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 30, 1994
Commission file number 1-7713
A M D A H L C O R P O R A T I O N
(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 (Zip Code)
executive offices)
Registrant's telephone number: (408) 746-6000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of class which registered
common stock American Stock Exchange, Inc.
par value of $.05 London Stock Exchange
per share
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 6,
1995: $691,210,223.
<PAGE>
Number of shares of common stock, par value of $.05 per
share, outstanding as of March 6, 1995: 117,504,131.
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) Portions of Registrant's Annual Report to Stockholders for
the fiscal year ended December 30, 1994 (the "Annual Report")
into Parts I and II; and
(2) Portions of Registrant's definitive Proxy Statement for the
Annual Meeting of Stockholders scheduled to be held on May 4,
1995 (the "Proxy Statement") into Part III.
<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 and related storage products which are
architecturally compatible at specific software and hardware
interface levels with the basic functions of competing IBM
systems. The Company also offers client-server hardware systems
for the open systems marketplace. In addition, the Company
provides software and communications products as well as
consulting and professional services for both the IBM compatible
and open systems markets. Amdahl's customer base is diversified
and includes large corporations, financial institutions, public
utilities, government agencies and universities.
Since its first product shipment of IBM compatible
processors in June 1975, the Company has continued to introduce
new and more powerful computer systems. In December 1991 Amdahl
began initial shipments of the newest of these systems, the 5995M
series. In 1994 Amdahl began delivery of the highest performance
models in this series, its ten-way and twelve-way processors, as
well as its newest models of storage products. In late 1993, the
Company also began delivery of high performance servers for the
open systems market.
In addition to its principal lines of computers and storage
systems, Amdahl offers software products, educational and
professional services, and hardware maintenance services. As
part of its software products, the Company offers Huron, a
comprehensive applications development and production system,
UTS, a UNIX based operating system for IBM compatible mainframes,
and its A+ family of performance and productivity tools for the
open systems environment.
The Company is organized along lines of business consisting
of its compatible processor, storage, maintenance and
professional services, Huron and open systems operations. The
Company intends to enhance its professional and consulting
services business and to enter into partnerships and alliances
with other companies as a way of enhancing its existing product
offerings and developing new products and services. Until its
Huron, professional services and open systems offerings are more
fully developed, however, the large-scale compatible processor
business, including its related maintenance service and storage
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 44% 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 principal storage products. In November 1993 Amdahl
and Fujitsu entered into an 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. 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, Europe and Asia
Pacific, through Fujitsu in Brazil, Japan, Malaysia and Spain and
through other distributors in Indonesia, Saudi Arabia, Latin
America, South Africa and Korea. In 1994 approximately 42% of
Amdahl's revenues were from international operations.
The Company offers its products for sale and lease. For
further information on leasing see "Note 3 - Equipment Leasing
and Third Party Transactions" on page 32 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
Practices" on pages 29 and 30 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
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 37 and 38 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
mainframe 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 make comparable changes to remain fully
compatible.
The growth in the market for large-scale computers has 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 has diversified 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
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 in successfully introducing 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 20, 22
and 23 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 prior years' restructuring programs, Amdahl
has significantly reduced its manufacturing capacity, partly to
address the lower levels of business experienced in the large-
scale mainframe market 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.
Its primary 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, direct-access storage devices 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
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 2 - Relationship with Fujitsu Limited" on page
31 of the Annual Report.
Product Development
The Company's future prospects depend upon its successful
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
$203,241,000 in 1994, $334,514,000 in 1993, and $372,365,000 in
1992. 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 into
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 technical
competence of its development personnel and the ability to
successfully enter into partnering or OEM agreements with outside
suppliers.
Amdahl and IBM are parties to an agreement pursuant to which
each 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 and software,
communications networks and related semiconductor technology,
generally covering the planned products of the Company while IBM
is licensed under substantially all Amdahl patents. For further
information regarding IBM see "Management's Discussion and
Analysis - Factors That May Affect Future Operating Results" on
page 23 of the Annual Report.
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.
Employees
As of February 24, 1995, the Company had approximately 5,600
full-time employees.
Executive Officers of Amdahl
The executive officers of the Company as of February 1, 1995
are as follows:
Name Age Positions
----- ----- ----------
John C. Lewis 59 Chairman of the Board
E. Joseph Zemke 54 President, Chief Executive Officer
and Director
Linda T. Alepin 49 Vice President, Business
Development
David L. Anderson 47 Vice President and General Manager,
Compatible Systems
John C. Cavalier 55 President and Chief Executive
Officer, Antares Alliance Group
William F. Ferone 50 Vice President and General Manager,
Customer Services
William Flanagan 55 Vice President, Business and
Marketing, Compatible Systems
Charles E. Fonner 51 Vice President, Product Management
and Marketing
Orval J. Nutt 54 Vice President and General Manager,
Worldwide Field Operations
Anthony M. Pozos 54 Senior Vice President, Human
Resources and Corporate Services
Bruce J. Ryan 51 Senior Vice President, Chief
Financial Officer and Corporate
Secretary
Ernest B. Thompson 58 Vice President and Controller
David B. Wright 45 Vice President and General Manager,
Worldwide Field Operations
Mr. John C. Lewis 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. E. Joseph Zemke 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.
Ms. Linda T. Alepin joined the Company in 1978. She held
positions of increasing responsibility within the Company until
she was appointed Vice President of Market Development in 1989.
She was appointed Vice President of Business Development in 1993.
Mr. David L. Anderson 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 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.
Mr. William F. Ferone 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 joined the Company in 1973 and was
elected Vice President of Manufacturing in 1985. In 1993 he
became Vice President of Operations, Compatible Systems and in
1994 he was appointed Vice President, Business and Marketing,
Compatible Systems.
Mr. Charles E. Fonner joined the Company in 1979 and was
elected Vice President of Systems Marketing in 1991. In 1992 Mr.
Fonner became Vice President of Product Management and Marketing.
Mr. Orval J. Nutt 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. Anthony M. Pozos 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. Bruce J. Ryan joined the Company in 1994 as Senior Vice
President, Chief Financial Officer and Corporate Secretary. From
1993 through 1994 Mr. Ryan was Vice President of Industry
Marketing at Digital Equipment Corporation, prior to which he
served as Vice President and Corporate Controller.
Mr. Ernest B. Thompson joined the Company in 1978 as
Controller. He was elected Corporate Vice President in 1980.
Mr. David B. Wright 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.
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 339,678
square feet and leases 944,051 square feet. Amdahl also leases
approximately 106 sales and service offices throughout the United
States, Canada, Europe, the Pacific Basin and Asia. See also
"Note 12 - Lease Commitments" on page 43 of the Annual Report.
Restructuring actions, which began in 1993, have caused
certain Company facilities and properties to be under utilized.
These include 716,000 square feet of leased properties worldwide,
primarily sales, service and administrative offices, and property
owned by the Company consisting of the International Headquarters
in Dogmersfield Park, England (50,000 square feet) and a San Jose
campus comprised of 13.2 acres and four buildings (289,000 square
feet). The leased properties are being subleased or offered for
sublease, and the other properties are being offered for sale.
ITEM 3. LEGAL PROCEEDINGS
Not Applicable.
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
STOCKHOLDER MATTERS
The information under "Common Stock Dividends and Price
Range" on page 44 of the Annual Report is incorporated by
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information under "Summarized Quarterly Financial Data"
on page 44 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 20 through 24 of the Annual Report is incorporated by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information on pages 25 through 45 of the Annual Report
is incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
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" and
"Compliance with Section 16(a) of the Securities Act of 1934" 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 "Certain Information with Respect to
Directors and Executive Officers-Compensation Committee
Interlocks and Insider Participation", "Certain Transactions" and
"Loans to Executive Officers" in the Proxy Statement is
incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) Financial Statements
Consolidated Financial Statements
The following consolidated financial statements and
related notes, together with the report thereon of
Arthur Andersen LLP, independent public accountants,
are incorporated by reference from the Annual Report:
Consolidated Balance Sheets--December 30, 1994 and
December 31, 1993.
Consolidated Statements of Operations for each of the
three years in the period ended December 30, 1994.
Consolidated Statements of Cash Flows for each of the
three years in the period ended December 30, 1994.
Consolidated Statements of Stockholders' Equity for
each of the three years in the period ended December
30, 1994.
(a)(2) Schedules Supporting Consolidated Financial Statements
Report of Independent Public Accountants
on Schedules
II Valuation and Qualifying Accounts
and Reserves
Schedules Omitted
In accordance with the rules of Regulation S-X, the
other required schedule is not submitted because (a) it
is 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.
(a)(3) Exhibits
Exhibit Description
------- -----------
*3(a) Restated Certificate of Incorporation
*3(b) Restated By-Laws
Executive Compensation Plans and Agreements
-------------------------------------------
10(a) 1994 Stock Incentive Plan (incorporated by
reference to Exhibit 4(a) of Registrant's
Registration Statement 33-54171, filed June
17, 1994)
10(b) Executive Incentive Performance Plan, as
amended (incorporated by reference to Exhibit
10(f) to Form 10-K for the fiscal year ended
December 31, 1993)
*10(c) Amdahl Corporation Officer Loan Program, as
amended
10(d) Amdahl Corporation Director Fee Deferral
Election Plan, as amended (incorporated by
reference to Exhibit 10(g) to Form 10-K for
the fiscal year ended December 25, 1992)
10(e) Amdahl Corporation Deferral Election Plan, as
amended (incorporated by reference to Exhibit
10(h) to Form 10-K for the fiscal year ended
December 25, 1992)
*10(f) Amdahl Corporation Corporate Officer
Severance Guidelines
*10(g) Amdahl Corporation Chief Executive Officer
Bonus Guidelines
*10(h) Amdahl Corporation 1994 Bonus Program for
Officers, Vice Presidents, Seniors and Keys
10(i) Form of Restricted Stock Purchase Agreement
under the Restricted Stock Plan (incorporated
by reference to Exhibit 4(k) of Registrant's
Registration Statement 33-54171, filed June
17, 1994)
Other Material Agreements
-------------------------
10(j) 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) (incorporated by reference to
Exhibit 10(y) to Form 10-K for the fiscal
year ended December 31, 1993)
10(k) Joint Development Agreement between Amdahl
and Fujitsu dated December 8, 1993 (Portions
of this exhibit are deleted pursuant to a
request for confidential treatment)
(incorporated by reference to Exhibit 10(aa)
to Form 10-K for the fiscal year ended
December 31, 1993)
10(l) Loan Agreement between Amdahl and Fujitsu
dated January 29, 1994 (incorporated by
reference to Exhibit 10(c) to Form 10-Q for
the fiscal period ended April 1, 1994)
Additional Exhibits
-------------------
*13 Annual Report to Stockholders for fiscal year
1994 (only those portions incorporated by
reference)
*21 List of Subsidiaries
*23 Consent of Arthur Andersen LLP
*24 Powers of Attorney
*27 Financial Data Schedule
*Filed herewith
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
December 30, 1994.
<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 23, 1995. Our audits were made for
the purpose of forming an opinion on those statements taken as a
whole. The schedule listed under Item 14 is the responsibility
of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and
is not part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states
in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken
as a whole.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Jose, California
January 23, 1995
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
AMDAHL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in thousands)
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 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
======== ========== ========= ======== =======
YEAR ENDED DECEMBER 30, 1994:
DOUBTFUL RECEIVABLES $ 3,266 $ 2,080(1) $ --- $ 150 $ 5,196
FUTURE ENGINEERING ======== ========== ========= ======== =======
CHANGES $ 57,133 $ --- (2) $ ---(2) $ 18,490 $38,643
======== ========== ========= ======== =======
(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 were established. Doubtful receivables deductions also include changes in
estimates.
</TABLE>
<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. 33-55460
and 33-54171 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 24th day of March, 1995.
AMDAHL CORPORATION
/s/ 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)
/s/E. JOSEPH ZEMKE President, Chief March 24, 1995
------------------ Executive Officer
(E. Joseph Zemke) and Director
(Principal Executive
Officer)
/s/ERNEST B. THOMPSON Vice President and March 24, 1995
--------------------- Controller
(Ernest B. Thompson) (Principal Accounting
Officer)
/s/BRUCE J. RYAN Senior Vice President, March 24, 1995
----------------- Chief Financial Officer
(Bruce J. Ryan) and Corporate Secretary
(Principal Financial
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)
<PAGE>
J. SIDNEY WEBB* Director
------------------
(J. Sidney Webb)
*By: /s/BRUCE J. RYAN Attorney-in-Fact March 24, 1995
------------------
(Bruce J. Ryan)
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
3(a) Restated Certificate of Incorporation
3(b) Restated By-Laws
10(c) Amdahl Corporation Officer Loan Program, as amended
10(f) Amdahl Corporation Corporate Officer Severance
Guidelines
10(g) Amdahl Corporation Chief Executive Officer Bonus
Guidelines
10(h) Amdahl Corporation 1994 Bonus Program for Officers,
Vice Presidents, Seniors and Keys
13 Annual Report to Stockholders for fiscal year 1994
(only those portions incorporated by reference)
21 List of Subsidiaries
23 Consent of Arthur Andersen LLP
24 Powers of Attorney
27 Financial Data Schedule
Exhibit 3(a)
RESTATED CERTIFICATE OF INCORPORATION
OF AMDAHL CORPORATION,
A Corporation Organized and Existing Under and By Virtue of the
General Corporation Law of the State of Delaware Hereby Certifies
as follows:
1. The date of filing of its original Certificate of
Incorporation with the Secretary of State of the State of
Delaware was March 8, 1972.
2. This Restated Certificate of Incorporation was duly
adopted by the directors of this Corporation in accordance with
the provisions of Section 245 of the General Corporation Law of
the State of Delaware.
3. This Restated Certificate of Incorporation restates and
integrates, and does not further amend, the provision of this
Corporation's Certificate of Incorporation as heretofore amended
or supplemented, and there is no discrepancy between those
provisions and the provisions hereof.
4. The provisions of the original Certificate of
Incorporation which named the incorporators, have been omitted
pursuant to Section 245(c) of the General Corporation Law of the
State of Delaware.
5. The text of the Certificate of Incorporation is hereby
restated and integrated to read as herein set forth in full:
FIRST. The name of the Corporation is AMDAHL CORPORATION.
SECOND. The address of its registered office in the State
of Delaware is 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD. The nature of the business or purposes to be
conducted or promoted is to engage in any lawful act activity for
which Corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
205,000,000 shares, of which 5,000,000 shares shall be Preferred
Stock with a par value of $1.00 per share and 200,000,000 shares
shall be common stock with a par value of $.05 per share
amounting in the aggregate to Fifteen Million Dollars
($15,000,000).
Part A. Provisions Relating to Preferred Stock
1. The Preferred Stock may be issued from time to time in
one or more series, each of such series to have such voting
powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or
restrictions thereof, as are stated and expressed herein and in
the resolution or resolutions providing for the issue of such
series adopted by the Board of Directors as hereinafter provided.
2. Authority is hereby expressly granted to the Board of
Directors, subject to the provisions of this Part A, to authorize
the issue of one or more series of Preferred Stock and with
respect to each series to fix by resolution or resolutions
providing for the issue of such series:
(a) The number of shares to constitute such series and
the distinctive designation thereof, provided that, unless stated
otherwise in any resolution or resolutions relating to such
series, such number of shares may be increased or decreased by
the Board of Directors;
(b) The relative priority of such series in relation
to other series of Preferred Stock in relation to dividends,
distributions of assets upon liquidation or otherwise;
(c) The annual dividend rate on the shares of such
series, the date or dates upon which such dividends shall be
payable and the date or dates from which dividends shall
accumulate;
(d) Whether or not the shares of such series shall be
subject to redemption, the limitations and restrictions with
respect to such redemption, if any, and the times of redemption
of the shares of such series and the prices to which the holders
of such series shall be entitled to receive upon the redemption
thereof, which prices may vary at different redemption dates and
may also be different with respect to shares redeemed through the
operation of any retirement or sinking fund and with respect to
shares otherwise redeemed;
(e) Whether or not the shares of such series shall be
subject to the operation of a retirement or sinking fund and, if
so, the extent to and manner in which it shall be applied to the
purchase or redemption of the shares of such series for
retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof;
(f) The amount or amounts which the holders of such
series shall be entitled to receive upon the voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, which may be different for voluntary and involuntary
liquidation, dissolution or winding up;
(g) Whether or not the shares of such series shall be
convertible into, or exchangeable for, shares of stock of any
other class or classes or of any other series of the same class
(except into a class or series of shares having preferences as to
dividends or distribution of assets upon liquidation which are
prior or superior in rank to such series), and if so convertible
or exchangeable, the price or prices or the rate or rates of
conversion or exchange and the method, if any, of adjusting the
same, and the other terms and conditions of such conversion or
exchange;
(h) The voting rights, if any, of holders of shares of
such series in addition to the voting rights provided for in this
Part A and by applicable law;
(i) The limitations and restrictions, if any, to be
effective while any shares of such series are outstanding upon
the payment of dividends or making of other distributions on, and
upon the purchase, redemption or other acquisition by the
Corporation of, the common stock or any other class or classes of
stock of the Corporation ranking junior to the shares of such
series; and
(j) Any other preferences and relative, participating,
optional or other special rights, and qualifications, limitations
or restrictions thereof, as shall not be inconsistent with this
Part A.
3. The Corporation, at the option of the Board of
Directors, may, at any time permitted by the resolution or
resolutions adopted by the Board of Directors providing for the
issue of any series of the Preferred Stock and at the redemption
price or prices stated in said resolution or resolutions, redeem
the whole or any part of the shares of such series at the time
outstanding (the total sum, including accrued dividends, so
payable on any such redemption being herein referred to as the
"redemption price"). Notice of every such redemption shall be
mailed to the holders of record of the shares of Preferred Stock
so to be redeemed at their respective addresses as the same shall
appear on the stock transfer books of the Corporation. Each such
notice of redemption shall (i) specify the date fixed for
redemption and the redemption price at which the shares of any
such series are to be redeemed, (ii) state that payment of the
redemption price will be made at the offices or agencies to be
maintained by the Corporation upon presentation and surrender of
such shares, (iii) state that accumulated but unpaid dividends
accrued to the date fixed for redemption will be paid as
specified in said notice, (iv) state that on and after said date
dividends thereon will cease to accrue, and (v) if the shares of
the series are convertible or exchangeable, state the conversion
price or exchange rate, the date on which the right to convert or
exchange the shares to be redeemed will terminate and the offices
or agencies where the shares may be surrendered for conversion or
exchange. If less than all the shares of any series are to be
redeemed, the notice of redemption mailed to each holder of
shares of such series to be redeemed shall specify the number of
shares held by such holder to be redeemed. In case any
certificate represents shares of any such series to be redeemed
in part only, the notice of redemption which is mailed and which
relates to such certificate shall state the number of shares of
such series to be redeemed and shall state that on and after the
redemption date, upon surrender of such certificate, a new
certificate or certificates for a number of shares of such series
equal to the unredeemed portion thereof will be issued. Such
notice shall be mailed by first class mail, postage prepaid, at
least 30 but not more than 60 days in advance of the date
designated for such redemption to the holders of record of shares
so to be redeemed. In case of the redemption of a part only of
any series of Preferred Stock at the time outstanding, the shares
of such series so to be redeemed shall be selected pro rata or by
lot or in such other manner as the Board of Directors may
determine to be equitable.
4. If, on the redemption date specified in such notice,
the funds necessary for such redemption shall have been set aside
by the Corporation, separate and apart from its other funds, in
trust for the pro rata benefit of the holders of the shares so
called for redemption, then, notwithstanding that any
certificates for shares of Preferred Stock so called for
redemption shall not have been surrendered for cancellation, the
shares represented thereby shall no longer be deemed outstanding,
the right to receive dividends thereon shall cease to accrue from
and after the date of redemption so designated and all rights of
holders of the shares of Preferred Stock so called for redemption
shall forthwith, after such redemption date, cease and terminate,
excepting only the right of the holders thereof to receive the
redemption price therefor but without interest. Any moneys so
set aside by the Corporation and unclaimed at the end of three
years from the date designated for such redemption shall revert
to the general funds of the Corporation, after which reversion
the holders of such shares so called for redemption shall look
only to the Corporation for payment of the redemption price.
5. If, after the giving of such notice but before the
redemption date specified therein, the Corporation shall deposit
with a bank or trust company in the City of New York or the City
of San Francisco, having a combined capital and surplus of at
least $50,000,000, in trust to be applied to the redemption of
the shares of Preferred Stock so called for redemption, the funds
necessary for such redemption, then from and after the date of
such deposit all rights of the holders of the shares of Preferred
Stock so called for redemption shall cease and terminate,
excepting only the right to receive the redemption price
therefor, but without interest, and the right to exercise on or
before the date designated for redemption privileges of
conversion or exchange, if any, not theretofore expired, and such
shares shall not be deemed to be outstanding. Any funds so
deposited which shall not be required for such redemption because
of the exercise of any such right of conversion or exchange
subsequent to the date of such deposit shall be returned to the
Corporation. In case the holders of shares of Preferred Stock
which shall have been called for redemption shall not, within
three years after the date fixed for redemption, claim the amount
deposited with respect to the redemption thereof, any such bank
or trust company shall, to the extent permitted by applicable
law, upon demand, pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company shall be
relieved of all responsibility in respect thereof to such holder
and such holder shall look only to the Corporation for the
payment thereof. Any interest accrued on funds so deposited
shall be paid to the Corporation from time to time.
6. Shares of Preferred Stock which have been issued and
reacquired in any manner by the Corporation (whether as a result
of purchase, redemption, conversion or exchange) shall, when
retired or deemed retired, have the status of authorized and
unissued shares of Preferred Stock undesignated as to series and
may be reissued as a part of the series of which they were
originally a part or issued as part of a new series of Preferred
Stock or as part of any other series of Preferred Stock, all
subject to the conditions or restrictions on issuance set forth
in any resolution or resolutions adopted by the Board of
Directors providing for the issuance of any series of Preferred
Stock.
7. So long as any of the Preferred Stock is outstanding,
the Corporation will not
(a) Without the affirmative vote or consent of the
holders of at least 66-2/3 percent of all shares of Preferred
Stock at the time outstanding, regardless of series, given in
person or by proxy, either in writing or by resolution adopted at
an annual or special meeting called for the purpose, at which the
holders of the Preferred Stock, regardless of series, shall vote
separately as a class, (i) amend, alter, repeal or add to any of
the provisions of this Certificate of Incorporation so as
adversely to affect the preferences, rights or powers of the
Preferred Stock; or (ii) authorize, create or increase the
authorized number of shares of, or reclassify any authorized
stock of the Corporation into, any stock of any class, or any
security convertible into or evidencing the right to purchase
stock of any class, ranking, by the terms of such authorization
or reclassification, prior to the Preferred Stock either as to
dividends or upon liquidation, or which could be so issued as to
rank prior to the Preferred Stock if further action contemplated
by such terms were taken;
(b) Without the affirmative vote or consent of the
holders of at least 50 percent of all shares of Preferred Stock
at the time outstanding, regardless of series, given in person or
by proxy, either in writing or by resolution adopted at an annual
or special meeting called for the purpose, at which the holders
of the Preferred Stock, regardless of series, shall vote
separately as a class, increase the authorized number of shares
of Preferred Stock or authorize, create or increase the
authorized number of shares of, or reclassify any authorized
stock of the Corporation into, any stock of any class, or any
security convertible into or evidencing the right to purchase
stock of any class, ranking, by the terms of such authorization
or reclassification, on a parity with the Preferred Stock either
as to dividends or upon liquidation, or which could be so issued
as to rank on a parity with the Preferred Stock if further action
contemplated by such terms were taken; or
(c) Without the affirmative vote or consent of the
holders of at least 66-2/3 percent of the shares of any series of
the Preferred Stock at the time outstanding, given in person or
by proxy, either in writing or by resolution adopted at an annual
or special meeting called for the purpose, at which the holders
of such series of the Preferred Stock shall vote separately as a
series, amend, alter, repeal or add to any of the provisions in
the resolution or resolutions adopted by the Board of Directors
providing for the issue of such series so as adversely to affect
the preferences, rights or powers of the Preferred Stock of such
series.
8. If and whenever six quarterly dividends (whether or not
consecutive) payable on any series of the Preferred Stock shall
be in arrears in whole or in part whether or not earned or
declared, the number of directors then constituting the Board of
Directors shall be increased by two and the holders of the
Preferred Stock, voting separately as a class, regardless of
series, shall have the exclusive and special right to elect the
two additional directors at any annual meeting of stockholders or
special meeting held in place thereof or at a special meeting of
the holders of the Preferred Stock called as hereinafter
provided. Whenever all arrears in dividends on the Preferred
Stock then outstanding shall have been paid and dividends thereon
for the current quarterly dividend period shall have been paid or
declared and set apart for payment, then the right of the holders
of the Preferred Stock to elect such additional two directors
shall cease (but subject always to the same provisions for the
vesting of such voting rights in the case of any similar future
arrearages in dividends), and the terms of office of all persons
elected as directors by the holders of the Preferred Stock shall
forthwith terminate and the number of the Board of Directors
shall be reduced accordingly. At any time after such voting
power shall have been so vested in the Preferred Stock, the
Secretary of the Corporation may, and upon the written request of
the holder of the Preferred Stock (addressed to the Secretary at
the principal office of the Corporation) shall, call a special
meeting of the holders of the Preferred Stock for the election of
the two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the By-Laws
for a special meeting of the stockholders or as required by law.
If any such special meeting required to be called as above
provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of the
Preferred Stock may call such meeting, upon the notice above
provided, and for that purpose shall have access to the stock
books of the Corporation. The directors elected at any such
special meeting shall hold office until the next annual meeting
of the stockholders or special meeting held in place thereof if
such office shall not have previously terminated as above
provided. In case any vacancy shall occur among the directors
elected by the holders of the Preferred Stock, a successor shall
be elected by the Board of Directors to serve until the next
annual meeting of the stockholders or special meeting held in
place thereof upon the nomination of the then remaining director
elected by the holders of the Preferred Stock or the successor of
such remaining director.
9. Except as may be required by applicable law, as
provided in this Part A or as may be provided in the resolution
or resolutions adopted by the Board of Directors providing for
the issue of any series of the Preferred Stock, no holder of
Preferred Stock as such shall have any voting powers as to any
matters upon which stockholders of the Corporation have the right
to vote.
Part B. Provisions Relating to Common Stock
Subject to the special voting rights of the Preferred Stock
set forth or determined as provided above, each holder of common
stock of the Corporation shall be entitled to one vote for each
share of such stock outstanding in the name of such holder on the
books of the Corporation on the record date designated for the
purpose of such vote; provided, however, that in all elections of
directors of the Corporation, each holder of any shares of common
stock of this Corporation shall be entitled to as many votes as
shall equal the number of votes which (except for this Part B
provision as to cumulative voting) he would be entitled to cast
for the election of directors with respect to his shares of stock
multiplied by the number of directors to be elected by him, and
he may cast all of such votes for a single director or may
distribute them among the number to be voted for, or for any two
or more of them as he may see fit.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly
authorized:
(a) To make, alter or repeal the by-laws of the
Corporation;
(b) To authorize and cause to be executed mortgages
and liens upon the real and personal property of the Corporation;
(c) To set apart out of any of the funds of the
Corporation available for dividends a reserve or reserves for any
proper purpose and to abolish any such reserve in the manner in
which it was created;
(d) By a majority of the whole Board, to designate one
or more committees, each committee to consist of two or more of
the Directors of the Corporation. The Board may designate one or
more directors as alternate members of any committee, who may
replace any absent or disqualified members at any meeting of the
committee. Any such committee, to the extent provided in the
resolution or in the By-Laws of the Corporation, shall have and
may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all
papers which may required it; provided, however, the By-Laws may
provide that in the absence or disqualification of any member of
such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in
the place of any such absent or disqualified member.
(e) When and as authorized by the affirmative vote of
the holders of a majority of the stock issued and outstanding
having voting power given at a stockholder's meeting duly called
upon such notice as is required by statute, or when authorized by
the written consent of the holders of a majority of the voting
stock issued and outstanding, to sell, lease or exchange all or
substantially all of the property and assets of the Corporation,
including its goodwill and its Corporate franchises, upon such
terms and conditions and for such consideration, which may
consist in whole or in part of money or property including
shares of stock in, and/or other securities of, any other
Corporation or Corporations, as its Board of Directors shall deem
expedient and for the best interests of the Corporation.
SEVENTH. Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them
and/or between this Corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this
Corporation under the provisions of Section 291 of Title 8 of the
Delaware code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware code
order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as
the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in
value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of this Corporation as a consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders
or class of stockholders, of this Corporation, as the case may
be, and also on this Corporation.
EIGHTH. Meetings of stockholders may be held within or
without the State of Delaware, as the By-Laws may provide. The
books of the Corporation may be kept (subject to any provision
contained in the statutes) outside the State of Delaware at such
place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
Elections of directors need not be by written ballot unless the
By-Laws of the Corporation shall so provide.
NINTH. At all elections of directors of the Corporation,
each holder of any shares of common stock of this Corporation
shall be entitled to as many votes as shall equal the number of
votes which (except for this Article NINTH) he would be entitled
to cast for the election of directors with respect to his shares
of stock multiplied by the number of directors to be elected by
him, and he may cast all of such votes for a single director or
may distribute them among the number to be voted for, or for any
two or more of them as he may see fit.
TENTH. Except as otherwise provided herein, the
Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this
reservation.
ELEVENTH. A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of his fiduciary duty as a director,
except for liability (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any
transaction from which the Director derived any improper personal
benefit. If the Delaware General Corporation Law is hereafter
amended to authorize, with the approval of a Corporation's
stockholders, further reductions in the liability of the
Corporation's directors for breach of fiduciary duty, then a
director of the Corporation shall not be liable for any such
breach to the fullest extent permitted by the Delaware General
Corporation Law as so amended. Any repeal or modification of the
foregoing provisions of this Article ELEVENTH by the stockholders
of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time
of such repeal or modification.
Exhibit 3(b)
AMDAHL CORPORATION
RESTATED BY-LAWS
----------------
Article I
---------
OFFICES
-------
SECTION 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
SECTION 2. The Corporation may also have offices at such other
places both within and without the State of Delaware as the Board of the
Directors may from time to time determine or the business of the
Corporation may require.
Article II
----------
MEETING OF STOCKHOLDERS
-----------------------
SECTION 1. All meetings of the stockholders for the election of
directors shall be held in the City of Sunnyvale, State of California,
at such place as may be fixed from time to time by the Board of
Directors, or at such other place either within or without the State of
Delaware as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place,
within or without the State of Delaware, as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
SECTION 2. Annual meetings of stockholders shall be held on the
third Tuesday in April, if not a legal holiday, and if a legal holiday,
then on the next secular day following, at 10:00 a.m., or at such other
date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which they shall
elect a Board of Directors and transact such other business as may
properly be brought before the meeting.
SECTION 3. Written notice of the Annual Meeting stating the
place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more than fifty
days before the date of the meeting.
SECTION 4. The office who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every
meeting of the stockholders, and complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten
days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present.
SECTION 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board
or any two directors and shall be called by the Chairman of the Board or
Secretary at the request in writing of one or more shareholders holding
not less than one-third of the voting power of the Corporation. Such
request shall state the purpose or purposes of the proposed meeting.
SECTION 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than ten nor more
than fifty days before the date of the meeting, to each stockholder
entitled to vote at such meeting.
SECTION 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
SECTION 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise
provided by statute or by the Certificate of Incorporation. If,
however, such quorum shall not be present or represented at any meeting
of the stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
adjourned meeting, at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the
meeting as originally noticed. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the meeting.
SECTION 9. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before
such meeting, unless the question is one upon which by express provision
of the statutes or of the Certificate of Incorporation, a different vote
is required in which case such express provision shall govern and
control the decision of such question.
SECTION 10. Except as may be otherwise provided in the Certificate
of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for every
share of the capital stock having voting power held by such stockholder,
but no proxy shall be voted on or after three years from its date,
unless the proxy provides for a longer period.
SECTION 11. Any action required or permitted, by statute or
otherwise, to be taken at any annual or special meeting of the
shareholders of this Corporation, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of such corporate action without a meeting
by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Article III
-----------
DIRECTORS
---------
SECTION 1. The number of directors which shall constitute the
whole Board shall be eleven (11). The directors shall be elected at the
Annual Meeting of the stockholders, except as provided in Section 2 of
this Article, and each director elected shall hold office until his
successor is elected and qualified. Directors need not be stockholders.
SECTION 2. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by
a majority of the directors then in office, though less than a quorum,
or by a sole remaining director, and the directors so chosen shall hold
office until the next annual election and until their successors are
duly elected and shall qualify, unless soon displaced. If there are no
directors in office, then an election of directors may be held in the
manner provided by statute. If, at the time of filling any vacancy or
any newly created directorship, the directors then in office shall
constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten
percent of the total number of the shares at the time outstanding having
the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to
replace the directors chosen by the directors then in office.
SECTION 3. The business of the Corporation shall be managed by
its Board of Directors which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute
or by the Certificate of Incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
SECTION 4. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State
of Delaware.
SECTION 5. The first meeting of each newly elected Board of
Directors shall be held immediately following and at the same place as
the Annual Meeting of the stockholders and no notice of such meeting
shall be necessary to the newly elected directors in order legally to
constitute the meeting, provided a quorum shall be present. In the
event such meeting is not held at the time and place set forth above,
the meeting may be held at such time and place as shall be specified in
a notice given as hereinafter provided for special meetings of the Board
of Directors, or as shall be specified in a written waiver signed by all
of the directors.
SECTION 6. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to
time be determined by the Board.
SECTION 7. Special meetings of the Board may be called by the
Chairman of the Board on three days' notice to each director, either
personally or by telegram or on five days' notice to each director by
mail; special meetings shall be called by the Chairman of the Board or
Secretary in like manner and on like notice on the written request of
two directors.
SECTION 8. At all meetings of the Board a majority of the total
number of directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any
meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute
or by the Certificate of Incorporation. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
SECTION 9. Unless otherwise restricted by the Certificate of
Incorporation or these by-laws, any action required or permitted to be
taken at any meeting of the Board of Directors or of any Committee
thereof may be taken without a meeting, if all members of the Board or
Committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the
Board or Committee.
COMMITTEES OF DIRECTORS
-----------------------
SECTION 10. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation.
The Board may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee, to the extent provided in
the resolution, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; provided, however, that in the
absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of
Directors.
SECTION 11. Each committee shall keep regular minutes of its
meeting and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
-------------------------
SECTION 12. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a
stated salary as director. No such payment shall preclude any director
from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Article IV
----------
NOTICES
-------
SECTION 1. Whenever, under the provisions of the statutes or of
the Certificate of Incorporation or of these by-laws, notice is required
to be given to any director or stockholder, it shall not be construed to
mean personal notice, but such notice may be given in writing, by mail,
addressed to such director or stockholder, at his address as it appears
on the records of the Corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall
be deposited in the United States mail. Notice to directors may also be
given personally or by telegram.
SECTION 2. Whenever any notice is required to be given under
the provisions of the statutes or of the Certificate of Incorporation or
of these by-laws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
Article V
---------
OFFICERS
--------
SECTION 1. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a Chairman of the Board, a
President, a Vice-President, a Secretary, and a Treasurer. The Board of
Directors may also choose additional Vice-Presidents, and one or more
Assistant Secretaries and Assistant Treasurers. Any number of offices
may be held by the same person, unless the Certificate of Incorporation
or these by-laws otherwise provide.
SECTION 2. The Board of Directors at its first meeting after
each Annual Meeting of stockholders shall choose a Chairman of the
Board, a President, one or more Vice-Presidents, a Secretary, and a
Treasurer.
SECTION 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board.
SECTION 4. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors. The Board of
Directors may appoint a committee of its members to fix such salaries.
It may also appoint an officer to fix the salaries of subordinate
officers and agents.
SECTION 5. The officers of the Corporation shall hold office
until their successors are chosen and qualify. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Any vacancy
occurring in any office of the Corporation shall be filled by the Board
of Directors.
THE CHAIRMAN OF THE BOARD
-------------------------
SECTION 6. The Chairman of the Board shall, subject to the
control of the board, and subject to the provisions below, and the
by-laws of the Corporation, have and be vested with supervision and
control over the business, affairs and property of the Corporation and
over its other officers, agents and employees. The Chairman of the
Board shall:
(a) Have the right to preside at all meetings of the Board of
Directors.
(b) Have the right to preside at all meetings of stockholders.
(c) Be responsible for all resolutions, orders and directives of
the Board of Directors being carried into effect.
(d) Keep the Board of Directors and any committees of the board
fully informed as to all matters within his knowledge which the
interests of the Corporation may require to be brought to their notice
and shall freely consult them concerning the affairs of the Corporation.
(e) Be an ex-officio member of all committees of the board of
which he is not otherwise a member.
(f) Execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, and upon specific approval of the
board for each instance, where required or permitted by law to be
otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some
other officer or agent of the Corporation.
(g) Perform such other duties as these by-laws prescribe or as the
Board of Directors may prescribe from time to time.
THE PRESIDENT
-------------
SECTION 7. The President shall, subject to the control of the
Board, and subject to the provisions below and the by-laws of the
Corporation, have and be vested with supervision and control over the
Corporation's manufacturing and domestic marketing operations, as well
as the design and development of the Corporation's products. The
President shall:
(a) In the absence of the Chairman of the Board, or at his
request, preside at meetings of the Board of Directors or act as
Chairman of meetings of stockholders.
(b) At the request of the Chairman of the Board, or in the case of
his absence or inability to act, perform the duties of the Chairman of
the Board and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the Chairman of the Board.
(c) From time to time report to the Chairman of the Board and the
Board of Directors upon all matters within his knowledge which the
interests of the Corporation may require to be brought to their notice.
(d) Keep the Chairman of the Board, the Board of Directors and any
committees of the Board fully informed as to all matters within his
knowledge which the interests of the Corporation may require to be
brought to their notice including, but not limited to, the operations of
the Corporation, and shall freely consult them concerning the affairs of
the Corporation.
(e) Execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, and upon specific approval of the
Board for each instance, where required or permitted by law to be
otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some
other officer or agent of the Corporation.
(f) Perform all duties incident to the office President and such
other duties as these by-laws prescribe, as the Board of Directors may
prescribe from time to time and as may be assigned to him by the
Chairman of the Board.
THE VICE-PRESIDENTS
-------------------
SECTION 8. The Vice-President (or in the event there be more
than one Vice-President, the Vice-Presidents in the order designated by
the Board of Directors, or in the absence of such designation, then in
the order designated by the Chairman of the Board) may assume and
perform the duties of the President and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President
in the absence of the President or in the event of his inability to act.
The Vice-Presidents shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
---------------------------------------
SECTION 9. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the Corporation and of the Board of
Directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or the Chairman of
the Board, under whose supervision he shall be. He shall have custody
of the corporate seal of the Corporation and he, or an Assistant
Secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or
by the signature of such Assistant Secretary. The Board of Directors
may give general authority to any officer to affix the seal of the
Corporation and to attest the affixing by his signature.
SECTION 10. The Assistant Secretary, or if there be more than one,
the Assistant Secretaries in the order determined by the Board of
Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Secretary or in the event
of his inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have
such other powers as the Board of Directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
--------------------------------------
SECTION 11. The Treasurer shall have the custody of the
Corporation's funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors.
SECTION 12. He may disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board and the
Board of Directors, at its regular meetings, or when the Board of
Directors so requires, an account of transactions and of the financial
condition of the Corporation.
SECTION 13. If required by the Board of Directors, the Treasurer
may give the Corporation a bond (which shall be renewed every six years)
in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his
office and for the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or
under his control belonging to the Corporation
SECTION 14. The Assistant Treasurer, or if there shall be more
than one, the Assistant Treasurers in the order determined by the Board
of Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Treasurer or in the event
of his inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have
such other powers as the Board of Directors may from time to time
prescribe.
Article VI
----------
CERTIFICATES OF STOCK
---------------------
SECTION 1. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the
Corporation by, the Chairman of the Board or the President or a
vice-president and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation.
SECTION 2. Where a certificate is countersigned (1) by a
transfer agent other than the Corporation or its employee, or, (2) by a
registrar other than the Corporation or its employee, any other
signature on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
-----------------
SECTION 3. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board
of Directors, may in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or give the Corporation
a bond in such sum as it may direct as indemnity against any claim that
may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
------------------
SECTION 4. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority
transfer, it shall be the duty of the Corporation, subject to
restrictions on transfer of such shares, if any, to issue a new
certificate to the person entitled thereto, cancel the old certificate
and record the transaction upon its books.
FIXED RECORD DATE
-----------------
SECTION 5. In order that the Corporation may determine the
stockholders entitled to notice or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote
at meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
-----------------------
SECTION 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of
shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any
other person, whether or not it shall express or other notice thereof,
except as otherwise provided by the laws of Delaware.
Article VII
-----------
GENERAL PROVISIONS DIVIDENDS
----------------------------
SECTION 1. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any,
may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation. Upon the declaration of any dividend, the
Board of Directors shall set a record date upon which the transfer agent
of the Corporation shall take a record of all stockholders entitled to
the dividend; the stock transfer books of the Corporation shall not be
closed; and, all stockholders of record on the record date shall be
entitled to the dividend notwithstanding any transfer on the books of
the Corporation after the record date.
SECTION 2. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such
sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the directors
shall think conducive to the interest of the Corporation, and the
directors may modify or abolish any such reserve in the manner in which
it was created.
SECTION 3. The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for
by vote of the stockholders, a full and clear statement of the business
and condition of the Corporation.
CHECKS
------
SECTION 4. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time
designate.
FISCAL YEAR
-----------
SECTION 5. The fiscal year of the Corporation shall begin on
the Saturday immediately following the last Friday in December of each
calendar year, and shall end on the last Friday in December of the
following calendar year.
SEAL
----
SECTION 6. The Corporate Seal shall have inscribed thereon the
name of the Corporation, the date of its organization and the name of
the State of Delaware. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
Article VIII
------------
AMENDMENTS
----------
SECTION 1. These by-laws may be altered, amended or repealed or
new bylaws may be adopted by the stockholders or by the Board of
Directors, when such power is conferred upon the Board of Directors by
the Certificate of Incorporation, at any regular meeting of the
stockholders or of the Board of Directors or at any special meeting of
the stockholders or of the Board of Directors if notice of such
alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting.
Article IX
----------
INDEMNIFICATION
---------------
SECTION 1. Each person who is or was a director or officer of
the Corporation and is or was made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom
he or she is the legal representative, is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
Corporation or a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists
or may hereafter be amended, against all expense, liability and loss
(including attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection with the
investigation, defense or appeal thereof and such indemnification shall
continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that except as provided in Section 3
hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
SECTION 2. Each person who may have a right to indemnification
under this Article shall also have the right to be paid by the
Corporation the expenses incurred in defending any proceeding in advance
of its final disposition; provided, however, that if the Delaware
General Corporation Law requires, the payment of such expenses incurred
by a director or officer in his or her capacity as a director or officer
(and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition
of a proceeding, shall be made only upon delivery to the Corporation of
an undertaking, by or on behalf of such director or officer, to repay
all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Article
or otherwise. The Corporation may, by action of the Board of Directors,
provide indemnification to employees and agents of the Corporation with
the same scope and effect as the foregoing indemnification of directors
and officers.
SECTION 3. If a claim under this Article is not paid in full by
the Corporation within thirty days after a written claim has been
received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the
claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking, if any
is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the
Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense
shall be on the Corporation.
SECTION 4. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article shall not be exclusive of any
other right which any person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
SECTION 5. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent
of the Corporation or another Corporation, partnership, joint venture,
trust or other enterprise against any such expense, liability or loss,
whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the Delaware
General Corporation Law.
SECTION 6. The Corporation shall have the express authority to
enter such agreements as the Board of Directors deems appropriate for
the indemnification of present or future directors or officers of the
Corporation in connection with their service to, or status with, the
Corporation or any other Corporation, entity or enterprise with whom
such person is serving at the express written request of the
Corporation.
Exhibit 10(c)
AMDAHL CORPORATION
OFFICER LOAN PROGRAM
(As Restated October 27, 1994)
A. PURPOSE: Pursuant to the specific authority granted to
the Compensation Committee of the Board of Directors
("Committee") under the Company's 1994 Stock Incentive Plan, and
pursuant to the general authority conferred upon the Board of
Directors ("Board") and the Committee by the Delaware General
Corporation Law, the Board implemented this Officer Loan Program
("Loan Program") in order to enable the Company to provide its
officers with limited financial assistance in connection with
(i) the acquisition of shares of Company common stock, par value
of $.05 per share ("Shares") under the 1994 Stock Incentive Plan
and/or (ii) the satisfaction of the federal, state and other tax
withholding obligations incurred in connection with such
acquisition. The plan to which this Loan Program shall pertain
is the Amdahl Corporation 1994 Stock Incentive Plan ("Plan") as
approved by the Company's stockholders.
UNDER NO CIRCUMSTANCES SHALL ANY FINANCIAL ASSISTANCE BE
PROVIDED UNDER THIS LOAN PROGRAM IN CONNECTION WITH THE
ACQUISITION OF SHARES UPON EXERCISE OF AN INCENTIVE STOCK OPTION
(WITHIN THE MEANING OF SECTION 422A OF THE INTERNAL REVENUE CODE)
GRANTED UNDER THE PLAN, UNLESS (A) THE INCENTIVE STOCK OPTIONS
ARE OUTSTANDING ON NOVEMBER 1, 1986 AND HELD BY OFFICERS SUBJECT
TO THE PROVISIONS OF SECTION 16(b) OF THE SECURITIES EXCHANGE ACT
OF 1934 OR (B) THE INSTRUMENT EVIDENCING THE GRANT SPECIFICALLY
PERMITS THE OPTIONEE TO APPLY FOR A LOAN OR GUARANTY FROM THE
COMPANY.
B. ADMINISTRATION: The Loan Program shall be administered
by the Committee or the Board. The Committee or the Board,
whichever is the program administrator, shall have full authority
to adopt rules and regulations for the proper administration of
the Loan Program and may from time to time establish general
policies for the approval of loans (as well as the guarantees of
third-party loans) under the Loan Program and delegate the
administration of such policies to one or more officers of the
Company. The program administrator (whether the Committee or the
Board) shall also have the authority to delegate to any officer
or officers of the Company one or more of its other
administrative duties (including, without limitation, the
authority to accept promissory notes and stock pledge agreements
on behalf of the Company and to extend the term of one or more
outstanding notes or guarantees). Decisions of the program
administrator (or its delegate) with respect to any issue or
matter which may arise under the Loan Program shall be final and
binding on all interested parties.
C. ELIGIBILITY FOR FINANCIAL ASSISTANCE: Officers or
other specifically designated employees of the Company who, under
the Company's Policy "Transactions in Amdahl Securities", are
subject to restrictions on trading in Amdahl Securities during
the periods specified in the Policy, and who acquire or vest in
Shares under the Plan may in connection with such acquisition or
vesting apply to the program administrator for (i) a loan from
the Company or (ii) a guarantee by the Company of a third-party
loan in accordance with the provisions of this Loan Program.
The program administrator shall have complete
discretion in determining whether to approve an application for a
loan or guarantee in whole or in part and shall not recommend the
extension of any loan or guarantee unless it is reasonably
assured that the loan proceeds are to be applied solely to (i)
the satisfaction of the applicant's obligations to the Company
with respect to the acquisition cost of Shares acquired under the
Plan and/or (ii) the satisfaction of federal, state and other tax
withholding requirements which arise by reason of such
acquisition or by reason of the Company's repurchase rights
lapsing with respect to restricted Shares issued under the Plan.
Loans shall not be made, nor guarantees extended, under this Loan
Program for any other purpose.
D. EXTENSION OF LOANS: The Company shall extend a loan to
an eligible applicant (for purposes of this Section D, the
"Borrower"); provided, however, that such loan shall be subject
to the following terms and conditions:
1. The proceeds of the loan must be used solely for
the purposes specified in Section C.
2. The principal balance of the loan shall not exceed
the lesser of (i) the acquisition cost of the Shares, plus the
total tax liability, including federal, state, and other employee
taxes, due with respect to the acquired Shares, or (ii) 100
percent of the fair market value of such Shares on the date of
acquisition.
3. The value of the Shares on the date in question
shall be determined on the basis of the mean of the lowest and
highest selling prices of one share of Amdahl common stock on
such date on the principal exchange on which Amdahl common stock
is at the time listed or admitted to trading, as officially
quoted by the composite tape of transactions on such exchange.
4. The loan shall have a maximum term of ten years
and shall accrue interest at the minimum annual rate required to
avoid the imputation of interest income to the Company and
compensation income to the Borrower under Section 483 or Section
7872 of the Internal Revenue Code. The interest rate of the loan
will be adjusted annually on the anniversary of the loan to the
then current applicable federal rate. Principal and accrued
interest shall be payable in one lump sum at the end of such ten
year period.
5. The loan shall be evidenced by the Borrower's
promissory note made payable to the Company's order. The note
shall be substantially in the form of attached Exhibit A.
6. Payment of the note is to be secured by a pledge
of Shares with a fair market value (at the date the loan is made)
equal to 150 percent of the principal balance of the note. The
Borrower shall effect such pledge by delivering to the Company
(i) the certificates for the pledged Shares, accompanied by a
duly endorsed assignment of stock powers, and (ii) a properly
executed stock pledge agreement in substantially the form
attached as Exhibit B.
7. If the fair market value of the pledged Shares at
the time the term of the loan it extended is less than 150
percent or the principal balance of the new note, the Borrower
shall then pledge additional Shares of Amdahl common stock to the
extent necessary to increase the aggregate value of the pledged
Shares to the applicable 150 percent level.
If insufficient Amdahl Stock is owned to reach the
collateral requirements on extension, the program administrator
shall accept as collateral the Shares of other publicly traded
companies that have readily ascertainable market value and are
readily marketable, CD's or other secure long term interest
bearing instruments subject to the applicable provisions of
Regulation G of the Federal Reserve System.
8. Each outstanding note under the Loan Program shall
provide that upon the occurrence of one or more of the following
events, the entire unpaid principal balance, together with
accrued and unpaid interest, shall become immediately due and
payable at the Company's election:
(a) the Borrower's cessation of employment with
the Company;
(b) the insolvency of the Borrower, the
commission of any act of bankruptcy by the Borrower, the
execution by the Borrower of a general assignment for the benefit
of creditors, the filing by or against the Borrower of any
petition in bankruptcy or any petition for relief under the
provisions of the federal bankruptcy act or any other state or
federal law for the relief of debtors and the continuation of
such petition without dismissal for a period of fifteen (15) days
or more, or the appointment of a receiver or trustee to take
possession of the property or assets of the Borrower; and
(c) the reduction in the fair market value of the
pledged Shares to less than 100 percent of the unpaid principal
balance of the note; provided, however, that no such acceleration
shall occur, if the Borrower shall, within five (5) business days
following notification by the Company of such reduction, (i)
pledge additional Shares of Company common stock and/or (ii)
reduce the unpaid principal balance of the note, so that the fair
market value of the pledged Shares shall, after such action,
equal at least the applicable 100 percent of the then unpaid
principal balance.
For purposes of applying the acceleration provisions
above, the following provisions shall be controlling:
(i) the Borrower shall be deemed to be in
the employ of the Company for so long as he is an employee of the
company or any subsidiary corporation, partnership, joint venture
or other business entity in which the Company owns directly or
indirectly through one or more subsidiaries a fifty percent (50%)
or greater capital or profit interest; and
(ii) the fair market value of the pledged
Shares at any particular time shall be determined in accordance
with the valuation provisions of paragraph 3 of Section D.
9. No loan extended under this Loan Program may have
a final due date which is more that 120 months after the date the
loan was initially made without the prior written authorization
of the program administrator, which shall have absolute
discretion in the matter.
E. GUARANTEE OF THIRD-PARTY LOANS: The program
administrator may, in its sole discretion, determine that the
Company shall be a guarantor of a third-party loan procured by an
eligible applicant; provided, however, that such loan shall be
subject to the following terms and conditions:
1. The loan must be procured from a commercial bank
or other reputable financial institution.
2. The proceeds of the loan must be used solely for
the purposes specified in Section C.
3. The principal balance of the loan must be within
the limits imposed by paragraph 2 of Section D. If the loan (or
guaranty) is secured by a pledge of the acquired Shares, the
value of the pledged Shares must satisfy the applicable
requirement of paragraph 5 of Section D.
4. The initial term of the loan shall not exceed one
year; however, the program administrator may, in its discretion,
extend the term of the guaranty for one or more successive one
year periods, up to a maximum aggregate term of 120 months, in
connection with any similar extension of the term of the loan by
the lender.
5. All other terms and conditions of the loan
(including the interest rate, the amortization schedule, and the
default and acceleration provisions) shall be reasonable and
customary in relation to loans which other lenders in the same
geographical area are at the time extending to employees for the
purpose of financing stock acquisitions under employee stock
option or stock purchase plans.
6. The applicant shall have the obligation to furnish
the program administrator with satisfactory evidence confirming
that the terms and conditions of the loan which the applicant
requests the Company to guarantee meet all of the criteria
specified above.
F. AMENDMENT AND TERMINATION: The Board may at any time
and from time to time suspend or terminate the operation of the
Loan Program and the extension of Company loans and guarantees
hereunder. Under no circumstances, however, shall any such
termination or suspension adversely affect the rights and
obligations of officers under any loans or guarantees at the time
outstanding under the Loan Program.
<PAGE>
EXHIBIT A
NOTE SECURED BY STOCK PLEDGE AGREEMENT
$ ,
Sunnyvale, California
FOR VALUE RECEIVED, the undersigned Maker promises to pay to
the order of Amdahl Corporation ("Amdahl"), at its principal
offices at 1250 East Arques Avenue, Sunnyvale, California, the
principal sum of
($ ), together with interest (from the date of
this note until the date of payment) on the unpaid principal
balance at an initial rate of percent, compounded
annually, with such rate to be adjusted annually on the
anniversary of this note to the minimum annual rate required to
avoid the imputation of interest income to Amdahl and
compensation income to the Maker under Section 483 or Section
7872 of the Internal Revenue Code. Principal and accrued
interest shall be payable in one lump sum on
, .
Payment shall be made in lawful tender of the United States
and shall be credited first to the accrued interest then due and
payable and the remainder applied to principal. Prepayment of
principal, together with accrued interest, may be made at any
time without penalty.
Payment of this note is secured by Shares of Amdahl common
stock pledged as collateral (the "Collateral Shares") under the
Maker's Stock Pledge Agreement with Amdahl, but the Maker shall
remain personally liable for payment of this note and assets of
the Maker, other than the Collateral Shares, may be applied to
the satisfaction of the Maker's obligations hereunder. If action
is instituted to collect this note, the Maker promises to pay all
costs and expenses, including reasonable attorneys' fees,
incurred in connection with such action.
The entire unpaid principal sum of this note, together with
accrued and unpaid interest to date, shall at the election of the
holder of this note become immediately due and payable upon one
or more of the following events:
1. the Maker's cessation of employment with Amdahl;
2. the insolvency of the Maker, the commission of any act
of bankruptcy by the Maker, the execution by the Maker of a
general assignment for the benefit of creditors, the filing by or
against the Maker of any petition in bankruptcy or any petition
for relief under the provisions of the federal bankruptcy act or
any other state or federal law for the relief of debtors and the
continuation of such petition without dismissal for a period of
fifteen (15) days or more, or the appointment of a receiver or
trustee to take possession of the property or assets of the
Maker.
3. the reduction in the fair market value of the
Collateral Shares to an amount less than 100 percent of the
unpaid principal balance of the note; provided, however, that no
such acceleration shall occur under this paragraph 3 if the Maker
shall, within five (5) business days following notification by
Amdahl of such reduction in value, (i) pledge additional Shares
of Amdahl common stock as collateral and/or (ii) reduce the
principal balance of this note, so that the fair market value of
the pledged Shares (the Collateral Shares and any additional
Shares pledged with Amdahl) shall, after such action, equal at
least 100 percent of the then unpaid principal balance of this
note.
For purposes of applying the acceleration provisions of
Paragraph 1 above, the Maker shall be deemed to be in the employ
of Amdahl for so long as the Maker is an employee of Amdahl or
any subsidiary corporation, partnership, joint venture or other
business entity in which the Company owns directly or indirectly
through one or more subsidiaries, a fifty percent (50%) or
greater capital or profit interest.
For purposes of applying the acceleration provisions of
Paragraph 3 above, the fair market value of a share of Amdahl
common stock on any date in question shall be the mean of the
lowest and highest selling prices of such share on such date on
the principal exchange on which Amdahl common stock is at the
time listed or admitted to trading, as such prices are officially
quoted by the composite tape of transactions on such exchange.
The Maker hereby waives notice of default, presentment or
demand for payment, protest or notice of nonpayment of dishonor
and all other notices or demands relative to this instrument.
This note shall be construed in accordance with the laws of
the State of California.
Maker
<PAGE>
EXHIBIT B
STOCK PLEDGE AGREEMENT
In consideration of the loan which Amdahl Corporation, a
California corporation ("Amdahl") having its principal offices at
1250 East Arques Avenue, Sunnyvale, California, has on this day
extended to the undersigned in connection
with the undersigned's unrestricted acquisition of
Shares of Amdahl common stock under the Amdahl Corporation 1994
Stock Incentive Plan ("Plan"), and as security for the payment of
that certain promissory note ("Note") in the principal sum of $
payable to Amdahl or order which the undersigned has on
this day executed to evidence such loan, the undersigned hereby
grants Amdahl a security interest in, and assigns, transfers to
and pledges with Amdahl, the following securities and other
property:
(i) shares of Amdahl Corporation common stock,
par value of $.05 per share ("Shares"), which have on this day
been delivered to and deposited with Amdahl;
(ii) any and all new, additional or different securities
subsequently distributed with respect to the Shares identified in
clause (i) above which are to be delivered to and deposited with
Amdahl pursuant to the requirements of paragraph 3 of this
agreement;
(iii) any and all other property and money which is
delivered to or comes into the possession of Amdahl pursuant to
the terms and provisions of this agreement; and
(iv) the proceeds of any sale, exchange or disposition of
the property and securities described in clauses (i), (ii) or
(iii) above.
All securities, property and money so assigned, transferred
to and pledged with Amdahl shall be herein referred to as the
"Collateral". Amdahl shall hold the Collateral in accordance
with the following terms and provisions:
1. WARRANTIES.
The undersigned hereby warrants that the undersigned is the
owner of the Collateral and has the right to pledge the
Collateral and that the Collateral is free from liens, adverse
claims and other security interests.
2. RIGHTS AND POWERS.
(a) Amdahl may, without obligation to do so, exercise at
any time and from time to time one or more of the following
rights and powers with respect to any or all of the Collateral:
(i) accept in its discretion, but subject to the
limitations of paragraph 8 of this agreement, other property of
the undersigned in substitution for all or part of the Collateral
and release Collateral to the undersigned to the extent necessary
to effect such substitution, and in such event the money,
property or securities received in substitution shall be held by
Amdahl as security for the Note and all other indebtedness
secured hereunder;
(ii) perform such acts as are necessary to preserve
and protect the Collateral and the rights, powers and remedies
granted with respect to such Collateral by this agreement; and
(iii) transfer record ownership of the Collateral to
Amdahl or its nominee and receive, endorse and give receipt for,
or collect by legal proceedings or otherwise, dividends or other
distributions made or paid with respect to the Collateral,
provided and only if there exists at the time an outstanding
event of default under paragraph 9 of this agreement.
(b) Expenses reasonably incurred in the exercise of such
rights and powers shall be payable by the undersigned and form
part of the indebtedness secured hereunder as provided in
paragraph 11.
(c) So long as there exists no event of default under
paragraph 9 of this agreement, the undersigned may exercise all
shareholder voting rights and be entitled to receive any cash
distribution with respect to the Collateral. Accordingly, until
such time as an event of default occurs under this agreement, all
proxy statements and other shareholder materials which Amdahl
receives with respect to the Collateral shall be delivered to the
undersigned at the address indicated below.
3. DUTY TO DELIVER.
(a) Any new, additional or different securities or other
property which may now or hereafter become distributable with
respect to the Collateral by reason of a stock dividend, stock
split or reclassification of the capital stock of Amdahl or by
reason of a merger, consolidation or other reorganization
affecting the capital structure of Amdahl shall, upon receipt by
the undersigned, be promptly delivered to and deposited with
Amdahl as part of the Collateral hereunder. Any securities so
delivered shall be accompanied by one or more properly endorsed
stock power assignments.
(b) The undersigned may, from time to time to the extent
required to avoid the acceleration of payment under the Note,
deliver additional Shares of Amdahl common stock to be held in
pledge hereunder. The certificates evidencing such additional
Shares shall be endorsed in blank by the undersigned or shall be
accompanied by one or more properly endorsed stock power
assignments. The pledged certificates shall be subject to all
the terms and provisions of this agreement and shall be released
from pledge solely in accordance with the provisions of
paragraphs 7 and 8 hereof.
4. CARE OF COLLATERAL.
(a) Amdahl shall exercise reasonable care in the custody
and preservation of the Collateral, but shall have no obligation
to initiate any action with respect to, or otherwise inform the
undersigned of, any conversion, call, exchange right, preemption
right, subscription right, purchase offer or other right or
privilege relating to or affecting the Collateral. Amdahl shall
have no duty to preserve the rights of the undersigned against
adverse claims or to protect the Collateral against the
possibility of a decline in market value. Amdahl shall not be
obligated to take any action with respect to the Collateral
requested by the undersigned unless the request is made in
writing and Amdahl determines that the requested action will not
unreasonably jeopardize the value of the Collateral as security
for the Note and other indebtedness secured hereunder.
(b) Amdahl may at any time deliver all or part of the
Collateral to the undersigned, and the receipt thereof by the
undersigned shall constitute a complete and full acquittance for
the Collateral so delivered. Amdahl shall accordingly be
discharged from any further liability or responsibility for the
delivered Collateral.
5. PAYMENT OF TAXES AND OTHER CHARGES.
The undersigned shall pay, prior to the delinquency date,
all taxes, liens, assessments and other charges against the
Collateral, and in the event of the undersigned's failure to do
so, Amdahl may at its election pay any or all of such taxes and
charges without contesting the validity or legality thereof. The
payments so made shall become part of the indebtedness secured
hereunder and shall bear interest until paid at the minimum per
annum rate of interest, compounded annually, required to avoid
the imputation of interest income to Amdahl and compensation
income to the undersigned under Section 483 or Section 7872 of
the Internal Revenue Code.
6. TRANSFER OF COLLATERAL.
In connection with the transfer or assignment of the Note
(whether by negotiation, discount or otherwise), Amdahl may
transfer all or any part of the Collateral, and the transferee
shall thereupon succeed to all the rights, powers and remedies
granted Amdahl hereunder with respect to the Collateral so
transferred. Upon such transfer, Amdahl shall be fully
discharged from all liability and responsibility for the
transferred Collateral.
7. RELEASE OF COLLATERAL.
(a) The Shares of Amdahl common stock which have on this
date been pledged and deposited hereunder shall be released from
pledge and returned to the undersigned within thirty (30) days
after payment in full of the Note and all other indebtedness
secured hereunder. There shall also be released at the same time
any additional Collateral which may hereafter be pledged and
deposited with Amdahl pursuant to the requirements of paragraph 3
as well as any substitute Collateral pledged hereunder pursuant
to the requirements of paragraph 2(a)(i).
(b) Provided the undersigned is not at the time otherwise
in default in any of his obligations hereunder, should the
undersigned make a prepayment of principal under the Note,
together with payment of all accrued interest to date, then one
or more Shares of Amdahl common stock held as Collateral
hereunder shall, subject to the limitations of paragraph 8, be
released to the undersigned within thirty (30) days after such
prepayment. The number of Shares to be so released shall be
equal to the number obtained by multiplying (i) the total number
of such Shares held under this Agreement at the time of the
prepayment, by (ii) a fraction the numerator of which shall be
the principal amount of the prepayment and the denominator of
which shall be the unpaid principal balance of the Note
immediately prior to such prepayment. In no event shall any
fractional Shares be released.
8. SUBSTITUTION OR RELEASE COLLATERAL.
The provisions of this paragraph 8 shall be applicable to
all Shares of Amdahl common stock held hereunder as Collateral
and to all other property which becomes Collateral hereunder. No
Shares of Amdahl common stock or other Collateral held hereunder
shall be substituted for any new Collateral pursuant to the
provisions of paragraph 2 (a) (i) or shall be released under
paragraph 7 (b), unless there is compliance with each of the
following requirements:
(a) The substitution or release must not result in such a
reduction to the aggregate fair market value of the Collateral
remaining after the substitution or release, that an event of
acceleration will occur pursuant to the provisions of the Note.
(b) The substitution or release must not increase the
amount by which the indebtedness secured hereunder exceeds the
maximum loan value of the Shares of Amdahl common stock and other
Collateral immediately prior to such substitution or release.
(c) The substitution or release must not cause the amount
of indebtedness secured hereunder to exceed the maximum loan
value of the Shares of Amdahl common stock and any other
Collateral remaining after such substitution or release is
effected. This requirement (c), however, will be applicable only
if the maximum loan value of such Amdahl Shares and other
Collateral prior to the substitution or release equals or exceeds
the indebtedness at the time secured hereunder.
(d) For purposes of clauses (b) and (c) above, the maximum
loan value of the Collateral shall be determined on the date the
substitution or release is effected. The following valuation
principles shall be applicable to such determination:
(i) for Shares of Amdahl common stock acquired under
the plan, the maximum loan value shall be equal to their good
faith loan value under Section 207.2(e)(1) of Regulation G of the
Federal Reserve Board;
(ii) for Shares of Amdahl common stock acquired under
the Amdahl Restricted Stock Plan, the maximum loan value shall be
equal to fifty percent (50%) of their fair market value at the
time;
(iii) for all other margin securities, the maximum
loan value shall be equal to fifty percent (50%) of their fair
market value at the time; and/or
(iv) for all other Collateral, the maximum loan value
shall be equal to its good faith loan value under Section
207.2(e)(1) of Regulation G.
9. EVENTS OF DEFAULT.
(a) The occurrence of one or more of the following events
shall constitute an event of default under this agreement:
(i) failure of the undersigned to pay principal and
interest when due under the Note;
(ii) the occurrence of any event of acceleration
specified in the Note;
(iii) the failure of the undersigned to perform any
obligation imposed upon the undersigned by reason of this
agreement; or
(iv) the breach of any warranty of the undersigned
contained in this agreement.
(b) Upon the occurrence of any such event of default,
Amdahl may, at its election, declare the Note and all other
indebtedness secured hereunder to become immediately due and
payable (to the extent not already so due and payable) and may
exercise any or all of the rights and remedies granted to a
secured party under the provisions of the California Uniform
Commercial Code (as now or hereafter in effect), including
(without limitation) the power to dispose of the Collateral by
public or private sale or to accept the Collateral in full
payment of the Note and all other indebtedness secured hereunder.
Any proceeds realized from the disposition of the Collateral
pursuant to the power of sale hereby granted to Amdahl shall
first be applied to the payment of expenses incurred by Amdahl in
connection with the disposition, and the balance shall be applied
to the payment of the Note and any other indebtedness secured
hereunder in such order of application as Amdahl shall deem
appropriate. Any surplus proceeds shall be paid over to the
undersigned. In the event such proceeds prove insufficient to
satisfy all indebtedness secured hereunder, then the undersigned
shall be personally liable for the deficiency.
10. OTHER REMEDIES.
The rights, powers and remedies granted to Amdahl pursuant
to the provisions of this agreement shall be in addition to all
rights powers and remedies granted to Amdahl under any statute or
rule of law. Any forbearance, failure or delay by Amdahl in
exercising any right, power or remedy under this agreement shall
not be deemed to be a waiver of such right, power or remedy. Any
single or partial exercise of any right, power or remedy under
this agreement shall not preclude the further exercise thereof,
and every right, power and remedy of Amdahl under this agreement
shall continue in full force and effect until such right, power
or remedy is specifically waived by an instrument executed by
Amdahl.
11. COSTS AND EXPENSES.
All costs and expenses (including reasonable attorneys'
fees) incurred by Amdahl in the exercise or enforcement of any
right, power of remedy granted it under this agreement shall
become part of the indebtedness secured hereunder and shall be
payable immediately by the undersigned, without demand, and until
paid shall bear interest at the minimum per annum rate of
interest, compounded annually, required to avoid the imputation
of interest income to Amdahl and compensation income to the
undersigned under Section 483 or section 7872 of the Internal
Revenue code.
12. APPLICABLE LAW.
This agreement shall be governed by and construed in
accordance with the laws of the State of California and shall be
binding upon the executors, administrators, heirs and assigns of
the undersigned.
13. SEVERABILITY.
If any provision of this agreement is held to be invalid
under applicable law, then such provision shall be ineffective
only to the extent of such invalidity, and neither the remainder
of such provision nor any other provisions of this agreement
shall be affected thereby.
IN WITNESS WHEREOF, this agreement has been executed by the
undersigned on this day of , .
Exhibit 10(f)
AMDAHL CORPORATION
CORPORATE OFFICER SEVERANCE GUIDELINES
The Corporate Officer Severance Guidelines ("Severance
Guidelines") apply to the Executive Officers and Corporate Vice
Presidents of the Company (collectively, "Corporate Officers") in
the event of a termination resulting from a change in control or
an involuntary termination for reasons other than cause.
A change in control would include:
(i) a merger or consolidation in which the Company is not
the surviving entity;
(ii) a sale, transfer or other disposition of all Company
assets;
(iii) a reverse merger in which the Company becomes a
subsidiary of another corporation;
(iv) an acquisition of 25 percent of the vesting power of
the Company's outstanding securities;
(v) an acquisition of sufficient shares which increases the
total holdings of a person or group to more than 50 percent of
the outstanding securities;
(vi) an acquisition of sufficient stock to elect an
absolute majority of the Board of Directors; or
(vii) a hostile take-over.
During the applicable severance period, the Corporate
Officer will receive the following severance benefits:
(i) continuation of base salary;
(ii) the average bonus payable to active officers of the
same salary level on the basis of the Company's attainment of the
performance goals established for the fiscal year or years
coincident with the severance period;
(iii) continued health care and life insurance coverage;
(iv) vesting of outstanding stock options and restricted
stock awards;
(v) vesting and pay-out of installments from the Corporate
Officer's short-term account under the Executive Incentive
Performance Plan; and
(vi) continued vesting in the Corporate Officer's long-term
account under the Executive Incentive Performance Plan, with
subsequent payout of the vested benefit upon the individual's
eligibility for benefit distribution under the plan.
Duration of Severance Period:
<TABLE>
Time Reason
<S> <C>
0 Termination for cause
1-2 Years Involuntary termination for other than
cause. (Duration to vary according to
performance, contribution over time,
service, age, gender and other protected
status.)
1-2 Years Resignation preceded by specific changes
to the terms and conditions of
employment. (Duration to vary according
to performance, contribution over time,
service, age, gender and other protected
status.)
1 1/2-2 Years Involuntary termination resulting from
change in control.
</TABLE>
Exhibit 10(g)
AMDAHL CORPORATION
CHIEF EXECUTIVE OFFICER BONUS GUIDELINES
Architecture
1. Bonus can rage from 0 to 150 percent of salary earned during
the year. Target bonus is 100 percent of salary at standard
performance.
2. There are two independent components to bonus: a profit
element and an "other" element.
3. Seventy-five percent of bonus (or 0 to 112.5 percent of
salary) can be earned depending upon performance against the
profit element.
4. Twenty-five percent of bonus (or 0 to 37.5 percent of
salary) can be earned depending upon performance against the
other measures.
5. No bonus is earned under the profit component until 75
percent of the profit goal is achieved.
6. The Board may establish a minimum threshold of something
other than 75 percent for a particular year if circumstances
warrant such a modification.
7. An amount of money equal to 25 percent of the Chief
Executive Officer's salary will be established as the amount that
can be earned at standard performance against the "other"
objectives. Each of the "other" objectives will be weighted
equally and the bonus potential for each will range from 0 to 150
percent of 6.25 percent of salary. The amount earned will be
determined by the Board's evaluation of the Chief Executive
Officer's performance against each objective.
8. Over-achievement of goals results in bonus greater than 100
percent of salary.
9. Maximum bonus is 150 percent of salary.
<PAGE>
<TABLE>
<CAPTION>
Bonus Schedule
Bonus Payable Under
Percent of the Profit Element
Plan Achieved as a percent of Salary
<S> <C>
74 0
75 30.00
80 35.00
85 40.00
90 55.00
95 65.00
100 75.00
105 82.50
110 90.00
115 97.50
120 105.00
125 or higher 112.50
</TABLE>
Exhibit 10(h)
AMDAHL CORPORATION
1994 BONUS PROGRAM FOR
OFFICERS, VICE PRESIDENTS, SENIORS AND KEYS
Principles:
1. Maintain a tiered approach to bonus plans to reflect market
practice
2. Raise the threshold at which bonuses begin to be paid
3. Strengthen the link between performance and compensation by
trending salaries towards the 50th percentile and targeting base
salary plus bonus to the 75th percentile of the market
4. Increase the bonus opportunity to make possible greater
variability in pay
5. Make pre-tax profit or operating income the determinant of
75 percent of bonus opportunity
6. Make performance against other quantifiable goals the
determinant of 25 percent of bonus opportunity
7. Persons managing or assigned to the various lines of
business will earn 75 percent of bonus based on their units'
operating income
8. Persons managing or assigned to the corporate functions will
earn 75 percent of bonus based on corporate pre-tax income
Conus Eligible Population
Approximately nine percent of the company's employees would be
bonus eligible. These employees have been assigned to various
levels of incentive participation based on competitive
positioning and internal organization.
<TABLE>
<CAPTION>
Incentive
Plan Representative Bonus
Level Participants Range
<S> <C> <C>
2 Sr. Officers 0-100%
& LOB GM's
3 Other Officers 0-75%
& Senior VP's
4 Other VP's 0-50%
5 Seniors 0-30%
6 Keys 0-15%
</TABLE>
Illustration of Profit and Quantifiable Goals Elements for Each
Incentive Plan Level
<TABLE>
<CAPTION>
Percent Salary Percent Salary
Incentive Paid at Plan Paid at Maximum
Plan Level Profit Other Profit Other
<S> <C> <C> <C> <C>
2 37.5 12.5 75.0 25.0
3 30.0 10.0 56.25 18.75
4 22.5 7.5 37.5 12.5
5 15.0 5.0 22.5 7.5
6 6.0 2.0 11.25 3.75
</TABLE>
Illustration of Operation of Profit Portion of Bonus Plans
<TABLE>
<CAPTION>
Percent Percent Salary Earned Under
Profit Plan Various Incentive Plans
Achieved 2 3 4 5 6
<S> <C> <C> <C> <C> <C>
75 10 8 5 3 2
80 13 10 8 4 2
85 16 13 10 6 3
90 25 20 15 10 4
95 31 25 19 13 5
100 38 30 23 15 6
105 45 35 26 17 7
110 53 41 29 18 8
115 60 46 32 20 9
120 68 51 35 21 10
125 75 56 38 23 11
</TABLE>
Operation of Quantifiable Goals Portion of Bonus Plan
If 75 percent of the profit plan is achieved, the quantifiable
goals element will be fully funded.
If 50 percent to 74 percent of the profit plan is achieved, the
quantifiable goals element will be partially funded. The actual
amount of such funding will be based on management's assessment
of all aspects of company/line of business performance for the
year.
If less than 50 percent of the profit plan is achieved, the
quantifiable goals element will not be funded.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
1994 Compared to 1993
Revenues
In 1994, total revenues decreased 2% and equipment sales decreased 7% from
the prior year. Processor equipment sales revenue declined 4% from 1993 to
1994 due primarily to a 46% decrease in revenues from equipment sales of the
Company's older 5995A mainframe product line. However, revenues from
equipment sales of 5995M systems increased 5% from 1993 to 1994 due to an
increase in shipment volumes of approximately 59%, although when compared to
1993 these shipment volumes consisted of smaller processor configurations.
The revenue generated from the increase in 5995M shipment volumes more than
offset 5995M pricing declines of approximately 20% in 1994. The rate of price
declines in 1994 was less severe than the declines experienced in 1992 and
1993, which the Company believes indicates an improved balance between supply
and demand in the mainframe marketplace. Storage product sales decreased 24%
from 1993 primarily due to price declines and, to a lesser extent, decreased
shipment volumes as the Company began to transition to new products. Open
systems equipment sales of high performance servers acquired under OEM
arrangements with Sun Microsystems, which the Company began shipping in
volume at the beginning of 1994, increased revenues in 1994, in part
offsetting the declines discussed above.
Maintenance, lease and other revenues increased 7% from the prior year,
reflecting increased maintenance revenues from a larger customer installed
base and to a lesser extent increased sales of Huron software licenses.
The impact of fluctuations in foreign currency exchange rates on revenues was
immaterial in 1994.
Gross Margins
Gross margin as a percentage of revenues increased from 27% in 1993 to 36% in
1994. Gross margin on equipment sales as a percentage of revenues increased
from 22% in 1993 to 32% in 1994, which primarily reflected lower production
costs resulting from reductions in excess manufacturing capacity and other
Company-wide restructuring actions begun in 1993 as well as a reduction in
vendor component costs. In addition, cost of equipment sales in 1993 included
the provision of $17 million (compared to no provision in 1994) for
implementation of engineering changes to support IBM features on certain
5995M processors shipped during 1993. The lower manufacturing costs more than
offset the pricing declines discussed above. Also, gross margins on
maintenance, lease and other revenues as a percentage of revenues increased
from 36% in 1993 to 44% in 1994, reflecting the cost reduction actions taken
in the field service organization in 1993.
Operating Expenses
Operating expenses in 1994 and 1993, excluding 1993 restructuring charges of
$478,000,000, were 32% and 41% of revenues, respectively.
Engineering and development expenses decreased 39% from 1993 to 1994 due to
cancellations and reductions in the scope of certain product development
projects as well as other cost reduction benefits realized from the
restructuring of operations. Engineering and development expenses also
decreased due to the November 1993 agreement with Fujitsu for the joint
development of the next generation of IBM compatible systems. The decrease in
marketing, general and administrative expenses of 8% from 1993 to 1994 also
reflected cost reductions from the restructuring of operations.
Interest Income/Expense and Income Taxes
Net interest income increased $11 million or 188% in 1994 from the prior
year, as decreased interest expense from lower average debt levels and
increased interest income from higher average cash levels were partially
offset by decreased interest income from lower levels of sales-type leases.
The effective annual income tax rate decreased from 18% in 1993 to 7% in
1994, reflecting utilization of net operating loss carryforwards.
Results of Operations
1993 Compared to 1992
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
consisted 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 were 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.
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 cancellation of development programs and
various other 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.
For further information see Note 7 to the Consolidated Financial Statements.
[a bar graph entitled Gross Margins (Percent) is inserted next to the above
text, indicating that the gross margins for 1992, 1993 and 1994 were 30%,
27% and 36%, respectively]
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. 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.
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.
[a bar graph entitled Operating Expenses* (Dollars in Millions) is inserted
next to the above text, indicating that the operating expenses for 1992, 1993
and 1994 were $779 million, $689 million and $531 million, respectively.
* Excluding 1993 restructuring charges]
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 deferred items. The Company
believed uncertainty existed as to the realizability of certain tax assets,
and, therefore, a valuation allowance 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 decreased the loss in 1993 by $8,746,000, or
$0.08 per share. Income taxes for the prior period were not restated for this
change.
Factors That May Affect Future Operating Results
Although the Company's financial performance improved in 1994, continuing
profitability will depend on sustained favorable economic conditions in the
Company's primary markets and continued stabilization of pricing for large
mainframe systems. Stabilization of pricing is dependent on continued balance
between the supply of mainframe systems and customer demand.
The Company's continued profitability will also depend on the ability of the
traditional mainframe market to grow in the face of competition from smaller,
less costly computer systems. Therefore, the Company intends to rely
increasingly on the utilization of lower cost technologies in future
compatible processor products and on the ability of its other 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 with the entry into new markets less related to the Company's traditional
compatible processor business.
IBM has recently introduced the use of lower cost technologies in certain of
its lower end mainframe systems and has announced its intention to utilize
similar technologies in future versions of its large-scale processors. Amdahl
has announced similar intentions to utilize lower cost technologies in future
versions of its processors. However, Amdahl will need to respond in a timely
manner to IBM's introductions to remain competitive on a price/performance
basis, and any material delays could have an adverse impact on processor
sales.
Also, the market for the Company's storage products has become increasingly
competitive in recent years, and competition is expected to further intensify
during 1995, making market conditions more difficult for the Company's
current products. The Company has new product offerings under development.
However, any delays in current development schedules will have a further
adverse impact on the Company's revenues for this line of business.
In July 1994, IBM gave the European Commission one year's advance notice of
IBM's intention to terminate the Undertaking which it entered into with the
Commission in 1984. The Undertaking called upon IBM to disclose interface
specifications related to its System /370/390 mainframes to qualified
competitors, including Amdahl. Since 1986 the Company has utilized
specifications made available pursuant to the Undertaking in maintaining
compatibility with new features and functions which IBM has announced from
time to time.
At the present time, the Company has no reason to believe that, upon
termination of the Undertaking, IBM will depart from its past practice of
disclosing interface specifications. However, a failure by IBM to continue to
disclose required information on a timely basis would require Amdahl to rely
extensively on technically difficult reverse engineering procedures. In such
a case, should IBM continue to introduce significant architectural changes to
its System/390 mainframes, the ability of the Company's products to remain
compatible in the future on a timely basis could be adversely impacted. The
Company is unable to predict the extent to which this would negatively affect
future operating results.
The Company does not expect operating expenses in 1995 to significantly
change from 1994 levels.
[a bar graph entitled Inventories (Dollars in Millions) is inserted next to
the above text, indicating that inventories for 1992, 1993 and 1994 were
$788 million, $511 million and $283 million, respectively.]
Financial Condition
December 30, 1994 Compared to December 31, 1993
The Company's net cash position (cash and short-term investments minus total
debt, excluding capitalized lease obligations) improved by $494 million from
December 31, 1993 to December 30, 1994. Cash, cash equivalents and short-term
investments increased $446 million, reflecting cash provided by operating
activities and long-term borrowings, which was offset to some extent by cash
used for repayments of bank borrowings.
The Company's continued efforts to reduce inventory levels resulted in a
decline of $228 million. Net property and equipment decreased $164 million
due to the downsizing of the Company as well as ongoing depreciation
charges, which exceeded capital spending.
The cash, cash equivalents and short-term investment balances as of December
30, 1994 included approximately $236 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.)
The Company's valuation allowance against worldwide operating losses,
deferred tax assets, and tax credit carryforwards which may expire before the
Company can utilize them decreased from $152 million at December 31, 1993 to
$112 million at December 30, 1994. The Company believes sufficient
uncertainty exists regarding the realizability of these items and accordingly
has continued to provide a valuation allowance for them.
At December 31, 1993 $130,000,000 classified as short-term debt was
outstanding under the Company's revolving credit agreement with a group of
banks. This amount was repaid by the Company upon expiration of the facility
on January 31, 1994. In January 1994, the Company and Fujitsu entered into a
loan agreement (see Notes 2 and 6 to the Consolidated Financial Statements).
At December 30, 1994, $80,000,000 was outstanding under this agreement and
was classified as long-term debt.
Accounts payable to Fujitsu increased $53 million due to increased purchases
of manufacturing materials.
Accrued liabilities decreased $50 million due primarily to charges against
accrued restructuring costs, which decreased from $146 million at December
31, 1993 to $88 million at December 30, 1994 (see Note 7 to the Consolidated
Financial Statements).
[a bar graph entitled Net Cash*(Debt) (Dollars in Millions) is inserted next
to the above text, indicating that Net Cash (Debt) for 1992, 1993 and 1994 was
($116 million), $117 million and $611 million, respectively.
* Cash and short-term investments, minus total debt(excluding capitalized
lease obligations]
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
existing cash and borrowings under its loan agreement with Fujitsu will be
adequate to finance continuing operations, investments in property and
equipment, inventories and spare parts, and expenditures for the development
of new products at least through the end of 1995 and into 1996. The Company
has no significant commitments with vendors other than Fujitsu (see Note 2 to
the Consolidated Financial Statements).
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
December 30, 1994 and December 31, 1993 1994 1993
--------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 358,006 $ 149,484
Short-term investments 340,600 103,585
Receivables, net of allowances of $5,196
in 1994 and $3,266 in 1993 309,927 307,747
Inventories 283,081 510,702
Prepaid expenses and deferred tax assets 54,874 53,629
--------------------------------------------------------------------------------
Total current assets 1,346,488 1,125,147
--------------------------------------------------------------------------------
Long-term receivables and other assets 34,908 45,620
--------------------------------------------------------------------------------
Property and equipment:
Leased systems 30,238 60,229
System spares 384,685 418,057
Production and data processing equipment 410,557 667,137
Office furniture, equipment and improvements 156,195 158,062
Land and buildings 137,429 177,791
--------------------------------------------------------------------------------
1,119,104 1,481,276
Less -- accumulated depreciation
and amortization 781,465 979,856
--------------------------------------------------------------------------------
Property and equipment, net 337,639 501,420
--------------------------------------------------------------------------------
$ 1,719,035 $ 1,672,187
================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and short-term debt $ 8,816 $ 137,056
Accounts payable 69,603 54,331
Accounts payable -- stockholder
(Fujitsu Limited) 71,214 18,092
Accrued liabilities 511,706 561,281
--------------------------------------------------------------------------------
Total current liabilities 661,339 770,760
--------------------------------------------------------------------------------
Long-term debt - stockholder
(Fujitsu Limited) 80,000 --
--------------------------------------------------------------------------------
Long-term debt and liabilities 49,674 52,208
---------------------------------------------------------------------------------
Deferred income taxes 51,767 59,013
---------------------------------------------------------------------------------
Stockholders' equity:
Common stock, $.05 par value
Authorized -- 200,000,000 shares
Outstanding -- 116,636,000 shares in 1994
and 114,578,000 shares in 1993 5,832 5,729
Additional paid-in capital 519,856 507,895
Retained earnings 342,468 267,664
Cumulative translation adjustments 8,861 8,918
Unrealized holding losses on
available-for-sale securities (762) --
--------------------------------------------------------------------------------
Total stockholders' equity 876,255 790,206
--------------------------------------------------------------------------------
$ 1,719,035 $ 1,672,187
================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Years Ended December 30, 1994 1994 1993 1992
-----------------------------------------------------------------------------------
(Dollars in thousands, except per common share amounts)
<S> <C> <C> <C>
Revenues
Equipment sales $ 1,050,236 $ 1,132,447 $ 2,022,110
Equipment lease, maintenance and other 588,377 548,085 502,624
-----------------------------------------------------------------------------------
1,638,613 1,680,532 2,524,734
-----------------------------------------------------------------------------------
Cost of Revenues
Equipment sales 716,144 881,528 1,431,338
Equipment lease, maintenance and other 327,420 350,982 335,905
-----------------------------------------------------------------------------------
1,043,564 1,232,510 1,767,243
-----------------------------------------------------------------------------------
Gross margin 595,049 448,022 757,491
-----------------------------------------------------------------------------------
Operating Expenses
Engineering and development 203,241 334,514 372,365
Marketing, general and administrative 327,917 354,939 407,030
Restructuring costs -- 478,000 --
-----------------------------------------------------------------------------------
531,158 1,167,453 779,395
-----------------------------------------------------------------------------------
Income (loss) from operations 63,891 (719,431) (21,904)
-----------------------------------------------------------------------------------
Interest
Income 26,305 23,461 28,957
Expense (9,942) (17,772) (21,028)
-----------------------------------------------------------------------------------
16,363 5,689 7,929
-----------------------------------------------------------------------------------
Income (loss) before provision
for (benefit from) income taxes 80,254 (713,742) (13,975)
Provision for (Benefit from) Income Taxes 5,450 (125,000) (7,000)
-----------------------------------------------------------------------------------
Income (loss) before change in
accounting principle 74,804 (588,742) (6,975)
Cumulative Effect of Change in
Accounting Principle -- 8,746 --
-----------------------------------------------------------------------------------
Net Income (Loss) $ 74,804 $ (579,996) $ (6,975)
===================================================================================
Earnings (Loss) per Common Share
Income (loss) before change in
accounting principle $ .63 $ (5.17) $ (.06)
Net income (loss) $ .63 $ (5.09) $ (.06)
Average outstanding shares
and equivalents 118,909,000 113,933,000 112,203,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Years Ended December 30, 1994 1994 1993 1992
------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Cash and Cash Equivalents at Beginning of Year $ 149,484 $ 173,012 $ 245,237
------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net income (loss) 74,804 (579,996) (6,975)
Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating
activities:
Depreciation and amortization 132,864 209,612 211,628
Restructuring charges -- 478,000 --
Deferred income tax provision (7,083) (102,611) (27,540)
Loss (gain) on sales of assets (8,524) 1,208 (5,599)
(Increase) decrease in receivables (2,384) 269,784 (182,322)
(Increase) decrease in inventories 271,872 221,454 (103,389)
(Increase) decrease in prepaid expenses
and deferred tax assets (1,781) 40,551 (30,534)
(Increase) decrease in long-term
receivables and other assets 9,992 53,874 (29,831)
Increase (decrease) in accounts payable 68,964 (150,914) (33)
Increase (decrease) in accrued liabilities (49,774) (128,722) 148,957
Increase (decrease) in long-term liabilities (2,287) (10,070) 9,012
------------------------------------------------------------------------------------------
Net cash provided by (used for) operating
activities 486,663 302,170 (16,626)
------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Purchases of available-for-sale short-term
investments (47,016) -- --
Purchases of held-to-maturity short-term
investments (519,684) -- --
Proceeds from sales of available-for-sale
short-term investments 40,677 -- --
Proceeds from maturities of held-to-maturity
short-term investments 286,075 -- --
Decrease in short-term investments -- 18,372 44,977
Capital expenditures:
Leased systems (18,200) (45,045) (52,081)
System spares (8,584) (50,841) (105,184)
Other property and equipment (40,841) (39,033) (252,397)
Proceeds from property and equipment sales 62,352 68,191 59,565
-----------------------------------------------------------------------------------------
Net cash used for investing activities (245,221) (48,356) (305,120)
-----------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Increase (decrease) in notes payable and
short-term borrowings 2,521 (106,854) 30,233
Borrowings under revolving credit agreement -- -- 300,000
Long-term borrowings 80,000 -- --
Repayments of borrowings under revolving
credit agreement (130,000) (170,000) (85,000)
Sale of common stock and exercise of options 12,064 7,393 16,854
Dividends paid -- (5,676) (11,214)
-----------------------------------------------------------------------------------------
Net cash provided by (used for) financing
activities (35,415) (275,137) 250,873
-----------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 2,495 (2,205) (1,352)
-----------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 208,522 (23,528) (72,225)
-----------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 358,006 $ 149,484 $ 173,012
=========================================================================================
</TABLE>
The accompanying notes are an integral part of these financial
statements. Prior years have not been restated to conform to
current-year presentation.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Three Years Ended December 30, 1994
Additional Cumulative Unrealized
Common Paid-In Retained Translation Holding
Stock Capital Earnings Adjustments Losses Total
-----------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
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
Sale of 2,057,964 shares, net of
repurchases, of common stock under
employee stock benefit plans 103 9,513 -- -- -- 9,616
Income tax benefit arising from
employee stock option plans -- 2,448 -- -- -- 2,448
Net income -- -- 74,804 -- -- 74,804
Translation adjustments -- -- -- (57) -- (57)
Unrealized holding losses on
available-for-sale securities -- -- -- -- (762) (762)
-----------------------------------------------------------------------------------------------------------------------
Balance at December 30, 1994 $ 5,832 $ 519,856 $ 342,468 $ 8,861 $ (762) $ 876,255
=======================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF ACCOUNTING PRACTICES
Amdahl Corporation and subsidiaries (the Company or Amdahl) provide
large-scale, high performance, general-purpose computer systems, storage,
software and communications products, and client-server hardware systems for
the open systems marketplace. 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 and majority 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 1994 and 1992 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.
A gain of $81,000 in 1994 and losses of $2,948,000 and $5,826,000 in 1993
and 1992, respectively, resulted from foreign exchange transactions and were
included in marketing, general, and administrative expenses.
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.
The Company accounts for software revenues in accordance with the American
Institute of Certified Public Accountants' Statement of Position 91-1,
"Software Revenue Recognition." Revenues earned under software license
agreements with end users are generally recognized when the software has been
shipped and there are no significant obligations remaining.
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 periodically makes engineering
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 and
$60,278,000 in 1993 and 1992, respectively. No amount was provided and
charged to cost of sales in 1994 because shipments made in 1994 were not
expected to require future engineering changes.
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>
1994 1993
----------------------------------------------------------
(In thousands)
<S> <C> <C>
Purchased materials $ 45,561 $ 134,615
Systems in process 135,408 233,560
Finished goods 102,112 142,527
----------------------------------------------------------
$ 283,081 $ 510,702
==========================================================
</TABLE>
Property and Equipment
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>
Software Development Costs
Certain software development costs have been capitalized and amortized over
the life of the product. At December 30, 1994 and December 31, 1993 software
development costs that had been capitalized were immaterial.
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.
NOTE 2 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:
<TABLE>
<CAPTION>
Cost Of
Purchases Revenues
----------------------------------------------------------------------
(In thousands)
<S> <C> <C>
1994 $ 218,925 $ 374,224
1993 $ 434,732 $ 444,595
1992 $ 1,048,819 $ 775,757
</TABLE>
Amdahl was committed to purchase manufacturing material and other equipment
from Fujitsu totaling approximately $126,000,000 at December 30, 1994. 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 1995. 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 periodically made advance payments to
Fujitsu for future inventory purchases in return for lower prices on certain
components related to these products. The advance payments balance was zero
at December 30, 1994. Advance payments of $4,886,000 were included in prepaid
expenses at December 31, 1993.
B. Joint development efforts under which Fujitsu supplies Amdahl with
services and material related to the Company's development of current and
future products, which resulted in charges to engineering and development
expense of $6,443,000 in 1994, $8,633,000 in 1993 and $4,313,000 in 1992.
In November 1993 Amdahl and Fujitsu entered into an 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.
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.
C. Distributorship arrangements whereby Fujitsu markets Amdahl's computer
equipment in Brazil, Japan, Malaysia and Spain. Sales in 1994, 1993 and 1992
by the Company of computer systems and complementary storage products to
Fujitsu contributed $38,682,000, $28,162,000 and $60,268,000 to equipment
sales and $14,405,000, $11,687,000 and $24,733,000 to gross margin,
respectively. At December 30, 1994 and December 31, 1993 receivables included
$21,097,000 and $35,931,000, respectively, from Fujitsu.
D. A loan agreement, entered into in January 1994, under which Fujitsu is to
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 December 30, 1994, $80,000,000 in principal was
outstanding under this agreement (see Note 6). Interest expense associated
with the loan in 1994 was $4,238,000, of which $987,000 was payable at
December 30, 1994 and was included in accrued liabilities.
NOTE 3 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
$14,119,000 at December 30, 1994 and $13,320,000 at December 31, 1993. 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>
1994 1993
--------------------------------------------------------------
(In thousands)
<S> <C> <C>
Minimum rentals receivable $ 22,001 $ 63,221
Estimated residual values of
leased equipment (unguaranteed) 4,607 3,182
Less unearned interest income (3,182) (7,557)
--------------------------------------------------------------
Net investment in sales-type leases $ 23,426 $ 58,846
==============================================================
</TABLE>
Minimum rentals receivable under existing leases as of December 30, 1994 were
as follows:
<TABLE>
<CAPTION>
Sales-Type Operating
--------------------------------------------------------------
(In thousands)
<S> <C> <C>
1995 $ 12,973 $ 10,756
1996 5,477 3,237
1997 2,798 1,391
1998 753 383
1999 -- --
Thereafter -- --
--------------------------------------------------------------
$ 22,001 $ 15,767
==============================================================
</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 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 $71,000,000, $91,000,000 and $157,000,000 in 1994, 1993 and
1992, respectively.
NOTE 4 FINANCIAL INSTRUMENTS
The Company invests in a variety of financial instruments but does not hold
or issue financial instruments for trading purposes.
Off-Balance Sheet Financial Instruments
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 and currency swap
agreements. These contracts and swaps generally have maturities that do not
exceed three months and two years, respectively. At December 30, 1994 and
December 31, 1993 the Company had approximately $94,000,000 and $132,000,000,
respectively, in notional principal of forward foreign exchange contracts
outstanding. The Company had $20,000,000 of currency swap agreements
outstanding at December 30, 1994 and December 31, 1993. The gains and losses
associated with currency rate changes on forward foreign exchange contracts
and currency swap agreements 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 and currency swap agreements approximates their fair
value, which was immaterial at December 30, 1994 and December 31, 1993.
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. At December 30, 1994 and December 31, 1993 the Company had
approximately $40,000,000 and $25,000,000 in notional principal of purchased
option contracts outstanding, respectively. 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 30, 1994 and December 31, 1993.
The Company enters into interest rate swap agreements to extend the effective
duration of a portion of the Company's investments in held-to-maturity debt
securities and accrues the differential to be paid or received under the
agreements as interest rates change over the life of the contracts. These
agreements generally have maturities that do not exceed three years. Notional
principal outstanding under these agreements at December 30, 1994 and
December 31, 1993 was approximately $30,000,000 and $50,000,000,
respectively. 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 30, 1994 and December 31, 1993 was
immaterial.
Balance Sheet Financial Instruments
Substantially all cash equivalents consist of investments in major bank time
deposits, certificates of deposit, and commercial paper with initial
maturities of three months or less. Substantially all short-term investments
consist of major bank time deposits, certificates of deposit, and commercial
paper which the Company intends to hold between three and twelve months.
In January 1994 the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (FAS 115). In compliance with the standard, the Company's
investments in debt or equity securities which are available for sale are
stated at fair value and investments which are held to maturity are stated at
amortized cost. Adoption of FAS 115 did not have a material impact on the
Company's financial position or results of operations.
At December 30, 1994 the Company's available-for-sale securities had
contractual maturities of three to fifteen years and the average maturity was
four years. The fair value of available-for-sale securities was determined
based on quoted market prices at the reporting date for those instruments.
Held-to-maturity securities had contractual maturities of less than one year
beyond December 30, 1994. The fair value of held-to-maturity securities was
estimated using weighted average values of quoted spreads at the reporting
date for those or similar instruments. At December 30, 1994 the amortized
cost basis, aggregate fair value and gross unrealized holding losses by major
security type were as follows:
<TABLE>
<CAPTION>
Amortized Aggregate Unrealized
Cost Fair Value Losses
------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Available-for-Sale Securities
Equity securities $ 2,582 $ 2,345 $ (237)
Debt securities issued by
U.S. Treasury and other
U.S. government agencies 11,935 11,499 (436)
Debt securities issued by
foreign governments 1,821 1,809 (12)
Corporate debt securities 6,145 6,125 (20)
Mortgage-backed securities 10,024 9,967 (57)
------------------------------------------------------------------------
32,507 31,745 (762)
------------------------------------------------------------------------
Held-to-Maturity Securities
Debt securities issued by
foreign governments 19,721 19,705 (16)
Corporate debt securities 155,729 155,603 (126)
Bank debt securities 417,592 417,010 (582)
------------------------------------------------------------------------
593,042 592,318 (724)
------------------------------------------------------------------------
Total investments in debt
and equity securities $ 625,549 $ 624,063 $ (1,486)
========================================================================
</TABLE>
In 1994 proceeds from sales of available-for-sale securities were
$40,677,000. Gross realized losses on those sales were $2,171,000 and were
included in marketing, general and administrative expenses. The Company used
specific identification as the cost basis in computing realized losses.
At December 30, 1994 and December 31, 1993 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 5 ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
1994 1993
------------------------------------------------------------
(In thousands)
Payroll and vacation $ 110,958 $ 102,363
Restructuring costs (Note 7) 88,228 145,601
Income taxes 38,588 48,707
Deferred income 120,857 108,365
Future engineering changes 38,643 57,133
Other 114,432 99,112
------------------------------------------------------------
$ 511,706 $ 561,281
============================================================
NOTE 6 LONG-TERM DEBT AND LIABILITIES AND BANK CREDIT AGREEMENTS
Long-term debt and liabilities consisted of the following:
1994 1993
-------------------------------------------------------------------------
(In thousands)
Long-term debt--stockholder (Fujitsu) (Note 2) $ 80,000 $ --
Bank credit agreement -- 130,000
Capitalized lease obligations (Note 12) 20,414 21,654
Long-term liabilities 30,271 31,804
-------------------------------------------------------------------------
130,685 183,458
Less current maturities 1,011 131,250
-------------------------------------------------------------------------
Long-term debt and liabilities $ 129,674 $ 52,208
=========================================================================
At December 31, 1993 $130,000,000 classified as short-term debt was
outstanding under the Company's revolving credit agreement with a group of
banks. This amount was repaid by the Company upon expiration of the facility
on January 31, 1994.
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 30, 1994 and December 31, 1993,
$7,805,000 and $5,806,000, respectively, was outstanding under these
agreements.
Interest paid on all borrowings was $9,098,000, $19,821,000 and $19,366,000
in 1994, 1993 and 1992, respectively.
Long-term liabilities included deferred equipment maintenance revenues and
long-term amounts accrued under the Executive Incentive Performance Plan.
NOTE 7 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 pricing which declined at much greater than normal
historical rates and reduced levels of demand. The restructuring consisted 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 were 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. 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 majority
of these actions were initiated by the end of 1994 and are expected to be
completed by 1996.
The 1993 restructuring charges reflected $298 million of noncash write-downs
of recorded assets and $180 million of projected cash outflows and were
comprised of several major components related to the planned actions. The
provision for reduction of the workforce of approximately $120 million
included severance and medical and other termination benefits for
approximately 2,400 employees in manufacturing, development, service, sales,
marketing and administrative functions. At December 30, 1994, approximately
two-thirds of the terminations had taken place. Approximately $200 million
was provided for lease payments on idle facilities, write-downs of leasehold
improvements, production, data processing and other equipment, and other
expenses associated with the consolidation of offices and facilities
throughout all principal geographic areas. Approximately $60 million was
provided for write-downs of excess inventory resulting from reduced
manufacturing capacity and changes in product plans, and $10 million was
provided for vendor charges due to the cancellation of development programs.
The provision for various other charges totaled $88 million and consisted of
write-downs of leased systems and system spares as a result of changes in
product plans and other costs associated with the restructuring actions.
Of the initial restructuring charges, at December 30, 1994 $88,228,000
remained in accrued liabilities and $27,942,000 remained as a reduction of
inventories. The $88 million balance in accrued restructuring costs was
comprised of approximately $31 million for the remaining reduction of the
workforce, $37 million for closing excess facilities and $20 million for
various other charges. Approximately $54 million of this accrual represents
estimated future cash outflows related to the remaining reduction of the
workforce and facilities exit costs. At December 31, 1993, $145,601,000
remained in accrued liabilities, $32,072,000 remained as a reduction of
inventories, and $3,070,000 remained as a reduction of net property and
equipment. A summary of the restructuring activity is presented below.
------------------------------------------------------------------------
(In thousands)
1993 provision $ 478,000
1993 activity:
Non-cash write-downs of property,
equipment and inventories (224,936)
Reduction in workforce and other cash outflows (72,321)
------------------------------------------------------------------------
Balance at December 31, 1993 180,743
1994 activity:
Non-cash write-downs of property,
equipment and inventories (11,113)
Reduction in workforce and other cash outflows (53,460)
------------------------------------------------------------------------
Balance at December 30, 1994 $ 116,170
========================================================================
NOTE 8 MAJOR CUSTOMER, GEOGRAPHIC AREA, AND PRODUCT LINE DATA
No single customer accounted for 10% or more of total revenues in 1994, 1993
or 1992. The Company's operations by geographical area for the three years
ended December 30, 1994 were as follows:
<TABLE>
<CAPTION>
United Asia Pacific Adjustments
1994 States Canada Europe & Other & Eliminations Consolidated
-------------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Customers $ 955,090 $ 62,433 $ 506,526 $ 114,564 $ -- $ 1,638,613
Intercompany 241,468 (88) 7,428 -- (248,808) --
-------------------------------------------------------------------------------------------------------------------------------
Total revenues $ 1,196,558 $ 62,345 $ 513,954 $ 114,564 $ (248,808) $ 1,638,613
===============================================================================================================================
Income from operations $ 49,908 $ 4,444 $ 3,256 $ 3,672 $ 2,611 $ 63,891
Interest income, net 16,363
------------
Income before income taxes $ 80,254
============
Identifiable assets $ 663,205 $ 23,051 $ 681,193 $ 32,128 $ (354,320) $ 1,045,257
Corporate assets 673,778
------------
Total assets $ 1,719,035
============
United Asia Pacific Adjustments
1993 States Canada Europe & Other & Eliminations Consolidated
-------------------------------------------------------------------------------------------------------------------------------
(In thousands)
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
============
United Asia Pacific Adjustments
1992 States Canada Europe & Other & Eliminations Consolidated
-------------------------------------------------------------------------------------------------------------------------------
(In thousands)
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
===============================================================================================================================
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>
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 equivalents 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>
1994 1993 1992
------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>
Processor equipment sales $ 802 $ 837 $ 1,676
Storage product equipment sales 203 268 309
Communications and other product
equipment sales 45 28 37
Equipment lease, maintenance and other 589 548 503
------------------------------------------------------------------------
$ 1,639 $ 1,681 $ 2,525
========================================================================
</TABLE>
NOTE 9 CAPITAL STOCK
There are 200,000,000 authorized shares of common stock, par value of $.05
per share, of which 116,636,000 shares were issued and outstanding as of
December 30, 1994.
As of December 30, 1994 the Company had reserved shares of its common stock
for the following purposes:
<TABLE>
<CAPTION>
Description Shares Reserved
-----------------------------------------------------------------------
<S> <C>
1994 Stock Incentive Plan--
Stock options outstanding 8,995,762
Stock options and restricted stock available for grant 4,383,877
Employee Stock Purchase Plan 2,444,702
-----------------------------------------------------------------------
15,824,341
=======================================================================
</TABLE>
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 30, 1994, no
Preferred Stock had been issued.
NOTE 10 EMPLOYEE STOCK OPTION AND BENEFIT PLANS
In January 1994 the Board of Directors adopted the 1994 Stock Incentive Plan
(the 1994 Plan), which was approved by Amdahl's stockholders at the 1994
Annual Meeting of Stockholders. In conjunction with the 1994 Plan becoming
effective, 24,000 shares from the 1971 Stock Option Plan, 12,413,148 shares
from the 1974 Stock Option Plan and the 1982 Non-Qualified Stock Option Plan,
and 251,782 shares from the Restricted Stock Plan were canceled and all
outstanding options and rights under these plans were incorporated into the
1994 Plan. Under the 1994 Plan, 14,088,930 shares were initially reserved for
issuance, which included an increase of 1,400,000 shares over the shares
already reserved for issuance under the plans that were canceled. In
accordance with the provisions of the 1994 Plan, on January 1, 1995 the
shares reserved for issuance under the 1994 Plan were increased by 592,731
shares.
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 30, 1994, options for 3,262,413 shares were
exercisable at prices ranging from $4.72 to $18.88.
Activity in the Company's option plans excluding restricted stock is
summarized as follows:
<TABLE>
<CAPTION>
Shares Option Prices
-------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at
December 27, 1991 6,154,485 $ .38 - $ 20.75
Granted 5,636,840 7.00 - 17.50
Exercised (511,393) .38 - 15.50
Expired or canceled (4,705,662) .38 - 20.75
-------------------------------------------------------------------------
Options outstanding at
December 25, 1992 6,574,270 .38 - 20.75
Granted 9,681,672 4.72 - 8.19
Exercised (39,231) .38 - 7.03
Expired or canceled (5,480,498) .38 - 20.75
-------------------------------------------------------------------------
Options outstanding at
December 31, 1993 10,736,213 4.72 - 18.88
Granted 391,477 5.50 - 10.06
Exercised (935,302) 4.72 - 8.19
Expired or canceled (1,196,626) 4.72 - 16.56
-------------------------------------------------------------------------
Options outstanding at
December 30, 1994 8,995,762 $ 4.72 - $ 18.88
=========================================================================
</TABLE>
As of December 30, 1994, the Company had 275,640 shares of restricted common
stock outstanding with certain officers and key employees under the 1994
Stock Incentive Plan. These shares carry certain restrictions on
transferability, which will lapse over periods as determined by the Board of
Directors at the time of award. 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.
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.
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 operations was
$9,025,000 in 1994 and $3,705,000 in 1993. In 1992 the cost of these plans
was immaterial.
NOTE 11 INCOME TAXES
Income (loss) before taxes and the provision for (benefit from) income taxes,
as calculated for 1994 and 1993 under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (FAS 109), and as calculated
for 1992 under Accounting Principles Bulletin No. 11, were comprised of the
following:
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Income (loss) before taxes:
Domestic $ 65,941 $ (488,628) $ 27,476
Foreign 14,313 (225,114) (41,451)
--------------------------------------------------------------------------
$ 80,254 $ (713,742) $ (13,975)
==========================================================================
Provision for (benefit from) income taxes:
Federal --
Current $ 20,531 $ (47,378) $ 40,650
Deferred, net (4,895) 6,578 (20,529)
--------------------------------------------------------------------------
15,636 (40,800) 20,121
--------------------------------------------------------------------------
State --
Current (7,284) (4,253) 1,524
Deferred, net 8,484 5,466 2,839
--------------------------------------------------------------------------
1,200 1,213 4,363
--------------------------------------------------------------------------
Foreign --
Current (744) (5,090) (3,571)
Deferred, net (10,642) (80,323) (27,913)
--------------------------------------------------------------------------
(11,386) (85,413) (31,484)
--------------------------------------------------------------------------
Net tax provision (benefit) $ 5,450 $ (125,000) $ (7,000)
==========================================================================
</TABLE>
The effective income tax provision (benefit) differed from the statutory
federal provision due to the following:
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Statutory federal tax provision (benefit) $ 28,089 $ (249,810) $ (4,752)
State tax provisions, net of federal
tax benefit 780 780 2,880
(Utilized) unutilized deductible
temporary differences (34,992) 120,558 7,081
Foreign subsidiaries' earnings taxed at
rates in excess of (less than) the
statutory federal rate 8,750 94 (11,531)
Research and development credits -- -- (1,221)
Other 2,823 3,378 543
-------------------------------------------------------------------------------------
Net tax provision (benefit) $ 5,450 $ (125,000) $ (7,000)
=====================================================================================
Net effective tax rate 7% 18% 50%
-------------------------------------------------------------------------------------
</TABLE>
Net income tax refunds of $12,340,000 and $16,000,000 were received by the
Company in 1994 and 1993, respectively, and net income taxes of $12,077,000
were paid by the Company in 1992.
The components of the net deferred tax liability at December 30, 1994 and
December 31, 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
-----------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Deferred tax liabilities:
Taxes on foreign income $ (39,926) $ (46,094)
Depreciation (31,059) (42,273)
Other (9,524) (16,861)
-----------------------------------------------------------------------------
Total deferred tax liabilities (80,509) (105,228)
-----------------------------------------------------------------------------
Deferred tax assets:
Reserves 126,682 165,578
Revenue timing -- 18,656
Net operating loss and credit carryforwards 50,074 50,672
-----------------------------------------------------------------------------
176,756 234,906
Valuation allowance (111,853) (152,337)
-----------------------------------------------------------------------------
Total deferred tax assets 64,903 82,569
-----------------------------------------------------------------------------
Net deferred tax liability $ (15,606) $ (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 at December 30, 1994 and December 31, 1993 provided
reserves against 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 has continued to provide a
valuation allowance for them.
In the first quarter of 1993 the Company adopted FAS 109. 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 were not
restated. The cumulative effect of this change in accounting increased net
income in 1993 by $8,746,000, or $0.08 per share.
For years prior to 1993, deferred taxes as accounted for under Accounting
Principles Bulletin No. 11 resulted from differences in the timing of revenue
and expense recognition for tax return and financial statement purposes. The
tax effects of these timing differences for 1992 were as follows:
<TABLE>
<CAPTION>
1992
--------------------------------------------------------------------------
(In thousands)
<S> <C>
Taxes on foreign income currently payable $ (24,452)
Accelerated depreciation 8,882
Reserves not currently deductible for tax purposes (49,663)
Revenue timing 16,800
Other items 2,830
--------------------------------------------------------------------------
Net deferred tax benefit $ (45,603)
==========================================================================
</TABLE>
Cumulative undistributed earnings of foreign subsidiaries for which no United
States income or foreign withholding taxes have been recorded, because such
earnings are expected to be reinvested indefinitely, amounted to $105,200,000
at December 30, 1994. The Company provides in full for United States income
taxes on the earnings of foreign subsidiaries not considered indefinitely
invested outside the United States.
At December 30, 1994 the Company had foreign net operating loss carryforwards
of $18,700,000 which will expire at various dates from 1998 through 2001 and
$40,800,000 which can be carried forward indefinitely.
In 1994 the Company agreed to certain adjustments proposed by the Internal
Revenue Service (IRS) related to the Company's 1983 through 1986 tax years,
which resulted in net operating loss and credit carryforwards previously
utilized in 1987 to be reordered to the 1983 through 1986 tax years. In the
third quarter of 1994 the Company paid $32,000,000, including interest, to
cover the deficiency created by the audit adjustments.
In the fourth quarter of 1994 the IRS issued a notice of deficiency to the
Company for disputed items related to the 1983 through 1986 tax years, the
most significant of which related to the treatment of system spares. The
proposed tax deficiency totals approximately $40,200,000 and would carry
interest through December 30, 1994 of approximately $68,000,000. If paid, the
tax and interest would give rise to a deferred tax asset of approximately
$46,000,000, subject to the recognition criteria of FAS 109. State income
taxes payable as a result of the proposed tax deficiency would be
approximately $15,000,000, net of federal income tax benefit.
Management believes the Company possesses strong factual support for its
treatment of system spares and will vigorously defend its position.
Subsequent to December 30, 1994 the Company filed a petition in the United
States Tax Court contesting the proposed deficiency. In the opinion of
management, the final resolution of the proposed deficiency will not have a
material adverse impact on the Company's financial position or results of
operations. The IRS field audit of the Company's 1987 through 1990 tax years
is in progress.
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 $31,347,000 and $25,652,000 with accumulated
amortization of $22,098,000 and $15,487,000 were included in the land and
buildings classification on the balance sheets at December 30, 1994 and
December 31, 1993, 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 30, 1994 were as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
-------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
1995 $ 3,143 $ 32,933
1996 3,144 26,083
1997 3,144 21,974
1998 3,113 16,077
1999 2,395 14,164
After 1999 22,329 46,046
-------------------------------------------------------------------------------
Total minimum lease commitments 37,268 $ 157,277
===========
Less imputed interest (9.25% to 13.74%) (16,854)
------------------------------------------------------------
Present value of minimum lease
commitments (Note 6) $ 20,414
============================================================
</TABLE>
Minimum obligations have not been reduced by minimum rentals of $2,357,000
and $19,703,000 receivable in the future under noncancelable subleases of
capital leases and operating leases, respectively, as of December 30, 1994.
Rental expense charged to income was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Minimum rent $ 38,768 $ 47,376 $ 50,583
Less sublease rent (4,073) (2,423) (2,453)
-------------------------------------------------------------------------------
Total $ 34,695 $ 44,953 $ 48,130
===============================================================================
</TABLE>
NOTE 13 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 and Year 1994
Revenues $ 378,791 $ 396,909 $ 364,210 $ 498,703 $ 1,638,613
Gross margin $ 129,069 $ 140,514 $ 138,145 $ 187,321 $ 595,049
Income before taxes $ 7,110 $ 13,166 $ 15,493 $ 44,485 $ 80,254
Net income $ 7,110 $ 12,516 $ 14,293 $ 40,885 $ 74,804
Net income per common share $ .06 $ .11 $ .12 $ .34 $ .63
Fiscal Quarter and Year 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)
</TABLE>
COMMON STOCK DIVIDENDS AND PRICE RANGE (UNAUDITED)
Dividends
In the third quarter of 1993 the Company suspended the quarterly cash
dividend on its common stock. Dividends declared per share for the most
recent five years were $.05 in 1993, and $.10 in 1990, 1991 and 1992. No
dividends were declared or paid in 1994. 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>
1994 High Low
------------------------------------------
<S> <C> <C>
First Quarter $ 7 3/8 $ 5 1/2
Second Quarter $ 7 7/8 $ 5 3/8
Third Quarter $ 10 1/4 $ 5 1/4
Fourth Quarter $ 11 1/8 $ 8
1993 High Low
------------------------------------------
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
</TABLE>
On December 30, 1994 there were approximately 26,000 holders of record of
Amdahl common stock.
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 30, 1994
and December 31, 1993, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 30, 1994. 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 30, 1994 and December 31, 1993, and the results
of their operations and their cash flows for each of the three years in the
period ended December 30, 1994 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.
San Jose, California ARTHUR ANDERSEN LLP
January 23, 1995
Exhibit 21
Office of the Corporate Secretary
Amdahl Corporation December 1994
AMDAHL CORPORATION SUBSIDIARIES
JURISDICTION SUBSIDIARY
------------ ----------
Australia Amdahl Australia Pty. Ltd.
Australia Amdahl Imports Pty. Ltd.
Australia Amdahl Pacific Services Pty. Ltd.
Australia Amdahl Superannuation (Australia) Pty.
Ltd.
Austria Amdahl Computersysteme Gesellschaft
m.b.H.
Belgium Amdahl Belgium S.A./N.V.
Bermuda Amdahl Ireland Limited
Bermuda Amdahl Middle East Operations, Limited
California Amdahl Asia, Inc.
California Amdahl Capital Corporation
California Amdahl Finance Corporation
California Amdahl International Corporation
California Amdahl International Sales Corporation
California Amdahl International Services
Corporation
California Amdahl Investment Corporation
California Amdahl North Atlantic, Inc.
California Amdahl Pacific Basin Operations, Inc.
California Amsub Inc.
California Amtemp, Inc.
Canada Amdahl Canada Limited
Canada Antares Alliance Group Canada Limited
Delaware Amdahl Federal Service Corporation
Delaware Antares Alliance Group
Denmark Amdahl Danmark Computer Systems A/S
France Amdahl France S.A.
Germany Amdahl Deutschland GmbH
Hong Kong Amdahl (China) Limited
Ireland Amdahl Ireland Limited
Italy Amdahl Italia S.p.A.
Netherlands Amdahl Europe 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
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. 33-55460 and 33-
54171 on Form S-8.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Jose, California
March 23, 1995
Exhibit 24
AMDAHL CORPORATION
POWER OF ATTORNEY
The undersigned directors of Amdahl Corporation, a Delaware
corporation, do hereby appoint Bruce J. Ryan, Corporate 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 26, 1995.
/s/ Keizo Fukagawa
------------------------
KEIZO FUKAGAWA
/s/ E.F. Heizer, Jr.
------------------------
E.F. HEIZER, JR.
/s/ Kazuto Kojima
------------------------
KAZUTO KOJIMA
/s/ R. Stanley Laing
------------------------
R. STANLEY LAING
/s/ John C. Lewis
------------------------
JOHN C. LEWIS
/s/ Burton G. Malkiel
------------------------
BURTON G. MALKIEL
/s/ George R. Packard
------------------------
GEORGE R. PACKARD
/s/ Walter B. Reinhold
------------------------
WALTER B. REINHOLD
/s/ Takamitsu Tsuchimoto
------------------------
TAKAMITSU TSUCHIMOTO
/s/ J. Sidney Webb
------------------------
J. SIDNEY WEBB
/s/ E. Joseph Zemke
------------------------
E. JOSEPH ZEMKE
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-30-1994
<PERIOD-END> DEC-30-1994
<CASH> 358,006
<SECURITIES> 340,600
<RECEIVABLES> 315,123
<ALLOWANCES> 5,196
<INVENTORY> 283,081
<CURRENT-ASSETS> 1,346,488
<PP&E> 1,119,104
<DEPRECIATION> 781,465
<TOTAL-ASSETS> 1,719,035
<CURRENT-LIABILITIES> 661,339
<BONDS> 80,000
<COMMON> 5,832
0
0
<OTHER-SE> 870,423
<TOTAL-LIABILITY-AND-EQUITY> 1,719,035
<SALES> 1,050,236
<TOTAL-REVENUES> 1,638,613
<CGS> 716,144
<TOTAL-COSTS> 1,043,564
<OTHER-EXPENSES> 531,158
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,942
<INCOME-PRETAX> 80,254
<INCOME-TAX> 5,450
<INCOME-CONTINUING> 74,804
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74,804
<EPS-PRIMARY> 0
<EPS-DILUTED> .63
</TABLE>
