<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NUMBER 1-7713
AMDAHL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-1728548
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
1250 EAST ARQUES AVENUE
SUNNYVALE, CALIFORNIA 94088-3470
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
Registrant's telephone number: (408) 746-6000
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of class Name of each exchange on which registered
-------------- -----------------------------------------
<S> <C>
common stock, par value of $.05 per share American Stock Exchange, Inc.
London Stock Exchange
</TABLE>
----------------
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. [_]
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 [_]
Aggregate market value of the registrant's common stock held by non-
affiliates, based on the closing sales price on March 7, 1994: $351,513,118.
Number of shares of common stock, par value of $.05 per share, outstanding as
of March 7, 1994: 115,120,751.
DOCUMENTS INCORPORATED BY REFERENCE
THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE IN THOSE PARTS OF THIS
ANNUAL REPORT ON FORM 10-K AS SET FORTH BELOW, BUT ONLY TO THE EXTENT
SPECIFICALLY STATED IN SUCH PARTS: (1) REGISTRANT'S PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS SCHEDULED TO BE HELD ON MAY 5, 1994 (THE "PROXY
STATEMENT"). THE INFORMATION REQUIRED BY PART III OF THIS FORM 10-K IS
INCORPORATED BY REFERENCE FROM THE PROXY STATEMENT AS PROVIDED ABOVE; AND, (2)
REGISTRANT'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER
31, 1993 (THE "ANNUAL REPORT"). PORTIONS OF THE INFORMATION REQUIRED BY PARTS I
AND II OF THIS FORM 10-K ARE INCORPORATED BY REFERENCE FROM THE ANNUAL REPORT
AS PROVIDED ABOVE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
General
Amdahl Corporation ("Amdahl" or the "Company"), organized in 1970,
provides large-scale, high-performance general-purpose computer systems as well
as software, storage and communications products. The Company also provides
consulting and professional services. Its principal computer systems are
architecturally compatible at specific software and hardware interface levels
with the basic functions of competing IBM computer systems. The Company also
develops and markets certain products for the open systems marketplace.
Amdahl's customer base is diversified and includes large corporations, financial
institutions, public utilities, government agencies and universities with high-
volume data processing requirements.
Since its first product shipment in June 1975, the Company has
continued to introduce new and more powerful computer systems. In December 1991
Amdahl began initial shipments of its newest system, the 5995M series. In 1993
Amdahl began delivery of higher performance models in this series. Since 1982
Amdahl has also offered high-performance direct access storage devices (DASD)
and front-end communications processors (FEP) for use with large-scale computer
systems. In the third quarter of 1992 the Company began shipments of its newest
line of DASD.
In addition to its primary product line of large-scale computers and
storage systems, Amdahl offers software products, educational and professional
services, and hardware maintenance services. As part of its software products,
the Company has developed and offers Huron, a comprehensive applications
development and production system, and UTS, a UNIX based operating system for
the mainframe environment.
During the latter half of 1993 the Company organized itself along
lines of business consisting of its compatible processor, storage, maintenance
and professional services, Huron and open systems operations in order to enable
Amdahl to more effectively diversify its product offerings beyond those
associated primarily with its large-scale computer systems. The Company intends
to enhance its professional and consulting services business and also expects to
enter into partnerships and alliances with other companies as a way of enhancing
its existing product offerings or developing new products and services. For
example, in June 1993 Amdahl and Electronic Data Systems Corporation ("EDS")
formed a joint venture, Antares Alliance Group, in which Amdahl holds an 80
percent (80%) interest, for the purpose of continuing the development and
marketing of Huron as well as certain software products contributed by EDS. The
Company has also entered into a series of marketing and development agreements
with Sun Microsystems Inc. ("Sun") pursuant to which the Company will
<PAGE>
offer certain Sun products through its open systems organization. Until its
Huron, professional services and open systems offerings are more fully
developed, however, the large-scale compatible processor business, including its
related storage product and maintenance service components, will continue to be
the primary source of the Company's revenues.
Fujitsu Limited ("Fujitsu"), a major Japanese manufacturer of computer
systems, telecommunications equipment and electronic components, owns
approximately 45.01% of the Company's outstanding common stock and is of
substantial importance to the Company in the areas of manufacturing and
technical assistance and supply of subsystems and components. Fujitsu also
manufactures the Company's DASD and FEP products. In November 1993 Amdahl and
Fujitsu entered into a preliminary agreement pursuant to which Amdahl and
Fujitsu would participate in the joint development of the Company's next
generation of compatible mainframes. Under the agreement, Fujitsu will
undertake primary responsibility for the design and manufacture of these
systems. Also in January 1994 the Company and Fujitsu entered into an
agreement under which Fujitsu would provide loans to the Company in an aggregate
amount not to exceed $100,000,000. Because of Amdahl's increased dependence on
Fujitsu as its supplier of future large-scale compatible processors and
Fujitsu's participation with the Company in certain other ongoing research and
development activities, the ability to negotiate favorable pricing terms with
respect to future product requirements and to maintain a satisfactory working
relationship are important.
Marketing
The Company markets its products directly through its sales force to
customers in the United States, Canada, Western Europe and the Pacific Basin,
through Fujitsu in Brazil, Japan, Malaysia and South Korea and through other
distributors in Saudi Arabia, Latin America and South Africa. In 1993
approximately 38% of Amdahl's revenues were from international operations.
The Company offers its products for sale and lease. For further
information on leasing see "Note 4 - Equipment Leasing and Third Party
Transactions" on pages 21 and 22 of the Annual Report.
Service for Amdahl products is provided under service and parts
warranty or separate maintenance agreements. For further information on
warranties, see "Note 1 - Summary of Accounting Policies" on pages 18 and 19 of
the Annual Report.
While it may receive "letters of intent" and "orders" from potential
customers, typically the Company does not have a firm contract with a customer
until shortly before shipment. In addition, the Company in many cases will
permit cancellation of an order without charge at any time until actual
delivery, which
<PAGE>
is common practice in the industry. For these reasons, the Company does not
believe indications of customer interest and "orders" constitute a firm
"backlog" and believes that a disclosure of a value of unfilled orders is not a
meaningful indicator of revenues nor material to an understanding of its
business.
Major Customer Information and Geographic Area Data
The information under "Note 8 - Major Customer, Geographic Area and
Product Line Data" on pages 24 and 25 of the Annual Report is incorporated by
reference.
Competition
The principal segment of the data processing industry in which the
Company competes remains the highly competitive large-scale computer system and
related storage products and services segment. Amdahl markets its products in
competition with several major multinational companies with substantial
resources. IBM is Amdahl's principal competitor and is dominant in this segment
of the computer industry. Competition is based primarily on price and
performance, product enhancements and new product development, and customer
service and support. However, price/performance relationships can change as new
models or enhancements to existing models are introduced and as prices change.
The financial strength and long-term viability of the supplier are also
important.
IBM competitive actions in the large-scale computer market and related
submarkets have historically taken the form of price reductions and shortened
product life cycles. As a result, selling prices and residual values of large-
scale computer systems have declined substantially over time. Also, the
continuing introduction by IBM of certain product modifications requires that
Amdahl also make comparable changes to remain fully compatible. Moreover, IBM
has indicated its intention to utilize lower cost technologies in future
versions of its large-scale computer systems. While Amdahl has announced
similar intentions, a successful introduction by IBM would require a timely
response by the Company in order to remain competitive on a price/performance
basis.
The growth in the market for large-scale computers itself has also
been affected by rapid technological changes in recent years which have enabled
smaller, less costly computer systems to compete for the development of
application programs historically run in mainframe environments.
The areas into which the Company is seeking to diversify its product,
software and service offerings are also intensely competitive. Competitors
include both highly specialized companies as well as fully integrated vendors
such as IBM, Digital Equipment Corporation and Hewlett-Packard Company. New
<PAGE>
computer products, particularly in the open systems marketplace, are subject to
rapid technological changes, short product life cycles, frequent product
enhancements and price reductions. For software products, ease of use, product
reliability, quality of technical support and product capabilities are
important. Strength of distribution channels and brand name recognition are also
of great importance.
While the Company believes that it can compete successfully in its
established and newer areas of business, there remain the inherent risks
attendant with the introduction of new technologies and the Company's lack of
extensive experience in developing product offerings not related to its
traditional compatible processor business.
For further discussion of competitive conditions, see "Management's
Discussion & Analysis - Results of Operations and Factors That May Affect Future
Operating Results" on pages 31 through 33 of the Annual Report.
Manufacturing
Amdahl manufactures its computers in Sunnyvale, California, and near
Dublin, Ireland. Major subsystems and components used in its computers are
manufactured by Amdahl as well as by Fujitsu. As part of its recently announced
restructuring programs, Amdahl has significantly reduced its manufacturing
capacity, partly to address the lower levels of business experienced in large-
scale mainframes and in anticipation of greater dependence on Fujitsu for the
supply of future mainframe products.
Amdahl purchases under contracts with Fujitsu certain subassemblies
and substantially all of its large-scale integrated semiconductor components and
high-density printed circuit boards. The FEP and DASD products are manufactured
by Fujitsu to Amdahl specifications.
While the Company seeks to identify qualified second sources of supply
and to maintain adequate inventories, it may have only one source of supply for
certain critical components, and material interruptions in product shipments
could occur if those components were unavailable for a period of time. In
addition, if for a substantial period Fujitsu failed to deliver subassemblies,
DASDs or certain other equipment as required under manufacturing agreements with
Amdahl, or should Fujitsu fail to meet development or manufacturing schedules
for future mainframe products, serious interruptions to the Company's delivery
schedules would occur, which would have a material adverse effect on the
Company.
The current supply agreements between Amdahl and Fujitsu generally
provide for fixed U.S. dollar prices so long as the U.S.-Japanese currency
exchange rate remains within a specified
<PAGE>
range. If the exchange rate fluctuates outside of this range, prices are to be
adjusted pursuant to a formula under which Amdahl and Fujitsu will share equally
any benefits or disadvantages. For further information regarding purchases from
Fujitsu see "Note 3 - Relationship with Fujitsu Limited" on pages 20 and 21 of
the Annual Report.
Product Development
The Company's future prospects depend upon its successful development
and introduction of new products. During the last three years, the Company's
product development costs, including amounts expended on development of both
existing and new products, amounted to $334,514,000 in 1993, $372,365,000 in
1992 and $312,541,000 in 1991. However, as part of recent restructuring
efforts, the Company has substantially reduced certain of its product
development activities and expects that future product development expenditures
will be considerably below those of recent years. The Company intends to rely,
to a much greater degree than in the past, on strategic alliances, partnering
arrangements and OEM relationships for major new products or product components.
Patents, Licenses and Related Matters
Amdahl has an active program to file applications for and obtain
patents in the United States and in selected foreign countries where a potential
market for its products exists. The Company's general policy has been to seek
patent protection for those inventions and improvements likely to be
incorporated in its products or otherwise expected to be of value. While Amdahl
believes that its patents and applications have value, it also believes that its
competitive position depends on the ability to successfully enter into
partnering or OEM agreements with outside suppliers and the technical competence
of its development personnel.
Amdahl and IBM concluded an agreement pursuant to which each party
grants to the other nonexclusive worldwide licenses as to certain of each
other's patents to be issued on patent applications having an effective filing
date prior to January 1, 1998. Under the agreement, which supersedes prior
agreements between the companies, Amdahl is licensed under substantially all IBM
patents relating to computer systems, communications networks and related
semiconductor technology, generally covering the planned products of the Company
while IBM is licensed under substantially all Amdahl patents.
The Company has also entered into licensing agreements with others and
contemplates entering into additional license agreements under patents or know-
how in the routine conduct of its business.
<PAGE>
Employees
As of February 25, 1994, the Company had approximately 5,552
full-time employees.
Executive Officers of Amdahl
The following sets forth certain information regarding the executive
officers of Amdahl as of February 1, 1994.
Mr. John C. Lewis, 58, has been Chairman of the Board since 1987. He
was President of Amdahl from 1977, when he joined the Company, until 1987. He
was the Company's Chief Executive Officer from 1983 until 1992.
Mr. Eugene R. White, 62, has been Vice Chairman of the Board since
1987. He served as Chairman of the Board from 1979 to 1987 and as Chief
Executive Officer from 1979 to 1983. From 1977 until 1979, Mr. White was Deputy
Chairman of the Board, and he was Amdahl's President from 1974 to 1977.
Mr. E. Joseph Zemke, 53, was elected President and a Director in 1987
and has been the Company's Chief Executive Officer since May 1992. He was the
Chief Operating Officer from 1985, when he joined the Company, until 1992.
Mr. David L. Anderson, 46, has been Vice President and General Manager
of Compatible Systems since 1993. Mr. Anderson joined the Company in 1971 and
was elected Vice President, Processor Product Management in 1987. In 1989 Mr.
Anderson became Vice President of Advanced Systems and in 1992 became Vice
President of Compatible Products Development.
Mr. John C. Cavalier, 54, joined the Company in 1993 as Vice President
and General Manager, Huron Sales and Development. In mid-1993 Mr. Cavalier
became President and Chief Executive Officer of Antares Alliance Group. From
1990 through 1992 Mr. Cavalier was President and Chief Executive Officer of
Bimillennium Corporation and from 1987 through 1990 he was President and Chief
Executive Officer of ShareBase Corporation.
Mr. William F. Ferone, 49, has been Vice President and General Manager
of Customer Services since 1992. He joined the Company in 1978 and was elected
Vice President of Customer Services in 1987. In 1988 he became Vice President
of Unix Systems. Mr. Ferone was elected to the position of Vice President,
Marketing, Open Systems Operations in 1990.
Mr. William Flanagan, 54, joined the Company in 1973 and was elected
Vice President of Manufacturing in 1985. Mr. Flanagan has been Vice President
of Operations, Compatible Systems since 1993.
<PAGE>
Mr. Charles E. Fonner, 50, joined the Company in 1979 and was elected
Vice President of Systems Marketing in 1991. In 1992 Mr. Fonner became the Vice
President of Product Management and Marketing.
Mr. Orval J. Nutt, 53, joined the Company in 1976 and was elected Vice
President of Corporate Marketing in 1986 and Vice President and General Manager
of U.S. Operations in 1991. In 1993 Mr. Nutt became Vice President and General
Manager of Worldwide Field Operations.
Mr. William F. O'Connell, Jr., 66, was appointed Senior Vice
President, Software Business Development in 1993. Mr. O'Connell joined the
Company in 1977 as Senior Vice President, Corporate Marketing, and in 1979
became Senior Vice President, International Operations. Mr. O'Connell became
Senior Vice President, Corporate Strategy in 1983.
Mr. Anthony M. Pozos, 53, has been Senior Vice President, Human
Resources and Corporate Services since 1986. Mr. Pozos joined the Company in
1976 as Corporate Vice President, Industrial Relations, and in 1983 assumed
responsibility for Corporate Services.
Mr. Edward F. Thompson, 55, has been Chief Financial Officer and
Secretary since 1983. Mr. Thompson joined the Company in 1976, was elected
Treasurer in 1977 and became a Corporate Vice President in 1980.
Mr. Ernest B. Thompson, 57, joined the Company in 1978 as Controller.
He was elected Corporate Vice President in 1980.
Ms. Erika Williams, 46, joined the Company in 1978 and was elected
Vice President of Processor Business Management in 1990 and Vice President of
Compatible Products Management in 1992. In 1993 Ms. Williams was appointed Vice
President, Compatible Products Marketing, and then Vice President and General
Manager, Enterprise Storage Systems.
Mr. David B. Wright, 44, joined the Company in 1987 as a regional Vice
President of Sales. After being named Vice President of Commercial U.S. Sales
in 1989 and Vice President and General Manager of European Operations in 1992,
Mr. Wright was appointed Vice President and General Manager of Worldwide Field
Operations in 1993.
<PAGE>
ITEM 2. PROPERTIES
Amdahl's corporate headquarters is in Sunnyvale, California, as are
its principal United States manufacturing, marketing, engineering and
educational facilities, of which it owns 511,543 square feet and leases 944,041
square feet. Amdahl owns 117,430 square feet of expansion space which is
currently leased to outside companies, and several parcels totalling 15.6 acres
in the San Jose/Sunnyvale area, of which 7.25 acres are being held as potential
future building sites. Amdahl owns a 50,000 square foot administrative facility
in Dogmersfield Park, England, a 260,000 square foot manufacturing facility in
Dublin, Ireland and a 6,000 square foot engineering facility in Rexburg, Idaho.
Amdahl also leases approximately 109 sales and service offices
throughout the United States, Canada, Europe and the Pacific Basin. See also
"Note 12 - Lease Commitments" on page 29 of the Annual Report.
Restructuring actions, which began in 1993, caused certain Company
facilities and properties to be under utilized. Included within this group of
facilities and properties are 485,000 square feet of leased properties
worldwide, the Dublin manufacturing facility, the Dogmersfield Park facility,
the Rexburg facility and 8.35 acres of San Jose property. The 485,000 square
feet of leased properties are being, or will be, offered for sublease. The
Dogmersfield Park facility, Rexburg facility and 8.35 acres of San Jose property
are being offered for sale.
ITEM 3. LEGAL PROCEEDINGS
Multiple securities class action lawsuits were filed against the
Company and certain of its directors, officers and other employees in September
and October of 1992 in the United States District Court for the Northern
District of California. These cases were subsequently consolidated into a
single action. On September 10, 1993 the Court gave final approval to a
settlement of this litigation under which all claims in the litigation were
dismissed and finally settled, and plaintiffs and their attorneys received a
cash payment from the Company and its insurer. The settlement payment did not
have a material impact on the Company's financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY OWNERS
Not Applicable.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK
HOLDER MATTERS
The information under "Common Stock Dividends and Price Range" on page 35
of the Annual Report is incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information under "Selected Financial Data" on page 35 of the Annual
Report is incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information under "Management's Discussion & Analysis" on pages 31
through 34 of the Annual Report is incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information on pages 13 through 35 of the Annual Report is incorporated
by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
<PAGE>
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information under "Certain Information with Respect to Directors and
Officers - Nominees to Board of Directors" in the Proxy Statement is
incorporated by reference. Also refer to the item entitled "Executive Officers
of Amdahl" in Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information under "Certain Information with Respect to Directors and
Officers - Director Compensation" and "Executive Compensation" (but excluding
the information under "Compensation Committee Report on Executive Compensation"
and "Company Stock Price Performance") in the Proxy Statement is incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under "Principal Stockholders" and "Certain Information
with Respect to Directors and Officers - Security Ownership" in the Proxy
Statement is incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under "Loans to Executive Officers" and "Compensation
Committee Interlocks and Insider Participation" in the Proxy Statement is
incorporated by reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
Consolidated Financial Statements
The following consolidated financial statements and related notes, together
with the report thereon of Arthur Andersen & Co., independent public
accountants, are incorporated by reference from the Annual Report:
Consolidated Balance Sheets--December 31, 1993 and December 25, 1992.
Consolidated Statements of Operations for each of the three years in the
period ended December 31, 1993.
Consolidated Statements of Cash Flows for each of the three years in the
period ended December 31, 1993.
Consolidated Statements of Stockholders' Equity for each of the three years
in the period ended December 31, 1993.
(a)(2) Schedules Supporting Consolidated Financial Statements
Report of Independent Public Accountants
on Schedules
II Accounts Receivable from Employees
V Property and Equipment
VI Accumulated Depreciation and Amortization
of Property and Equipment
VIII Valuation and Qualifying Accounts
and Reserves
IX Short-term Borrowings
X Supplementary Income Statement Information
Schedules Omitted
In accordance with the rules of Regulation S-X, the other required
schedules are not submitted because (a) they are not applicable to or required
by the Company or (b) the information required to be set forth therein is
included in the consolidated financial statements or other schedules.
<PAGE>
(a)(3) Exhibits
Exhibit Description
------- -----------
3(a) Restated Certificate of Incorporation, as amended
(incorporated by reference to Exhibit 3(a) to
Form 10-K for fiscal year ended December 25,
1992)
3(b) Restated By-Laws (incorporated by reference to
Exhibit 3(b) to Form 10-K for fiscal year ended
December 25, 1992)
Executive Compensation Plans and Agreements
-------------------------------------------
10(a) Officer Loan Program, as amended (incorporated by
reference to Exhibit 10(a) to Form 10-K for fiscal
year ended December 27, 1991)
10(b) Amdahl Corporation Restricted Stock Plan, as
amended (incorporated by reference to Exhibit
10(c) to Form 10-Q for the quarter ended June 26,
1992)
10(c) Amdahl Corporation Stock Option Plan (1971), as
amended (incorporated by reference to Exhibit
10(c) to Form 10-K for fiscal year ended December
27, 1991)
10(d) Amdahl Corporation Stock Option Plan (1974), as
amended (incorporated by reference to Exhibit
10(a) to Form 10-Q for the quarter ended June 26,
1992)
10(e) Amdahl Corporation Non-Qualified Stock Option Plan
(1982), as amended (incorporated by reference to
Exhibit 10(b) to Form 10-Q for the quarter ended
June 26, 1992)
*10(f) Amdahl Corporation Executive Incentive Performance
Plan, as amended
10(g) Amdahl Corporation Director Fee Deferral Election
Plan, as amended (incorporated by reference to
Exhibit 10(g) to Form 10-K for fiscal year ended
December 25, 1992)
10(h) Amdahl Corporation Deferral Election Plan, as
amended (incorporated by reference to Exhibit
10(h) to Form 10-K for fiscal year ended December
25, 1992)
10(i) Form of Option Agreement under the Stock Option
Plan (1974) relating to a stock option granted to
<PAGE>
a non-employee director of Amdahl (incorporated by
reference to Exhibit 4(b) of Registrant's
Registration Statement 33-55460, filed December 7,
1992)
10(j) Form of Notice of Grant of Stock Option and Grant
Agreement for incentive stock option grants under
the Stock Option Plan (1974) (incorporated by
reference to Exhibit 4(f) of Registrant's
Registration Statement 33-35547, filed June 22,
1990)
10(k) Form of Automatic/Non-Employee Director Grant Non-
Qualified Stock Option Agreement dated November
15, 1988 under the Stock Option Plan (1974)
(incorporated by reference to Exhibit 4(i) of
Registrant's Registration Statement 33-35547,
filed June 22, 1990)
10(l) Form of Automatic/Non-Employee Director Grant Non-
Qualified Stock Option Agreement under the Stock
Option Plan (1974) (incorporated by reference to
Exhibit 4(j) of Registrant's Registration
Statement 33-35547, filed June 22, 1990)
10(m) Form of Non-Qualified Stock Option Agreement for
repriced options under the Stock Option Plan
(1971) and Stock Option Plan (1974) (incorporated
by reference to Exhibit 4(m) of Registrant's
Registration Statement 33-35547, filed June 22,
1990)
10(n) Form of Notice of Grant of Stock Option and Grant
Agreement for non-qualified stock option grants
under the Stock Option Plan (1971), Stock Option
Plan (1974) and Non-Qualified Stock Option Plan
(1982) (incorporated by reference to Exhibit 4(o)
of Registrant's Registration Statement 33-35547,
filed June 22, 1990)
10(o) Form of Addendum to Stock Option Agreement
(incorporated by reference to Exhibit 4(m) of
Registrant's Registration Statement 33-55460,
filed December 7, 1992)
10(p) Form of Non-Qualified Stock Option Agreement dated
December 1, 1992 (incorporated by reference to
Exhibit 10(p) to Form 10-K for fiscal year ended
December 25, 1992)
<PAGE>
10(q) Form of Restricted Stock Purchase Agreement under
the Restricted Stock Plan (incorporated by
reference to Exhibit 4(z) of Registrant's
Registration Statement 33-35547, filed June 22,
1990)
10(r) Form of Addendum to Restricted Stock Purchase
Agreement (incorporated by reference to Exhibit
10(r) to Form 10-K for fiscal year ended December
25, 1992)
*10(s) Termination Agreement With Named Executive Officer
dated July 1, 1993
Other Material Agreements
-------------------------
*10(t) Letter Agreement between Amdahl and Fujitsu dated
April 3, 1984
10(u) Agreement between Amdahl and Fujitsu dated March
4, 1982, regarding Conversion and Modification of
License Rights (incorporated by reference to
Exhibit 10(t) to Form 10-K for fiscal year ended
December 25, 1992)
10(v) Credit Agreement dated November 21, 1990 among
Amdahl, certain Amdahl subsidiaries and certain
banks (Portions of this exhibit are deleted
pursuant to a request for confidential treatment)
(incorporated by reference to Exhibit 10(m) to
Form 10-K for the fiscal year ended December 28,
1990)
10(w) Development Agreement between Amdahl and Fujitsu
dated June 7, 1991 (Portions of this exhibit are
deleted pursuant to a request for confidential
treatment) (incorporated by reference to Exhibit
10(b) to Form 10-Q for the quarter ended June 28,
1991)
10(x) Amendment dated as of September 24, 1993 to Credit Agreement
dated November 21, 1990 (incorporated by reference to Exhibit
10(a) to Form 10-Q/A for the quarter ended September 24, 1993)
*10(y) Partnership Agreement dated June 21, 1993 between
wholly owned subsidiaries of Amdahl and Electronic
Data Systems Corporation (Portions of this
exhibit are deleted pursuant to a request for
confidential treatment)
*10(z) Letter of commitment by Fujitsu dated December 3,
1993
<PAGE>
*10(aa) Joint Development Agreement between Amdahl and
Fujitsu dated December 8, 1993 (Portions of this
exhibit are deleted pursuant to a request for
confidential treatment)
Additional Exhibits
-------------------
*13 Annual Report to Stockholders for fiscal year 1993
(Only portions incorporated by reference)
*21 List of Subsidiaries
*23 Consent of Arthur Andersen & Co.
*24 Powers of Attorney
*Filed herewith
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
1993.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Amdahl Corporation:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Amdahl Corporation's Annual
Report to Stockholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated January 31, 1994. Our audits were made for the
purpose of forming an opinion on those statements taken as a whole. The
schedules listed under Item 14 are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen & Co.
San Jose, California
January 31, 1994
<PAGE>
SCHEDULE II
AMDAHL CORPORATION AND SUBSIDIARIES
ACCOUNTS RECEIVABLE FROM EMPLOYEES(1)
(in thousands)
<TABLE>
<CAPTION>
BALANCE
AT BALANCE
BEGINNING AT END
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTIONS OF PERIOD(2)
Year ended
December 27, 1991:
<S> <C> <C> <C> <C>
Bruce O. Beebe $278 $ 21 $--- $299
David M. Brewer 183 13 --- 196
Orval J. Nutt 104 7 --- 111
Erika Williams 102 7 --- 109
Year ended
December 25, 1992:
Bruce O. Beebe $299 $ 2 $301 $---
David M. Brewer 196 1 197 ---
Eric L. Miles --- 250 --- 250
Orval J. Nutt 111 6 --- 117
Edward F. Thompson --- 569 --- 569
Eugene R. White 62 42 --- 104
Erika Williams 109 5 69 45
Year ended
December 31, 1993:
John C. Cavalier $--- $408 $--- $408
Eric L. Miles 250 16 --- 266
Orval J. Nutt 117 5 --- 122
Edward F. Thompson 569 22 --- 591
Eugene R. White 104 17 --- 121
</TABLE>
(1) Includes only amounts receivable from employees with balances due of
$100,000 or more at any time during the periods, exclusive of amounts receivable
for ordinary travel and expense advances and other items arising in the ordinary
course of business.
(2) Depending upon the nature of the amount outstanding, balance is included in
current receivables or as an offset to additional paid-in capital.
Except as noted below, these receivables represent loans made under the Officer
Loan Program. This program provides qualified
<PAGE>
individuals with loans at the applicable short term federal interest rate for
the purpose of purchasing common stock and/or paying taxes incidental to the
purchase of stock. The notes under the Officer Loan Program are due and payable
after six months and may be renewed for a maximum of nine additional six-month
periods. All loans are collateralized by common stock valued at not less than
150% of the principal loan amount based on market prices of the Company's common
stock at the time the note is made or renewed.
The receivable from Mr. Miles represents an unsecured loan, with interest
payable at 6.06% per year, compounded semi-annually, and all principal and
accrued interest payable in one lump sum on December 15, 1998. Payment is
subject to acceleration in the following amounts: (i) 50% of each cash bonus
awarded to Mr. Miles, but no more than $50,000 in the aggregate during any
calendar year; (ii) Mr. Miles' share of any net proceeds from the sale of his
home; and (iii) the entire unpaid balance, at the discretion of the Company,
should Mr. Miles cease to be employed by the Company.
The receivable from Mr. Cavalier represents a loan for $400,000, for the purpose
of assisting Mr. Cavalier with his relocation to Dallas, Texas, the headquarters
of Antares Alliance Group, where Mr. Cavalier is President and Chief Executive
Officer. The note bears interest at 5.25% compounded semi-annually. This note
will become due and payable within ten years except to the extent previously
forgiven or paid.
<PAGE>
SCHEDULE V
AMDAHL CORPORATION AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
(in thousands)
<TABLE>
<CAPTION>
BALANCE SALES,
AT RETIREMENTS BALANCE
BEGINNING ADDITIONS AND OTHER OTHER AT END
OF PERIOD AT COST DISPOSITIONS CHANGES(1) OF PERIOD
YEAR ENDED DECEMBER 27, 1991:
<S> <C> <C> <C> <C> <C>
LEASED SYSTEMS $ 63,104 $ 33,874 $ 34,780 $ (6,524) $ 55,674
SYSTEM SPARES 401,362 70,766 98,109 --- 374,019
PRODUCTION AND DATA
PROCESSING EQUIPMENT 594,127 208,324 34,908 (41,548) 725,995
OFFICE FURNITURE, EQUIPMENT
AND IMPROVEMENTS 129,519 5,859 3,740 12,419 144,057
LAND AND BUILDINGS 127,280 6,959 1,241 35,653 168,651
---------- -------- -------- -------- ----------
$1,315,392 $325,782 $172,778 $ --- $1,468,396
========== ======== ======== ======== ==========
YEAR ENDED DECEMBER 25, 1992:
LEASED SYSTEMS $ 55,674 $ 51,770 $ 29,702 $ (917) $ 76,825
SYSTEM SPARES 374,019 100,546 25,090 (19,870) 429,605
PRODUCTION AND DATA
PROCESSING EQUIPMENT 725,995 243,611 78,111 (30,592) 860,903
OFFICE FURNITURE, EQUIPMENT
AND IMPROVEMENTS 144,057 5,886 3,270 17,630 164,303
LAND AND BUILDINGS 168,651 1,665 2,989 13,223 180,550
---------- -------- -------- -------- ----------
$1,468,396 $403,478 $139,162 $(20,526) $1,712,186
========== ======== ======== ======== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993:
<S> <C> <C> <C> <C> <C>
LEASED SYSTEMS $ 76,825 $ 45,866 $ 61,470 $ (992) $ 60,229
SYSTEM SPARES 429,605 40,273 37,821 (14,000) 418,057
PRODUCTION AND DATA
PROCESSING EQUIPMENT 860,903 36,759 81,278 (149,247) 667,137
OFFICE FURNITURE, EQUIPMENT
AND IMPROVEMENTS 164,303 2,112 7,397 (956) 158,062
LAND AND BUILDINGS 180,550 267 3,358 332 177,791
---------- -------- -------- --------- ----------
$1,712,186 $125,277 $191,324 $(164,863) $1,481,276
========== ======== ======== ========= ==========
</TABLE>
(1) Generally represents transfers and reclassifications. In 1993, however,
property, plant, and equipment cost decreased approximately $165 million and
accumulated depreciation increased approximately $36 million as a result of the
Company's restructuring of operations. See Note 2 to the Consolidated Financial
Statements, on page 20 of the Annual Report.
<PAGE>
SCHEDULE VI
AMDAHL CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY AND EQUIPMENT
(in thousands)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED SALES,
AT TO COSTS RETIREMENTS BALANCE
BEGINNING AND AND OTHER OTHER AT END
OF PERIOD EXPENSES DISPOSITIONS CHANGES(1) OF PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 27, 1991:
LEASED SYSTEMS $ 35,463 $ 8,828 $ 12,320 $(2,368) $ 29,603
SYSTEM SPARES 271,045 40,844 63,438 --- 248,451
PRODUCTION AND DATA
PROCESSING EQUIPMENT 300,279 81,192 23,436 2,319 360,354
OFFICE FURNITURE, EQUIPMENT
AND IMPROVEMENTS 56,733 12,841 2,227 (513) 66,834
BUILDINGS 30,832 6,151 6 562 37,539
-------- -------- -------- ------- --------
$694,352 $149,856 $101,427 $ --- $742,781
======== ======== ======== ======= ========
YEAR ENDED DECEMBER 25, 1992:
LEASED SYSTEMS $ 29,603 $ 12,130 $ 8,286 $ (917) $ 32,530
SYSTEM SPARES 248,451 48,226 16,968 (1,086) 278,623
PRODUCTION AND DATA
PROCESSING EQUIPMENT 360,354 123,880 57,455 1,040 427,819
OFFICE FURNITURE, EQUIPMENT
AND IMPROVEMENTS 66,834 15,651 2,087 (777) 79,621
BUILDINGS 37,539 7,716 399 (2) 44,854
-------- -------- -------- ------- --------
$742,781 $207,603 $ 85,195 $(1,742) $863,447
======== ======== ======== ======= ========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
LEASED SYSTEMS $ 32,530 $ 13,604 $ 37,899 $ 5,085 $ 13,320
SYSTEM SPARES 278,623 53,045 29,123 --- 302,545
PRODUCTION AND DATA
PROCESSING EQUIPMENT 427,819 111,516 49,476 93 489,952
OFFICE FURNITURE, EQUIPMENT
AND IMPROVEMENTS 79,621 8,207 4,339 13,124 96,613
BUILDINGS 44,854 15,746 1,090 17,916 77,426
-------- -------- -------- ------- --------
$863,447 $202,118 $121,927 $36,218 $979,856
======== ======== ======== ======= ========
</TABLE>
Depreciation and amortization methods and asset lives: See Notes 1 and 4 to the
Consolidated Financial Statements, on pages 18 and 21 of the Annual Report.
(1) Generally represents transfers and reclassifications. In 1993, however,
property, plant, and equipment cost decreased approximately $165 million and
accumulated depreciation increased approximately $36 million as a result of the
Company's restructuring of operations. See Note 2 to the Consolidated Financial
Statements, on page 20 of the Annual Report.
<PAGE>
SCHEDULE VIII
AMDAHL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in thousands)
<TABLE>
<CAPTION>
ADDITIONS ADDITIONS
BALANCE CHARGED CHARGED
AT TO COSTS TO PROPERTY BALANCE
BEGINNING AND AND DEDUC- AT END
OF PERIOD EXPENSES EQUIPMENT TIONS(3) OF PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 27, 1991:
DOUBTFUL RECEIVABLES $ 5,042 $ 1,298(1) $ --- $ 1,544 $ 4,796
FUTURE ENGINEERING ======= ======== ====== ======= =======
CHANGES $84,144 $ 1,512(2) $3,361(2) $51,906 $37,111
======= ======== ======= ======= =======
YEAR ENDED DECEMBER 25, 1992:
DOUBTFUL RECEIVABLES $ 4,796 $ 296(1) $ --- $ 1,865 $ 3,227
FUTURE ENGINEERING ======= ======== ====== ======= =======
CHANGES $37,111 $60,278(2) $9,032(2) $20,417 $86,004
======= ======== ======= ======= =======
YEAR ENDED DECEMBER 31, 1993:
DOUBTFUL RECEIVABLES $ 3,227 $ 1,009(1) $ --- $ 970 $ 3,266
FUTURE ENGINEERING ======= ======== ======= ======= =======
CHANGES $86,004 $16,672(2) $ 967(2) $46,510 $57,133
======= ======== ======= ======= =======
</TABLE>
(1) Estimated uncollectible accounts receivable.
(2) Estimated costs of future engineering changes for shipped and capitalized
systems.
(3) The deductions represent charges against the reserves for the purposes for
which the reserves are intended. Doubtful receivables deductions also include
changes in estimates.
<PAGE>
SCHEDULE IX
AMDAHL CORPORATION AND SUBSIDIARIES
SHORT-TERM BORROWINGS
(dollars in thousands)
<TABLE>
<CAPTION>
WEIGHTED
MAXIMUM AVERAGE AVERAGE
WEIGHTED AMOUNT AMOUNT INTEREST
BALANCE AVERAGE OUTSTAND. OUTSTAND. RATE
AT END INTEREST DURING DURING DURING
OF PERIOD RATE PERIOD PERIOD(1) PERIOD(2)
<S> <C> <C> <C> <C> <C>
DECEMBER 27, 1991:
BORROWINGS
UNDER THE COMPANY'S
LINES OF CREDIT $ 82,827 7.01% $ 82,827 $ 44,634 10.34%
========= ==== ========= ========= =====
DECEMBER 25, 1992:
BORROWINGS
UNDER THE COMPANY'S
LINES OF CREDIT $211,153 4.88% $215,806 $150,326 6.66%
========= ==== ========= ========= =====
DECEMBER 31, 1993:
BORROWINGS
UNDER THE COMPANY'S
LINES OF CREDIT $135,806 4.06% $271,667 $124,431 4.85%
========= ==== ========= ========= =====
</TABLE>
(1) The average borrowings were determined based on the month-end amounts
outstanding.
(2) Represents the weighted average of contracted interest rates on all short-
term borrowings outstanding during the period.
<PAGE>
SCHEDULE X
AMDAHL CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands)
For the period ended December 31, 1993
Taxes, other than payroll and income taxes:
Property Taxes $18,180
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
For the purposes of complying with the amendments to the rules governing
Form S-8 under the Securities Act of 1933, the Company hereby undertakes as
follows:
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or controlling persons of the
Company, the Company has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities registered on the Form S-8 Registration Statements identified below,
the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
The preceding undertaking is hereby incorporated by reference to
outstanding Registration Statements Nos. 2-94748, 33-7275, 33-27425, 33-35547
and 33-55460 of the Company on Form S-8.
<PAGE>
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, on this 25th day of
March, 1994.
AMDAHL CORPORATION
By E. JOSEPH ZEMKE
---------------------------------
(E. Joseph Zemke, President
and Chief 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.
Signatures Title Date
- ------------------- ----- ----
JOHN C. LEWIS* Chairman of the Board
- ------------------
(John C. Lewis)
EUGENE R. WHITE* Vice Chairman of
- ------------------ the Board
(Eugene R. White)
E. JOSEPH ZEMKE President, Chief March 25, 1994
- ------------------ Executive Officer
(E. Joseph Zemke) and Director
(Principal Executive
Officer)
EDWARD F. THOMPSON Vice President, Chief March 25, 1994
- ------------------ Financial Officer
(Edward F. Thompson) and Secretary
(Principal Financial
Officer)
ERNEST B. THOMPSON Vice President and March 25, 1994
- ------------------ Controller
(Ernest B. Thompson) (Principal Accounting
Officer)
<PAGE>
Signatures Title Date
- ---------- ----- ----
KEIZO FUKAGAWA* Director
- -------------------
(Keizo Fukagawa)
E. F. HEIZER, JR.* Director
- ------------------
(E. F. Heizer, Jr.)
KAZUTO KOJIMA* Director
- -------------------
(Kazuto Kojima)
R. STANLEY LAING* Director
- -------------------
(R. Stanley Laing)
BURTON G. MALKIEL* Director
- ------------------
(Burton G. Malkiel)
GEORGE R. PACKARD* Director
- -------------------
(George R. Packard)
WALTER B. REINHOLD* Director
- -------------------
(Walter B. Reinhold)
TAKAMITSU TSUCHIMOTO* Director
- ---------------------
(Takamitsu Tsuchimoto)
J. SIDNEY WEBB* Director
- ------------------
(J. Sidney Webb)
<PAGE>
*By: EDWARD F. THOMPSON Attorney-in-Fact March 25, 1994
------------------
(Edward F. Thompson)
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------- -------
10(f) Amdahl Corporation Executive Incentive Performance Plan, as amended
10(s) Termination Agreement With Named Executive Officer dated July 1,
1993
10(t) Letter Agreement between Amdahl and Fujitsu dated April 3, 1984
10(y) Partnership Agreement dated June 21, 1993 between wholly owned
subsidiaries of Amdahl and Electronic Data Systems Corporation
(Portions of this exhibit are deleted pursuant to a request for
confidential treatment)
10(z) Letter of commitment by Fujitsu dated December 3, 1993
10(aa) Joint Development Agreement between Amdahl and Fujitsu dated
December 8, 1993 (Portions of this exhibit are deleted pursuant to
a request for confidential treatment)
13 Annual Report to Stockholders for fiscal year 1993 (Only portions
incorporated by reference)
21 List of Subsidiaries
23 Consent of Arthur Andersen & Co.
24 Powers of Attorney
<PAGE>
Exhibit 10(f)
AMDAHL CORPORATION
EXECUTIVE INCENTIVE PERFORMANCE PLAN
REVISED AND RESTATED THROUGH DECEMBER 31, 1993
1. PURPOSES OF THE PLAN
1.1 This Executive Incentive Performance Plan (the "Plan") is intended to
promote the interests of AMDAHL CORPORATION (the "Corporation") and its
Subsidiaries by providing a select group of employees of the Corporation and its
Subsidiaries who are primarily responsible for the management, growth and
success of the business with the opportunity to participate in a special program
of deferred cash bonuses and retirement income accumulation designed to reward
them for the services they have rendered and to provide them with an incentive
to continue in the employ of the Corporation and its Subsidiaries through normal
retirement age.
2. ADMINISTRATION OF THE PLAN
2.1 The Plan shall be administered by a committee (the "Committee") of three
(3) or more members appointed from time to time by the Corporation's Board of
Directors (the "Board"). The Committee shall have full authority to administer
the Plan and shall from time to time select the eligible employees who are to
participate in the Plan.
2.2 The interpretation and construction of any provision of the Plan and the
adoption of rules and regulations for administering the Plan shall be made by
the Committee. Decisions of the Committee shall be final and binding on all
parties who have an interest in the Plan.
2.3 For purposes of the Plan, the following definitions shall be in effect:
Active Participant: An Active Participant shall, for each fiscal year the
-------------------
Plan remains in effect after December 1, 1993, be any individual selected for
participation in the Plan, whether in the current fiscal year or in any earlier
fiscal year, who has not otherwise been excluded by the Committee from receiving
an allocation of the short-term and long-term awards made under the Plan for the
current fiscal year.
Eligible Earnings: The Eligible Earnings of a participant for any relevant
------------------
fiscal year under the Plan shall be equal to (i) his/her base salary for such
fiscal year plus (ii) any cash bonus
<PAGE>
(other than awards under this Plan) earned for services rendered in such fiscal
year and payable in the immediately succeeding fiscal year.
Employee: A participant shall be deemed to continue in Employee status for
---------
so long as the participant remains in the active employ of the Corporation or
one or more of its Subsidiaries.
Long-Term Account: The Long-Term Account of each participant shall be the
------------------
account maintained in his/her name on the books of the Corporation to which
there shall be credited the participant's share of the long-term awards made for
the 1988 and all subsequent fiscal years.
Normal Retirement Date: The participant's Normal Retirement Date shall be
-----------------------
the latest to occur of (i) the first date on which the sum of the participant's
------
age and Years of Service total at least 70 years, (ii) the date on which the
participant attains age 55, or (iii) the date on which the participant completes
10 Years of Service.
Permanent Disability: A participant shall be deemed to have terminated
---------------------
Employee status by reason of Permanent Disability if he/she is unable, by reason
of any physical or mental impairment or illness expected to result in death or
to continue for a period of twenty-four (24) consecutive months or more, to
perform his/her usual duties for the Corporation or Subsidiary employing such
individual.
Separate Account: The Separate Account of each participant shall be the
-----------------
account maintained in his/her name on the books of the Corporation to which
there is credited the participant's share of the long-term awards made for the
1986 and 1987 fiscal years.
Short-Term Account: The Short-Term Account of each participant shall be
-------------------
the account maintained in his/her name on the books of the Corporation to which
there shall be credited the participant's share of the short-term awards made
for each of his/her fiscal years of participation in the Plan. The Short-Term
Account of each participant will be divided into a series of subaccounts in
accordance with the provisions of Section 5.2(b).
Subsidiary: Each corporation (other than the Corporation) in any unbroken
-----------
chain of corporations ending with the Corporation shall be considered to be a
Subsidiary of the Corporation, provided
<PAGE>
such corporation (other than the last corporation in the unbroken chain) owns,
at the time of determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
Year of Service: The participant shall be credited with one Year of
----------------
Service under the Plan for each twelve (12)-month period, measured from his/her
date of hire, during which he/she remains an Employee (whether or not the months
of Employee status included within such period were rendered consecutively). Any
period intervening between the participant's termination of Employee status and
his/her subsequent rehire shall not be taken into account for Year of Service
purposes.
3. DETERMINATION OF PARTICIPANTS
3.1 The persons who shall be eligible to participate in the Plan shall be
those Corporate Officers and other key employees primarily responsible for the
management, growth and success of the business who are recommended for
participation in the Plan by the Chairman of the Board and approved by the
Committee.
3.2 Each individual selected for participation in the Plan shall remain an
Active Participant for each fiscal year during which that individual continues
in Employee status, except to the extent the Committee should elect to exclude
such individual from Active Participant status for one or more of those fiscal
years. Effective with the 1994 fiscal year, the Committee shall have complete
discretion to exclude one or more existing participants from Active Participant
status for any fiscal year or years the Committee deems appropriate, including
the entire period the participant continues in Employee status following such
exclusion. If any individual is excluded from Active Participant status for one
or more fiscal years, then such individual shall not receive any allocation of
the incentive awards (either short-term or long-term) made to the Plan for those
fiscal years. However, each participant in Employee status shall, in accordance
with the applicable vesting schedule, continue to vest with respect to any
incentive awards already allocated to his/her accounts under the Plan, whether
or not that participant remains an Active Participant for the current or any
subsequent fiscal year.
4. INCENTIVE PERFORMANCE AWARDS
4.1 For each fiscal year of the Corporation for which the Plan is in effect,
the Corporation shall make an aggregate incentive award on behalf of the Active
Participants in an amount not to exceed two percent (2%) of the Corporation's
consolidated pre-tax earnings for such fiscal year. The amount of the award each
fiscal year shall be determined at the discretion of the Board on the basis of
the progress made in such year toward achievement of the Corporation's
<PAGE>
long-term performance objectives, as such objectives may be identified from time
to time by the Board.
4.2 The aggregate incentive award for each fiscal year, beginning with the
incentive award for the 1986 fiscal year, shall be divided into two components:
(i) the short-term award and (ii) the long-term award. For the 1986 and 1987
fiscal year incentive awards, the Board shall have discretionary authority to
determine the percentage of the aggregate award allocated to each component,
provided not more than 50% of the aggregate award shall be designated as the
- --------
long-term component. Beginning with the 1988 fiscal year, each aggregate
incentive award shall automatically be divided into equal short-term and long-
term components.
4.3 The short-term and long-term components of the aggregate incentive award
for the fiscal year shall be allocated among the individuals who are Active
Participants for that fiscal year. Beginning with the 1988 fiscal year, the
allocation shall be made in accordance with the following provisions:
Short-Term Award
(a) The Committee shall, as soon as reasonably practicable after the
aggregate short-term award for the fiscal year has been determined,
allocate a portion of such award to the Short-Term Account of each
Active Participant who has continued in Employee status through the
last day of such year. The allocation to each such Active Participant
shall be in the same proportion as his/her Eligible Earnings for the
fiscal year of the award bear to the Eligible Earnings of all Active
Participants for such fiscal year.
(b) The short-term award so allocated to each individual Active
Participant (the "Short-Term Award") shall not exceed 25% of his/her
Eligible Earnings for the fiscal year for which the award is made. To
the extent the Short-Term Award for any fiscal year would otherwise
exceed the applicable 25% limitation for one or more Active
Participants, the excess shall be added to the long-term award to be
allocated for such year.
Long-Term Award
(a) Effective with the 1988 fiscal year, the Committee shall establish a
fixed-dollar retirement income pool for each individual participant
(the "Retirement Fund Objective") in order to provide such individual
with replacement income upon his/her retirement from the Corporation
following his/her Normal Retirement Date. The Retirement Fund
Objective established for each participant shall be reviewed
periodically by the Committee and shall be adjusted from time to time
as circumstances warrant.
<PAGE>
(b) The Committee shall, as soon as reasonably practicable after the
aggregate long-term award for the fiscal year has been determined,
allocate to each Active Participant who has continued in Employee
status through the last day of such year that portion of the actual
long-term award which is in the same ratio as the Retirement Fund
Objective then in effect for such Active Participant bears to the
aggregate dollar amount of the Retirement Fund Objectives then in
effect for all Active Participants in the Plan.
(c) The long-term award allocated to each individual Active Participant
(the "Long-Term Award") shall in no event exceed in dollar amount the
sum necessary to bring the existing balance of the Long-Term Account
maintained for such Active Participant under the Plan (as adjusted in
accordance with Sections 4.4 and 4.5 below) up to the dollar amount
of the Retirement Fund Objective then in effect for that individual.
4.4 Once an individual becomes a participant in this Plan, he/she may not
during the balance of his/her period of continued Employee status participate in
any other pension or retirement plans sponsored by the Corporation or its
Subsidiaries (other than the Employee Savings Plan and the Individual Deferred
Compensation Program), whether or not that individual remains an Active
Participant after selection into this Plan. If such individual has participated
in the Accumulation Program of the Corporation's Capital Accumulation/Individual
Deferred Compensation Plan prior to his/her entry into the Plan, the balance
from time to time outstanding in his/her capital accumulation account under the
Accumulation Program shall be added to the balance of his/her Long-Term Account
under this Plan for purposes of determining whether the combined sum exceeds the
participant's Retirement Fund Objective. To the extent the combined sum equals
or exceeds the participant's Retirement Fund Objective, no further long-term
awards under the Plan shall, by reason of the limitations of Section 4.3(c), be
allocated to his/her Long-Term Account.
4.5 As a transitional procedure for the new vesting schedule made applicable
to the participant's Long-Term Account by reason of Section 6.2 of the November
15, 1988 restatement of the Plan, the participant's long-term account as of the
close of the 1987 fiscal year shall be maintained as his/her Separate Account
under the Plan, and the participant shall continue to vest in this Separate
Account in accordance with the vesting schedule in effect immediately prior to
the November 15, 1988 restatement of the Plan (100% vesting when age and Years
of Service total at least 70 years with at least 10 Years of Service, but in no
event earlier than April 1, 1989). However, no payment from the vested portion
of such account shall be made prior to the participant's attainment of age 55.
The following additional provisions shall be applicable to the Separate Account:
<PAGE>
(a) Until paid, the balance in the Separate Account shall continue to
accrue interest in accordance with the applicable provisions of
Section 7.2.
(b) The balance from time to time outstanding in the Separate Account
shall be added to the balance of the participant's post-1987 Long-
Term Account under the Plan for purposes of determining whether the
combined sum exceeds the participant's Retirement Fund Objective. To
the extent the combined sum equals or exceeds the participant's
Retirement Fund Objective, no further long-term awards under the Plan
shall, by reason of the limitations of Section 4.3(c), be allocated
to his/her Long-Term Account.
(c) To the extent any portion of the Separate Account is paid to the
participant prior to his/her actual retirement from the Corporation,
the amount distributed, together with interest imputed thereon at the
rate specified in Section 7.2 from the date of distribution, shall
continue to be treated as part of the outstanding balance of the
participant's Separate Account for purposes of applying the
provisions of Sections 4.3(c) and 4.5(b).
4.6 Should any portion of an aggregate or individual incentive award for a
particular fiscal year remain unallocated by reason of one or more of the
foregoing limitations, then such portion shall not be allocated to any other
participant (whether for the current or any subsequent fiscal year) nor used for
any other purpose under the Plan.
5. VESTING AND PAYMENT OF SHORT-TERM AWARD
5.1 The interest of the participant in his/her Short-Term Award for a
particular fiscal year shall vest in accordance with the following provisions,
whether or not such individual remains an Active Participant:
(a) Upon the expiration of the one-year period measured from the day on
which the Short-Term Award is first allocated to the participant
pursuant to Section 4.3, the participant shall vest in 25% of the
principal amount of such award, provided such individual continues in
Employee status through vesting date.
(b) On each of the next three (3) anniversaries of the initial vesting
date under subparagraph (a), the participant shall vest in an
additional 25% of the principal amount of the Short-Term Award,
provided the participant continues in Employee status through each
such vesting date.
(c) The participant's interest, however, shall immediately vest with
respect to all unvested Short-Term Awards
<PAGE>
credited to his/her Short-Term Account under this Plan or to his/her
deferred compensation account under the Corporation's Deferral
Election Plan (the "Deferral Plan"), if his/her Employee status is
terminated by reason of death or Permanent Disability. Such full and
immediate vesting shall likewise occur if the participant terminates
Employee status on or after attainment of his/her Normal Retirement
Date.
5.2 The following provisions shall govern the maintenance of the Short-Term
Account to be established for each Active Participant who is allocated one or
more Short-Term Awards under the Plan:
(a) Each participant to whom a Short-Term Award is made hereunder shall
have the election to (i) receive payment of one or more vested
installments of such award in accordance with the provisions of this
Plan or (ii) defer payment of one or more vested installments of such
award to a later period pursuant to a timely-filed election under the
Deferral Plan. Except to the extent the participant makes such a
deferral election with respect to one or more vested installments of
the Short Term Award earned for a particular fiscal year, all vested
installments of that award will be paid in accordance with the
provisions of this Plan.
(b) The Short-Term Account of each participant who is to receive payment
under this Plan of one or more Short Term Awards shall be maintained
as a special deferred compensation account on the books of the
Corporation. This account shall in turn be divided into a series of
separate subaccounts ("Short-Term Subaccounts"), and a separate
subaccount shall accordingly be maintained for the installments of
each annual Short Term Award allocated to the participant under
Section 4.3 and not otherwise subject to a deferred payout under the
Deferral Plan. Each of the participant's Short-Term Subaccounts shall
be paid in accordance with the provisions of Section 5.4.
(c) Any installments of a Short-Term Award which are the subject of a
timely-filed deferral election under the Deferral Plan shall be paid
in accordance with the deferred payout provisions of that plan, and
payment shall not be governed by the terms and conditions of this
Plan.
(d) Should the participant elect, with respect to the Short-Term Award
for a particular fiscal year, to receive payment of one or more
installments of that award under this Plan and to receive the balance
of such installments under the Deferral Plan, then the installments
which are to be paid under this Plan shall be the last installments
in which the participant vests hereunder pursuant to the
<PAGE>
annual vesting schedule of Section 5.1 and shall accordingly be paid
hereunder as such installments vest. The installments which are to be
paid under the Deferral Plan shall be the first annual installments
which vest pursuant to the Section 5.1 schedule and, once vested,
shall be subject to payment in accordance with the deferral election
in effect for such installments under the Deferral Plan.
5.3 Each Short-Term Subaccount shall accrue interest in accordance with the
provisions of Section 7.1
5.4 The balance credited to the participant's Short-Term Subaccount shall be
paid to him/her as the installment or installments of the Short Term Award
credited to such subaccount vest from time to time in accordance with the
vesting provisions of Section 5.1. Each payment shall be equal in amount to the
installment of the Short-Term Award in which the participant has vested,
together with the accrued interest thereon. Should a participant terminate
Employee status by reason of death or Permanent Disability while there is still
an amount outstanding in one or more of his/her Short-Term Subaccounts, then the
total amount outstanding in all such subaccounts shall be distributed in one
lump-sum payment to him/her (or the designated beneficiary in the case of the
participant's death) within ninety (90) days after such termination of Employee
status. Upon the participant's accelerated vesting in one or more otherwise
unvested Short-Term Award installments following termination of Employee status
after attainment of his/her Normal Retirement Date, the amount so accelerated
shall be paid to the participant either in one lump sum under this Plan within
ninety (90) days after such termination of Employee status or in accordance with
any deferral election in effect for such installments under the Deferral Plan.
5.5 The Committee shall have full power and authority, exercisable in its sole
discretion at any time, to accelerate the vesting and payout of one or more
otherwise unvested installments credited to the Short-Term Subaccounts
maintained for the participants under Section 5.2(b) of the Plan, together with
all interest accrued to date on those installments. Each accelerated installment
shall be paid in a lump sum within thirty (30) days after Committee
authorization of the payout, and such payment shall be subject to the Company's
collection of all applicable Federal and State income and employment taxes. In
no event, however, shall there be any accelerated payout of any installments
credited to the participant's Short-Terms Subaccounts as to which there exists
any outstanding deferral election filed by the Participant under the Deferral
Plan.
6. VESTING AND PAYMENT OF LONG-TERM AWARD.
6.1 The Corporation shall establish on its books a Long-Term Account for each
participant as a special deferred compensation
<PAGE>
account to which there shall be credited one or more annual Long-Term Awards
allocated to the participant under Section 4.3.
6.2 The participant's interest in his/her Long-Term Account (to the extent
attributable to Long-Term Awards for the 1988 and all subsequent fiscal years)
shall initially vest upon his/her Normal Retirement Date, provided the
participant continues in Employee status through such date. At such vesting
date, the participant shall be vested in that percentage of his/her Long-Term
Account obtained by multiplying his/her Years of Service by 5%. The participant
shall vest in an additional 5% of the Long-Term Account for each Year of Service
subsequently completed until he/she becomes 100% vested in the Long-Term Account
upon completion of 20 Years of Service. Should the participant terminate
Employee status by reason of death or Permanent Disability prior to his/her
Normal Retirement Date, such individual shall thereupon vest in that percentage
of his/her Long-Term Account obtained by multiplying his/her Years of Service
(whether or not in excess of 10 years) by 5%. Such vesting in the Long-Term
Account shall occur on the basis of the Years of Service completed by the
participant, whether or not the participant remains in Active Participant status
for one or more of those Years of Service.
6.3 Upon the participant's termination of Employee status on or after his/her
Normal Retirement Date, benefit payments from his/her Long-Term Account shall be
made in accordance with the following provisions:
(a) If the participant is at the time of his/her termination of Employee
status vested in 100% of his/her Long-Term Account, then the entire
balance of the Long-Term Account shall be paid to him/her in a lump
sum within ninety (90) days.
(b) If the participant is at the time of his/her termination of Employee
status vested in less than 100% of his/her Long-Term Account, then
the participant shall be entitled to a lump sum payment, due within
ninety (90) days after such termination of Employee status, equal to
the lesser of (i) the product of the Retirement Fund Objective at the
------
time in effect for him/her and the percentage to which he/she is at
such time vested in his/her Long-Term Account, less any amount paid
or payable to such individual from his/her Separate Account in
accordance with Section 6.5, or (ii) the entire balance credited to
his/her Long-Term Account at the time of such termination.
(c) The participant may, by filing an irrevocable election with the
Committee at least 24 months prior to attainment of his/her Normal
Retirement Date, elect to receive his/her subparagraph (a) or (b)
benefits in substantially equal annual installments over a 5 or 10-
year period. To
<PAGE>
the extent such an installment payout is elected, the unpaid vested
balance of the Long-Term Account shall accrue interest at the rate
specified in Section 7.2 for the period commencing with the
participant's actual retirement date and ending with the date of the
payment.
6.4 The participant's interest in the Separate Account attributable to the
Long-Term Awards made for the 1986 and 1987 fiscal years shall vest upon the
latest to occur of (i) his/her completion of 10 Years of Service, (ii) the first
- ------
date on which the sum of the participant's age and Years of Service totals 70
years, or (iii) April 1, 1989. However, the participant's interest in the
Separate Account shall immediately vest if his/her Employee status is terminated
by reason of death or Permanent Disability. The balance from time to time
outstanding in the Separate Account shall accrue interest in accordance with the
provisions of Section 7.2.
6.5 The balance credited to the participant's Separate Account, to the extent
vested pursuant to the provisions of Section 6.4, shall be paid to such
participant either in one lump sum or in a series of annual installments over a
designated period of years (not to exceed ten (10) years). The method of
distribution and commencement date shall be irrevocably designated by the
participant in an election filed with the Committee no later than the earlier of
-------
(i) eighteen (18) months prior to the earliest date on which he/she will vest in
the Separate Account pursuant to the provisions of Section 6.4 or (ii) the first
day of the first calendar year immediately preceding the calendar year in which
the participant's vesting date under Section 6.4 will occur. In the absence of
such a timely-filed election, the vested balance of the Separate Account shall
be paid in one lump sum upon the participant's termination of Employee status.
However, no payment shall be made from the participant's Separate Account prior
to his/her attainment of age fifty-five (55), except to the limited extent
otherwise provided in Section 6.6.
6.6 Notwithstanding either the provisions of Section 6.5 or any election made
by the participant to receive payment of his/her vested interest in the Long-
Term Account or the Separate Account in two or more installments, in the event
of such participant's death or Permanent Disability (whether or not he/she is
still in Employee status), the entire vested balance of his/her Long-Term
Account and Separate Account shall be paid to him/her (or to the designated
beneficiary in the event of the participant's death) in one lump sum payment
within ninety (90) days after the date of the participant's death or Permanent
Disability.
6.7 If either the Long-Term Account or the Separate Account is to be paid in
two or more annual installments, then the amount payable at the time of each
installment shall be equal to the aggregate balance outstanding in such account
at the time of the installment
<PAGE>
payment, divided by the number of unpaid installments (including the current
installment).
7. PAYMENT OF INTEREST
7.1 Short-Term Awards.
------------------
(a) Pre-1987 Awards. The balance from time to time outstanding in each
----------------
Short-Term Subaccount maintained hereunder, to the extent
attributable to incentive awards made to the participant for fiscal
years ending prior to January 1, 1987 ("Pre-1987 Awards"), shall
accrue interest each calendar year at the average blended rate at
which interest is earned for the same period on the assets of the
Corporation's Employee Savings Plan invested in one or more
guaranteed investment contracts thereunder ("Blended Rate"). Pre-1987
Awards will earn interest at the Blended Rate until paid to the
participant.
(b) Post-1986 Awards. The balance from time to time outstanding in each
-----------------
Short-Term Subaccount attributable to incentive awards made for
fiscal years ending after December 31, 1986 shall accrue interest
each calendar year at the Applicable Rate specified in Section 7.2
until paid to the participant.
7.2 Long-Term Awards.
-----------------
(a) Pre-1988 Awards. The balance from time to time outstanding in each
----------------
Separate Account maintained hereunder for Long-Term Awards made for
the 1986 and 1987 fiscal years shall accrue interest each calendar
year at the weighted average rate at which interest is earned for
such year on the assets of the Employee Savings Plan invested in one
or more guaranteed insurance contracts thereunder during such year
("Applicable Rate"). The Applicable Rate shall be calculated at the
end of each calendar year, and interest earned on outstanding account
balances for such year shall be credited to the participant's
Separate Account at that time.
(b) Post-1987 Awards. The individual Long-Term Account to which each
-----------------
participant's share of the Long-Term Awards made for the 1988 and all
subsequent fiscal years is to be allocated shall not bear any
interest during the period the participant remains in Employee
status. Following the participant's termination of Employee status at
or after his/her Normal Retirement Date, the unpaid vested balance of
the Long-Term Account shall bear
<PAGE>
interest at the Applicable Rate during any installment period in
excess of ninety (90) days which may be in effect for the payment of
such account balance.
7.3 Pro-Rated Interest. To the extent an amount is paid out of a particular
------------------
account prior to the last day of a calendar year, the interest accruable on such
amount for the portion of such calendar year preceding the payment date shall,
in accordance with Section 7.1 or Section 7.2 (whichever is applicable), be
calculated and credited at the end of such year, and payment of such accrued
interest shall be made within ninety (90) days after the close of the year.
8. GENERAL PROVISIONS
------------------
8.1 Upon the participant's cessation of Employee status prior to attainment of
his/her Normal Retirement Date, the portion of his/her Long-Term and Separate
Accounts and each of his/her Short-Term Subaccounts in which the participant is
not at such time vested shall be immediately forfeited, and the participant
shall have no further rights or interest with respect to the portion of each
account or subaccount so forfeited.
8.2 In the event of a severe financial hardship, the participant may apply to
the Committee for an immediate distribution (in whole or in part) of the vested
balance of his/her Long-Term and Separate Accounts maintained hereunder. The
Committee shall have complete discretion to accept or reject the request.
8.3 Except to the extent the Committee may in its sole discretion elect to
implement a so-called "Rabbi Trust" for the payment of benefits hereunder, the
obligation to pay the balance credited to the participant's Long-Term Account,
Separate Account and Short-Term Subaccounts shall at all times be an unfunded
and unsecured obligation of the Corporation or Subsidiary employing such
individual; and the participant shall look solely and exclusively to the general
assets of the Corporation or Subsidiary employing the participant for the
payment of his/her accounts under the Plan.
8.4 This restated version of the Plan shall become effective with respect to
the eligible employees of the Corporation when adopted by the Board (October 27,
1993) and shall become effective with respect to the eligible employees of one
or more Subsidiaries when adopted by the board of directors of such Subsidiary
or Subsidiaries. The board of directors of any participating corporation may at
any time amend, suspend or terminate the Plan with respect to its participants;
provided, however, that such action shall not adversely affect rights and
- --------
interests existing under the Plan at the time of such action.
<PAGE>
8.5 No participant shall have the right to alienate, pledge or encumber
his/her interest in any Long-Term Account, Separate Account or any Short-Term
Subaccounts maintained hereunder, and no such account or subaccount shall be
subject to the claims of the participant's creditors or to attachment, execution
or other process of law.
8.6 A participant may designate a beneficiary to receive any unpaid vested
balance outstanding in his/her Long-Term Account or Separate Account or any of
his/her Short-Term Subaccounts at the time of the participant's death. In the
absence of such designation, such vested balance shall be paid in accordance
with the participant's will or pursuant to the laws of descent and distribution.
The participant may from time to time revoke his/her beneficiary designation and
file a new beneficiary designation. All beneficiary designations, however, must
be on the form prescribed by the Committee.
8.7 Neither the action of the Corporation in establishing the Plan, nor any
action taken under the Plan by the board of directors of any participating
company or by the Committee, nor any provision of the Plan itself, shall be
construed so as to grant any person the right to remain in the employ of the
Corporation or any of its Subsidiaries for any period of specific duration, and
the Employee status of such individual may be terminated at any time, with or
without cause.
8.8 All costs and expenses incurred in the operation and administration of the
Plan shall be borne by the Corporation. Payment of applicable withholding taxes
on benefits paid under the Plan shall be the responsibility of the recipients.
8.9 The provisions of the Plan shall be governed by the Employee Retirement
Income Security Act of 1974 (as amended) and, to the extent not thereby pre-
empted, by the laws of the State of California without resort to the
conflict-of-laws rules of such State.
8.10 The obligations of the Corporation and its Subsidiaries to make the
payments required hereunder shall be binding upon any successor or assign of the
Corporation or any such Subsidiary, whether by merger, consolidation,
acquisition or other reorganization. No amendment or termination of the Plan by
the Corporation or any of its Subsidiaries (or any successor or assign) shall
adversely affect or otherwise impair the rights of participants to receive
benefit payments hereunder, to the extent attributable to Short-Term or Long-
Term Awards made prior to the date of such amendment or termination, in
accordance with the applicable vesting and payment provisions of Articles 4, 5
and 6 hereof.
<PAGE>
AMDAHL CORPORATION
EXECUTIVE INCENTIVE PERFORMANCE PLAN
DESIGNATION OF BENEFICIARY
--------------------------
I hereby designate the following individual or individuals as the
beneficiary or beneficiaries of all my right, title and interest in and to all
monies in which I am vested under the Executive Incentive Performance Plan at
the time of my death, hereby revoking any prior designation of beneficiaries
made by me:
Name Relationship Percent of Total
(1)
--------------------------- --------------------- ----------------
(2)
--------------------------- --------------------- ----------------
(3)
--------------------------- --------------------- ----------------
(4)
--------------------------- --------------------- ----------------
The beneficiary must survive me; otherwise, his or her designated share is
to be divided equally among the beneficiaries who do survive me.
Signature:
-------------------------------------
Name:
-------------------------------------
Date:
-------------------------------------
<PAGE>
Exhibit 10(s)
July 1, 1993
Mr. Joseph J. Francesconi
1319 San Mateo Drive
Menlo Park, CA 94025
Dear Joe:
The following reflects Amdahl's agreement with you that is associated with your
leaving the company:
1. You will resign as an officer of the company effective today.
2. Your salary will continue to be paid through December 31, 1994.
3. Vacation accrued through July 1, 1993 will be paid.
4. Life, long-term disability, and health insurances now in effect will be
continued through December 31, 1994. All other benefits will cease as of
July 1, 1993.
5. On January 31, 1994, the $47,092.12 installment due you from the short-term
account of the Executive Incentive Performance Plan will be paid you. On
December 31, 1994 the remaining balance of $27,066.98 will be paid. Each of
these amounts will be increased by interest earnings to the date of
payment.
6. On September 30, 1993 and on every three (3) months thereafter, one sixth
of an amount equivalent to the balance of $866,639 in the long-term account
of the Executive Incentive Performance Plan will be paid to you. These
quarterly disbursements will be increased by the interest earnings that are
attributable to the $290,634 in the 1986 - 1987 subaccount.
7. Consistent with the terms of the Officer Financial Planning Assistance
Program, up to $5,000 will be reimbursed for the personal financial plan
that is now being developed for you.
8. On January 1, 1995, you will be placed on personal leave of absence,
without pay or benefits, through January 31, 1996.
9. Restrictions will continue to lapse on your restricted stock grants through
January 31, 1996.
10. Your existing stock options will continue to vest through January 31, 1996,
and you will have 90 days from that date to exercise any stock that has
vested to you through that
<PAGE>
date.
11. You will continue to be entitled to indemnification, as provided in
Amdahl's bylaws, with respect to the current securities litigation in which
you are named as an individual defendant.
12. We have agreed that you will not join or form a company through January 31,
1996 that sells the same compatible products as does Amdahl. Lastly, we
have further agreed that you will not directly or indirectly solicit for
hire any Amdahl/Antares employee or refer any Amdahl/Antares employee for
hire by another employer through January 31, 1996.
Please confirm your agreement with these terms by signing in the space provided
below.
I regret that you will be leaving Amdahl and join with many others in thanking
you for your many contributions that have materially and positively enabled our
business growth and success. Stay in touch and please let me know if I can be
helpful to you in some way as you develop and implement your plans.
Cordially,
Anthony M. Pozos
Senior Vice President
Human Resources and
Corporate Services
AMP/sh
By Joseph J. Francesconi
---------------------
Joseph J. Francesconi
<PAGE>
Exhibit 10(t)
April 3, 1984
Amdahl Corporation
1250 East Arques
Sunnyvale, CA 94086
U.S.A.
Attention: Mr. John C. Lewis
President
Gentlemen:
This letter will confirm the agreements and representations of Fujitsu Limited
("Fujitsu") and Amdahl Corporation ("Amdahl") with respect to the acquisition by
Fujitsu of 6,007,832 shares (the "Shares") of Amdahl Common Stock, $.05 par
value ("Common Stock") and warrants to purchase 2,490,000 shares of Common Stock
expiring December 31, 1984 ("Warrants") from Heizer Corporation ("Heizer"). For
purposes of this Agreement, the term "Amdahl Equity Securities" at a particular
time shall mean all shares of Amdahl Common Stock, $.05 par value, Amdahl
Preferred Stock and any other class or series of equity securities then
authorized in the Amdahl Certificate of Incorporation, and all such securities
issuable upon conversion or exercise of any then outstanding options, warrants
or convertible securities of Amdahl.
1. Neither Fujitsu nor any majority-owned subsidiary of Fujitsu (collectively
called "Fujitsu Group") will, without the prior approval of Amdahl, directly
or indirectly, acquire any Amdahl Equity Securities, whether in the open
market, directly from Amdahl, directly from other Amdahl security holders,
or otherwise, if such acquisition would result in the Fujitsu Group's
Percentage Ownership of Common Stock Outstanding On A Fully Diluted Basis
exceeding 49.5% of all Common Stock Outstanding On A Fully Diluted Basis.
"Common Stock Outstanding On A Fully Diluted Basis" shall mean all shares of
Common Stock having voting power in the election of directors outstanding at
any time plus all shares of Common Stock issuable upon conversion or
exercise of securities convertible into, and rights to acquire, Common Stock
having voting power in the election of directors outstanding at any time.
2. Section 1 (a) (i) of the Amdahl/Fujitsu 1982 Agreement, dated as of March 4,
1982, is hereby amended so as to delete the number "31.3%" wherever it
appears and to substitute therefor the number "49.5%".
3. The provisions of this Agreement will become effective on the date of the
closing of the purchase of the Shares and Warrants by Fujitsu from Heizer
and shall remain in full
<PAGE>
force and effect until the tenth anniversary of such date, or earlier
termination as provided below, after which such provisions, except for
provisions of Section 2 above, which shall survive, shall become null and
void and will cease to have any further force or effect, provided, however,
that this Agreement (except for Section 2) may be terminated by Fujitsu or
by Amdahl by delivering a written notice of termination to the other party
at any time during the period from April 1, 1990 to June 30, 1990.
4. Each party hereto acknowledges that the breach of any of its agreements
contained herein would result in irreparable damage to the other which could
not be adequately compensated in monetary damages.
5. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
If the foregoing correctly sets forth the understanding between us, please
execute this letter in the space provided below, whereupon it will become a
binding agreement between us pursuant to its terms.
Very truly yours,
FUJITSU LIMITED
By TAKUMA YAMAMOTO
-----------------
(Takuma Yamamoto)
President
Acknowledge and agreed to:
AMDAHL CORPORATION
By JOHN C. LEWIS
---------------
(John C. Lewis)
<PAGE>
Portions of this exhibit have been deleted pursuant to a request for
confidential treatment.
Exhibit 10(y)
PARTNERSHIP AGREEMENT
between
AMSUB INC.,
a California Corporation
and
EDS ANTARES, INC.
a Nevada Corporation
to form
ANTARES ALLIANCE GROUP,
a Delaware General Partnership
June 21, 1993
<PAGE>
PARTNERSHIP AGREEMENT
AGREEMENT dated as of June 21, 1993 between Amsub Inc., a wholly owned
corporate subsidiary of Amdahl Corporation ("Amdahl"), organized and existing
under the laws of California, having its principal place of business at 1250 E.
Arques Avenue, Sunnyvale, California 94086 (hereinafter referred to as "Amdahl
Sub") and EDS Antares, Inc. a wholly owned corporate subsidiary of Electronic
Data Systems Corporation ("EDS") organized and existing under the laws of
Nevada, having its principal place of business at 5400 Legacy Drive, Plano,
Texas, 75024 (hereinafter referred to as "EDS Sub"), pursuant to which Antares
Alliance Group, a Delaware general partnership having its principal place of
business at
, Dallas, Texas (hereinafter referred to as the "Partnership") is hereby formed.
INTRODUCTION
------------
In consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the following terms, whether used in the
singular or the plural, will have the following meanings:
1.1 "Affiliate" means any corporation, company, partnership, joint venture, firm
---------
and/or entity which controls, is controlled by, or is under common control with
a Partner, except for the Partnership. For purposes of this Section 1.1,
"control" will mean (a) in the case of corporate entities, direct or indirect
ownership of greater than fifty percent (50%) of the stock or shares entitled to
vote for the election of the board of directors or other governing body of the
entity; and (b) in the case of noncorporate entities, direct or indirect
ownership of greater than fifty percent (50%) of the equity interest with the
power to direct the management and policies of such noncorporate entities.
1.2 "Annual Budget" is defined in Section 3.3 of this Agreement.
-------------
1.3 "Agreements" has the same meaning as in the Master Agreement
----------
<PAGE>
between Amdahl, EDS and the Partnership dated the same date as this Agreement.
1.4 "Board" means the Supervisory Board of the Partnership.
-----
1.5 "Business Deadlock" means the inability of the Board to obtain a unanimous
-----------------
decision for any Unanimous Decision requiring action by the Board, which
inability continues for a period of at least 75 days from the time the Unanimous
Decision at issue was initially presented to the Board for action.
1.6 "Capital Account" means a separate account maintained for each Partner and
---------------
adjusted in accordance with the Treasury Regulations under Section 704 of the
Internal Revenue Code of 1986, as amended (the "Code"). Consistent with such
Treasury Regulations, the following adjustments to such accounts will be made:
(a) There will be credited to each Partner's Capital Account the amount of
any cash contributed by such Partner to the capital of the Partnership, the
fair market value of any property (other than cash) contributed by such
Partner to the capital of the Partnership (net of any liabilities secured
by such property that the Partnership is considered to assume or take
subject to under Code Section 752) and such Partner's share of the Net
Profit of the Partnership and of any items in the nature of income or gain
separately allocated to such Partner; and there will be charged against
each Partner's Capital Account the amount of all cash distributions to such
Partner, the fair market value of any property (other than cash)
distributed to such Partner by the Partnership (net of any liability
secured by such property that the Partner is considered to assume or take
subject to under Code Section 752) and such Partner's share of the Net Loss
of the Partnership and of any items in the nature of loss or deduction
separately allocated to such Partner;
(b) If the Partnership at any time distributes any of its assets in-kind to
any Partner, the Capital Account of each Partner will be adjusted to
account for that Partner's allocable share (as determined under Section 4.2
of this Agreement) of the Net Profit or Net Loss that would have been
realized by the Partnership had it sold the assets that were distributed at
their respective fair market values immediately prior to their
distribution; and
(c) In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee will succeed to
the Capital Account of the
<PAGE>
transferor to the extent it relates to the transferred interest.
(d) Sections 1.6(a), (b), and (c) are intended to comply with the capital
account maintenance rules under Code Section 704(b) and the regulations
promulgated thereunder. The Board will implement such adjustments to the
Capital Accounts of the Partners as are necessary or appropriate,
consistent with this Agreement, to insure compliance with such capital
account maintenance rules, provided that if such adjustments adversely
affect any Partner, such Partner must consent to such adjustment.
1.7 "Capital Budget" is defined in Section 3.3 of this Agreement.
--------------
1.8 "Carrying Value" means, with respect to any Partnership asset, the asset's
--------------
adjusted basis for federal income tax purposes, except as follows:
(a) the initial Carrying Value of any asset contributed to the Partnership
will be such asset's gross fair market value, as determined by the
contributing Partner and agreed to by the Partnership, at the time of such
contribution;
(b) the Carrying Values of all Partnership assets will be adjusted to equal
their respective gross fair market values upon an election by the
Partnership pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) to
adjust Partners' Capital Accounts; and
(c) if the Carrying Value of an asset has been determined pursuant to
clause (a) or (b) above, such Carrying Value will thereafter be adjusted in
the same manner as would the asset's adjusted basis for federal income tax
purposes except that depreciation deductions will be computed in accordance
with Section 1.12(a) hereof.
1.9 "Cash Available for Distribution" means, with respect to any fiscal period,
-------------------------------
the excess of all cash receipts of the Partnership from operations and from any
and all other sources, including any proceeds from sales, financings or
refinancings and any amounts released from reserves (provided that in no event
will any Cash Available for Distribution be deemed to exist during any fiscal
quarter in which any Partner makes any cash capital contribution), over the sum
of the following amounts (to the extent the following amounts are expected to be
paid before other cash receipts sufficient to cover them are anticipated to be
received):
<PAGE>
(a) cash disbursements for all items which are customarily considered to be
operating expenses under generally accepted accounting principles,
including, without limitation, all payments made to any party pursuant to
agreements between the Partnership and either Amdahl Sub or EDS Sub or
their respective Affiliates;
(b) payments of interest and principal under any indebtedness of the
Partnership;
(c) payments made for capital expenditures; and
(d) reasonable amounts set aside as reserves by the Board for working
capital, contingent liabilities, replacements or for any of the
expenditures described in clauses (a), (b) and (c) above, or as otherwise
deemed reasonable by the Board to meet the current or anticipated needs of
the Partnership.
1.10 "Confidential Information" means all information and materials of a person
------------------------
or entity, patentable or otherwise, including, without limitation, computer
programs, code, equipment, data, reports, know-how, patent positioning,
financial information and business plans, including any negative developments,
whether disclosed on, before or after the date of this Agreement.
1.11 "Initial Period" means the period beginning on the date of this Agreement
--------------
and ending on March 31, 1995.
1.12 "Net Profit" and "Net Loss" mean the taxable income or loss,as the case may
---------- --------
be, for a period as determined in accordance with Code Section 703(a) computed
with the following adjustments:
(a) Items of gain, loss and deduction will be computed based upon the
Carrying Values of the Partnership's assets rather than upon such assets'
adjusted bases for federal income tax purposes, and, in particular, the
amount of any deductions for depreciation or amortization with respect to
an asset for a period will equal such asset's Carrying Value multiplied by
a fraction the numerator of which will be the amount of depreciation or
amortization with respect to such asset allowable for federal income tax
purposes for such period and the denominator of which will be such asset's
adjusted tax basis at the beginning of such period;
(b) Any tax-exempt income received by the Partnership will be included as
an item of gross income;
(c) Any items of loss or deduction allocated pursuant to Section 4.2(c)
will not be taken into account;
<PAGE>
(d) The amount of any adjustments to the Carrying Values of any assets of
the Partnership pursuant to Code Section 743 will not be taken into
account; and
(e) Any expenditure of the Partnership described in Code Section
705(a)(2)(B) (including any expenditures treated as being described in Code
Section 705(a)(2)(B) pursuant to the Treasury Regulations under Code
Section 704(b)) will be treated as a deductible expense.
1.13 "Operating Budget" is defined in Section 3.3 of this Agreement.
----------------
1.14 "Operating Plan" is defined in Section 3.3 of this Agreement.
--------------
1.15 "Partners" means Amdahl Sub, EDS Sub and any new partners, whether by
--------
transfer from other Partners or otherwise.
1.16 "Percentage Shares" will mean initially 80.1% for Amdahl Sub and 19.9% for
-----------------
EDS Sub. The Percentage Shares will be changed to reflect transfers of
Partnership interests and as otherwise specified in this Agreement and will be
subject to pro rata dilution upon admission of new partners.
<PAGE>
ARTICLE II
FORMATION OF THE PARTNERSHIP
----------------------------
2.1 Formation. Amdahl Sub and EDS Sub hereby form the Partnership as a general
---------
partnership under the Delaware Uniform Partnership Act.
2.2 Name of Partnership. The name of the Partnership will be Antares Alliance
-------------------
Group, or such other name as the Board may from time to time determine. The
Board will cause to be filed on behalf of the Partnership such partnership or
assumed or fictitious name certificate or certificates as may from time to time
be required by law.
2.3 Business of Partnership. The business of the Partnership will be to form and
-----------------------
conduct a global business (either directly or through third parties) for the
development and commercialization of software products and related products and
technology. The Partnership will not sell or license products or technology
directly to end-user customers except as specifically authorized by the Board,
as defined below.
2.4 Place of Business of Partnership. The principal place of business of the
--------------------------------
Partnership will be_______ , Dallas, Texas. The Board may, at any time and from
time to time, change the location of the Partnership's principal place of
business and may establish such additional place or places of business of the
Partnership as they may from time to time determine.
2.5 Duration of Partnership. The term of this Agreement will commence on the
-----------------------
date hereof and unless otherwise extended by the mutual agreement of the
Partners will continue until dissolution and termination of the Partnership as
provided in Section 7 below.
2.6 Title to Partnership Property. All property owned by the Partnership,
-----------------------------
whether real or personal, tangible or intangible, will be deemed to be owned by
the Partnership as an entity, and no Partner, individually, will have any
ownership of such property. The Partnership may hold any of its assets in its
own name or in the name of its nominee, which nominee may be one or more
individuals, partnerships, trusts or other entities.
2.7 Partition. The Partners hereby agree that no Partner, nor
---------
<PAGE>
any successor-in-interest to any Partner, will have the right while this
Agreement remains in effect to have the property of the Partnership partitioned,
or to file a complaint or institute any proceeding at law or in equity to have
the property of the Partnership partitioned, and each Partner, on behalf of
itself, its successors and assigns, hereby waives any such right. It is the
intention of the Partners that during the term of this Agreement, the rights of
the Partners and their successors-in-interest, as among themselves, will be
governed by the terms of this Agreement, and that the right of any Partner or
successor-in-interest to assign, transfer, sell or otherwise dispose of its
interest in the Partnership's properties will be subject to the limitations and
restrictions of this Agreement.
2.8 Fiscal Year. The fiscal year of the Partnership will end on the last
-----------
Friday of December of each calendar year.
<PAGE>
ARTICLE III
MANAGEMENT
----------
3.1 Supervisory Board; Officers.
----------------------------
The Partnership will be managed by a Supervisory Board (the "Board")
which will consist of seven (7) members, two of which will be designated by each
of Amdahl Sub and EDS Sub and the other three of which will be (a) the Chief
Executive Officer of the Partnership, (b) the Senior Vice President/Chief
Financial Officer of the Partnership and (c) the Senior Vice President of
Operations of the Partnership. The Chairman of the Board will be one of the
Amdahl Sub designees on the Board and will be determined by Amdahl Sub. The
Chief Executive Officer, Chief Technical Officer and Senior Vice President of
Operations of the Partnership will be designated by Amdahl Sub and the Senior
Vice President/Chief Financial Officer will be designated by EDS Sub; the
selection of such an officer (whether initially or as a replacement) by one such
party may be rejected by the other only for good and reasonable cause. Amdahl
Sub and EDS Sub will also appoint a Partnership Chief Marketing Officer by
mutual agreement, which agreement will not be unreasonably withheld. If any
member of the Board dies, resigns or becomes incapacitated, the Partner or
Partners that designated such member or officer will designate his or her
successor (whose term will commence immediately), and any Partner may withdraw
the designation of and remove any member or officer designated by it and
designate a replacement (whose term will commence immediately) at any time by
giving notice of the withdrawal and replacement to the other Partners. In the
event a Board member is unable to attend a meeting of the Board, such Board
member may designate an alternate member to serve in such absent Board member's
stead solely for such Board meeting. Upon admission of a new partner (other
than by transfer) or, if earlier, 5 years after the date of this Agreement,
Board members and officers will no longer be designated, removed or replaced as
set forth above and all such matters will be determined as provided for under
Delaware corporate law for corporations having cumulative voting (the
Supervisory Board will be treated as analogous to a corporate board of directors
and each percentage point of a Partner's Percentage Share will be treated as a
share of voting stock, provided that in all events, the holder of each 14.3%
Percentage Share will be entitled to appoint and elect one director and,
provided further, in no event will any Unanimous Decision be adopted by the
Board if less than all members of the Board are in attendance or consent in
writing).
3.2 Authority of the Board and Officers.
------------------------------------
(a) The overall business of the Partnership will be managed by the Board.
All acts of management of the Partnership will be taken by the Board acting
by majority pursuant to
<PAGE>
this Agreement or by agents duly authorized in writing by the Board. No
individual Partner will purport to act on behalf of the Partnership, either
as a Partner or as an agent of the Partnership unless, and then only to the
extent, authorized to do so by the Board.
(b) All Unanimous Decisions by or on behalf of the Partnership will be made
by the Board acting by the unanimous consent of all Board members. As used
in this Agreement, the term "Unanimous Decisions" will mean:
(i) admission of a new partner to the Partnership other than as the
result of a transfer of a Partner's full or partial Partnership
interest to a third party in accordance with this Agreement;
(ii) a decision as to whether to effect a dissolution of the
Partnership;
(iii) approval of Annual Budgets and Quarterly Outlooks (as defined
below), but only until Cash Available for Distribution is achieved for
two consecutive fiscal quarters and a majority of the members of the
Board do not expect more than an aggregate of $1 million in capital
contributions to be required for the 24 month period thereafter (the
"Development Period");
(iv) any individual capital expenditure of more than $500,000, but
only during the Development Period;
(v) Partnership distributions (other than distributions to the
Partners to pay taxes on their allocable shares of Partnership income
assuming each partner pays taxes thereon at the highest marginal tax
rate applicable to corporations under the Code plus 5%), but only
during the Development Period;
(vi) Transfer or sale of a Partner's interest in the Partnership
during the Initial Period except in accordance with Section 6.1(a).
(c) The Partnership Chief Executive Officer will have the same authority
with respect to the Partnership as presidents have under the Delaware
corporate law with respect to their corporations. The Chief Financial,
Chief Technical and Chief Marketing Officers and the Senior Vice President
of Operations will similarly each have authority analogous to a vice
president of a Delaware corporation.
3.3 Budgets and Outlooks. The Board will cause to be prepared an annual
---------------------
operating plan ("Operating Plan") which will include an analysis of all
strategic development and marketing plans of the Partnership for such fiscal
year. In addition the Board will
<PAGE>
cause to be prepared an annual operating budget ("Operating Budget") and an
annual capital expenditures budget ("Capital Budget") (collectively, the "Annual
Budgets") for each fiscal year of the Partnership, commencing with the fiscal
year ending December 31, 1993, on or before 60 days prior to the commencement of
such fiscal year. The anticipated Annual Budgets for the 1993 fiscal year are
attached hereto as Schedule 3.3 and the Partners recognize that such budgets are
subject to further review and Board approval. The Board will also cause a
quarterly forecast in such detail and for such periods as the Board may
reasonably request (a "Quarterly Outlook") to be prepared at least 30 days prior
to commencement of the applicable fiscal quarter. The Annual Budgets and
Quarterly Outlooks will be reviewed by the Board and will not be effective until
approved by a majority of the Board. The Operating Budget will set forth in
reasonable detail (a) the authorized headcount and expenses on a quarterly basis
of each functional area of the Partnership, (b) estimated revenue by product and
distribution channel on a quarterly basis, (c) a projected profit and loss
statement for the fiscal year on a quarterly basis, (d) a projected balance
sheet as of the end of each quarter of each fiscal year, (e) a schedule of
projected cash flow, including estimated Partner capital contributions for each
quarter of each fiscal year and (f) any other information any member of the
Board may reasonably request. The Capital Budget will set forth and itemize in
reasonable detail amounts to be committed and/or expended on a quarterly basis
for equipment, leasehold improvements and other capitalized items and any other
items as any member of the Board may reasonably request.
3.4 Accounting and Internal Controls.
---------------------------------
(a) The Partnership will conduct its business at all times in accordance
with high standards of business ethics and maintain the Partnership's
accounts in accordance with generally accepted accounting principles
consistently applied and, specifically, will:
(i) maintain full and accurate books, records and accounts which will,
in reasonable detail, accurately and fairly reflect all transactions
of the Partnership; and
(ii) devise and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with general or specific authorizations, and
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and all tax information returns, and to maintain
accountability for assets.
(b) The Partnership books will be kept on the accrual method of accounting,
or on such other method of accounting
<PAGE>
as the Partners may from time to time determine, and will be closed and
balanced at the end of each fiscal year. The Partnership will make such
tax elections as directed by the Partnership's tax matters partner from
time to time, provided however, that upon a transfer of an interest in the
Partnership, the Partnership will make the election provided for in Code
Section 754 if requested to do so by any such transferring Partner. The
Board will cause the timely preparation and filing of all required federal
and state Partnership income tax returns and the provision to the Partners
of all tax information returns and other information as are necessary to
enable the Partners to report their respective allocations of tax items
from the Partnership on their respective tax returns.
(c) Amdahl Sub will be the Tax Matters Partner for the Partnership pursuant
to Sections 6221-6231 of the Code.
3.5 Access to Books and Records. The Partnership will permit each Partner or any
----------------------------
authorized representative thereof to visit and inspect the properties of the
Partnership, including its corporate and financial records, during normal
business hours following reasonable notice and as often as may be reasonably
requested.
3.6 Business Deadlock. The Partners recognize that bona fide disputes as to
------------------
business matters may arise in the conduct of the Partnership's business, which
disputes may impair the ability of the Partnership to effectively carry on its
business. Each Partner will act reasonably and in good faith to avoid Business
Deadlock. In the event of the occurrence of a Business Deadlock regarding the
subject matter listed in Section 3.2(b), either Partner may, by written notice
to the other Partner, have the Business Deadlock referred to a panel consisting
of one senior executive from each of Amdahl and EDS, for resolution by
negotiation within 30 days after such written notice is received. In the event
no resolution is achieved within such 30 day period, such Business Deadlock will
be referred to the chief executive officers of Amdahl and EDS for resolution by
negotiation within 45 days after such referral is made. All such negotiations
will be conducted reasonably and in a good faith manner in an effort to reach a
mutually satisfactory resolution. Such resolution, if any, of the Business
Deadlock will be binding on the Partners, and the Partners will instruct the
members of the Board designated by them to approve such resolution.
<PAGE>
ARTICLE IV
CAPITAL CONTRIBUTIONS
PROFITS AND LOSSES AND DISTRIBUTIONS
------------------------------------
4.1 Capital Contributions.
----------------------
(a) On the date of this Agreement, each Partner will make a capital
contribution as set forth on Schedule 4.1. On or before the first day of
each fiscal quarter, or at such other times as the Board will determine,
each Partner will contribute to the Partnership an amount equal to its
Percentage Share of the Partnership's capital requirements for the next
succeeding fiscal quarter as determined in the relevant Quarterly Outlook;
provided, however, that no Partner will be required to make any such
capital contribution unless it is within the capital contribution
commitment amount for that Partner as specified in (i) Schedule 4.1 with
respect to the Initial Period or (ii) an Annual Budget approved as a
Unanimous Decision pursuant to Section 3.2. Notwithstanding the foregoing,
if one Partner fails to make a required capital contribution the other
Partner need not make further capital contributions until the first Partner
makes the delinquent contribution.
(b) Except as provided in this Section 4.1, neither Partner will be
obligated to make contributions to the capital of the Partnership, lend any
funds or otherwise advance or contribute any additional funds to the
Partnership.
(c) No interest will accrue on any contributions to the capital of the
Partnership, and no Partner will have the right to withdraw or to be repaid
any capital contributed by it or to receive any other payment in respect of
its interest in the Partnership, including without limitation as a result
of its withdrawal from the Partnership, except as specifically provided in
this Agreement.
(d) In the event that a Partner fails to fully make a capital contribution
requested by the Partnership in which all Partners are requested to
contribute in proportion to their Percentage Shares (the "Noncontributing
Partner"), the other Partners who make their contributions (the
"Contributing Partners") will have the right, at their option, (i) to
pursue their remedies under law and under this Agreement or (ii) as their
exclusive remedy, to make loans to the Partnership, subject to the
provisions set forth below, up to the aggregate amount of the
Noncontributing Partner's unpaid capital contribution (the "Unpaid
Amount"). Such loans, if made, will bear simple interest at the then
prevailing prime rate of interest as announced by the Bank of America,
NT&SA from time to time
<PAGE>
plus 2% per annum, payable prior to any distributions of cash to the
Partners, but in no event later than upon liquidation of the Partnership.
In the first instance, each Contributing Partner may lend up to its pro
rata share (based upon the relative Percentage Shares of the Contributing
Partners that choose to make such loans) of the Unpaid Amount to the
Partnership. In the event that any Contributing Partner fails to lend its
full pro rata share of the Unpaid Amount pursuant to the preceding
sentence, the Partners that did so lend may choose to lend their pro rata
share of the remaining balance of the Unpaid Amount. If any Contributing
Partner chooses option (ii) above, the Noncontributing Partner will have
two quarters in which to make its contribution (the "Cure Period"), during
which period there will be no distributions of Cash Available for
Distribution. If the Noncontributing Partner does not do so, the
Contributing Partners will have the option for a period of thirty days
following the expiration of the Cure Period to convert all but not less
than all of the principal amount of their respective loans to the
Partnership to a capital contribution to the Partnership. In the event of
such conversion, each such Contributing Partner's Percentage Share will be
increased by one and one quarter percentage point for each $1 million of
principal amount lent and converted by such Contributing Partner. Upon
conversion of loan principal to capital contribution all accrued but unpaid
interest will be payable in cash by the Partnership to the relevant
Contributing Partner.
4.2 General Allocations of Net Profits and Net Losses.
--------------------------------------------------
(a) Except as provided in Section 4.2(b), Net Profit and Net Loss of the
Partnership for a period will be allocated to the Partners in accordance
with their respective Percentage Shares.
(b) The amount of any Net Loss in excess of any then positive balance in
the Capital Account of a Partner, which would be allocable to such Partner
but for this Section 4.2(b), will be allocated pro rata among the other
Partners in proportion to their respective Percentage Shares to the extent
that such allocation of Net Loss does not exceed the positive Capital
Account balance of such other Partners. Any remaining unallocated Net Loss
will be allocated among the Partners in accordance with their respective
Percentage Shares. Thereafter, Net Profit otherwise allocable pursuant to
Section 4.2(a) to the Partner from whom Net Loss was allocated, first will
be allocated to the other Partners in proportion to the amount of Net Loss
previously allocated to them pursuant to Section 4.2(b) until an amount of
Net Profit equal to the amount of Net Loss previously reallocated pursuant
to this Section 4.2(b) has been allocated to the other Partner.
<PAGE>
(c) Interest expense with respect to any Partnership indebtedness to a
Contributing Partner established in accordance with Section 4.1(d) will be
specially allocated to the Noncontributing Partner.
(d) With respect to any fiscal period during which any Partner's interest
in the Partnership changes, whether by reason of the admission of a
Partner, the withdrawal of a Partner, a non-pro rata contribution of
capital to the Partnership or any other event described in Code Section
706(d)(1) and the Treasury Regulations thereunder, allocations of Net
Profit or Net Loss will take into account the varying interests of the
Partners during such period in a manner consistent with Code Section 706(d)
and the Treasury Regulations thereunder.
(e) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Partnership will, solely for tax
purposes, be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership
for federal income tax purposes and its initial Carrying Value. In the
event the Carrying Value of any Partnership assets is adjusted pursuant to
Section 1.8 hereof, subsequent allocations of income, gain, loss, and
deduction with respect to such asset will take account of any variation
between the adjusted basis of such asset for federal income tax purposes
and its Carrying Value in the same manner as under Code Section 704(c) and
the Treasury Regulations thereunder. Any elections or other decisions
relating to allocations under this Section 4.2(e) will be made by the Tax
Matters Partner in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this Section 4.2(e)
are solely for the purposes of federal, state, and local taxes and will not
affect, or in any way be taken into account, in computing any Partner's
Capital Account or share of Net Profit, Net Loss, other items, or
distributions pursuant to any provision of this Agreement.
4.3 Distributions of Cash and Cash Available for Distribution.
----------------------------------------------------------
(a) Cash Available for Distribution generally will be distributed to the
Partners in proportion to their respec-tive Capital Account Balances.
<PAGE>
ARTICLE V
CONFIDENTIAL INFORMATION
------------------------
5.1 Treatment of Confidential Information. Each of the Partnership and each
--------------------------------------
Partner (and its Affiliates) will maintain in confidence the others'
Confidential Information and will not disclose, divulge or otherwise communicate
such Confidential Information to others, or use it for any purpose, except as
otherwise provided under the terms of the Agreements and hereby agrees to
exercise reasonable precautions (including, without limitation, use of written
agreements) to prevent and restrain the unauthorized disclosure of such
Confidential Information by any of its directors, officers, employees,
consultants, subcontractors, sublicensees or agents. The provisions of this
Article V will survive termination of this Agreement.
5.2 Release from Restrictions.
--------------------------
(a) The provisions of Section 5.1 will not apply to any Confidential
Information disclosed pursuant to the Agreements or otherwise which:
(i) was known or used by the receiving entity or its Affiliates
(unless known on account of research or development done on behalf of
the disclosing entity) prior to its date of disclosure to the
receiving entity, as evidenced by the prior written records of the
receiving entity or its Affiliates; or
(ii) either before or after the date of the disclosure to the
receiving entity is lawfully disclosed without restriction to the
receiving entity or its Affiliates by an independent, unaffiliated
third party rightfully in possession of the Confidential Information
(but only to the extent of the rights received from and limitations
imposed by such third party); or
(iii) either before or after the date of the disclosure to the
receiving entity becomes published or available to the public through
no fault or omission on the part of the receiving entity or its
Affiliates;
(iv) is required to be disclosed by the receiving entity or its
Affiliates to comply with applicable laws, to defend or prosecute
litigation or to comply with governmental regulations, provided that
the receiving entity provides prior written notice of such disclosure
to the other entity and takes reasonable and lawful actions to
minimize the degree of such disclosure; or
<PAGE>
(v) is independently developed by the receiving entity (other than on
account of research or development done on behalf of the disclosing
entity) without reference to the Confidential Information, as
evidenced by written records.
<PAGE>
ARTICLE VI
RESTRICTIONS ON TRANSFER
------------------------
6.1 Transfer of Partnership Interest.
---------------------------------
(a) Except as set forth in Section 6.1(b), no Partner will have the right
(directly, indirectly, voluntarily, involuntarily or by operation of law)
to sell, assign, transfer, mortgage, encumber, grant a security interest in
or otherwise dispose of all or any portion of its interest in the
Partnership, provided that subject to compliance with the other terms of
this Agreement (i) a Partner may transfer all, but not less than all, of
its interest in the Partnership to a party that acquires all or
substantially all of such Partner's business by merger, sale of assets or
otherwise, and (ii) a Partner may transfer all, but not less than all, of
its interest in the Partnership to an Affiliate provided that, in the event
of a transfer to an Affiliate, such transferring Partner will remain fully
responsible for the satisfaction of its obligations hereunder and (iii) a
Partner may pledge its interest in the Partnership as security for bona
fide bank credit, provided, however, that in the case of this Section
6.1(a)(iii), (A) the bank will not obtain any right to vote with respect to
or participate in management of the Partnership, (B) the right of the other
Partners under Section 6.1(b) will continue with respect thereto and (C)
EDS' options under Section 3.5 of the Master Agreement will continue in
full force and effect with respect thereto. Unless the conditions of this
Section 6.1 are met, the foregoing arrangements may not take place and any
attempted transfer in derogation hereof will be deemed null and void.
(b) Subject to Section 3.2(b), the transfer of any Partnership interest in
whole or in part by one Partner is permissible subject to the right of
first refusal of any Partners with a Percentage Share of at least 7% (a
"Qualified Partner") as follows:
(i) No Partner may sell, assign, transfer, or in any other manner
dispose of or alienate, or transfer or assign any interest in, any or
all of its Partnership interest which now or hereafter may be held or
owned by it to any person or entity unless such party (for purposes of
this Section 6.1(b) only referred to as "Offeror") will have first
made the written offer to sell as hereinafter described, and the
offered Partnership interest will not have been purchased, within the
time hereinafter provided.
Each time an Offeror proposes to sell any or all of its Partnership
interest, the Offeror will first make an
<PAGE>
offering of such Partnership interest to each Qualified Partner in
accordance with the following provisions:
a. The Offeror will deliver a notice by certified mail ("Notice")
to the Qualified Partners stating (x) its receipt from a third
party of a bona fide offer to purchase such Partnership interest,
(y) the amount of the Partnership to be purchased and the
identity of the proposed purchaser ("Purchaser"), and (z) the
price and terms of the bona fide offer.
b. If any Qualified Partner holding at least a 7% Percentage
Shares determines in good faith for substantial legitimate
business reasons that the Purchaser is not reasonably acceptable
to such Qualified Partner, the objecting Qualified Partner will
so notify the Offeror.
c. Within 50 calendar days after giving of the Notice, each
Qualified Partner may elect to purchase or obtain, at the price
and on the terms specified in the Notice, all or none of that
portion of such Partnership interest which equals the proportion
that the Percentage Share then held by such Qualified Partner
bears to the total Percentage Shares in the Partnership then held
by all Qualified Partners excluding the Offeror; provided,
however, that if the Offeror provides each Qualified Partner a
general notice of its intention to sell hereunder 50 days prior
to the date upon which it proposes to sell, then each Qualified
Partner will have only 30 days after receipt of the Notice to
elect to purchase or obtain such portion of such percentage
interest. The Offeror will promptly, in writing, inform each
Qualified Partner which purchases all of the offered Partnership
interest available to it ("Fully-Exercising Qualified Partner")
of any other Qualified Partner's failure to do likewise. During
the ten-day period commencing after such information is given,
each Fully-Exercising Qualified Partner will be entitled to
obtain that portion of the Partnership interest for which other
Qualified Partners were entitled to subscribe but which were not
subscribed for by the other Qualified Partners which is equal to
the proportion that the Percentage Share then held by such Fully-
Exercising Qualified Partner bears to the total Percentage Shares
then held, by all Fully-Exercising Qualified Partners who wish to
purchase some of the unsubscribed Partnership interest.
<PAGE>
d. If all Partnership interests which Qualified Partners are
entitled to obtain pursuant to the foregoing paragraph are not
elected to be obtained as provided therein, the Offeror may,
during the 30-day period following the expiration of the period
provided in the foregoing paragraph, offer the remaining
unsubscribed portion of such Partnership interest to the
Purchaser at a price not less than, and upon terms no more
favorable to the offeree than those specified in the Notice. If
the Offeror does not enter into such an agreement for the sale of
the Partnership interest within such period, or if such agreement
is not consummated within 30 days of the execution thereof, the
right provided hereunder will be deemed to be revived and such
Partnership interest will not be offered unless first reoffered
to the other Qualified Partners in accordance herewith.
e. The right of first offer set forth herein may not be assigned
or transferred, except that such right is assignable by each
Qualified Partner to (i) any Affiliate of such Qualified Partner
or (ii) a party or parties reasonably acceptable to each of the
other Qualified Partners.
f. In the event any Partner objects to a proposed transferee
pursuant to subsections 6.1 b. or e. above, the matter will be
referred for resolution under the same procedures as for
resolution of a Business Deadlock, as set forth in Section 6.2
above.
(c) A permitted transferee of a Partnership interest will (1) be deemed
admitted as a new Partner of the Partnership and (2) be subject to all the
terms of this Agreement with respect to Partners.
<PAGE>
ARTICLE VII
DISSOLUTION AND TERMINATION
---------------------------
7.1 Events of Dissolution.
----------------------
(a) The Partnership will be dissolved:
(i) on a date designated by mutual consent of the Partners;
(ii) upon the sale or other disposition of all of the Partnership's
assets;
(iii) at the election by a majority of the nondefaulting Partners, in
the event of a material default by a Partner of a material term of the
Partnership Agreement which will not be cured or resolved within sixty
(60) days of notice thereof;
(iv) in any event, at 12:00 midnight on the day that is twenty (20)
years from the date of this Agreement, unless extended by mutual
agreement or pursuant to Section 2.5.
(b) No Partner will be entitled to or attempt to terminate, dissolve,
liquidate, or withdraw or retire voluntarily from the Partnership, except
as expressly stated in this Agreement.
(c) Dissolution of the Partnership will be effective on the day on which
the event occurs giving rise to the dissolution, but the Partnership will
not terminate until the assets of the Partnership will have been
distributed as provided in this Agreement. Notwithstanding the dissolution
of the Partnership, prior to the termination of the Partnership, as
aforesaid, the business of the Partnership and the affairs of the Partners,
as such, will continue to be governed by this Agreement. Subject to
Section 7.2(c), upon dissolution, the Board will liquidate the assets of
the Partnership and apply and distribute the proceeds thereof as provided
for under this Agreement.
7.2 Distributions Upon Liquidation.
-------------------------------
(a) After payment of liabilities owing to creditors, the Board will set up
such reserves as it deems reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership. Said reserves
may be paid over by the Board to a bank, to be held in escrow for the
purpose of paying any such contingent or unforeseen liabilities or
obligations and, at the expiration of such
<PAGE>
period as the Board may deem advisable, such reserves will be distributed
to the Partners or their assigns in the manner set forth in subsection (b)
below.
(b) After paying such liabilities and providing for such reserves, the
Board will cause the remaining net assets of the Partnership to be
distributed to the Partners in repayment of the amount of their Capital
Account balances. In the event that any part of such net assets consists
of notes or accounts receivable or other noncash assets, the Board will
take whatever steps it deems appropriate to convert such assets into cash
or into any other form which would facilitate the distribution thereof. If
any assets of the Partnership are to be distributed in kind, such assets
will be distributed on the basis of their fair market value.
(c) Notwithstanding the foregoing, and without affecting any other
distribution of assets, if requested by any Partner with at least a 7%
Percentage Share, the intellectual property assets of the Partnership will
be distributed in liquidation between such Partners on an equitable basis
as they may mutually agree based on the following factors: (1) original
ownership of the intellectual property used to create or derive the
Partnership intellectual properties, (2) the sources and amounts of
Partnership funding, (3) the elimination, to the extent possible, of
affirmative harm to any Partner's business as a result of such allocation,
and (4) the effect of the allocation of customer support. In the event
that the intellectual property assets of the Partnership are not
distributed strictly in accordance with the respective Capital Account
balances of the Partners, then either the Partners or the consultants
referred to in the following paragraph, as the case may be, will structure
a royalty with respect to such of the intellectual property assets as is
necessary to effectively achieve a distribution of assets in liquidation
economically equivalent to a distribution in accordance with the Partners'
Capital account balances taking into account the net present value of such
royalty discounted at the then prevailing prime rate of interest as
announced by The Bank of America, N.T. & S.A. Such royalty will be based
on the level of use or distribution of the relevant intellectual property
assets or products based thereon.
If such Partners cannot reach agreement within 90 days of the request for
allocation, the allocation will be determined using the same factors by a
majority of three independent consultants, one picked by each of the two
Partners with the largest Percentage Shares within 10 business days of a
request by the other to do so and the third selected by the other two or
(2) if one such Partner fails to timely select a consultant, by the other
such Partner's consultant alone.) The consultant(s) will make
<PAGE>
the allocation within 30 days of being selected. Any Partner entitled to
be considered for allocation of intellectual property will be entitled to
submit materials for consideration by the consultant(s), provided it is
simultaneously provided to all other such Partners and provided further
that no materials will be submitted after 20 days following selection of
the consultant(s) except in response to materials provided by other
Partners, which responses will be provided as soon as reasonably possible.
The consultants will not have the discretion to allocate any intellectual
property to two or more Partners jointly. The participatory Partners will
bear the costs and fees of the consultants equally.
In reaching the allocation set forth in this Section 7.2(c); (i) no
license or sublicense between any two Partners or the Partnership and a
Partner may be modified in any way and (ii) no lump sum payment will be
required by any Partner.
(d) At such time during liquidation as all assets of the Partnership have
been sold, all liabilities and expenses have been paid, all income, gains,
losses and deductions have been allocated in accordance with Section 4.2,
all distributions have been made, and all adjustments to the Capital
Accounts have been made, if a Partner then has a negative balance in its
Capital Account, such Partner will by the end of the taxable year of the
liquidation (or, if later, within 90 days after the date of such
liquidation) contribute to the capital of the Partnership an amount equal
to the deficit amount of its Capital Account. Any amount so contributed
will be distributed as provided for in this Article 7. The Partners will
not be required to make any further contribution to the Partnership on
dissolution except as required by this Section 7.2(d).
<PAGE>
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------
8.1 Other Businesses. It is understood that the Partners and their Affiliates
----------------
are and will be engaged in other activities and occupations not directly related
to the Partnership, and, except to the extent otherwise agreed to, the Partners
and their Affiliates will be required to devote only so much time as each in its
sole discretion may deem necessary to the affairs of the Partnership. Except as
otherwise specifically provided in the Agreements, and without affecting either
Partner's or its Affiliates' duty to perform its obligations under the
Agreements in the best interest of the Partnership, nothing contained in the
Agreements will be construed as limiting the right of either Partner or its
Affiliates to engage in any business outside of and independent from the
Partnership, including (but not limited to) the businesses in which the
respective Partners and their Affiliates are currently engaged or in which they
contemplate being engaged. Any benefits and/or obligations arising from such
independent business will inure solely to such Partners or its Affiliates and
not the Partnership or the other Partner or its Affiliates; and neither the
Partnership nor the other Partners will have any rights by virtue of this
Agreement in and to such independent ventures or the income or profits derived
therefrom.
8.2 Publicity. No Partner (nor any Affiliate of either Partner) will originate
---------
any written publicity, news release or other public announcement, relating to
the Partnership, this Agreement or any other agreement between the Partnership
and either Amdahl Sub or EDS Sub or their respective Affiliates, or the
existence of an arrangement between the Partners, without the prior written
approval of the other Partner, which approval will not be unreasonably withheld
or delayed, except as otherwise required by law.
8.3 Assignment. Neither this Agreement nor any of the rights or obligations
----------
hereunder may be assigned by any Partner without the prior written consent of
the other Partner, except to a permitted transferee under Section 6.1 of this
Agreement.
8.4 Governing Law. This Agreement will be governed by and interpreted in
-------------
accordance with the internal laws of the State of Delaware, without regard to
conflicts-of-law provisions.
8.5 Force Majeure. In the event that any Partner is prevented from performing or
-------------
is unable to perform any of its obligations under this Agreement due to any act
of God; fire; casualty;
<PAGE>
flood; war; strike; lockout; failure of public utilities; injunction or any act,
exercise, assertion or requirement of governmental authority; epidemic;
destruction of production facilities; riots; insurrection; inability to procure
or use materials, labor, equipment, transportation or energy; or any other cause
beyond the reasonable control of the Partner invoking this Section 8.5 if such
Partner will have used its reasonable efforts to avoid such occurrence and
minimize its duration, such Partner will give notice to the other Partner in
writing promptly, and thereupon the affected Partner's performance will be
excused and the time for performance will be extended for the period of delay or
inability to perform due to such occurrence.
8.6 Waiver. The waiver by either Partner of a breach or a default of any
------
provision of this Agreement by the other Partner will not be construed as a
waiver of any succeeding breach of the same or any other provision, nor will any
delay or omission on the part of either Partner to exercise or avail itself of
any right, power or privilege that it has or may have hereunder operate as a
waiver of any right, power or privilege by such Partner.
8.7 Notices. Any notice or other communication in connection with this Agreement
-------
must be in writing and will be delivered by personal delivery, by overnight
courier, by registered mail (return receipt requested), or by telecopier, and
will be effective when received by the addressee at the address listed below or
such other address as the addressee will have specified in a notice actually
received by the addressor.
If to the Partnership:
Antares Alliance Group
Attn: Chief Executive Officer
If to Amdahl Sub:
Amsub Inc.
1250 East Arques Avenue
Sunnyvale, CA 94086
Attn: Chief Executive Officer
With a copy to:
Brobeck, Phleger & Harrison
2200 Geng Road
Palo Alto, CA 94303
<PAGE>
Attn: Thomas F. Villeneuve, Esq.
If to EDS Sub:
EDS Antares, Inc.
5400 Legacy Drive
Plano, Texas 75024
Attn: Chief Executive Officer
with a copy to:
Electronic Data Systems Corporation
5400 Legacy Drive
Plano, Texas 75024
Attn: General Counsel
8.8 Entire Agreement. This Agreement and the Agreements contain the full
----------------
understanding of the Partners with respect to the subject matter hereof and
supersedes all prior understandings and writings relating thereto. No waiver,
alteration or modification of any of the provisions of this Agreement will be
binding unless made in writing and signed by Partners collectively holding
Percentage Shares aggregating more than 50%, provided that so long as either EDS
Sub or Amdahl Sub, respectively, hold at least a 3% Percentage Share, the
consent thereof will also be required.
8.9 Headings; References. The headings contained in this Agreement are for
--------------------
convenience of reference only and will not be considered in construing this
Agreement. The words "herein", "hereof ", "hereunder ", "hereby" and other
similar references will be construed to mean and include this Agreement and all
amendments and supplements to this Agreement unless the context will clearly
indicate or require otherwise.
8.10 Severability. In the event that any provision of this Agreement is held by
------------
a court of competent jurisdiction to be unenforceable because it is invalid or
in conflict with any law of any relevant jurisdiction, the validity of the
remaining provisions will not be affected, and the rights and obligations of the
Partners will be construed and enforced as if the Agreement did not contain the
particular provision held to be unenforceable.
8.11 Equitable Remedies. The Partners acknowledge that the services to be
------------------
rendered hereunder are unique and substitute or comparable services will not be
readily available to a Partner. Accordingly, the parties agree that monetary
damages may not be an adequate remedy for a Partner in the event of a breach of
this Agreement by either Partner and that the Partnership or the
<PAGE>
nondefaulting Partner will be entitled to specific performance and/or injunctive
relief in the event of such a breach. Such specific performance will include a
court order directing the defaulting Partner to perform any or all of its
obligations set forth in the Agreements, and to assign qualified personnel of
the defaulting Partner to such tasks in accordance with a schedule to be
determined by the court. In the event of any legal action brought by the
Partnership or by either Partner to enforce its rights under the Agreements, the
prevailing party will be entitled to recover its reasonable attorneys' fees and
expenses incurred in such action from the other party.
8.12 Successors and Assigns. This Agreement will be binding upon and inure to
----------------------
the benefit of the Partners hereto and their successors and permitted assigns.
8.13 Counterparts. This Agreement may be executed in any number of counterparts,
------------
each of which will be deemed an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed as a sealed instrument in their names by their properly and duly
authorized officers or representatives as of the date set forth above.
AMSUB INC., a California Corporation
By E. Joseph Zemke
---------------
E. Joseph Zemke
President and
Chief Executive Officer
EDS ANTARES, INC., a Nevada Corporation
By Joseph W. Holmes
----------------
Joseph W. Holmes
President
<PAGE>
SCHEDULE 4.1
1. CAPITAL CONTRIBUTION UPON EXECUTION OF PARTNERSHIP AGREEMENT
ON THE DATE OF THIS AGREEMENT, EACH PARTNER WILL MAKE A CAPITAL
CONTRIBUTION AS FOLLOWS:
AMDAHL [ ]
EDS [ ]
TOTAL [ ]
2. CAPITAL CONTRIBUTIONS DURING INITIAL PERIOD
THE CAPITAL CONTRIBUTIONS BY QUARTER REQUIRED TO BE MADE BY THE PARTNERS
DURING THE INITIAL PERIOD INCLUDING THE AMOUNTS PAID ON EXECUTION OF THIS
AGREEMENT AS STATED ABOVE ARE EQUAL TO THE PARTNER'S RESPECTIVE PERCENTAGE
SHARE TIMES THE FOLLOWING AMOUNTS(1):
UPON EXECUTION PER ABOVE [ ]
QUARTER ENDED 9-24-93 [ ]
QUARTER ENDED 12-31-93 [ ]
QUARTER ENDED 3-25-94 [ ]
QUARTER ENDED 6-24-94 [ ]
QUARTER ENDED 9-30-94 [ ]
QUARTER ENDED 12-30-94 [ ]
QUARTER ENDED 3-31-95 [ ]
TOTAL REQUIRED COMMITMENT [ ]
- ----------------------------
(1) Any such amounts not called for by the Partnership for a particular quarter
will be carried forward to succeeding quarters within the Initial Period.
<PAGE>
Exhibit 10(z)
December 3, 1993
Mr. Edward F. Thompson
Vice President
CFO and Secretary
AMDAHL CORPORATION
1250 East Arques Avenue
P.O. Box 3470
Sunnyvale, California, 94088-3470
Dear Mr. Thompson
This commitment letter constitutes a firm commitment by Fujitsu Limited
("FJ") to make certain loans to Amdahl Corporation ("AC") on the terms
and conditions specified herein.
1. FJ sets up the loan facility to AC up to the total amount
USD 100 million.
2. This loan should be subordinated only to the existing bank
credit facility, the Bank Credit Facility to be set up by
the end of January 1994, and to bank credit extensions
sharing in the collateral of the Bank Credit Facility via
intercreditor agreements.
3. FJ executes loans up to USD 80 million by the end of
January, 1994.
4. The loan period is longer by one year and a day than that of
the Bank Credit Facility which will be executed in January,
1994.
For other details of loan term, such as funding currency, interest rate,
etc., will be decided after discussion with AC.
Best Regards,
FUJITSU LIMITED
KEIZO FUKAGAWA
- --------------
(Keizo Fukagawa)
Managing Director
<PAGE>
Portions of this exhibit are deleted pursuant to a request for confidential
treatment
Exhibit 10(aa)
Processor Joint Development Agreement
Principles
AC/FJ will design and FJ will manufacture complete S/390 processor systems for
AC.
AC and FJ will have common hardware processor systems based on a Product
Specification.
AC and FJ will discuss and jointly agree on a Product Specification based on FJ
product needs and AC market needs.
The attached diagram shows the roles and responsibilities of AC and FJ.
FJ is responsible for manufacturing.
[
]
Contingency clauses will be renegotiated if there are modifications to the
Product Specification that change the schedule.
AC and FJ Intellectual property rights to be discussed.
Price
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
Price basis is [ ] or [ ] if drop shipped. AC
requests to be importer of record. Final arrangements to be discussed
and agreed to later.
<PAGE>
[
] Foreign exchange conversion to be handled as currently done by AC
and FJ.
Ordering
Products initially provided by FJ [ ] days after ordered by AC. This will be
reduced to [ ] days as manufacturing processes improve. AC will provide
additional [ ] day forecast for planning purposes. AC and FJ will regularly
discuss long-term supply and demand planning. No volume commitments.
FJ tests maximum configuration and ships standard configuration to AC. Final
configuration is done by AC in the field. AC and FJ will discuss the best way
of shipping, with customer drop shipping being a long term possibility.
FJ warrants product and spares:
design [ ]
manufacturing problems [ ]
technology [ ]
Product Plan
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
Detailed product definition will be done jointly by AC and FJ,
including RAS
[ ]
[ ]
[ ]
Competitiveness
<PAGE>
AC and FJ intend to:
* Provide products that compete successfully in the S/390 market.
* Keep products current with agreed to S/390 facilities.
[
]
* [
] The primary criteria
for deciding whether to implement a feature [
]
* Deliver competitive RAS.
Development
Most development will be done and paid for by FJ. AC pays development
cost of work done by AC as agreed with FJ on a task by task basis.
[
]
FJ is responsible for managing product development. The following
list of responsibilities is our general understanding:
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
<PAGE>
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[
]
Manufacturing
FJ is responsible for all new build, repair and update.
AC retains rights to technology and manufacturing if FJ cannot
supply products.
Spares
[
]
Repair
* FJ will repair spares with a [ ] factory turn-around
time for FJ manufactured parts. Parts from other vendors
will be determined later.
* FJ will provide failure analysis feedback to AC within [ ]
after receipt of failed part.
Field Support
AC and FJ will jointly discuss how to provide service tools.
FJ 3rd level support to backup AC support center.
[
]
Makes all FJ service tools available to AC.
<PAGE>
Train AC to support product.
AC Direct field support and has microcode and firmware patch capability.
Normal sparing.
Develops any AC unique service tools.
AC and FJ will work together to define interfaces to allow AC service tools to
operate. FJ will make product changes to support these as mutually agreed to.
Exclusivity
FJ will provide S/390 compatible processors exclusively to AC.
FJ can market AC products in markets to be agreed upon based on the existing
distributor relationship.
Approved
AMDAHL
David L. Anderson December 8, 1993
- -----------------
David L. Anderson
Vice President and General Manager
Compatible Systems
FUJITSU
T. Miyazawa December 9, 1993
- -----------
T. Miyazawa
General Manager
Mainframe Division
<PAGE>
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
[ ]
<PAGE>
Exhibit 13
Financial Contents
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders' Equity
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Management's Discussion and Analysis
Selected Financial Data
Common Stock Dividends and Price Range
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
DECEMBER 31, 1993 AND DECEMBER 25, 1992 1993 1992
(Dollars in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 149,484 $ 173,012
Short-term investments 103,585 121,957
Receivables, net of allowances of $3,266
in 1993 and $3,227 in 1992 307,747 575,800
Inventories 510,702 788,085
Prepaid expenses and deferred tax assets 53,629 94,022
---------- ----------
Total current assets 1,125,147 1,752,876
---------- ----------
Long-term receivables and other assets 45,620 99,409
---------- ----------
Property and equipment:
Leased systems 60,229 76,825
System spares 418,057 429,605
Production and data processing equipment 667,137 860,903
Office furniture, equipment and improvements 158,062 164,303
Land and buildings 177,791 180,550
---------- ----------
1,481,276 1,712,186
Less - accumulated depreciation and
amortization 979,856 863,447
---------- ----------
Property and equipment, net 501,420 848,739
---------- ----------
$1,672,187 $2,701,024
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and short-term debt $ 137,056 $ 212,621
Accounts payable 54,331 86,020
Accounts payable - stockholder
(Fujitsu Limited) 18,092 136,737
Accrued liabilities 561,281 471,253
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
---------- ----------
Total current liabilities 770,760 906,631
---------- ----------
Long-term debt and liabilities 52,208 262,243
Deferred income taxes 59,013 161,034
Stockholders' equity:
Common stock, $.05 par value
Authorized - 200,000,000 shares
Outstanding - 114,578,000 shares at
December 31, 1993 and 113,139,000
shares at December 25, 1992 5,729 5,657
Additional paid-in capital 507,895 500,574
Retained earnings 267,664 853,336
Cumulative translation adjustments 8,918 11,549
---------- ----------
Total stockholders' equity 790,206 1,371,116
---------- ----------
$1,672,187 $2,701,024
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Operations
FOR THE THREE YEARS ENDED DECEMBER 31, 1993 1993 1992 1991
<S> <C> <C> <C>
(Dollars in thousands,
except per common share amounts)
REVENUES
Equipment sales $ 1,132,447 $ 2,022,110 $ 1,234,616
Equipment lease, maintenance and other 548,085 502,624 467,870
------------ ------------ ------------
1,680,532 2,524,734 1,702,486
------------ ------------ ------------
COST OF REVENUES
Equipment sales 881,528 1,431,338 760,292
Equipment lease, maintenance and other 350,982 335,905 303,133
------------ ------------ ------------
1,232,510 1,767,243 1,063,425
------------ ------------ ------------
Gross margin 448,022 757,491 639,061
------------ ------------ ------------
OPERATING EXPENSES
Engineering and development 334,514 372,365 312,541
Marketing, general and administrative 354,939 407,030 358,670
Restructuring costs 478,000 --- ---
------------ ------------ ------------
1,167,453 779,395 671,211
------------ ------------ ------------
Loss from operations (719,431) (21,904) (32,150)
------------ ------------ ------------
INTEREST
Income 23,461 28,957 51,551
Expense (17,772) (21,028) (12,363)
------------ ------------ ------------
5,689 7,929 39,188
Income (loss) before provision
for (benefit from) income taxes (713,742) (13,975) 7,038
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
PROVISION FOR (BENEFIT FROM) INCOME TAXES (125,000) (7,000) 2,600
----------- ----------- -----------
Income (loss) before extraordinary
credit and change in accounting principle (588,742) (6,975) 4,438
EXTRAORDINARY CREDIT - Income tax benefit from
utilization of net operating loss carryforwards -- -- 6,190
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 8,746 -- --
----------- ----------- -----------
NET INCOME (LOSS) $ (579,996) $ (6,975) $ 10,628
=========== =========== ===========
EARNINGS (LOSS) PER COMMON SHARE
Income (loss) before extraordinary credit
and change in accounting principle $ (5.17) $ (.06) $ .04
----------- ----------- -----------
Net income (loss) $(5.09) $(.06) $.10
----------- ----------- -----------
Average outstanding shares and equivalents 113,933,000 112,203,000 111,677,000
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
FOR THE THREE YEARS ENDED DECEMBER 31, 1993 1993 1992 1991
<S> <C> <C> <C>
(Dollars in thousands)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR $ 173,012 $ 245,237 $ 239,186
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (579,996) (6,975) 10,628
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization 209,612 211,628 151,895
Restructuring charges 478,000 -- --
Deferred income tax provision (102,611) (27,540) (14,109)
Loss (gain) on property and equipment sales 1,208 (5,599) (12,484)
(Increase) decrease in receivables 269,784 (182,322) 108,333
(Increase) decrease in inventories 221,454 (103,389) (252,400)
(Increase) decrease in prepaid expenses and
deferred tax assets 40,551 (30,534) 19,773
(Increase) decrease in long-term receivables
and other assets 53,874 (29,831) 41,387
Decrease in accounts payable (150,914) (33) (17,890)
Increase (decrease) in accrued liabilities (128,722) 148,957 (99,204)
Increase (decrease) in long-term liabilities (10,070) 9,012 (6,596)
----------- ----------- -----------
Net cash provided by (used for) operating
activities 302,170 (16,626) (70,667)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in short-term investments 18,372 44,977 186,766
Capital expenditures:
Leased systems (45,045) (52,081) (33,265)
System spares (50,841) (105,184) (74,037)
Other property and equipment (39,033) (252,397) (220,572)
Proceeds from property and equipment sales 68,191 59,565 83,836
----------- ----------- -----------
Net cash used for investing activities (48,356) (305,120) (57,272)
----------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in notes payable and short-term
borrowings (106,854) 30,233 52,767
Borrowings under revolving credit agreement -- 300,000 85,000
Repayments of borrowings under revolving credit
agreement (170,000) (85,000) --
Sale of common stock and exercise of options 7,393 16,854 11,619
Dividends paid (5,676) (11,214) (11,068)
----------- ----------- -----------
Net cash provided by (used for) financing
activities (275,137) 250,873 138,318
----------- ----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (2,205) (1,352) (4,328)
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents (23,528) (72,225) 6,051
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 149,484 $ 173,012 $ 245,237
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE
FOR THE THREE YEARS COMMON PAID-IN RETAINED TRANSLATION
ENDED DECEMBER 31, 1993 STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL
<S> <C> <C> <C> <C> <C>
(Dollars in thousands,
except per share amounts)
BALANCE AT DECEMBER 28, 1990 $5,509 $472,249 $ 871,965 $20,904 $1,370,627
Sale of 1,053,068 shares, net of
repurchases, of common stock
under employee stock benefit plans 53 11,162 --- --- 11,215
Income tax benefit arising from
employee stock option plans --- 404 --- --- 404
Cash dividends ($.10 per share) --- --- (11,068) --- (11,068)
Net income --- --- 10,628 --- 10,628
Translation adjustments --- --- --- (4,277) (4,277)
------ -------- --------- ----------- ----------
BALANCE AT DECEMBER 27, 1991 5,562 483,815 871,525 16,627 1,377,529
Sale of 1,908,024 shares, net of
repurchases, of common stock
under employee stock benefit plans 95 15,602 --- --- 15,697
Income tax benefit arising from
employee stock option plans --- 1,157 --- --- 1,157
Cash dividends ($.10 per share) --- --- (11,214) --- (11,214)
Net loss --- --- (6,975) --- (6,975)
Translation adjustments --- --- --- (5,078) (5,078)
------ -------- --------- ----------- ----------
BALANCE AT DECEMBER 25, 1992 5,657 500,574 853,336 11,549 1,371,116
Sale of 1,439,269 shares, net of
repurchases, of common stock
under employee stock benefit plans 72 7,234 --- --- 7,306
Income tax benefit arising from
employee stock option plans --- 87 --- --- 87
Cash dividends ($.05 per share) --- --- (5,676) --- (5,676)
Net loss --- --- (579,996) --- (579,996)
Translation adjustments --- --- --- (2,631) (2,631)
------ -------- --------- ----------- ----------
BALANCE AT DECEMBER 31, 1993 $5,729 $507,895 $ 267,664 $ 8,918 $ 790,206
====== ======== ========= =========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
NOTE 1
SUMMARY OF ACCOUNTING POLICIES
Amdahl Corporation and subsidiaries (the Company or Amdahl) provide large-scale,
high-performance, general-purpose computer systems, software, storage and
communications products. The Company also provides consulting and professional
services.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. Intercompany accounts and transactions have been
eliminated.
FISCAL YEAR
The Company's fiscal year ends on the last Friday in December. As a result,
1993 was a 53-week year, whereas 1992 and 1991 were each 52-week years.
TRANSLATION OF FOREIGN CURRENCIES
The financial position and results of operations of the Company's non-U.S. sales
subsidiaries are measured using local currency as the functional currency.
Accordingly, all assets and liabilities are translated into U.S. dollars at
current exchange rates as of the respective balance sheet date. Revenue and
expense items are translated at the average exchange rates prevailing during the
period. Cumulative translation gains and losses are reported as a separate
component of stockholders' equity.
Losses resulting from foreign exchange transactions were $2,948,000, $5,826,000
and $3,340,000 in 1993, 1992 and 1991, respectively, and were included in
marketing, general and administrative expenses.
FOREIGN CURRENCY OPTIONS AND FORWARD CONTRACTS
The Company enters into foreign currency options and forward contracts to
protect against currency exchange risks associated with the settlement of its
non-U.S. intercompany payables and receivables and with inventory purchase
commitments with Fujitsu Limited. Realized and unrealized gains and losses on
such contracts and the associated cash flows which qualify as hedges are
reported as components of the related transactions.
<PAGE>
REVENUES
Revenues from equipment sales and sales-type leases are generally recognized
when the equipment has been shipped, installed and financing arrangements have
been completed. Revenues from operating leases are recognized over the term of
the respective contracts.
Service for Amdahl products is provided under service and parts warranty or
separate maintenance agreements. The large-scale computer systems normally
carry a one-year service and parts warranty, and the storage and other products
usually have shorter warranty periods. Where material, a portion of equipment
sales revenue is deferred and recognized over the warranty period as service is
provided. Following the warranty period, Amdahl provides maintenance service
under separate contracts which typically can be terminated by the customer on 90
days notice. Revenues from maintenance contracts are recognized over the term
of the respective contracts as service is provided.
SOFTWARE DEVELOPMENT COSTS
Certain software development costs have been capitalized and amortized over the
life of the product. At December 31, 1993 and December 25, 1992 software
development costs that had been capitalized were immaterial.
FUTURE ENGINEERING CHANGES
Amdahl's computer systems are architecturally compatible at specific software
and hardware interface levels with the basic functions of competing IBM computer
systems. The introduction from time to time by IBM of certain product
enhancements requires that Amdahl make product changes to remain fully
compatible. In addition, the Company makes changes to enhance the functionality
of its products. The Company provides a reserve for estimated future
engineering changes in connection with each sale. The reserve is intended to
cover direct material, direct labor and manufacturing overhead associated with
implementation of engineering changes. Amounts provided and charged to cost of
equipment sales were $16,672,000, $60,278,000 and $1,512,000 in 1993, 1992 and
1991, respectively.
CASH AND CASH EQUIVALENTS
Substantially all cash equivalents consist of investments in major bank time
deposits and certificates of deposit with initial maturities of three months or
less.
<PAGE>
SHORT-TERM INVESTMENTS
Substantially all short-term investments consist of major bank time deposits,
certificates of deposit, U.S. Treasury bills and Euro-notes and bonds which the
Company intends to hold between three and twelve months. Short-term investments
are valued at cost, which approximates market value.
In May 1993 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The Company will adopt this standard in the first
quarter of 1994 and does not believe that adoption of the standard will have a
material impact on its financial statements or results of operations.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market.
Systems in process and finished goods include material, labor and manufacturing
overhead. Year-end inventories consisted of the following:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
(In thousands)
Purchased materials $134,615 $142,443
Systems in process 233,560 409,879
Finished goods 142,527 235,763
-------- --------
$510,702 $788,085
======== ========
PROPERTY AND EQUIPMENT
</TABLE>
Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over estimated useful lives (or, for
leasehold improvements and assets recorded under capital lease obligations, over
the remaining lease terms or estimated useful lives, whichever is shorter) as
follows:
<TABLE>
<CAPTION>
YEARS
<S> <C>
System spares 5
Production and data processing equipment 3-15
Office furniture, equipment and improvements 3-20
Buildings 20-40
</TABLE>
EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share have been computed based on the weighted
average number of common and common equivalent shares outstanding. Common
equivalent shares result from the assumed exercise of stock options which would
have a dilutive effect in years where there are earnings. Primary and fully
diluted earnings per common share amounts are substantially the same.
<PAGE>
NOTE 2
RESTRUCTURING OF OPERATIONS
In 1993 the Company began to restructure its worldwide operations in order to
address the competitive conditions in the markets for large-scale computing
systems, including prices which declined at much greater than normal historical
rates and reduced levels of demand. The restructuring consists of a series of
planned actions, including a reduction in the number of employees by
approximately one-third, consolidation of offices and facilities and disposition
of assets that are no longer required due to changes in product plans, reduction
in manufacturing capacity by approximately 50%, and elimination of selected
product development programs, as well as other expense reductions. The majority
of these actions are expected to be initiated by the end of 1994.
In connection with these actions, the Company recorded restructuring charges
totaling $478,000,000 to operating expenses, $243,000,000 of which was recorded
in the first quarter of 1993 and $235,000,000 of which was recorded in the third
quarter of 1993. The restructuring costs included the following approximate
amounts: $120 million related to reductions in the workforce, $200 million
related to closing excess facilities and write-downs of equipment, $60 million
related to write-downs of excess inventory resulting from reduced manufacturing
capacity and changes in product plans, $10 million related to vendor charges due
to the cancellation of development programs, and other various charges totaling
$88 million. In total the restructuring charges reflected $298 million of
noncash write-offs of recorded assets and $180 million of projected cash
outflows. Of the estimated cash outflows, $107 million is expected to occur
beyond 1993.
The Company believes that the restructuring actions which it took in 1993 will
bring its costs in line with anticipated levels of business in 1994 and beyond.
However, levels of business are a function of a number of factors, including
general economic conditions, the availability and cost of components,
competition from smaller, less costly computer systems, and various other
competitive pressures. Any significant deterioration in anticipated levels of
business would likely require the Company to make additional adjustments to its
expense structure, including additional restructuring charges.
NOTE 3
RELATIONSHIP WITH FUJITSU LIMITED
The Company has entered into agreements with Fujitsu Limited (Fujitsu), a
principal stockholder, which provide for, among other things:
A. Purchases of computer equipment, subassemblies and spare parts from Fujitsu.
The cost of computer equipment, subassemblies and spare parts purchased from
Fujitsu and the amount included in cost of revenues for equipment sales were as
follows:
<PAGE>
<TABLE>
<CAPTION>
COST OF
PURCHASES REVENUES
<S> <C> <C>
(In thousands)
1993 $ 434,732 $444,595
1992 1,048,819 775,757
1991 855,379 517,680
</TABLE>
Amdahl was committed to purchase material and other equipment from Fujitsu
totaling approximately $34,000,000 at December 31, 1993. Prices for these
manufacturing materials and other equipment are subject to adjustment if the
U.S. dollar-Japanese yen exchange rate fluctuates outside of specified ranges.
The Company has entered into hedging arrangements designed to protect against
currency exchange risks associated with anticipated product purchases from
Fujitsu in 1994. Also, Amdahl has agreed to purchase from Fujitsu 50% of certain
subsystem components and 100% of certain devices, boards and modules contained
in its current processor products. In addition, the Company has made advance
payments to Fujitsu for future inventory purchases in return for lower prices on
certain components related to these products. Advance payments of $4,886,000 and
$7,339,000 were included in prepaid expenses as of December 31, 1993 and
December 25, 1992, respectively.
B. Joint development efforts under which Fujitsu supplies Amdahl with services
and material related to the Company's development of current and future
products, resulting in charges to engineering and development expense of
$8,633,000 in 1993, $4,313,000 in 1992 and $11,923,000 in 1991.
In 1991 the Company entered into a cross-license agreement related to certain
technologies in the Company's processor products, in which the Company agreed to
pay Fujitsu up to $15,000,000 in royalties, to be remitted to Fujitsu as
shipments occurred in 1992 and 1993. Amounts charged to cost of revenues related
to this agreement amounted to $3,600,000 in 1993 and $11,400,000 in 1992. In
connection with an agreement for the development and supply by Fujitsu of
certain LSI devices for Amdahl products, the Company paid Fujitsu approximately
$16,000,000 in 1990. This advance payment was expensed in 1990 and 1991 as
materials and services were provided by Fujitsu.
In November 1993 Amdahl and Fujitsu entered into a preliminary agreement
pursuant to which Amdahl and Fujitsu agreed to participate in the joint
development of the Company's next generation of IBM compatible systems. Under
the agreement, Fujitsu will undertake primary responsibility for the design and
manufacture of these systems.
C. A limitation on Fujitsu's maximum ownership interest in Amdahl, such that
until April 19, 1994 Fujitsu will not purchase additional shares of Amdahl
common stock if such purchases would cause its beneficial ownership of
outstanding Amdahl common stock, computed on a fully-diluted basis, to exceed
49.5%.
D. Distributorship arrangements whereby Fujitsu markets Amdahl's computer
equipment in Brazil, Japan, Malaysia, South Korea and Spain. Sales in 1993, 1992
and 1991 by the Company of computer
<PAGE>
systems and complementary storage products to Fujitsu contributed $28,162,000,
$60,268,000 and $29,211,000 to equipment sales and $11,687,000, $24,733,000 and
$12,163,000 to gross margin, respectively. At December 31, 1993 and December 25,
1992 receivables included $35,931,000 and $42,153,000, respectively, from
Fujitsu.
E. A commitment by Fujitsu, pursuant to a loan agreement entered into in
January 1994, under which Fujitsu would provide loans to the Company in an
aggregate amount not to exceed $100,000,000 (see Note 7).
NOTE 4
EQUIPMENT LEASING AND THIRD PARTY TRANSACTIONS
The Company is the lessor of equipment under operating leases for periods
generally less than three years. Certain operating leases contain provisions for
early termination with a penalty or with conversion to another system. The cost
of leased systems is depreciated to a zero value on a straight-line basis over
two to four years. Accumulated depreciation on leased systems was $13,320,000 at
December 31, 1993 and $32,530,000 at December 25, 1992. The Company also leases
equipment to customers under sales-type leases as defined in Statement of
Financial Accounting Standards No. 13. The components of the net investment in
sales-type leases were as follows:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
(In thousands)
Minimum rentals receivable $63,221 $142,738
Estimated residual values of
leased equipment (unguaranteed) 3,182 6,988
Less unearned interest income (7,557) (18,458)
------- --------
Net investment in sales-type leases $58,846 $131,268
======= ========
</TABLE>
Minimum rentals receivable under existing leases as of December 31, 1993 were as
follows:
<TABLE>
<CAPTION>
SALES-TYPE OPERATING
<S> <C> <C>
(In thousands)
1994 $29,382 $21,739
1995 21,067 10,312
1996 9,611 4,329
1997 1,786 957
1998 1,179 411
Thereafter 196 200
------- -------
$63,221 $37,948
======= =======
</TABLE>
In addition, during the periods presented, the Company sold certain equipment
subject to operating leases and financed certain sales-type equipment leases and
installment contracts with financing institutions ("third parties"). The Company
sometimes agrees to perform certain services and obligations with respect to
<PAGE>
the equipment and related leases, such as general lease administration,
invoicing and collection of rentals, payment of insurance and personal property
taxes, maintenance services and non-priority remarketing of equipment that comes
off lease. For these services and obligations, the Company generally receives
its normal maintenance charges and a remarketing and administration fee. Many
of the agreements with third parties provide the Company with residual rights in
revenues, if any, derived from the equipment after the third parties have
received a designated return. Equipment sales revenues arising from these
transactions with third parties were approximately $91,000,000, $157,000,000 and
$94,000,000 in 1993, 1992 and 1991, respectively.
NOTE 5
FINANCIAL INSTRUMENTS
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS: RISK AND FAIR VALUE
The Company hedges certain portions of its exposure to foreign currency
fluctuations through a variety of strategies and financial instruments,
including the use of forward foreign exchange contracts. These contracts
generally have maturities that do not exceed three months. At December 31, 1993
the Company had approximately $132,000,000 of forward foreign exchange contracts
outstanding. The gains and losses associated with currency rate changes on
forward foreign exchange contracts are recorded currently in income as they
offset corresponding gains and losses on the foreign currency-denominated assets
and liabilities being hedged. Therefore, the carrying value of forward foreign
exchange contracts approximates their fair value, which was immaterial at
December 31, 1993 and December 25, 1992.
The Company enters into foreign currency options to protect against currency
exchange risks associated with its probable anticipated, but not firmly
committed, non-U.S. intercompany sales and with both inventory purchase
commitments and probable anticipated inventory purchases from Fujitsu. Realized
and unrealized gains and losses on such contracts and the associated cash flows
that qualify as hedges are reported as components of the related transactions.
These option contracts generally have maturities that do not exceed one year.
The net income effect deferred on foreign currency option contracts represents
the amount by which the carrying value of the option contracts exceeded their
fair value and was immaterial as of December 31, 1993 and December 25, 1992.
The Company enters into interest rate swap agreements as hedges of investments
and accrues the differential to be paid or received under the agreements as
interest rates change over the life of the contracts. At December 31, 1993 the
Company had approximately $50,000,000 notional principal outstanding under these
agreements. The fair value of interest rate swaps is the estimated amount that
the Company would receive or pay to terminate the swap agreements at the
reporting date, taking into account current interest rates. The fair value of
interest rate swaps at December 31, 1993 and December 25, 1992 was immaterial.
<PAGE>
BALANCE SHEET FINANCIAL INSTRUMENTS: FAIR VALUE
At December 31, 1993 and December 25, 1992 the carrying value of cash, cash
equivalents and short-term investments approximated fair value, primarily
because of the immediate or short-term maturity of these instruments. At
December 31, 1993 and December 25, 1992 the carrying value of notes payable,
short-term debt and long-term debt approximated fair value because of the
variable interest rate nature of these instruments.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments and trade
receivables. The Company has cash investment policies that limit the amount of
credit exposure to any one financial institution and restrict placement of these
investments to financial institutions evaluated as highly creditworthy.
Concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Company's customer base, and
their dispersion across many different industries and geographies.
NOTE 6
ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
1993 1992
(In thousands)
<S> <C> <C>
Payroll and vacation $102,363 $ 95,328
Restructuring costs 145,601 ---
Income taxes 48,707 53,332
Deferred income 108,365 133,944
Future engineering changes 57,133 86,004
Other 99,112 102,645
-------- --------
$561,281 $471,253
======== ========
</TABLE>
NOTE 7
LONG-TERM DEBT AND LIABILITIES AND BANK CREDIT AGREEMENTS
Long-term debt and liabilities consisted of the following:
<TABLE>
<CAPTION>
1993 1992
(In thousands)
<S> <C> <C>
Bank credit agreement $130,000 $300,000
Capitalized lease obligations
(Note 12) 21,654 23,243
Long-term liabilities 31,804 40,468
-------- --------
183,458 363,711
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Less current maturities 131,250 101,468
-------- --------
Long-term debt and liabilities $ 52,208 $262,243
======== ========
</TABLE>
The Company's credit agreement with a group of banks providing for an unsecured
multi-year revolving credit facility was amended effective September 24, 1993.
As a result, the Company's borrowing capacity under the agreement was reduced
from $450,000,000 to $300,000,000, its tangible net worth maintenance
requirement was reduced, and the Company was required to repay all outstanding
borrowings upon expiration of the facility on January 31, 1994. The interest
rate applicable to borrowings under the revolving credit agreement was, at the
Company's option, based upon the U.S. reference rate, Interbank Offered Rate or
Certificate of Deposit rate. At December 31, 1993, and December 25, 1992,
$130,000,000 and $300,000,000, respectively, was outstanding under the revolving
credit agreement. The amount outstanding at December 31, 1993 was classified as
short-term debt and was repaid by the Company on January 31, 1994.
The amended revolving credit agreement contained certain financial restrictions
and covenants. The Company was in compliance with all financial ratio
requirements and covenants at December 31, 1993.
In January 1994 the Company and Fujitsu entered into an agreement under which
Fujitsu would provide loans to the Company in an aggregate amount not to exceed
$100,000,000. Such loans bear interest at a rate based upon the London
Interbank Offered Rate. Any outstanding loan balance is payable to Fujitsu on
January 28, 1997. As of January 28, 1994, $80,000,000 was outstanding under
this agreement.
In addition, the Company has credit agreements with a number of banks providing
for short-term borrowings in U.S. dollars and various foreign currencies at
varying interest rates. At December 31, 1993 and December 25, 1992, $5,806,000
and $111,153,000, respectively, was outstanding under these agreements.
Interest paid on all borrowings was $19,821,000, $19,366,000 and $12,015,000 in
1993, 1992 and 1991, respectively.
Long-term liabilities of $31,804,000 include deferred equipment maintenance
revenues and long-term amounts accrued under the Executive Incentive Performance
Plan.
<PAGE>
NOTE 8
MAJOR CUSTOMER, GEOGRAPHIC AREA AND PRODUCT LINE DATA
No single customer accounted for 10% or more of total revenues in 1993, 1992 or
1991.
The Company's operations by geographical area for the three years ended
December 31, 1993 were as follows:
<TABLE>
<CAPTION>
ASIA
UNITED PACIFIC ADJUSTMENTS
1993 STATES CANADA EUROPE & OTHER & ELIMINATIONS CONSOLIDATED
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Customers $1,042,490 $ 50,540 $ 488,259 $ 99,243 $ --- $1,680,532
Intercompany 186,400 4,412 27,774 --- (218,586) ---
---------- -------- --------- -------- --------- ----------
Total revenues $1,228,890 $ 54,952 $ 516,033 $ 99,243 $(218,586) $1,680,532
========== ======== ========= ======== ========= ==========
Income (loss) from operations $ (502,594) $ (5,949) $(190,410) $ 3,275 $ (23,753) $ (719,431)
Interest income, net 5,689
----------
Loss before income taxes $ (713,742)
==========
Identifiable assets $ 983,405 $ 33,259 $ 763,273 $ 59,057 $(393,128) $1,445,866
Corporate assets 226,321
----------
Total assets $1,672,187
==========
</TABLE>
<TABLE>
<CAPTION>
ASIA
UNITED PACIFIC ADJUSTMENTS
1992 STATES CANADA EUROPE & OTHER & ELIMINATIONS CONSOLIDATED
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Customers $1,568,390 $115,151 $ 698,655 $142,538 $ --- $2,524,734
Intercompany 383,566 1,267 101,377 --- (486,210) ---
---------- -------- --------- -------- --------- ----------
Total revenues $1,951,956 $116,418 $ 800,032 $142,538 $(486,210) $2,524,734
========== ======== ========= ======== ========= ==========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from operations $ 21,494 $ (6,510) $ (35,980) $ (8,164) $ 7,256 $ (21,904)
Interest income, net 7,929
----------
Loss before income taxes $ (13,975)
==========
Identifiable assets $1,800,511 $ 43,505 $ 913,376 $ 99,713 $(420,431) $2,436,674
Corporate assets 264,350
----------
Total assets $2,701,024
==========
</TABLE>
<TABLE>
<CAPTION>
ASIA
UNITED PACIFIC ADJUSTMENTS
1991 STATES CANADA EUROPE & OTHER & ELIMINATIONS CONSOLIDATED
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Customers $1,006,495 $133,992 $ 447,730 $114,269 $ --- $1,702,486
Intercompany 270,076 2,839 87,679 --- (360,594) ---
---------- -------- --------- -------- --------- ----------
Total revenues $1,276,571 $136,831 $ 535,409 $114,269 $(360,594) $1,702,486
========== ======== ========= ======== ========= ==========
Income (loss) from operations $ (46,906) $ 7,354 $ 15,094 $ 695 $ (8,387) $ (32,150)
Interest income, net 39,188
----------
Income before income taxes $ 7,038
==========
Identifiable assets $1,384,115 $ 72,826 $ 671,390 $ 45,734 $(231,195) $1,942,870
Corporate assets 392,694
----------
Total assets $2,335,564
==========
</TABLE>
<PAGE>
The Company's operations are structured to achieve consolidated objectives. As
a result, significant interdependencies and overlaps exist among the Company's
operating units. Accordingly, the revenue, operating income (loss) and
identifiable assets shown for each geographic area may not be indicative of the
amounts that would have been reported if the operating units were independent of
one another.
Intercompany sales and transfers of manufacturing materials between areas are at
prices which, in general, provide a profit after coverage of all manufacturing
costs. Intercompany sales of finished systems are at prices intended to provide
a profit for purchasing entities after coverage of marketing, support and
general and administrative costs.
Operating income (loss) is revenue less related costs and direct and allocated
operating expenses, excluding interest and, for all areas except the United
States, the unallocated portion of corporate expenses. United States operating
income (loss) is net of corporate research and development and administrative
expenses.
Corporate assets are those assets maintained for general purposes, principally
cash and short-term investments.
The Company operates in the large-scale computer system and related storage and
communications products segment of the data processing industry. Revenues for
similar classes of products or services within this one business segment for the
most recent three years are presented below:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
(In millions)
Processors $ 857 $1,696 $ 980
Storage products 277 316 221
Communications products 26 35 65
Maintenance services 474 431 397
Software and education services 47 47 39
------ ------ ------
Total $1,681 $2,525 $1,702
====== ====== ======
</TABLE>
NOTE 9
CAPITAL STOCK
There are 200,000,000 authorized shares of common stock, par value of $.05 per
share, of which 114,578,000 shares were issued and outstanding as of December
31, 1993.
As of December 31, 1993 the Company had reserved shares of its common stock for
the following purposes:
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION SHARES RESERVED
<S> <C>
Stock options-
Outstanding 10,736,213
Available for grant 1,931,946
Employee Stock Purchase Plan 3,475,959
Restricted Stock Plan 361,782
----------
16,505,900
==========
</TABLE>
In January 1994, the Board of Directors adopted the 1994 Stock Incentive Plan
(the 1994 Plan), subject to stockholder approval at the 1994 Annual Meeting of
Stockholders. Upon the 1994 Plan becoming effective, the Company's 1971 and
1974 Stock Option Plans, the 1982 Non-Qualified Stock Option Plan and the
Restricted Stock Plan would be cancelled and all outstanding options and rights
under these plans would be incorporated into the 1994 Plan. Up to 14,300,000
shares would be initially reserved for issuance under the 1994 Plan.
There are 5,000,000 authorized shares of Preferred Stock, par value of $1 per
share. This stock, if issued, will carry liquidation preferences and other
rights, as determined by the Board of Directors. As of December 31, 1993, no
Preferred Stock had been issued.
NOTE 10
EMPLOYEE STOCK OPTION AND BENEFIT PLANS
Under the Company's stock option plans, options generally become exercisable in
cumulative annual installments beginning one year after the date of grant, are
fully exercisable after four or five years and expire after five or ten years.
Options are granted to non-employee directors, under the Automatic Option Grant
Program. On December 31, 1993, options for 1,278,577 shares were exercisable at
prices ranging from $4.88 to $18.88.
Activity in the Company's option plans is summarized as follows:
<TABLE>
<CAPTION>
SHARES OPTION PRICES
<S> <C> <C>
Options outstanding at
December 28, 1990 5,396,139 $ 0.07 - $20.75
Granted 1,070,965 $14.06 - $15.00
Exercised (192,894) $ 0.07 - $14.59
Expired or cancelled (119,725) $ 0.38 - $15.50
--------- ---------------
Options outstanding at
December 27, 1991 6,154,485 $ 0.38 - $20.75
Granted 5,636,840 $ 7.00 - $17.50
Exercised (511,393) $ 0.38 - $15.50
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Expired or cancelled (4,705,662) $ 0.38 - $20.75
---------- ---------------
Options outstanding at
December 25, 1992 6,574,270 $ 0.38 - $20.75
Granted 9,681,672 $ 4.72 - $8.19
Exercised (39,231) $ 0.38 - $7.03
Expired or cancelled (5,480,498) $ 0.38 - $20.75
---------- ---------------
Options outstanding at
December 31, 1993 10,736,213 $ 4.72 - $18.88
========== ===============
</TABLE>
Under the Employee Stock Purchase Plan, the Company's employees, subject to
certain restrictions, may purchase shares of common stock at a price per share
that is the lesser of 85% of the fair market value as of the first day or the
last day of each three month purchase period.
As of December 31, 1993, the Company had 387,270 shares of common stock
outstanding with certain officers and key employees under the Restricted Stock
Plan. These shares carry certain restrictions on transferability, which will
lapse over periods as determined by the Board of Directors at the time of grant.
The difference between the fair market value at the date of grant and the
purchase price of the shares (generally, $.05 per share) is recorded as
compensation expense ratably over the period from the date of grant to the date
the restrictions lapse.
The Company has a Capital Accumulation Plan available to all its domestic and
Canadian employees to which it contributes based on its profits. The Company
also has a Savings Plan for domestic employees whereby it matches 25% of
employee contributions up to specified limits. In addition, under the Executive
Incentive Performance Plan, amounts up to 2% of income before taxes are accrued
for selected key employees instead of their participation in the Capital
Accumulation Plan. Approximately half of the award vests over the following
four years and the remainder vests over a service period of up to twenty years.
The total cost of these plans charged to income was $3,705,000 in 1993 and
$5,234,000 in 1991. In 1992 the cost of these plans was immaterial.
NOTE 11
INCOME TAXES
In the first quarter of 1993 the Company adopted Statement of Financial
Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes." The
adoption of this standard changed the Company's method of accounting for income
taxes from the deferred method to an asset and liability method. FAS 109 was
adopted on a prospective basis and amounts presented for prior years have not
been restated. The cumulative effect of this change in accounting increased
earnings in 1993 by $8,746,000, or $0.08 per share.
<PAGE>
Income (loss) before taxes and the provision for (benefit from) income taxes
were comprised of the following:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
(In thousands)
Income (loss) before taxes:
Domestic $(488,628) $ 27,476 $(35,539)
Foreign (225,114) (41,451) 42,577
--------- -------- --------
$(713,742) $(13,975) $ 7,038
========= ======== ========
Provision for (benefit from)
income taxes:
Federal-
Current $ (47,378) $ 40,650 $ 5,012
Deferred, net 6,578 (20,529) (1,970)
--------- -------- --------
(40,800) 20,121 3,042
--------- -------- --------
State-
Current (4,253) 1,524 680
Deferred, net 5,466 2,839 (608)
--------- -------- --------
1,213 4,363 72
--------- -------- --------
Foreign-
Current (5,090) (3,571) 15,001
Deferred, net (80,323) (27,913) (15,515)
--------- -------- -------
(85,413) (31,484) (514)
--------- -------- --------
Net tax provision
(benefit) $(125,000) $ (7,000) $ 2,600
========= ======== ========
</TABLE>
The effective income tax provision (benefit) differed from the statutory Federal
provision due to the following:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
(In thousands)
Statutory Federal tax
provision (benefit) $(249,810) $ (4,752) $ 2,393
State tax provisions,
net of Federal tax
benefit 780 2,880 47
Research and development
credits --- (1,221) (2,396)
Net operating losses in
excess of available
benefits 120,558 7,081 1,000
Foreign subsidiaries'
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
earnings taxed at
rates in excess of
(less than) the
statutory Federal
rate 94 (11,531) 1,174
Other 3,378 543 382
--------- -------- -------
Net tax provision
(benefit) $(125,000) $ (7,000) $ 2,600
========= ======== =======
Net effective tax rate 18% 50% 37%
--------- -------- -------
</TABLE>
Net income tax refunds of $16,000,000 were received by the Company in 1993, and
net income taxes of $12,077,000 and $57,340,000 were paid by the Company in 1992
and 1991, respectively.
The components of the net deferred tax liability under FAS 109 as of December
31, 1993 were as follows:
<TABLE>
<CAPTION>
<S> <C>
(In thousands)
Deferred tax liabilities:
Tax on foreign income $ (46,094)
Depreciation (42,273)
Other (16,861)
---------
Total deferred tax liabilities (105,228)
---------
Deferred tax assets:
Reserves 165,578
Revenue timing 18,656
Net operating loss carryforwards 50,672
---------
234,906
Valuation allowance (152,337)
---------
Total deferred tax assets 82,569
---------
Net deferred tax liability $ (22,659)
=========
</TABLE>
No tax benefit was recorded for losses other than recoverable taxes or future
taxable income from the reversal of deferred items.
The valuation allowance of $152,337,000 at December 31, 1993 consisted of
worldwide operating losses, deferred tax assets, and tax credit carryforwards
which may expire before the Company can utilize them. The Company believes
sufficient uncertainty exists regarding the realizability of these items, and
accordingly, a valuation allowance has been established.
For years prior to 1993, deferred taxes as accounted for under Accounting
Principles Bulletin No. 11 resulted from differences in
<PAGE>
the timing of revenue and expense recognition for tax return and financial
statement purposes. The tax effects of these timing differences for the years
indicated were as follows:
<TABLE>
<CAPTION>
1992 1991
<S> <C> <C>
(In thousands)
Taxes on foreign income
currently payable $(24,452) $(15,771)
Accelerated depreciation 8,882 14,324
Reserves currently
deductible (not currently
deductible) for tax purpose (49,663) 37,678
Revenue timing 16,800 (49,362)
Other items 2,830 (4,962)
-------- --------
Net amount $(45,603) $(18,093)
======== ========
</TABLE>
The Company provides in full for United States income taxes on the earnings of
foreign subsidiaries not considered indefinitely invested outside the United
States. Cumulative earnings of foreign subsidiaries considered indefinitely
invested outside of the United States amounted to $130 million at December 31,
1993. If these earnings were distributed, deferred tax assets would become
available to substantially reduce or eliminate any resulting United States
income tax liability.
The Company had operating loss carryforwards remaining at December 31, 1993 for
certain foreign subsidiaries of approximately $59 million, approximately $27
million of which expire at various dates from 1997 through 2003 and
approximately $32 million of which can be carried forward indefinitely.
During the fourth quarter of 1993 the Internal Revenue Service (IRS) completed
its field audit of the Company's 1985 and 1986 tax years. Results of the audit
were similar to the IRS' proposed adjustments to the 1983 and 1984 tax years,
the most significant of which related to the treatment of system spares. The
Company expects to file a protest with the Appeals Division of the IRS
contesting the proposed adjustments to tax years 1985 and 1986 and combine this
action with the protest already underway regarding tax years 1983 and 1984. In
the opinion of management, the final resolution of the protest will not have an
adverse impact on the Company's operating results or financial position.
NOTE 12
LEASE COMMITMENTS
The Company leases a substantial portion of its principal facilities under
capital lease agreements extending through the year 2008. Capitalized
facilities leases totaling $25,652,000 and $31,366,000 with accumulated
amortization of $15,487,000 and
<PAGE>
$18,285,000 were included in the land and buildings classification on the
balance sheets at December 31, 1993 and December 25, 1992, respectively. The
lease agreements provide for renewal options extending the lease terms beyond
the initial terms in five-year increments. The Company also leases certain
equipment and sales and service facilities under operating leases. The minimum
lease commitments as of December 31, 1993 were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
<S> <C> <C>
(In thousands)
1994 $ 3,662 $ 33,231
1995 3,318 25,922
1996 3,318 21,543
1997 3,318 17,742
1998 3,273 14,686
After 1998 23,598 46,934
-------- --------
Total minimum lease commitments $ 40,487 $160,058
========
Less imputed interest
(9.25% to 13.76%) (18,833)
--------
Present value of minimum lease
commitments (Note 7) $ 21,654
========
</TABLE>
Rental expense charged to income was $44,953,000 in 1993, $48,130,000 in 1992
and $43,623,000 in 1991.
NOTE 13
LITIGATION
Multiple securities class action lawsuits were filed against the Company
and certain of its directors, officers and other employees in September and
October of 1992 in the United States District Court for the Northern District of
California. These cases were subsequently consolidated into a single action.
On September 10, 1993 the Court gave final approval to a settlement of this
litigation under which all claims in the litigation were dismissed and finally
settled, and plaintiffs and their attorneys received a cash payment from the
Company and its insurer. The settlement payment did not have a material impact
on the Company's financial position or results of operations.
<PAGE>
NOTE 14
SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH YEAR
(In thousands, except per common share amounts)
<S> <C> <C> <C> <C> <C>
FISCAL QUARTER 1993
Revenues $ 380,713 $463,206 $ 393,673 $442,940 $1,680,532
========= ======== ========= ======== ==========
Gross margin $ 82,709 $139,402 $ 105,264 $120,647 $ 448,022
========= ======== ========= ======== ==========
Loss before taxes $(340,353) $(29,599) $(296,930) $(46,860) $ (713,742)
========= ======== ========= ======== ==========
Loss before accounting change $(248,453) $(23,699) $(275,730) $(40,860) $ (588,742)
========= ======== ========= ======== ==========
Net loss $(239,707) $(23,699) $(275,730) $(40,860) $ (579,996)
========= ======== ========= ======== ==========
Loss per common share:
Loss before accounting change $ (2.19) $ (.21) $ (2.41) $ (.36) $ (5.17)
========= ======== ========= ======== ==========
Net loss $ (2.12) $ (.21) $ (2.41) $ (.36) $ (5.09)
========= ======== ========= ======== ==========
FISCAL QUARTER 1992
Revenues $ 497,916 $692,983 $ 588,840 $744,995 $2,524,734
========= ======== ========= ======== ==========
Gross margin $ 174,744 $219,943 $ 146,594 $216,210 $ 757,491
========= ======== ========= ======== ==========
Income (loss) before taxes $ 7,394 $ 28,948 $ (55,567) $ 5,250 $ (13,975)
========= ======== ========= ======== ==========
Net income (loss) $ 4,394 $ 16,948 $ (30,767) $ 2,450 $ (6,975)
========= ======== ========= ======== ==========
Net income (loss) per common share $ .04 $ .15 $ (.27) $ .02 $ (.06)
========= ======== ========= ======== ==========
</TABLE>
<PAGE>
Report of Independent Public Accountants
TO AMDAHL CORPORATION:
We have audited the accompanying consolidated balance sheets of Amdahl
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1993
and December 25, 1992, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1993. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements 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 financial position of Amdahl Corporation and
subsidiaries as of December 31, 1993 and December 25, 1992, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles.
As discussed in Note 11 to the Consolidated Financial Statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, in 1993.
ARTHUR ANDERSEN & CO
SAN JOSE, CALIFORNIA
JANUARY 31, 1994
MANAGEMENT'S DISCUSSION AND ANALYSIS
1993 COMPARED TO 1992
RESULTS OF OPERATIONS
In 1993 the Company began to restructure its worldwide operations in order to
address the competitive conditions in the markets for large-scale computing
systems, including prices which declined at much greater than normal historical
rates and reduced levels of demand. The restructuring consists of a series of
planned actions, including a reduction in the number of employees by
approximately one-third, consolidation of offices and facilities and disposition
of assets that are no longer required due to changes in product
<PAGE>
plans, reduction in manufacturing capacity by approximately 50%, and elimination
of selected product development programs, as well as other expense reductions.
The majority of these actions are expected to be initiated by the end of 1994.
In connection with these actions, the Company recorded restructuring charges
totaling $478,000,000 to operating expenses, $243,000,000 of which was recorded
in the first quarter of 1993 and $235,000,000 of which was recorded in the third
quarter of 1993. The restructuring costs included the following approximate
amounts: $120 million related to reductions in the workforce, $200 million
related to closing excess facilities and write-downs of equipment, $60 million
related to write-downs of excess inventory resulting from reduced manufacturing
capacity and changes in product plans, $10 million related to vendor charges due
to the cancellation of development programs, and other various charges totaling
$88 million. In total the restructuring charges reflected $298 million of
noncash write-offs of recorded assets and $180 million of projected cash
outflows. Of the estimated cash outflows, $107 million is expected to occur
beyond 1993.
REVENUES
Total revenues decreased 33% from 1992 to 1993, and equipment sales decreased
44%. Prices for the Company's 5995M mainframe computers, as well as the
Company's other products, declined at greater than normal historical rates
because of significant competitive pressures. In 1993 prices for the 5995M and
5995A processors declined approximately 34% and 38%, respectively, compared to
systems of like configuration and model sold in 1992. The Company also
experienced reduced levels of demand during 1993 for certain of its products,
particularly the 5995M mainframe systems. Processor shipment volumes of the
5995M and the older 5995A series decreased approximately 23% and 32%,
respectively. As a result, processor equipment sales decreased 50%. The
reduced volume of business reflected ongoing economic weakness in the Company's
principal markets, particularly its international markets. Demand for large-
scale mainframe processors also continued to be negatively impacted by a shift
by some customers from centralized mainframe computing to smaller systems and by
an excess supply of computing capacity in the marketplace. Also, as previously
reported, a limited number of customers affected by component failure associated
with deliveries of the 5995M mainframe system deferred additional purchases of
those systems. A decrease of 13% in storage equipment sales also contributed to
the Company's revenue decrease in 1993.
Maintenance, lease and other revenues increased 9% from the prior year,
reflecting increased maintenance revenues from a larger customer installed base
and increased consulting and services revenues.
<PAGE>
Revenues were also adversely impacted by approximately $58 million by a
strengthened U.S. dollar, as international revenues denominated in foreign
currencies translated to fewer dollars in 1993, when compared to 1992.
GROSS MARGINS
Gross margin as a percentage of revenues declined from 30% in 1992 to 27% in
1993. The decreases in processor pricing discussed above more than offset
improved gross margins on storage equipment sales and maintenance services
revenues, lower production costs resulting from manufacturing efficiencies from
maturing product lines, and a decrease in cost of equipment sales of
approximately $44 million related to the provision for implementation of
engineering changes to support IBM features on certain 5995M processors shipped
during 1993, when compared to 1992.
OPERATING EXPENSES
Engineering and development expenses amounted to $334,514,000 in 1993, a
decrease of 10% from 1992. Marketing, general and administrative expenses
decreased 13% to $354,939,000 in 1993. These decreases reflect the benefits
from the Company's reduction in force in November 1992 and the restructuring
actions taken in 1993, as well as other cost control programs. Operating
expenses also included a separate category for the 1993 restructuring charges
discussed previously.
In the first quarter of 1993 the Company implemented Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." This statement requires that the cost of these benefits be accrued in
the financial statements. The effect of this implementation did not have a
material impact on the Company's financial position or results of operations.
Statement of Financial Accounting Standards No. 106, which established
accounting standards for employers' accounting for postretirement benefits other
than pensions, was required to be adopted in 1993. The Company does not offer
post-retirement benefits and therefore this statement did not have a material
impact on the Company's financial position or results of operations.
INTEREST INCOME/EXPENSE AND INCOME TAXES
Net interest income decreased 28% in 1993 from the prior year due to lower
average investment levels and decreased yields.
The effective annual income tax rate decreased from 50% in 1992 to 18% in 1993.
No tax benefit was recorded for losses other than recoverable taxes or future
taxable income from the reversal of
<PAGE>
deferred items. The Company believes uncertainty exists as to the realizability
of certain tax assets. Therefore, a valuation reserve was recorded in 1993,
resulting in the decreased tax benefit.
In the first quarter of 1993 the Company implemented Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." The cumulative
effect of this accounting change increased earnings in 1993 by $8,746,000, or
$0.08 per share. Income taxes for the prior period were not restated for this
change.
1992 COMPARED TO 1991
REVENUES
Revenues increased 48% from 1991 to 1992. Equipment sales increased 64% and
accounted for 96% of the year over year revenue increase. Processor equipment
sales increased 75%, primarily as a result of volume shipments of the Company's
new 5995M processor. Combined processor shipment volumes of the 5995M and
5990/5995A series increased approximately 47%. However, because of intense
competition, especially during the later half of the year, prices for the 5995M
decreased approximately 26% during 1992. This rate of decline in pricing was
more acute when compared to pricing patterns for previous processors during
their first year of shipments. In addition, prices for the older 5990/5995A
series processors decreased approximately 57% in 1992 compared to systems of
like configuration and model sold in 1991. An increase of 45% in storage
equipment sales revenues also contributed to the Company's revenue increase in
1992 as shipments of the Company's new storage products reached volume levels.
Maintenance, lease and other revenues increased 7% from the prior year primarily
due to maintenance revenue from a larger installed base of the Company's
processor products.
GROSS MARGINS AND OPERATING EXPENSES
The gross margin percentage decreased from 38% in 1991 to 30% in 1992,
reflecting the significant decreases in processor pricing. In addition, cost of
equipment sales included the provision of approximately $60 million in 1992
(compared to approximately $2 million in 1991) for implementation of
engineering changes to support IBM features on certain 5995M processors shipped
during 1992.
Gross margins and operating expenses were also unfavorably impacted by a charge
of $25 million in the third and fourth quarters of 1992, of which approximately
$13 million was charged to cost of sales and approximately $12 million was
charged to operating expenses, in connection with a nine percent reduction in
the employee workforce in November 1992.
<PAGE>
Operating expenses increased approximately 16% from 1991 to 1992 and were 31%
of revenues in 1992 compared to 39% of revenues in 1991. The 19% increase in
1992 in engineering and development expenses was due primarily to the increased
average number of employees in 1992, compared to 1991, and depreciation expense
associated with additional capital equipment used for product design and
development. The 13% increase in marketing, general and administrative expenses
reflected expenses associated with a larger salesforce.
INTEREST INCOME/EXPENSE AND INCOME TAXES
Net interest income decreased 80% in 1992 from the prior year due to lower
average investment levels, decreased yields and increased average debt levels.
The effective annual income tax rate increased from 37% in 1991 to 50% in 1992.
The higher rate actually reflected an increased tax benefit given the year's
loss before taxes. The higher rate was primarily due to additional tax benefits
from foreign subsidiaries' earnings taxed at rates lower than the statutory
Federal rate. Included in this tax benefit was the permanent reinvestment of
approximately $30 million of the Company's Irish subsidiary's prior years'
earnings.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Operating results are a function of a number of factors, including general
economic conditions, the availability and cost of components, the uncertainties
inherent in the development, engineering and manufacturing of technically
complex products, the performance and reliability of these products, the
requirement to maintain compatibility with competing IBM systems, and various
other competitive pressures.
The Company expects the competitive pricing pressures and the shift in the mix
of units shipped to equipment with smaller configurations (which are less
profitable) will continue to adversely affect revenues and gross margins in
1994. A persistence of the economic weakness in the Company's international
markets experienced in prior years would also have a material adverse impact on
earnings. Also, the Company believes that the growth of the market for
mainframe systems generally is being impacted by the competition from smaller,
less costly computer systems.
The Company believes that the restructuring actions which it took in 1993 will
bring its costs in line with anticipated levels of business in 1994 and beyond.
However, any significant deterioration in these levels of business would likely
require the Company to make additional adjustments to its expense structure,
including additional restructuring charges. Because of these
<PAGE>
uncertainties the Company is unable to predict when it will be able to achieve
or sustain profitability.
In the latter part of 1993 the Company reorganized along lines of business
consisting of its compatible processors, storage products, maintenance and
consulting services, open systems and Huron software businesses, in order to
enable the Company to more effectively enhance and expand its product offerings.
Because of the factors noted above affecting its traditional mainframe business,
the Company intends to rely increasingly on its ability to utilize lower cost
technologies in future compatible processor products and on the ability of its
newer lines of business to contribute a higher percentage of revenues and
profits to overall operations. Successful implementation of this strategy is,
however, subject to the inherent risks associated with the introduction of new
technologies and the Company's lack of extensive experience in developing
product offerings not related to its traditional compatible processor business.
In May 1993 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The Company will adopt this standard in the first
quarter of 1994 and does not believe that adoption of the standard will have a
material impact on its financial statements or results of operations.
FINANCIAL CONDITION
DECEMBER 31, 1993 COMPARED TO DECEMBER 25, 1992
The Company's net cash position (cash and short-term investments net of short-
term and long-term bank debt) improved by $233 million, from a net borrowing
position of $116 million at December 25, 1992 to a net cash and investment
position of $117 million at December 31, 1993.
Cash, cash equivalents and short-term investments decreased $42 million,
reflecting cash provided by operating activities which was offset by cash used
for repayments of bank borrowings and capital expenditures (net of proceeds from
property and equipment sales). Receivables decreased $268 million due to
decreased revenues and improved collections. Inventories decreased $277 million
primarily due to the Company's efforts to reduce inventory levels and as a
result of additional inventory reserves taken in 1993, including $60 million
related to the restructuring actions taken in the first and third quarters of
1993 (discussed under "Results of Operations"). Long-term receivables and other
assets decreased $54 million primarily due to decreased sales-type lease
receivables. Net property and equipment decreased by $347 million primarily due
to write-downs of approximately $200 million related to the restructuring
actions taken in 1993, as well as ongoing depreciation charges.
<PAGE>
The cash, cash equivalents and short-term investment balances as of December 31,
1993 included approximately $175 million currently invested outside the United
States. Repatriation of these investments and cash would give rise to Federal
taxable income for the year of transfer, taxes for which have been provided.
(See Note 11 to the Consolidated Financial Statements regarding foreign
subsidiaries' earnings on which taxes have not been provided.)
Accounts payable and accounts payable to Fujitsu decreased $150 million due
primarily to significantly reduced purchases of manufacturing materials. Notes
payable and short-term debt decreased $76 million because the Company paid down
borrowings under a number of its credit agreements. The increase in accrued
liabilities of $90 million was primarily due to accruals of costs associated
with restructuring the Company's operations.
At December 31, 1993 and December 25, 1992, $130,000,000 and $300,000,000,
respectively, was outstanding under the Company's revolving credit agreement
with a group of banks. The amount outstanding at December 31, 1993 was
classified as short-term debt and was repaid by the Company upon expiration of
the facility on January 31, 1994. (See Note 7 to the Consolidated Financial
Statements.)
In January 1994 the Company and Fujitsu entered into an agreement under which
Fujitsu would provide loans to the Company in an aggregate amount not to exceed
$100,000,000. Such loans bear interest at a rate based upon the London
Interbank Offered Rate. Any outstanding loan balance is payable to Fujitsu on
January 28, 1997. As of January 28, 1994, $80,000,000 was outstanding under
this agreement.
LIQUIDITY
The nature of the computer industry, combined with the current economic
environment, make it very difficult for the Company to predict future liquidity
requirements with certainty. However, the Company believes that internally
generated cash and borrowings under its loan agreement with Fujitsu will be
adequate to finance continuing operations, investments in plant and equipment,
inventories and spare parts, and expenditures for the development of new
products at least through the next twelve months, providing that financial
results are not significantly less favorable than planned, and objectives for a
further reduction in inventories are achieved. Capital spending for items other
than leased systems in 1994 is expected to be less than the $90 million spent in
1993. While customer demands for lease financing constitute a potential use of
cash, the Company feels that, as in the past, adequate sources exist to provide
such funding on a non-recourse basis. The Company also expects that other
sources of capital will be available to meet any additional financing
requirements during and beyond 1994.
<PAGE>
The Company has no significant commitments with vendors other than Fujitsu (see
Note 3 to the Consolidated Financial Statements).
<PAGE>
Selected Financial Data
<TABLE>
<CAPTION>
FOR THE FIVE YEARS ENDED DECEMBER 31, 1993 1993 1992 1991 1990 1989
(In thousands, except per common share amounts)
<S> <C> <C> <C> <C> <C>
Revenues $1,680,532 $2,524,734 $1,702,486 $2,158,755 $2,101,121
Income (loss) before extraordinary
credit and accounting change (588,742) (6,975) 4,438 183,954 152,972
Net income (loss) (579,996) (6,975) 10,628 183,954 152,972
Earnings (loss) per common share:
Income (loss) before extraordinary
credit and accounting change (5.17) (.06) .04 1.66 1.39
Net income (loss) (5.09) (.06) .10 1.66 1.39
Dividends per common share .05 .10 .10 .10 .10
Long-term debt and liabilities 52,208 262,243 138,347 59,893 87,085
Total assets 1,672,187 2,701,024 2,335,564 2,326,767 2,233,666
</TABLE>
<PAGE>
Common Stock Dividends and Price Range
DIVIDENDS
In the third quarter of 1993 the Company suspended the quarterly cash dividend
on its common stock which the Company had paid since April 1977. Dividends
declared per share for the most recent five years are shown under "Selected
Financial Data." Payment of future dividends will be dependent upon the
Company's earnings, capital requirements, financial condition and other factors.
MARKET PRICE
The common stock is listed on both the American and London Stock Exchanges. The
following table sets forth, for the periods indicated, the range of high and low
sale prices on the American Stock Exchange-Composite Transactions, as reported
by The Wall Street Journal.
<TABLE>
<CAPTION>
1993 HIGH LOW
<S> <C> <C>
First Quarter $ 8 1/2 $ 6 5/8
Second Quarter 6 1/2 4 5/8
Third Quarter 6 3/8 4 1/2
Fourth Quarter 7 1/8 4 3/8
1992 HIGH LOW
First Quarter $20 5/8 $15 1/4
Second Quarter 18 1/4 14 1/2
Third Quarter 18 3/8 8 7/8
Fourth Quarter 9 3/8 6 5/8
</TABLE>
On December 31, 1993 there were approximately 22,500 holders of record of Amdahl
common stock.
<PAGE>
Exhibit 21
Office of the Corporate Secretary December 1993
Amdahl Corporation
AMDAHL CORPORATION SUBSIDIARIES
<TABLE>
<CAPTION>
JURISDICTION SUBSIDIARY
- ------------- ----------
DOMESTIC
--------
<S> <C>
California Amdahl Capital Corporation
California Amdahl Finance Corporation
California Amdahl International Corporation
California Amdahl International Sales Corporation
California Amdahl International Service Corporation
California Amdahl Investment Corporation
California Amdahl North Atlantic, Inc.
California Amdahl Pacific Basin Operations, Inc.
California Amsub Inc.
Delaware Amdahl Federal Service Corporation
INTERNATIONAL
-------------
Australia Amdahl Australia Pty., Ltd.
Australia Amdahl Import Pty., Ltd.
Australia Amdahl Pacific Services Pty., Ltd.
Australia Amdahl Superannuation (Australia) Pty., Ltd.
Austria Amdahl Computersysteme Gesellschaft mbH
Belgium Amdahl Belgium S.A.
Bermuda Amdahl Ireland Limited
Bermuda Amdahl Middle East Operations, Limited
Canada Amdahl Canada Limited
Denmark Amdahl Danmark Computer Systems A/S
France Amdahl France S.A.
Germany Amdahl Deutschland GmbH
Guam Amdahl Foreign Sales Corporation
Ireland Amdahl Ireland Limited
Italy Amdahl Italia S.p.A.
Netherlands Amdahl Lease B.V.
Netherlands Amdahl Nederland B.V.
Netherlands Antilles Amdahl Overseas Capital Corporation N.V.
Norway Amdahl Norge A/S
Switzerland Amdahl (Schweiz) AG
United Kingdom Amdahl Communications Systems Limited
United Kingdom Amdahl International Management Services
Limited
United Kingdom Amdahl (U.K.) Limited
</TABLE>
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports included (or incorporated by reference) in this Form
10-K into the Company's previously filed Registration Statement Nos. 2-94748,
33-7275, 33-27425, 33-35547 and 33-55460 on Form S-8.
Arthur Andersen & Co.
San Jose, California
March 25, 1994
<PAGE>
Exhibit 24
AMDAHL CORPORATION
POWERS OF ATTORNEY
The undersigned directors of Amdahl Corporation, a Delaware corporation, do
hereby appoint Edward F. Thompson, Secretary of the Corporation, their lawful
attorney and agent for signature with power to execute the Corporation's Annual
Report on Form 10-K filed with the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended. The power granted herewith
includes the power and authority to sign the names of the undersigned directors
to any and all amendments filed to the Annual Report. Each of the undersigned
hereby ratifies and confirms all that said attorney and agent shall do pursuant
to this power. This power of attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney
as of January 27, 1994.
By K. Fukagawa By George R. Packard
------------------- -----------------------
Keizo Fukagawa George R. Packard
By E. F. Heizer, Jr. By Walter B. Reinhold
------------------- -----------------------
E. F. Heizer, Jr. Walter B. Reinhold
By Kazuto Kojima By Takamitsu Tsuchimoto
------------------- -----------------------
Kazuto Kojima Takamitsu Tsuchimoto
By R. Stanley Laing By J. Sidney Webb
------------------- -----------------------
R. Stanley Laing J. Sidney Webb
By John C. Lewis By E. R. White
------------------- -----------------------
John C. Lewis Eugene R. White
By Burton G. Malkiel By E. Joseph Zemke
------------------- -----------------------
Burton G. Malkiel E. Joseph Zemke
