (expense), net.......................................... 2.9 0.8
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Income before income taxes........................................... 18.1 13.4
Provision for income taxes........................................... 6.1 4.8
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Net income.......................................................... 11.9% 8.6%
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SALES. Sales increased 69.9% to $65.7 million for the first quarter of fiscal
2001 from $38.7 million for the first quarter of fiscal 2000. New orders
increased 72.0% to $72.2 million for the first three months of fiscal 2001,
compared with $42.0 million for the same period last year. The increase in sales
and orders was primarily attributable to high growth experienced by our Wireless
Semiconductor and Ceramic Products Groups as a result of increased demand for
wireless products and broadband data applications. Deliveries to two customers
represented approximately 32% and 14%, respectively, of our total sales for the
first three months of fiscal 2001. Deliveries to one customer represented
approximately 32% of our total sales for the first three months of fiscal 2000.
GROSS PROFIT. Gross profit increased 73.8% to $29.5 million or 45.0% of sales
for the first three months of fiscal 2001 from $17.0 million or 44.0% of sales
for the comparable period last year. This increase was primarily a result of
increasingly higher margins experienced in our Ceramic Products and Application
Specific Products Groups as they both continued to leverage capacity and improve
operating efficiencies. We were also able to successfully absorb NDI operations
and ramp production in our Woburn facility, while maintaining gross margin in
our Wireless Semiconductor Products Group.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses increased
45.8% to $7.9 million or 12.0% of sales for the first quarter of fiscal 2001
from $5.4 million or 14.0% of sales for the comparable period last year. The
increase in research and development expenses was primarily attributable to the
added costs associated with NDI's development capabilities, in addition to our
ongoing development activities directed toward new processes and applications in
our Wireless Semiconductor Products Group. Approximately 85% of total research
and development costs were focused on this segment.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses totaled
$11.7 million or 17.8% of sales for the first quarter of fiscal 2001. Included
in the $11.7 million for the first quarter of fiscal 2001 was approximately $1.8
million in one-time closing costs associated with the acquisition of NDI, which
was completed on April 24, 2000. Excluding these one-time costs, selling and
administrative expenses for the first quarter of fiscal 2001 totaled $9.9
million or 15.1% of sales compared with $6.7 million or 17.4% of sales for the
10
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
same period last year. The increase in selling and administrative expenses
was attributable to increased direct selling costs resulting from higher sales
volumes, as well as increased training and recruiting costs. Because we have the
infrastructure in place to support our sales growth, selling and administrative
expenses as a percentage of sales for the first quarter of fiscal 2001 declined
when compared to the same period last year.
OTHER INCOME (EXPENSE), NET. Other income, net, for the first quarter ended July
2, 2000 increased $1.6 million or 517% over the comparable period last year. The
increase was primarily attributable to an increase in interest income as a
result of considerably higher average levels of cash, cash equivalents and
short-term investments.
PROVISION FOR INCOME TAXES. Our effective tax rates for the first three months
of fiscal 2001 and 2000 were 34% and 36%, respectively.
WEIGHTED AVERAGE OUTSTANDING SHARES. Weighted average outstanding shares (basic)
increased 6.1 million shares for the first quarter ended July 2, 2000 over the
comparable period last year. The increase was primarily attributable to the
public stock offering completed in June 1999, which increased our outstanding
shares by approximately 6.6 million. The weighting of those shares is fully
reflected in the weighted average calculation for the three months ended July 2,
2000 compared to only one-month inclusion in the weighted average calculation
for the three months ended June 27, 1999. Additionally, weighted average
outstanding shares for both periods have been restated to reflect the
approximate 2.8 million shares issued in exchange for all outstanding shares and
options of NDI.
BUSINESS SEGMENTS
The table below displays sales and operating income by business segment for the
first quarter of fiscal 2001 and 2000. All data represented in the table has
been restated to reflect the Company's acquisition of Network Device, Inc. on
April 24, 2000:
<TABLE>
<CAPTION>
Three Months Ended
July 2, June 27,
2000 1999
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<S> <C> <C>
(in thousands)
SALES
Wireless Semiconductor Products................................ $ 44,509 $ 24,046
Ceramic Products............................................... 12,728 8,022
Application Specific Products.................................. 8,451 6,585
------- --------
$ 65,688 $ 38,653
======== ========
OPERATING INCOME
Wireless Semiconductor Products................................ $ 6,779 $ 2,286
Ceramic Products............................................... 2,077 898
Application Specific Products.................................. 2,885 1,690
One-Time Acquisition Closing Costs............................. (1,786) --
-------- -------
$ 9,955 $ 4,874
======== =======
</TABLE>
WIRELESS SEMICONDUCTOR PRODUCTS. The Wireless Semiconductor Products Group's
results for the first quarter of fiscal 2001 and the comparable quarter last
year have been restated to include the operating results of NDI for the same
periods. Sales for the Wireless Semiconductor Products Group increased 85.1% to
$44.5 million for the first quarter of fiscal 2001 from $24.0 million for the
same quarter last year. The increase was primarily attributable to increased
demand and penetration into our two targeted markets- wireless and broadband.
Operating income for the Wireless Semiconductor Group more than doubled to $6.8
million for the first three months of fiscal 2001 from $2.3 million for the
comparable quarter last year. The increase was primarily attributable to
increased sales and improved operating efficiencies as this group continued to
leverage capacity and improve yields. In addition, NDI has been fully integrated
into this segment, contributing productive GaAs fab capacity and technology
capabilities in support of future growth.
11
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CERAMIC PRODUCTS. Sales for the Ceramic Products Group increased 58.7% to $12.7
million for the first quarter of fiscal 2001 from $8.0 million for the same
quarter last year. The increase was primarily attributable to growth in demand
and increased penetration in the wireless infrastructure and broadband markets.
Operating income for the Ceramic Products Group more than doubled to $2.1
million for the first quarter of fiscal 2001 from $898 thousand for the same
quarter last year. The increase in operating income was primarily due to
improved operating efficiencies, including the leveraging of capacity and
increased manufacturing automation.
APPLICATION SPECIFIC PRODUCTS. Sales for the Application Specific Products Group
increased 28.3% to $8.5 million for the first quarter of fiscal 2001 from $6.6
million for the same quarter last year. The increase was primarily attributable
to this segment's ability to generate revenues by harvesting end of life cycle
products and specialty products in non-strategic markets.
Operating income for the Application Specific Products Group increased 70.7% to
$2.9 million for the first quarter of fiscal 2001 from $1.7 million for the same
quarter last year. The group continued to realign its cost structure to current
volumes, reporting a gross margin of over 55% and an operating margin of 34.1%
for the first quarter of fiscal 2001.
FINANCIAL CONDITION
At July 2, 2000, working capital totaled $182.9 million and included $136.2
million in cash, cash equivalents and short-term investments. Annualized
inventory turns for the first quarter ended July 2, 2000 increased to 11.1
compared to 9.2 for the same period last year. Additionally, average days sales
outstanding for the first quarter ended July 2, 2000 decreased to 54 days
compared to 56 days for the same period last year. Uses of cash for the quarter
ended July 2, 2000 included $9.7 million for capital expenditures and
$3.0 million for the repayment of NDI's long-term debt.
Of the $9.7 million in capital expenditures, approximately $8.3 million was
related to the Wireless Semiconductor Products Group as we continued our
investment in the semiconductor GaAs wafer fabrication operation and integrated
circuit and discrete semiconductor assembly and test areas. In September 1999,
we announced the completion of the first phase of a major expansion program to
enhance and expand the available clean room space in our GaAs IC facility in
Massachusetts. The new clean room space is complete and in use, and additional
manufacturing equipment has been installed and brought to full productivity. The
second phase, which involved the installation of additional production equipment
within the existing facility, has been completed. We are in the initial stages
of the third phase of this project, which involves the conversion of our
Massachusetts GaAs IC facility to allow us to manufacture product on six inch
wafers. We expect to complete this phase within twelve to fifteen months.
We believe that anticipated cash from operations, available funds and borrowings
under our revolving credit agreement, together with the net proceeds from our
June 1999 stock offering, will be adequate to fund our currently planned working
capital and capital expenditure requirements, at least through fiscal 2001.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" establishes accounting and
reporting standards for derivatives and hedging activities. In June 2000, the
Financial Accounting Standards Board issued SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities," and amendment
to SFAS No. 133. These statements require that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. These statements will be effective
for our fiscal 2002. We are currently evaluating SFAS No. 133 and SFAS No. 138.
We do not expect these new statements to have a material effect on our
consolidated financial position, results of operations or cash flow.
12
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
OTHER MATTERS
Safe Harbor Statement - Except for the historical information contained herein,
this report contains forward-looking statements that constitute the Company's
current intentions, hopes, beliefs, expectations or predictions of the future,
which are, therefore, inherently subject to risks and uncertainties. The
Company's actual results could differ materially from those anticipated in the
Company's forward-looking statements based on various factors, including without
limitation: cancellation or deferral of customer orders, dependence on a small
number of large customers, 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 performance is included in the Company's
periodic reports filed with the SEC, including but not limited to the Company's
Form 10-K for the year ended April 2, 2000, and subsequent Forms 10-Q. The
Company cautions readers not to place undue reliance upon any such
forward-looking statements, which speak only as of the date made. The Company
expressly disclaims any obligations or undertaking to release publicly any
updates or revisions to any such statements to reflect any change in the
Company's expectations or any change in events, conditions or circumstances on
which any such statement is based.
13
<PAGE> 14
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
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 July 2, 2000,
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 $396 thousand at July 2, 2000. 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))*.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
(b) 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)*.
(c) Revolving credit agreement dated November 1, 1999 between
Alpha Industries, Inc., and Trans-Tech, Inc. and Fleet Bank
of Massachusetts and Silicon Valley Bank (Filed as Exhibit
4(c) to the Quarterly Report on Form 10-Q for the quarter
ended December 26, 1999)*.
(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 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)
(f) 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)
(g) 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)
(h) 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)
(i) 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)
(j) 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)*.
(k) 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 fiscal quarter
ended September 27, 1998)*. (1)
(l) Severance Agreement dated December 11, 1998 between the
Registrant and Jean-Pierre Gillard (Filed as Exhibit 10(r)
to the Quarterly Report on Form 10-Q for the fiscal quarter
ended December 27, 1998)*. (1)
(m) 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)
(n) Alpha Industries, Inc. 1996 Long-Term Incentive Plan (Filed
as Exhibit 99 to Registration Statement on Form S-8 filed
January 22, 1999)*.(1)
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<PAGE> 16
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
(o) Alpha Industries, Inc. 1999 Employee Long-Term Incentive
Plan dated April 27, 1999 (Filed as Exhibit 10(q) to the
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 27, 1999)*.(1)
(p) Severance Agreement dated September 13, 1999 between the
Registrant and Thomas C. Leonard (Filed as Exhibit 10(p) to
the Quarterly Report on Form 10-Q for the fiscal quarter
ended September 26, 1999)*.(1)
(11) Statement re computation of per share earnings.**
(27) Financial Data Schedules.
(b) Reports on Form 8-K
On May 8, 2000, Form 8-K was filed with the SEC stating that
the Company had completed its acquisition of Network Device,
Inc. on April 24, 2000.
--------------
* 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
by reference herein.
** Reference is made to Note 6 of the notes to Consolidated Financial
Statements on Page 9 of this Quarterly Report on Form 10-Q, which Note 6 is
hereby incorporated by reference herein.
(1) Management Contracts.
16
<PAGE> 17
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
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: August 9, 2000
--------------
Alpha Industries, Inc. and Subsidiaries
----------------------------------------
Registrant
/s/ David J. Aldrich
----------------------------------------
David J. Aldrich
Chief Executive Officer
President
/s/ Paul E. Vincent
----------------------------------------
Paul E. Vincent
Chief Financial Officer
Principal Financial Officer
Principal Accounting Officer
Secretary
17
