<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from_______________ to ________________
Commission File No. 1-7819
Analog Devices, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2348234
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Technology Way, Norwood, MA 02062-9106
(Address of principal executive offices) (Zip Code)
(781) 329-4700
(Registrant's telephone number, including area code)
----------------------
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 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
The number of shares outstanding of each of the issuer's classes of Common
Stock as of February 26, 1999 was 161,344,938 shares of Common Stock.
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(thousands except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
JANUARY 30, 1999 JANUARY 31, 1998*
---------------- -----------------
<S> <C> <C>
Net sales $300,500 $317,791
Cost of sales 162,805 154,332
-------- --------
Gross margin 137,695 163,459
Operating expenses:
Research and development 52,584 54,975
Selling, marketing, general and
administrative 46,181 55,646
-------- --------
Operating income 38,930 52,838
Equity in loss of WaferTech 1,149 1,590
Interest and other expense, net 420 (767)
-------- --------
Income before income taxes 37,361 52,015
Provision for income taxes 7,467 11,756
-------- --------
Income before cumulative effect of change in
accounting principle 29,894 40,259
Cumulative effect of change in
accounting principle -- (37,080)
-------- --------
Net income $ 29,894 $ 3,179
======== ========
</TABLE>
* Restated to reflect change in accounting principle.
2
<PAGE> 3
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Continued)
(Unaudited)
(thousands except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
JANUARY 30, 1999 JANUARY 31, 1998*
---------------- -----------------
<S> <C> <C>
Shares used to compute earnings per share - basic 159,572 161,023
======== ========
Shares used to compute earnings per share - diluted 176,857 178,146
======== ========
Earnings per share before cumulative effect of
change in accounting principle
Earnings per share - basic $ 0.19 $ 0.26
======== ========
Earnings per share - diluted $ 0.18 $ 0.24
======== ========
Earnings per share after cumulative effect of
change in accounting principle
Earnings per share - basic $ 0.19 $ 0.03
======== ========
Earnings per share - diluted $ 0.18 $ 0.03
======== ========
</TABLE>
* Restated to reflect change in accounting principle.
See accompanying notes.
3
<PAGE> 4
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(thousands)
<TABLE>
<CAPTION>
Assets JANUARY 30, 1999 OCTOBER 31, 1998 JANUARY 31, 1998*
---------------- ---------------- -----------------
<S> <C> <C> <C>
Cash and cash equivalents $ 332,403 $ 263,331 $ 217,198
Short-term investments 129,670 41,575 76,546
Accounts receivable, net 213,727 207,361 261,272
Inventories:
Finished goods 96,475 107,313 83,776
Work in process 148,897 142,139 128,587
Raw materials 24,964 25,624 29,145
---------- ---------- ----------
270,336 275,076 241,508
Deferred tax assets 98,000 98,148 82,133
Prepaid expenses 14,638 18,038 19,585
---------- ---------- ----------
Total current assets 1,058,774 903,529 898,242
---------- ---------- ----------
Property, plant and equipment, at cost:
Land and buildings 159,617 158,792 158,346
Machinery and equipment 1,043,087 1,034,619 979,570
Office equipment 71,033 70,576 59,910
Leasehold improvements 103,989 103,482 92,617
---------- ---------- ----------
1,377,726 1,367,469 1,290,443
Less accumulated depreciation
and amortization 696,475 664,038 595,922
---------- ---------- ----------
Net property, plant and
equipment 681,251 703,431 694,521
---------- ---------- ----------
Investments 88,511 187,224 188,690
Intangible assets, net 15,115 15,815 17,925
Other assets 50,902 51,731 58,415
---------- ---------- ----------
Total other assets 154,528 254,770 265,030
---------- ---------- ----------
$1,894,553 $1,861,730 $1,857,793
========== ========== ==========
</TABLE>
* Restated to reflect change in accounting principle.
See accompanying notes.
4
<PAGE> 5
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(thousands except share amounts)
<TABLE>
<CAPTION>
Liabilities and Stockholders'
Equity JANUARY 30, 1999 OCTOBER 31, 1998 JANUARY 31, 1998*
---------------- ---------------- -----------------
<S> <C> <C> <C>
Short-term borrowings and current
portion of long-term debt $ 2,333 $ 193 $ 1,489
Obligations under capital leases 14,386 14,266 11,844
Accounts payable 58,000 59,115 95,447
Deferred income on shipments to
domestic distributors 101,797 113,784 122,996
Income taxes payable 57,373 53,595 60,525
Accrued liabilities 79,369 79,906 70,648
---------- ---------- ----------
Total current liabilities 313,258 320,859 362,949
---------- ---------- ----------
Long-term debt 309,871 309,985 310,000
Noncurrent obligations under
capital leases 27,150 30,773 35,871
Deferred income taxes 33,000 31,789 24,000
Other noncurrent liabilities 45,119 39,935 32,327
---------- ---------- ----------
Total noncurrent liabilities 415,140 412,482 402,198
---------- ---------- ----------
Commitments and Contingencies
Stockholders' equity:
Preferred stock, $1.00 par value,
500,000 shares authorized,
none outstanding -- -- --
Common stock, $.16 2/3 par value,
600,000,000 shares authorized,
164,684,927 shares issued
(164,092,719 in October 1998,
162,317,316 in January 1998) 27,448 27,349 27,053
Capital in excess of par value 254,788 248,970 224,800
Retained earnings 944,265 913,992 834,763
Cumulative translation adjustment 7,397 6,025 6,185
---------- ---------- ----------
1,233,898 1,196,336 1,092,801
Less 3,763,903 shares in treasury,
at cost (3,782,763 in October 1998
and 19,934 in January 1998) 67,743 67,947 155
---------- ---------- ----------
Total stockholders' equity 1,166,155 1,128,389 1,092,646
---------- ---------- ----------
$1,894,553 $1,861,730 $1,857,793
========== ========== ==========
</TABLE>
* Restated to reflect change in accounting principle.
See accompanying notes.
5
<PAGE> 6
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
JANUARY 30, 1999 JANUARY 31, 1998*
---------------- -----------------
<S> <C> <C>
OPERATIONS Cash flows from operations:
Net income $ 29,894 $ 3,179
Adjustments to reconcile net income
to net cash provided by operations:
Cumulative effect of change in accounting
principle, net of $20 million of income taxes -- 37,080
Depreciation and amortization 35,156 29,744
Equity in loss of WaferTech, net of dividends 1,149 1,590
Deferred income taxes 1,214 3,274
Other noncash expense 1,165 586
Changes in operating assets and liabilities (10,221) (1,282)
--------- ---------
Total adjustments 28,463 70,992
--------- ---------
Net cash provided by operations 58,357 74,171
--------- ---------
INVESTMENTS Cash flows from investments:
Purchase of short-term investments
available for sale (110,659) (43,364)
Long-term investments 105,601 (58,110)
Maturities of short-term investments
available for sale 22,564 17,824
Additions to property, plant and equipment, net (12,293) (62,200)
(Increase) decrease in other assets 2,403 (2,532)
--------- ---------
Net cash provided by (used for) investments 7,616 (148,382)
--------- ---------
FINANCING ACTIVITIES Cash flows from financing activities:
Proceeds from employee stock plans 4,820 1,283
Payments on capital lease obligations (3,503) (2,870)
Net increase in variable rate borrowings 2,030 1,489
--------- ---------
Net cash provided by (used for)
financing activities 3,347 (98)
--------- ---------
Effect of exchange rate changes on cash (248) 1,906
--------- ---------
Net increase (decrease) in cash and cash equivalents 69,072 (72,403)
Cash and cash equivalents at beginning of period 263,331 289,601
--------- ---------
Cash and cash equivalents at end of period $ 332,403 $ 217,198
========= =========
SUPPLEMENTAL INFORMATION Cash paid during the period for:
Income taxes $ 2,061 $ 2,232
========= =========
Interest $ 4,469 $ 4,559
========= =========
</TABLE>
* Restated to reflect change in accounting principle.
See accompanying notes.
6
<PAGE> 7
Analog Devices, Inc.
Notes to Condensed Consolidated Financial Statements
January 30, 1999
Note 1 - In the opinion of management, the information furnished in the
accompanying financial statements reflects all adjustments which are necessary
to fairly state the results for this interim period and should be read in
conjunction with the Company's Annual Report to Stockholders on Form 10-K for
the fiscal year ended October 31, 1998, (1998 Annual Report).
Note 2 - Certain amounts reported in the previous year have been reclassified to
conform to the 1999 presentation.
Note 3 - Investments
During the first quarter of fiscal 1999 Analog Devices Inc., (the Company),
completed the sale of 14% of its 18% equity ownership in WaferTech, its joint
venture with Taiwan Semiconductor Manufacturing Company and other investors. The
Company sold 14% of its investment to other WaferTech partners and received $105
million in cash, which was equal to the carrying value of the 14% equity
ownership at October 31, 1998.
Note 4 - Comprehensive Income
In the first quarter of fiscal 1999 the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income", (FAS 130). FAS
130 establishes new rules for the reporting and display of comprehensive income
and its components. Components of comprehensive income include net income and
certain transactions that have generally been reported in the consolidated
statement of shareholders' equity. FAS 130 requires that these transactions be
included with net income and presented separately as comprehensive income in the
financial statements. The adoption of this Statement had no impact on the
Company's net income or shareholders' equity and, during the periods presented,
the Company had no material transactions other than net income that should be
reported as comprehensive income.
Note 5 - Earnings Per Share
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share," in the first quarter of fiscal 1998. Basic earnings per
share is computed based only on the weighted average number of common shares
outstanding during the period. Diluted earnings per share is computed using the
weighted average number of common shares outstanding during the period, plus the
dilutive effect of future issues of common stock relating to stock option
programs and convertible debt financing. In calculating diluted earnings per
share, the dilutive effect of stock options is computed using the average market
price for the period. The following table sets forth the computation of basic
and diluted earnings per share:
7
<PAGE> 8
Note 5 - Earnings Per Share (continued)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
JANUARY 30, 1999 JANUARY 31, 1998*
---------------- ----------------
<S> <C> <C>
Basic:
Income before cumulative effect of change in
accounting principle $ 29,894 $ 40,259
Cumulative effect of change in accounting principle -- (37,080)
--------- ---------
Net income $ 29,894 $ 3,179
========= =========
Weighted shares outstanding 159,572 161,023
========= =========
Earnings per share:
Income before cumulative effect of change in
accounting principle $ 0.19 $ 0.26
Cumulative effect of change in accounting principle -- (0.23)
--------- ---------
Net income $ 0.19 $ 0.03
========= =========
Diluted:
Income before cumulative effect of change in
accounting principle $ 29,894 $ 40,259
Interest related to convertible subordinated
notes, net of tax 1,425 1,411
--------- ---------
Income before cumulative effect of change in
accounting principle including the effect
of dilutive securities 31,319 41,670
Cumulative effect of change in accounting principle -- (37,080)
--------- ---------
Net income $ 31,319 $ 4,590
========= =========
Weighted shares outstanding 159,572 161,023
Assumed exercise of common stock equivalents 6,307 6,138
Assumed conversion of subordinated notes 10,978 10,985
--------- ---------
Weighted average common and common equivalent shares 176,857 178,146
========= =========
Earnings per share:
Income before cumulative effect of change in
accounting principle $ 0.18 $ 0.24
Cumulative effect of change in accounting principle -- (0.21)
--------- ---------
Net income $ 0.18 $ 0.03
========= =========
</TABLE>
* Restated to reflect change in accounting principle.
Note 6 - Convertible Debt
On February 9, 1999 the Company announced that on March 11, 1999 it will redeem
in full its 3 1/2% Convertible Subordinated Notes due 2000 (Notes) in the
outstanding aggregate principal amount of $230 million. Prior to redemption,
holders may convert their Notes into shares of Analog Devices Inc. (ADI) common
stock, at a price of $20.938 per share. Cash will be paid in lieu of fractional
shares. Alternatively, holders may have their Notes redeemed at a total
redemption price of $1,023.72 per $1000 principal amount of Notes. As of March
11, 1999, $229,967,000 of the Notes were converted into an aggregate of
10,983,163 shares of the Company's common stock.
8
<PAGE> 9
Note 7 - Acquisitions
Subsequent to the quarter ended January 30, 1999, the Company acquired two DSP
tools companies, White Mountain DSP, Inc. of New Hampshire and Edinburgh
Portable Compilers Limited, of Scotland. The total cost of these acquisitions
was approximately $21 million in cash and $2 million in common stock of the
Company, with additional contingent cash consideration to be paid if the
acquired companies achieve certain revenue and operational objectives. In
connection with these acquisitions, the Company expects to record a charge of
less than $5 million, in the second quarter of fiscal 1999, for the write-off of
in-process Research & Development.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information should be read in conjunction with the unaudited consolidated
condensed financial statements and the notes thereto included in Item 1 of this
Quarterly Report and the audited consolidated financial statements and notes
thereto and Management's Analysis for the fiscal year ended October 31, 1998,
contained in the Company's 1998 Annual Report.
The following discussion and analysis may contain forward-looking statements.
Such statements are subject to certain risks and uncertainties, including those
discussed below or in the Company's 1998 Annual Report, that could cause actual
results to differ materially from the Company's expectations. Readers are
cautioned not to place undue reliance on any forward-looking statements, as they
reflect management's analysis only as of the date hereof. The Company undertakes
no obligation to release the results of any revision to these forward-looking
statements which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Results of Operations
The Company experienced strong demand in the first half of fiscal 1998, which
declined in the second half of the year primarily due to a cyclical downturn in
the semiconductor industry. Demand during the first quarter of fiscal 1999
recovered somewhat from sales levels that were very depressed in the second half
of fiscal 1998. As a result, net sales for the first quarter of fiscal 1999 were
$301 million, 1% above the fourth quarter of fiscal 1998 but $17 million or 5%
below the first quarter of fiscal 1998. This decline from the prior year was
mainly due to a decrease in analog IC sales, primarily caused by a decline in
sales to automatic test equipment (ATE) customers. These decreases were
partially offset by increased sales of communications and computer products.
The decline in ATE sales primarily impacted the North American OEM channel,
causing sales to North American customers to decrease to 46.9% of total sales
for the first quarter of fiscal 1999, compared to 50.7% for the year earlier
period. Sales in Europe and Japan declined in comparison to the first quarter of
fiscal 1998 and Southeast Asian sales rose as a result of increased sales of
analog IC and communications products.
Gross margin for the first quarter of fiscal 1999 was 45.8% compared to 51.4%
for the first quarter of fiscal 1998. The decrease in gross margin from the
prior year period was primarily due to a reduction in production rates resulting
from lower demand. The Company expects that gross margin will continue to be
adversely impacted by lower production rates until sales growth resumes.
Research and development (R&D) expenses were $53 million for the three months
ended January 30, 1999, compared to $55 million for the three months ended
January 31, 1998. This decline was attributable to the Company's decision to
curtail the growth in R&D spending until sales growth resumes. However, the
Company believes that a continued commitment to research and development is
essential in order to maintain product leadership in its existing products and
to provide innovative new product offerings, and therefore expects to continue
to make significant investments in research and development in the future.
Selling, marketing, general & administrative (SMG&A) expenses were $46 million
in the first quarter of fiscal 1999, compared to $56 million for the first
quarter of fiscal 1998. Of the $10 million decrease, $8 million was attributable
to a charge that was recorded in the first quarter of fiscal 1998 related to
collection difficulties the Company experienced with customers whose business
and financing had been adversely affected by the Southeast Asia economic
situation. The remainder of the decrease resulted from the Company's continued
effort to constrain spending.
10
<PAGE> 11
The effective income tax rate decreased from 22.6% for the first three-month
period of fiscal 1998 to 20% for the first three-month period of fiscal 1999
primarily due to a shift in the mix of worldwide profits.
In the fourth quarter of fiscal 1998, the Company changed its accounting method
for recognizing revenue on all shipments to international distributors and
certain shipments to domestic distributors. The change was made with an
effective date of November 2, 1997 (the beginning of fiscal 1998). While the
Company has historically deferred revenue on most shipments made to domestic
distributors until the products were resold by the distributors to end users, it
recognized revenue on shipments to international distributors and certain
shipments to domestic distributors upon shipment to the distributors, net of
appropriate reserves for returns and allowances. As a result of this accounting
change, revenue recognition on shipments to distributors worldwide is deferred
until the products are resold to the end users. The Company believes that
deferral of revenue on shipments to distributors and related gross margin until
the product is shipped by the distributors is a more meaningful measurement of
results of operations because it better conforms to the substance of the
transaction considering the changing business environment in the international
marketplace; is consistent with industry practice; and will, accordingly, better
focus the entire organization on sales to end users and, therefore, is a
preferable method of accounting. The cumulative effect in prior years of the
change in accounting principle was a charge of approximately $37 million (net of
$20 million of income taxes) or $0.21 per diluted share. The results of
operations and cash flows for the period ended January 31, 1998 have been
restated to reflect the accounting change.
Liquidity and Capital Resources
At January 30, 1999, cash, cash equivalents and short-term investments totaled
$462 million, an increase of $157 million from the fourth quarter of fiscal 1998
and an increase of $168 million from the first quarter of fiscal 1998. The
increase in cash, cash equivalents and short-term investments was primarily due
to operating cash inflows, $105 million received in January 1999 related to the
sale of the Company's investment in WaferTech and lower capital spending. Cash
provided by operating activities was $58 million or 19% of sales in the first
quarter of fiscal 1999 compared to $74 million or 23% of sales in the first
quarter of fiscal 1998.
Accounts receivable totaled $214 million at the end of the first quarter of
fiscal 1999, an increase of $6 million from the fourth quarter of fiscal 1998
and a decrease of $48 million from the first quarter of fiscal 1998. The
Company's days sales outstanding has improved from 75 at January 31, 1998 to 65
at January 30, 1999.
Inventories of $270 million at January 30, 1999 declined $5 million compared to
the fourth quarter of fiscal 1998 and were $29 million higher than the end of
the first quarter of fiscal 1998. The increase in inventory levels from the
prior year period was a result of production rates in the first half of fiscal
1998 that did not anticipate the downturn in the second half of fiscal 1998. The
Company has since adjusted production rates to conform to current levels of
demand.
During the first quarter of fiscal 1999 the Company completed the sale of 14% of
its 18% equity ownership in WaferTech, its joint venture with Taiwan
Semiconductor Manufacturing Company and other investors. The Company sold 14% of
its investment to other WaferTech partners and received $105 million in cash,
which was equal to the carrying value of the 14% equity ownership at October 31,
1998.
Net additions to property, plant and equipment of $12 million for the first
quarter of fiscal 1999 were funded with a combination of cash on hand and cash
generated from operations. The first quarter's level of spending was down
substantially from the $62 million spent in the first quarter of fiscal 1998.
The decrease in capital expenditures was attributable to the Company's efforts
to constrain all spending, including capital expenditures, until sales growth
resumes. The Company currently plans to make capital expenditures of
approximately $100 million during fiscal 1999.
11
<PAGE> 12
At January 30, 1999, the Company's principal sources of liquidity were $462
million of cash and cash equivalents and short-term investments. In addition,
the Company has various lines of credit both in the U.S. and overseas, including
a $60 million credit facility in the U.S., which expires in 2000, all of which
were substantially unused at January 30, 1999. At January 30, 1999, the
Company's debt-to-equity ratio was 30%.
The Company believes that its existing sources of liquidity and cash expected to
be generated from future operations, together with current and anticipated
available long-term financing, will be sufficient to fund operations, capital
expenditures and research and development efforts for the foreseeable future.
Factors Which May Affect Future Results
The Company's future operating results are difficult to predict and may be
affected by a number of factors including the timing of new product
announcements or introductions by the Company and its competitors, competitive
pricing pressures, fluctuations in manufacturing yields, adequate availability
of wafers and manufacturing capacity, changes in product mix and economic
conditions in the United States and international markets, and the outcome and
impact of the Year 2000. In addition, the semiconductor market has historically
been cyclical and subject to significant economic downturns at various times.
The Company's business is subject to rapid technological changes and there can
be no assurance, depending on the mix of future business, that products stocked
in inventory will not be rendered obsolete before they are shipped by the
Company. As a result of these and other factors, there can be no assurance that
the Company will not experience material fluctuations in future operating
results on a quarterly or annual basis.
The Company's success depends in part on its continued ability to develop and
market new products. There can be no assurance that the Company will be able to
develop and introduce new products in a timely manner or that such products, if
developed, will achieve market acceptance. In addition, the Company's growth is
dependent on its continued ability to penetrate new markets such as the
communications, computer and automotive segments of the electronics market,
where the Company has limited experience and competition is intense. There can
be no assurance that the markets being served by the Company will grow in the
future; that the Company's existing and new products will meet the requirements
of such markets; that the Company's products will achieve customer acceptance in
such markets; that competitors will not force prices to an unacceptably low
level or take market share from the Company; or that the Company can achieve or
maintain profits in these markets. Also, some of the customers in these markets
are less well established which could subject the Company to increased credit
risk.
The semiconductor industry is intensely competitive. Certain of the Company's
competitors have greater technical, marketing, manufacturing and financial
resources than the Company. The Company's competitors also include emerging
companies attempting to sell products to specialized markets such as those
served by the Company. Competitors of the Company have, in some cases, developed
and marketed products having similar design and functionality as the Company's
products. There can be no assurance that the Company will be able to compete
successfully in the future against existing or new competitors or that the
Company's operating results will not be adversely affected by increased price
competition.
The Company has substantially increased its manufacturing capacity through both
expansion of its production facilities and increased access to third-party
foundries. However, the Company cannot be sure that it will not encounter
unanticipated production problems at either its own facilities or at third-party
foundries, or that the increased capacity will be sufficient to satisfy demand
for its products. The Company relies, and plans to continue to rely, on assembly
and test subcontractors and on third-party wafer fabricators to supply most of
its wafers that can be manufactured using industry-standard digital processes,
and such reliance involves several risks, including reduced control over
delivery schedules, manufacturing yields and costs. In addition, the Company's
12
<PAGE> 13
capacity additions resulted in a significant increase in operating expenses, and
if revenue levels do not increase to offset these additional expense levels, the
Company's future operating results could be adversely affected. In addition,
asset values could be impaired if the additional capacity is underutilized for
an extended period of time. Also, non-compliance with "take or pay" covenants in
certain of its supply agreements, could adversely impact operating results. The
Company also believes that other semiconductor manufacturers have expanded their
production capacity over the past several years, and there can be no assurance
that the expansion by the Company and its competitors will not lead to
overcapacity in the Company's target markets, which could lead to price erosion
that would adversely affect the Company's operating results.
For the first three months of fiscal 1999, 53% of the Company's revenues was
derived from customers in international markets. The Company has manufacturing
facilities outside the U.S. in Ireland, the Philippines and Taiwan. The Company
also has supply agreements that include "take or pay" covenants with suppliers
located in Southeast Asia (SEA) and as part of these arrangements, the Company
has $23 million on deposit with two of these suppliers. The Company also has a
$21 million investment in one of these suppliers. In addition, the Company's
major partner in its joint venture, WaferTech, is TSMC, which is located in SEA.
In addition to being exposed to the ongoing economic cycles in the semiconductor
industry, the Company is also subject to the economic and political risks
inherent in international operations, including the risks associated with the
ongoing uncertainties in the economies in SEA. These risks include air
transportation disruptions, expropriation, currency controls and changes in
currency exchange rates, tax and tariff rates and freight rates. Although the
Company engages in certain hedging transactions to reduce its exposure to
currency exchange rate fluctuations, there can be no assurance that the
Company's competitive position will not be adversely affected by changes in the
exchange rate of the U.S. dollar against other currencies.
The semiconductor industry is characterized by frequent claims and litigation
involving patent and other intellectual property rights. The Company has from
time to time received, and may in the future receive, claims from third parties
asserting that the Company's products or processes infringe their patents or
other intellectual property rights. In the event a third party makes a valid
intellectual property claim and a license is not available on commercially
reasonable terms, the Company's operating results could be materially and
adversely affected. Litigation may be necessary to enforce patents or other
intellectual property rights of the Company or to defend the Company against
claims of infringement, and such litigation can be costly and divert the
attention of key personnel. See the Company's 1998 Annual Report for information
concerning certain pending litigation involving the Company. An adverse outcome
in such litigation, may, in certain cases, have a material adverse effect on the
Company's consolidated financial position or on its consolidated results of
operations or cash flows in the period in which the litigation is resolved.
The Company's software applications have been updated to accommodate the new
Euro currency. System testing was completed during the fourth quarter of
calendar 1998 and the Euro functionality was implemented as planned on January
1, 1999. No major system-related issues were encountered and none are
anticipated. The impact, either positive or negative, of the Euro on the
European economy generally and on the Company's operations in Europe in the
future is unknown at this time.
Because of these and other factors, past financial performance should not be
considered an indicator of future performance. Investors should not use
historical trends to anticipate future results and should be aware that the
trading price of the Company's common stock may be subject to wide fluctuations
in response to quarter-to-quarter variations in operating results, general
conditions in the semiconductor industry, changes in earnings estimates and
recommendations by analysts or other events.
13
<PAGE> 14
Year 2000
Over the past five years the Company has made significant investments in new
manufacturing, financial and operating hardware and software. These investments
were made to support the growth of its operations; however, the by-product of
this effort is that the Company now has year 2000, (Y2K), compliant hardware and
software running on many of its major platforms.
The Company has made the year 2000 issue a significant priority and a task force
is engaged in the ongoing effort to reduce the year 2000 related risk in the
balance of the Company's systems and equipment. It is estimated that the
aggregate cost of this project, which commenced at the beginning of fiscal 1998,
is approximately $10 million in total, for fiscal 1998 and fiscal 1999. The task
force's efforts are concentrated in six separate areas. The status of each area
as of January 30, 1999 is summarized below.
Centrally Managed Global Systems
Centrally managed global systems are the enterprisewide, centrally managed
operating systems, which include customer service, customer order entry,
work-in-progress (WIP) tracking, warehousing, production planning, and financial
systems. These systems have been split into "mission critical" and "non-mission
critical." Mission critical is defined as systems that can seriously impair the
Company's ability to conduct its business. Of the 15 mission critical
applications identified as of August 1, 1998, three systems were not Y2K
compliant: Promis (WIP tracking), the order entry system in Japan and the
Electronic Data Interchange (EDI) translator. Since that time Promis system
upgrades have been completed in three of the five manufacturing sites, and the
remaining two are scheduled to be upgraded in early 1999. The migration to SAP
for order entry in Japan and the upgrade of the EDI translator were successfully
completed in the first quarter of fiscal 1999. Once the remaining two Promis
systems are upgraded, all mission critical systems will be 100% compliant. In
addition, several mission critical systems, such as SAP, Forecasting, Data
Warehouse and Distributor Management systems have been specifically tested and
certified to be year 2000 compliant. The Company is on schedule towards retiring
its non-compliant mainframe in early 1999. Non-mission critical is defined as
systems which would not cause serious impairment to the organization. The task
force is continually reviewing and re-prioritizing the non-mission critical
systems to ensure that the appropriate items are receiving the proper attention.
Design and Engineering Systems
The Company's Computer Aided Design (CAD) Council is leading a worldwide year
2000 compliance review of hardware and software related to the Company's design
and engineering systems. The team has completed its analysis and the required
updates to CAD operating systems are 75% complete. All operating systems are
expected to be fully Y2K compliant by the end of the third quarter of fiscal
1999. Critical CAD application software upgrade packages have been vendor
certified Y2K compliant and migration to, and testing of, these new packages
will proceed over the next 6 to 8 months. The Company routinely completes full
archives of all designs that are currently shipping, or in development, to
enable the recovery of any design database needed for future derivative
products. This archive system is currently undergoing compliancy testing and
will be verified Y2K compliant by the third quarter of fiscal 1999. The Company
believes that if all design engineering systems are not compliant in time, this
will result in inconvenience and inefficiencies rather than any significant risk
to operations.
Site Based Manufacturing Systems
Manufacturing site managers are committed to ensuring a successful transition of
operations in the year 2000. All critical manufacturing equipment has been
identified and analyzed. The analysis process included ensuring that date
compliance is necessary. The Company is considering "rolling back" the internal
date mechanism as a contingency plan for certain equipment and the task force is
14
<PAGE> 15
in the process of testing the effectiveness of this contingency plan. All
manufacturing sites are performing Y2K compliance testing and this effort is
expected to be complete by the end of March 1999. All testing is being done to
the latest vendor specifications and the Company is using the suite of test
programs provided by Sematech, a semiconductor research organization. Thus far,
no crucial piece of equipment has been identified where there is a Y2K
compliance problem for which no solution exists. In all instances where a Y2K
compliance issue has arisen, the Company has been able to develop a solution,
without having to replace the equipment. While the review is not yet complete,
the Company does not foresee any manufacturing equipment-related obstacles which
would prevent the continuation of operations in Year 2000.
Personal Computers (PCs)
The Company has a PC Standards Committee, comprised of participants from various
Company locations. This committee has selected a tool and developed a hardware
and software certification plan. This plan requires certification of PC Basic
Input/Output System (BIOS), software applications and user files. The Company
has certified the BIOS on its 3,500 networked PCs first quarter of 1999 and less
than 2% were found to be non-Y2K compliant. The Company will also issue a tool
to assist users in analyzing their data files for potential year 2000 issues. In
addition, a year 2000 "patch" is available for the Microsoft Office Suite
(Excel, Word and Access) and this is scheduled to be implemented in April 1999.
The Company does not foresee any year 2000 issues in this area.
Facility Related Systems
Systems such as heating, sprinklers, elevators and card-key access are also
being reviewed by site teams. Each team has a designated facilitator and there
are representatives from each department participating. All of the teams have
taken a thorough inventory of their site's systems and the Company expects to be
100% compliant, with 80% of the facility systems to be compliant by the second
quarter of 1999.
Third Party
The corporate year 2000 task force is also reviewing third-party connectivity
issues. The Company's EDI translator supplier, Harbinger, has been successfully
tested for Y2K compliance. The EDI carrier, GEIS, has notified the Company that
it is compliant as well. Other external service providers, primarily financial
and human resource services, as well as outside vendors, have also been surveyed
as to their state of readiness and most expect to be Y2K compliant. The Company
has identified 200 crucial, sole-source suppliers that could put Analog at risk
and is currently conducting on site audits to verify their state of readiness
for Y2K. As a contingency plan the Company is going to ensure that adequate
supplies of critical raw materials and spare parts are in stock at December 31,
1999. In addition, the Company tested its financial interface with its
major financial services provider for Y2K compliance, and the results were
successful.
The Company currently believes that its most reasonably likely worst case year
2000 scenario would relate to problems with systems of third parties which would
create the greatest risks with infrastructure, including water and sewer
services, electricity, transportation, telecommunications and critical supplies
of raw materials and spare parts. The Company is assessing various scenarios and
contingency planning will continue during 1999 as the Company completes the
remedial work on its internal systems and assesses the state of readiness of its
third-party suppliers.
Summary
The Company believes that the year 2000 issue will not pose significant
operational problems. However, year 2000 issues could have a significant impact
on the Company's operations and its financial results if modifications to
internal systems and equipment cannot be completed on a timely basis; unforeseen
needs or problems arise; or if the systems operated by third parties are not
year 2000 compliant.
15
<PAGE> 16
PART II - OTHER INFORMATION
ANALOG DEVICES, INC.
Item 6. Exhibits and reports on Form 8-K
(a) See Exhibit Index.
(b) There were no reports on Form 8-K filed for the three months ended
January 30, 1999.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Analog Devices, Inc.
--------------------
(Registrant)
Date: March 15, 1999 By: /s/ Jerald G. Fishman
-----------------------
Jerald G. Fishman
President and
Chief Executive Officer
(Principal Executive Officer)
Date: March 15, 1999 By: /s/ Joseph E. McDonough
-----------------------
Joseph E. McDonough
Vice President-Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
17
<PAGE> 18
EXHIBIT INDEX
Analog Devices, Inc.
Item
3.1 Restated Articles of Organization of Analog Devices, Inc., filed
herewith.
10.1 Assignment and Assumption Agreement between Analog Devices Inc. and
Taiwan Semiconductor Manufacturing Co., Ltd., dated as of January 28,
1999, filed herewith.
10.2 Assignment and Assumption Agreement between Analog Devices Inc. and
Altera Corporation dated as of January 29, 1999, filed herewith.
10.3 Amendment to Second Amended and Restated Limited Liability Company
Agreement of WaferTech LLC, dated as of November 30, 1998, filed
herewith.
10.4 Second Amendment to Second Amended and Restated Limited Liability
Company Agreement of WaferTech LLC, dated as of January 21, 1999,
filed herewith.
27.1 Financial Data Schedule for the three months ended January 30, 1999.
27.2 Restated Financial Data Schedule for the three months ended January
31, 1998.
27.3 Restated Financial Data Schedule for the six months ended May 2, 1998.
27.4 Restated Financial Data Schedule for the nine months ended August 1,
1998.
18
<PAGE> 1
Exhibit 3.1
Examiner
___________
Name
Approved
C [ ]
P [ ]
M [X]
R.A. [ ]
22
- --------
P.C.
FEDERAL IDENTIFICATION
No. 04-2348234
------------------
THE COMMONWEALTH OF MASSACHUSETTS
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
We, Jerald G. Fishman *President ,
----------------------------------------------------,
and Paul P. Brountas *Clerk ,
-----------------------------------------------------,
of Analog Devices, Inc.
--------------------------------------------------------------------------,
(Exact name of corporation)
located at One Technology Way, P.O. Box 9106, Norwood, MA 02062-9106
-------------------------------------------------------------------,
(Street address of corporation Massachusetts)
do hereby certify that the following Restatement of the Articles of Organization
was duly adopted at a meeting held on June 10 19 98 by a vote of the
directors ------------, -------
______ shares of ______________________________ of _________ shares outstanding,
(type, class & series, if any)
______ shares of ______________________________ of _____ shares outstanding, and
(type, class & series, if any)
______ shares of ______________________________ of _________ shares outstanding,
(type, class & series, if any)
**being at least a majority of each type, class or series outstanding and
entitled to vote thereon: / **being at least two-thirds of each type, class or
series outstanding and entitled to vote thereon and of each type, class or
series of stock whose rights are adversely affected thereby:
ARTICLE I
The name of the corporation is:
Analog Devices, Inc.
ARTICLE II
The purpose of the corporation is to engage in the following business
activities:
See Attachment 2
*Delete the Inapplicable words. **Delete the inapplicable clause.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of
paper, with a left margin of at least 1 inch. Additions to more than one article
may be made on a single sheet so long as each article requiring each addition is
clearly indicated.
<PAGE> 2
ARTICLE III
State the total number of shares and par value, if any, of each class of stock
which the corporation is authorized to issue:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE WITH PAR VALUE
- ------------------------------------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common: Common: 600,000,000 $ .16 2/3
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Preferred: Preferred: *471,934 $1.00
- ------------------------------------------------------------------------------------------------
(Series A Junior
Participating Preferred 300,000 $1.00)
- ------------------------------------------------------------------------------------------------
</TABLE>
*The number of Preferred Shares has been adjusted to reflect the cancellation of
28,066 shares of Preferred Stock that were issued and retired.
ARTICLE IV
If more than one class of stock is authorized, state a distinguishing
designation for each class. Prior to the issuance of any shares of a class, if
shares of another class are outstanding, the corporation must provide a
description of the preferences, voting powers, qualifications, and special or
relative rights or privileges of that class and of each other class of which
shares are outstanding and of each series then established within any class.
See Attachment 4
ARTICLE V
The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are:
None
ARTICLE VI
**Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
See Attachment 6
**If there are no provisions state "None".
Note: The preceding six (6) articles are considered to be permanent and may ONLY
be changed by filing appropriate Articles of Amendment.
<PAGE> 3
ARTICLE VII
The effective date of the restated Articles of Organization of the corporation
shall be the date approved and filed by the Secretary of the Commonwealth. If a
later effective date is desired, specify such date which shall not be more than
thirty days after the date of filing.
ARTICLE VIII
The information contained in Article VIII is not a permanent part of the
Articles of Organization.
a. The street address (post office boxes are not acceptable) of the principal
office of the corporation in Massachusetts is:
One Technology Way, Norwood, MA 02062-9106
b. The name, residential address and post office address of each director and
officer of the corporation is as follows:
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS
President:
Treasurer:
Clerk: See Attachment 8
Directors:
c. The fiscal year (i.e., tax year) of the corporation shall end on the last
day of the month of: October
d. The name and business address of the resident agent, if any, of the
corporation is:
**We further certify that the foregoing Restated Articles of Organization affect
no amendments to the Articles of Organization of the corporation as heretofore
amended, except amendments to the following articles. Briefly describe
amendments below:
SIGNED UNDER THE PENALTIES OF PERJURY, this 29 day of June , 1998
----- ------------- ----
/s/ Jerald G. Fishman *President
- ------------------------------------------------------,
/s/ Paul P. Brountas *Clerk
- ---------------------------------------------------------,
*Delete the inapplicable words. **If there are no amendments, state 'None'.
<PAGE> 4
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
===============================================
I hereby approve the within Restated Articles of Organization and, the filing
fee in the amount of $200 having been paid, said articles are deemed to have
been filed with me this 1st day of July, 1998.
Effective Date: _______________________________________________
/s/ WILLIAM FRANCIS GALVIN
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
Donna A. Pace
_______________________________________________
Corporate Paralegal
Hale and Dorr LLP
_______________________________________________
60 State Street
Boston, MA 02109
_______________________________________________
Telephone: (617) 526-5179
_____________________________________
<PAGE> 5
ATTACHMENT 4
4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting powers,
qualifications, special or relative rights or privileges as to each class
thereof and any series now established:
RIGHTS, PREFERENCES, LIMITATIONS AND RESTRICTIONS ON CAPITAL STOCK.
The following is a statement of the designations and the powers,
preferences and rights and the qualifications, limitations or restrictions
thereof, in respect of the authorized capital stock of the corporation.
A. ISSUANCE IN SERIES.
The Preferred Stock may be issued in one or more series at such time or
times and for such consideration or considerations as the Board of Directors may
determine. Each series shall be so designated as to distinguish the shares
thereof from the shares of all other series and classes. Except as to the
relative rights and preferences referred to in paragraph B below, in respect of
any or all of which there may be variations between different series, all shares
of Preferred Stock shall be identical. Different series of Preferred Stock shall
not be construed to constitute different classes of shares for the purpose of
voting by classes.
B. I. AUTHORITY TO ESTABLISH VARIATIONS BETWEEN SERIES.
The Board of Directors is expressly authorized, subject to the limitations
prescribed by law and the provisions of these Articles of Organization, to
provide by adopting a vote or votes, a certificate of which shall be filed in
accordance with the Business Corporation Law of the Commonwealth of
Massachusetts, for the issue of the Preferred Stock in one or more series, each
with such designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof as
shall be stated in the vote or votes creating such series. The authority of the
Board of Directors with respect to each such series shall include without
limitation of the foregoing the right to determine and fix:
(1) The distinctive designation of such series and the number of shares to
constitute such series;
(2) The rate at which dividends on the shares of such series shall be
declared and paid, or set aside for payment, whether dividends at the rate so
determined shall be cumulative, and whether the shares of such series shall be
entitled to any participating or other dividends in addition to dividends at the
rate so determined, and if so on what terms;
<PAGE> 6
(3) The right, if any, of the corporation to redeem shares of the
particular series and, if redeemable, the price, terms and manner of such
redemption;
(4) The special and relative rights and preferences, if any, and the amount
or amounts per share, which the shares of such series shall be entitled to
receive upon any voluntary or involuntary liquidation, dissolution or winding up
of the corporation;
(5) The terms and conditions, if any, upon which shares of such series
shall be convertible into, or exchangeable for, shares of stock of any other
class or classes, including the price or prices or the rate or rates of
conversion or exchange and the terms of adjustment, if any;
(6) The obligation, if any, of the corporation to retire or purchase shares
of such series pursuant to a sinking fund or fund of a similar nature or
otherwise, and the terms and conditions of such obligation;
(7) Voting rights, if any, provided that the shares of all series with
voting rights shall not have more than one vote per share;
(8) Limitations, if any, on the issuance of additional shares of such
series or any shares of any other series of Preferred Stock; and
(9) Such other preferences or restrictions or qualifications thereof as the
Board of Directors may deem advisable and are note inconsistent with law and the
provisions of these Articles.
II. SERIES A JUNIOR PARTICIPATING PREFERRED STOCK.
Pursuant to the authority vested in the Board of Directors of the
Corporation by Article 4 of these Articles, the Board of Directors has
designated a series of Preferred Stock, $1.00 par value per shares (the
"Preferred Stock"), of the Corporation and hereby states the designation, and
number of shares, and fixes the relative rights, preferences and limitations
thereof as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be three hundred thousand (300,000). Such number of shares may be
increased or decreased by resolution of the Board of Directors prior to
issuance; PROVIDED, that no decrease shall reduce the number of shares of Series
A Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Preferred Stock.
-2-
<PAGE> 7
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
A Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common Stock, par value
$.16 2/3 per share (the "Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds of the Corporation legally available for the
payment of dividends, quarterly dividends payable in cash on the last day of
each fiscal quarter of the Corporation in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $100 or (b) subject to the
provision for adjustment hereinafter set forth, 1,000 times the aggregate per
share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event. In
the event the Corporation shall at any time declare or pay any dividend on the
Series A Preferred Stock payable in shares of Series A Preferred Stock, or
effect a subdivision, combination or consolidation of the outstanding shares of
Series A Preferred Stock (by reclassification or otherwise than by payment of a
dividend in shares of Series A Preferred Stock) into a greater or lesser number
of shares of Series A Preferred Stock, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the first sentence of this Section 2(A)
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Series A Preferred Stock that were outstanding
immediately prior to such event and the denominator of which is the number of
shares of Series A Preferred Stock outstanding immediately after such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) of this Section immediately after
it
-3-
<PAGE> 8
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock) and the Corporation shall pay such dividend
or distribution on the Series A Preferred Stock before the dividend or
distribution declared on the Common Stock is paid or set apart; provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $100 per share on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. In the event the Corporation shall
at any time declare or pay any dividend on the Series A Preferred Stock payable
in shares of Series A Preferred Stock, or effect a
-4-
<PAGE> 9
subdivision, combination or consolidation of the outstanding shares of Series A
Preferred Stock (by reclassification or otherwise than by payment of a dividend
in shares of Series A Preferred Stock) into a greater or lesser number of shares
of Series A Preferred Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Series A Preferred
Stock that were outstanding immediately prior to such event and the denominator
of which is the number of shares of Series A Preferred Stock outstanding
immediately after such event.
(B) Except as otherwise provided herein, in the Articles of Organization or
by law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall be
in arrears in an amount equal to six quarterly dividends thereon, the holders of
the Series A Preferred Stock, voting as a separate series from all other series
of Preferred Stock and classes of capital stock, shall be entitled to elect two
members of the Board of Directors in addition to any Directors elected by any
other series, class or classes of securities and the authorized number of
Directors will automatically be increased by two. Promptly thereafter, the Board
of Directors of the Corporation shall, as soon as may be practicable, call a
special meeting of holders of Series A Preferred Stock for the purpose of
electing such members of the Board of Directors. Such special meeting shall in
any event be held within 45 days of the occurrence of such arrearage.
(ii) During any period when the holders of Series A Preferred Stock,
voting as a separate series, shall be entitled and shall have exercised their
right to elect two Directors, then, and during such time as such right
continues, (a) the then authorized number of Directors shall be increased by
two, and the holders of Series A Preferred Stock, voting as a separate series,
shall be entitled to elect the additional Directors so provided for, and (b)
each such additional Director shall not be a member of any existing class of the
Board of Directors, but shall serve until the next annual meeting of
stockholders for the election of Directors, or until his successor shall be
elected and shall qualify, or until his right to hold such office terminates
pursuant to the provisions of this Section 3(C).
(iii) A Director elected pursuant to the terms hereof may be removed
with or without cause by the holders of Series A Preferred Stock entitled to
vote in an election of such Director.
(iv) If, during any interval between annual meetings of stockholders
for the election of Directors and while the holders of Series A Preferred Stock
shall be entitled to elect two Directors, there is no such Director in office by
reason of resignation, death or removal, then, promptly thereafter, the Board of
Directors shall
-5-
<PAGE> 10
call a special meeting of the holders of Series A Preferred Stock for the
purpose of filling such vacancy and such vacancy shall be filled at such special
meeting. Such special meeting shall in any event be held within 45 days of the
occurrence of such vacancy.
(v) At such time as the arrearage is fully cured, and all dividends
accumulated and unpaid on any shares of Series A Preferred Stock outstanding are
paid, and, in addition thereto, at least one regular dividend has been paid
subsequent to curing such arrearage, the term of office of any Director elected
pursuant to this Section 3(C), or his successor, shall automatically terminate,
and the authorized number of Directors shall automatically decrease by two, the
rights of the holders of the shares of the Series A Preferred Stock to vote as
provided in this Section 3(C) shall cease, subject to renewal from time to time
upon the same terms and conditions, and the holders of shares of the Series A
Preferred Stock shall have only the limited voting rights elsewhere herein set
forth.
(D) Except as set forth herein, or as otherwise provided by law, holders of
Series A Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
-6-
<PAGE> 11
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Organization, or in any other Certificate of Designations creating a
series of Preferred Stock or any similar stock or as otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $1000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up.
(B) Neither the consolidation, merger or other business combination of the
Corporation with or into any other corporation nor the sale, lease, exchange or
conveyance of all or any part of the property, assets or business of the
Corporation shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 6.
-7-
<PAGE> 12
(C) In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of paragraph (A) of this Section 6 shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. In the event the Corporation shall
at any time declare or pay any dividend on the Series A Preferred Stock payable
in shares of Series A Preferred Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Series A Preferred Stock (by
reclassification or otherwise than by payment of a dividend in shares of Series
A Preferred Stock) into a greater or lesser number of shares of Series A
Preferred Stock, then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of paragraph (A) of this Section 6 shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Series A Preferred Stock that were outstanding immediately
prior to such event and the denominator of which is the number of shares of
Series A Preferred Stock outstanding immediately after such event.
Section 7. CONSOLIDATION, MERGER, ETC. Notwithstanding anything to the
contrary contained herein, in case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case each share of Series A
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision, combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event. In
the event the Corporation shall at any time declare or pay any dividend on the
Series A Preferred Stock payable in shares of Series A Preferred Stock, or
effect a subdivision, combination or
-8-
<PAGE> 13
consolidation of the outstanding shares of Series A Preferred Stock (by
reclassification or otherwise than by payment of a dividend in shares of Series
A Preferred Stock) into a greater or lesser number of shares of Series A
Preferred Stock, then in each such case the amount set forth in the first
sentence of this Section 7 with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Series A Preferred
Stock that were outstanding immediately prior to such event and the denominator
of which is the number of shares of Series A Preferred Stock outstanding
immediately after such event.
Section 8. NO REDEMPTION. The shares of Series A Preferred Stock shall not
be redeemable.
Section 9. RANK. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Preferred Stock issued either before or after the
issuance of the Series A Preferred Stock, unless the terms of any such series
shall provide otherwise.
Section 10. AMENDMENT. At such time as any shares of Series A Preferred
Stock are outstanding, the Articles of Organization, as amended, of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of Series A Preferred Stock.
C. STATEMENT OF LIMITATIONS, RELATIVE RIGHTS AND POWERS IN RESPECT OF
SHARES OF COMMON STOCK.
(1) After the requirements with respect to preferential dividends on the
Preferred Stock (fixed in accordance with the provisions of paragraph B above)
shall have been met and after the corporation shall have complied with all the
requirements, if any, with respect to the setting aside of sums as sinking funds
or redemption or purchase accounts (fixed in accordance with the provisions of
said paragraph B), then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time by the
Board of Directors.
(2) After distribution in full of the preferential amount (fixed in
accordance with the provisions of said paragraph B) to be distributed to the
holders of Preferred Stock in the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or winding up of this corporation,
the holders of the
-9-
<PAGE> 14
Common Stock shall be entitled to receive all the remaining assets of this
corporation, tangible and intangible, of whatever kind available for
distribution to the stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or the provisions of these
Articles, or by the Board of Directors pursuant to authority granted in these
Articles, each holder of Common Stock shall have one vote in respect of each
share of stock held by him in all matters voted upon by the stockholders.
D. DENIAL OF PREEMPTIVE RIGHTS.
No holder of shares of the Common Stock or of the Preferred Stock shall be
entitled as such, as a matter of right, to subscribe for or purchase any part of
any new or additional issue of stock of any class whatsoever of the corporation,
or of securities convertible into stock of any class, whether now or hereafter
authorized, or whether issued for cash or other consideration or by way of
dividend.
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<PAGE> 15
ATTACHMENT 6
6A. INDEMNIFICATION
Section 1. ACTIONS, SUITS AND PROCEEDINGS. Except as otherwise provided
below, the Corporation shall, to the fullest extent authorized by Chapter 156B
of the Massachusetts General Laws, as the same exists or may hereafter be
amended (in the case of any such amendment, only to the extent that such
amendment either (i) permits the Corporation to provide broader indemnification
rights than such laws permitted prior to such amendment or (ii) prohibits or
limits any of the indemnification rights previously set forth in such laws),
indemnify each person who is, or shall have been, a director or officer of the
Corporation or who is or was a director or employee of the Corporation and is
serving, or shall have served, at the request of the Corporation, as a director
or officer of another organization or in any capacity with respect to any
employee benefit plan of the Corporation, against all liabilities and expenses
(including judgments, fines, penalties, amounts paid or to be paid in
settlement, and reasonable attorneys' fees) imposed upon or incurred by any such
person (the "Indemnitee") in connection with, or arising out of, the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which he may be a defendant or with which he may be threatened or otherwise
involved, directly or indirectly, by reason of his being or having been such a
director or officer or as a result of his serving or having served with respect
to any such employee benefit plan; PROVIDED, HOWEVER, that the Corporation shall
provide no indemnification with respect to any matter as to which any such
Indemnitee shall be finally adjudicated in such action, suit or proceeding not
to have acted in good faith in the reasonable belief that his action was (i) in
the best interests of the Corporation or (ii) to the extent such matter relates
to service with respect to an employee benefit plan, in the best interests of
the participants or beneficiaries of such employee benefit plan.
Section 2. SETTLEMENTS. The right to indemnification conferred in this
Article shall include the right to be paid by the Corporation for liabilities
and expenses incurred in connection with the settlement or compromise of any
such action, suit or proceeding, pursuant to a consent decree or otherwise,
unless a determination is made, within 45 days after receipt by the Corporation
of a written request by the Indemnitee for indemnification, that such settlement
or compromise is not in the best interests of the Corporation or, to the extent
such matter relates to service with respect to an employee benefit plan, that
such settlement or compromise is not in the best interests of the participants
or beneficiaries of such plan. Any such determination shall be made (i) by the
Board of Directors of the Corporation by a majority vote of a quorum consisting
of disinterested directors, or (ii) if such quorum is not obtainable, by a
majority of the disinterested directors of the Corporation then in office.
Notwithstanding the foregoing, if there are less than two disinterested
directors then in office, the Board of Directors shall promptly direct that
independent legal counsel (who may be regular legal counsel to the Corporation)
determine, based
<PAGE> 16
on facts known to such counsel at such time, whether such Indemnitee acted in
good faith in the reasonable belief that his action was in the best interests of
the Corporation or the participants or beneficiaries of any such employee
benefit plan, as the case may be; and, in such event, indemnification shall be
made to such Indemnitee unless, within 45 days after receipt by the Corporation
of the request by such Indemnitee for indemnification, such independent legal
counsel in a written opinion to the Corporation determines that such Indemnitee
did not act in good faith in the reasonable belief that his action was in the
best interests of the Corporation or the participants or beneficiaries of any
such employee benefit plan, as the case may be.
Section 3. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to
his right to be indemnified, the Indemnitee must give to the Corporation notice
in writing as soon as practicable of any action, suit or proceeding involving
him for which indemnity will or could be sought. With respect to any action,
suit or proceeding of which the Corporation is so notified, the Corporation will
be entitled to participate therein at its own expense and/or to assume the
defense thereof at its own expense, with legal counsel reasonably acceptable to
such Indemnitee. After notice from the Corporation to the Indemnitee of its
election so to assume such defense, the Corporation shall not be liable to such
Indemnitee for any legal or other expenses subsequently incurred by such
Indemnitee in connection with such claim, but the fees and expenses of such
counsel incurred after notice from the Corporation of its assumption of the
defense thereof shall be at the expense of the Indemnitee unless (i) the
employment of counsel by the Indemnitee has been authorized by the Corporation,
(ii) counsel to the Indemnitee shall have reasonably concluded that there may be
a conflict of interest or position on any significant issue between the
Corporation and the Indemnitee in the conduct of the defense of such action or
(iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases, the fees and expenses of counsel
for the Indemnitee shall be at the expense of the Corporation, except as
otherwise expressly provided by this Article. The Corporation shall not be
entitled to assume the defense of any claim brought by or on behalf of the
Corporation or as to which counsel for the Indemnitee shall have reasonably made
the conclusion provided for in (ii) above.
Section 4. ADVANCE OF EXPENSES. Subject to Section 3 above, the right to
indemnification conferred in this Article shall include the right to be paid by
the Corporation for expenses (including reasonable attorneys' fees) incurred in
defending a civil or criminal action, suit or proceeding in advance of its final
disposition, subject to receipt of an undertaking by the Indemnitee to repay
such payment if it is ultimately determined that the Indemnitee is not entitled
to indemnification under this Article. Such undertaking may be accepted without
reference to the financial ability of such Indemnitee to make such repayment.
Notwithstanding the foregoing, no advance shall be made by the Corporation under
this Section 4 if a determination is reasonably and promptly made by the Board
of Directors by a majority vote of a
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<PAGE> 17
quorum consisting of disinterested directors or, if such quorum is not
obtainable, by a majority of the disinterested directors of the Corporation then
in office or, if there are not at least two disinterested directors then in
office, by independent legal counsel (who may be regular legal counsel to the
Corporation) in a written opinion that, based on facts known to the Board or
counsel at such time, such Indemnitee did not act in good faith in the
reasonable belief that his action was in the best interests of the Corporation
or the participants or beneficiaries of an employee benefit plan of the
Corporation, as the case may be.
Section 5. PARTIAL INDEMNITY. If an Indemnitee is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the liabilities or expenses imposed upon or incurred by such
Indemnitee in the investigation, defense, appeal or settlement of any action,
suit or proceeding but not, however, for the total amount thereof, the
Corporation shall nevertheless indemnify the Indemnitee for the portion of such
liabilities or expenses to which such Indemnitee is entitled.
Section 6. RIGHTS NOT EXCLUSIVE. The right to indemnification and the
payment of expenses incurred in defending any action, suit or 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 Articles of Organization, By-Laws,
agreement, vote of stockholders or directors or otherwise. Without limiting the
generality of the foregoing, the Corporation, acting through its Board of
Directors, may enter into agreements with any director, officer, employee or
agent of the Corporation providing for indemnification rights equivalent to or
greater than the indemnification rights set forth in this Article.
Section 7. INSURANCE. The Corporation may purchase and maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another organization or employee benefit plan against any
expense or liability incurred by him in any such capacity, or arising out of the
status as such, whether or not the Corporation would have the power to indemnify
such person against such expense or liability under Chapter 156B of the
Massachusetts General laws.
Section 8. INSURANCE OFFSET. The Corporation's obligation to provide
indemnification under this Article shall be offset to the extent of any other
source of indemnification or any otherwise applicable insurance coverage under a
policy maintained by the Corporation or any other person.
Section 9. AMENDMENT. Without the consent of a person entitled to the
indemnification and other rights provided in this Article (unless otherwise
required by Chapter 156B of the Massachusetts General Laws), no amendment
modifying or
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<PAGE> 18
terminating such rights shall adversely affect such person's rights
under this Article with respect to the period prior to such Amendment.
Section 10. MERGERS, ETC. If the Corporation is merged into or consolidated
with another corporation and the Corporation is not the surviving corporation,
or if substantially all of the assets of the Corporation are acquired by any
other corporation, or in the event of any other similar reorganization involving
the Corporation, the Board of Directors of the Corporation or the board of
directors of any corporation assuming the obligations of the Corporation shall
assume the obligations of the Corporation under this Article, through the date
of such merger, consolidation, sale or reorganization, with respect to each
person who is entitled to indemnification rights under this Article as of such
date.
Section 11. SAVINGS CLAUSE. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any liabilities
and expenses with respect to any action, suit or proceeding to the full extent
permitted by any applicable portion of this Article that shall not have been
invalidated and to the full extent permitted by applicable law.
Section 12. DEFINITIONS. As used in this Article, the term
"director", "officer" and "person" include their respective heirs, executors,
administrators, and legal representatives, and an "interested" director is one
against whom in such capacity the proceedings in question or another proceeding
on the same or similar grounds is then pending.
6B. STOCKHOLDERS' MEETINGS
Meetings of Stockholders of the Corporation may be held anywhere in the
United States.
6C. AMENDMENT OF BY-LAWS
The power to make, amend or repeal by-laws shall be in the Stockholders,
provided, however, that the by-laws may provide that the directors may make,
amend or repeal the by-laws in whole or in part, except with respect to any
provisions thereof which according to law, the Articles of Organization or
by-laws requires action by the Stockholders.
6D. LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by Chapter 156B of the Massachusetts
General Laws, as it may be amended from time to time, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages
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<PAGE> 19
for breach of fiduciary duty as a director, notwithstanding any provision of law
imposing such liability.
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<PAGE> 20
Attachment 8
------------
ANALOG DEVICES, INC.
<TABLE>
<CAPTION>
OFFICERS
- ---------------------------------------------------------------------------------------------
TITLE NAME RESIDENTIAL POST OFFICE ADDRESS
ADDRESS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Chief Executive Officer Jerald G. Fishman 169 Hickory Road One Technology Way
and President Weston, MA 02193 Norwood, MA 02062-9106
- ---------------------------------------------------------------------------------------------
Clerk Paul P. Brountas 22 Conant Road Hale and Dorr LLP
Weston, MA 02193 60 State Street
Boston, MA 02109
- ---------------------------------------------------------------------------------------------
Treasurer William A. Martin 3 Harden Road One Technology Way
Foxboro, MA 02035 Norwood, MA 02062-9106
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS
- ----------------------------------------------------------------------------------------
Name Residential Post Office Address
Address
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Ray Stata 6 Miller Hill Road One Technology Way
Dover, MA 02030 Norwood, MA 02062-9106
- ----------------------------------------------------------------------------------------
John L. Doyle 177 Ramoso Road 177 Ramoso Road
Portola Valley, CA 94025 Portola Valley, CA 94025
- ----------------------------------------------------------------------------------------
F. Grant Saviers 3050 Three Spring Court President & CEO
San Jose, CA 95190-9714 Adaptec, Inc.
691 South Milpitas Boulevard
Milpitas, CA 95035
- ----------------------------------------------------------------------------------------
Joel Moses 70 Fairview Road MIT
Weston, MA 02193 77 Massachusetts Avenue - 3-208
Cambridge, MA 02139
- ----------------------------------------------------------------------------------------
Lester C. Thurow 4 Longfellow Place (#3306) MIT
Boston, MA 02114 50 Memorial Drive, E-52-454
Cambridge, MA 02142
- ----------------------------------------------------------------------------------------
Jerald G. Fishman 169 Hickory Road One Technology Way
Weston, MA 02193 Norwood, MA 02062-9106
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 21
<TABLE>
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Charles O. Holliday, Jr. Dupont Asia Pacific Ltd. Dupont
Arco Tower 8-1 1007 Market Street, D-9000
Shimomeguro 1-CHOME Wilmington, DE 19898
Meguro-KU
Tokyo 153
Japan
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.1
WAFERTECH, LLC
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of January 21, 1999 by
and between Analog Devices, Inc., a Massachusetts corporation ("ADI"), and TSMC
Development, Inc., a Delaware corporation ("TSMC").
WHEREAS, ADI and TSMC are members of WaferTech, LLC, a Delaware limited
liability company (the "Company"), and parties to the Second Amended and
Restated Limited Liability Company Agreement of WaferTech, LLC dated as of
October 28, 1997 (the "LLC Agreement");
WHEREAS, ADI proposes to transfer to TSMC a Nine Percent (9%) Membership
Interest in the Company, corresponding to Twenty Million Two Hundred Fifty
Thousand (20,250,000) Preferred Shares (the "Interest");
WHEREAS, the Preferred Members have unanimously consented to the transfer
of the Interest by ADI to TSMC pursuant to a Unanimous Written Consent dated
November 30, 1998;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. CAPITALIZED TERMS
Capitalized terms not otherwise defined in this Agreement have the
meanings assigned to them in the LLC Agreement.
2. ASSIGNMENT AND ASSUMPTION
In consideration of (i) the payment of the purchase price in the
amount of Sixty-Seven Million Five Hundred One Thousand One Hundred Fifty-Three
United States Dollars (U.S.$67,501,153) (the "Purchase Price") by TSMC to ADI as
provided herein and (ii) the assumption by TSMC of the obligations associated
with the Interest as set forth in the LLC Agreement and Purchase Agreement, ADI
hereby irrevocably assigns, transfers and conveys to TSMC all right, title and
interest in and to, and all benefits and burdens of the ownership of, the
Interest. TSMC hereby assumes the obligations associated with the Interest as
set forth in the LLC Agreement and Purchase Agreement.
<PAGE> 2
3. PAYMENT
TSMC shall pay the Purchase Price to ADI by the transfer of
immediately available funds denominated in U.S. dollars for value before 2:00
p.m. EST January 29, 1999 to the following account:
Analog Devices, Inc.
BankBoston
Boston, Massachusetts
Account No. 521-79901
SWIFT No. FNBBUS33
The assignment and assumption contemplated by Section 2 of this Agreement shall
become effective immediately upon receipt by ADI of the full amount of the
Purchase Price in the above mentioned account. Upon receipt of the Purchase
Price, ADI shall deliver to TSMC a written receipt therefor in the form of
Exhibit A attached hereto.
4. ADI'S REPRESENTATIONS AND WARRANTIES.
ADI hereby represents and warrants to TSMC that:
(i) ADI has the full right, power, and authority to execute this
Agreement and to sell the Interest to TSMC.
(ii) The Interest is owned by ADI free and clear of any and all liens,
encumbrances, charges, assessments and restrictions (other than restrictions on
transfer imposed by the LLC Agreement and restrictions on transfer generally
imposed on securities under Federal or state securities laws).
(iii) Upon transfer of the Interest to TSMC pursuant to this
Agreement, TSMC will, as a result, receive good title to the Interest, free and
clear of any and all liens, encumbrances, claims, charges, assessments, and
restrictions (other than restrictions on transfer imposed by the LLC Agreement
and restrictions on transfer generally imposed on securities under Federal or
state securities laws).
(iv) All corporate action on the part of ADI, its directors and
stockholders necessary for the authorization, execution, delivery and
performance by ADI of this Agreement has been taken.
(v) The execution, delivery and performance of and compliance with
this Agreement and the sale of the Interest hereunder will not result in any
violation of, or conflict with, or constitute a default under, ADI's charter or
bylaws or any of ADI's material agreements (including but not limited to the LLC
Agreement), or
-2-
<PAGE> 3
result in the creation of any mortgage, pledge, lien, encumbrance or charge upon
the Interest being transferred.
(vi) No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority on the part of ADI is
required in connection with the valid execution and delivery of this Agreement,
the sale of the Interest hereunder or the consummation of any other transaction
contemplated hereby.
(vii) (a) ADI has consulted its own independent tax advisors with
respect to the transactions contemplated by this Agreement to the extent it
deemed necessary and advisable; (b) ADI is not relying in any respect on
WaferTech or any Managing Member, employee or other agent or representative of
WaferTech to provide any advice with respect to the Federal, state, local or
foreign tax consequences of the transactions contemplated hereby; and (c) ADI
shall bear its own tax consequences, if any, associated with the transactions
contemplated hereby and shall not seek any reimbursement in connection with any
such tax consequences from TSMC, WaferTech or any of their affiliates.
5. TSMC'S REPRESENTATIONS AND WARRANTIES.
TSMC hereby represents and warrants to ADI that:
(i) TSMC has the full right, power, and authority to execute this
Agreement and to purchase the Interest from ADI.
(ii) TSMC understands and acknowledges that any further transfer of
the Interest by TSMC is restricted under the LLC
Agreement.
(iii) TSMC is acquiring the Interest for its own account for
investment, and not with a view to distribution.
6. EFFECT ON ANCILLARY AGREEMENTS.
The parties acknowledge and agree that the transfer of the Interest
pursuant to this Agreement will affect the Percentage Interests of ADI and TSMC
and, consequently, their respective rights and obligations under the Purchase
Agreement, as well as their respective rights and obligations under the LLC
Agreement, including under Section 19.2 thereof with respect to Future Purchase
Agreements.
-3-
<PAGE> 4
7. MISCELLANEOUS.
(a) FURTHER ASSURANCES. Each of the parties agrees to promptly execute
and deliver any and all further agreements, documents, or instruments necessary
to effectuate this Agreement and the transaction referred to herein or
reasonably requested by the other party to perfect or evidence its rights
hereunder.
(b) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in this Agreement shall survive the transfer of the
Interest made pursuant to this Agreement.
(c) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument, binding on the parties,
and the signature of any party to any counterpart shall be deemed a signature
to, and may be appended to, any other counterpart.
(d) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
ANALOG DEVICES, INC.
By: /s/ Joseph E. McDonough
-----------------------
Name Joseph E. McDonough
Its______________________________
TSMC DEVELOPMENT, INC.
By: /s/ Morris Chang
-----------------------
Name Morris Chang
Its______________________________
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<PAGE> 5
Exhibit A
RECEIPT
Analog Devices, Inc. ("ADI") hereby acknowledges receipt of the sum of
Sixty-Seven Million Five Hundred One Thousand One Hundred Fifty-Three United
States Dollars (U.S$67,501,153) from TSMC Development, Inc. ("TSMC")
constituting full payment of the purchase price payable under the Assignment and
Assumption Agreement between ADI and TSMC dated as of January 21, 1999.
Accordingly the transfer of the Interest contemplated by the aforesaid
Assignment and Assumption Agreement is effective as of the date hereof.
IN WITNESS WHEREOF, this Receipt has been executed as of the date set
forth below.
Date: January 29, 1999 ANALOG DEVICES, INC.
By: /s/ Joseph E. McDonough
-----------------------
Name Joseph E. McDonough
Its______________________________
-5-
<PAGE> 1
EXHIBIT 10.2
WAFERTECH, LLC
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of January 21, 1999 by
and between Analog Devices, Inc., a Massachusetts corporation ("ADI"), and
Altera Corporation, a Delaware corporation ("Altera").
WHEREAS, ADI and Altera are members of WaferTech, LLC, a Delaware limited
liability company (the "Company"), and parties to the Second Amended and
Restated Limited Liability Company Agreement of WaferTech, LLC dated as of
October 28, 1997 (the "LLC Agreement");
WHEREAS, ADI proposes to transfer to Altera a Five Percent (5%) Membership
Interest in the Company, corresponding to Eleven Million Two Hundred Fifty
Thousand (11,250,000) Preferred Shares (the "Interest");
WHEREAS, the Preferred Members have unanimously consented to the transfer
of the Interest by ADI to Altera pursuant to a Unanimous Written Consent dated
November 30, 1998;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. CAPITALIZED TERMS
Capitalized terms not otherwise defined in this Agreement have the meanings
assigned to them in the LLC Agreement.
2. ASSIGNMENT AND ASSUMPTION
In consideration of (i) the payment of the purchase price in the amount of
Thirty-Seven Million Five Hundred Thousand Six Hundred Forty United States
Dollars (U.S.$37,500,640) (the "Purchase Price") by Altera to ADI as provided
herein and (ii) the assumption by Altera of the obligations associated with the
Interest as set forth in the LLC Agreement and Purchase Agreement, ADI hereby
irrevocably assigns, transfers and conveys to Altera all right, title and
interest in and to, and all benefits and burdens of the ownership of, the
Interest. Altera hereby assumes the obligations associated with the Interest as
set forth in the LLC Agreement and Purchase Agreement.
<PAGE> 2
3. PAYMENT
Altera shall pay the Purchase Price to ADI by the transfer of
immediately available funds denominated in U.S. dollars for value before 2:00
p.m. EST January 29, 1999 to the following account:
Analog Devices, Inc.
BankBoston
Boston, Massachusetts
Account No. 521-79901
ABA No. 011-000-390
The assignment and assumption contemplated by Section 2 of this Agreement shall
become effective immediately upon receipt by ADI of the full amount of the
Purchase Price in the abovementioned account. Upon receipt of the Purchase
Price, ADI shall deliver to Altera a written receipt therefor in the form of
Exhibit A attached hereto.
4. ADI'S REPRESENTATIONS AND WARRANTIES.
ADI hereby represents and warrants to Altera that:
(i) ADI has the full right, power, and authority to execute this
Agreement and to sell the Interest to Altera.
(ii) The Interest is owned by ADI free and clear of any and all liens,
encumbrances, charges, assessments and restrictions (other than restrictions on
transfer imposed by the LLC Agreement and restrictions on transfer generally
imposed on securities under Federal or state securities laws).
(iii) Upon transfer of the Interest to Altera pursuant to this
Agreement, Altera will, as a result, receive good title to the Interest, free
and clear of any and all liens, encumbrances, claims, charges, assessments, and
restrictions (other than restrictions on transfer imposed by the LLC Agreement
and restrictions on transfer generally imposed on securities under Federal or
state securities laws).
(iv) All corporate action on the part of ADI, its directors and
stockholders necessary for the authorization, execution, delivery and
performance by ADI of this Agreement has been taken.
(v) The execution, delivery and performance of and compliance with
this Agreement and the sale of the Interest hereunder will not result in any
violation of, or conflict with, or constitute a default under, ADI's charter or
bylaws or any of ADI's material agreements (including but not limited to the LLC
Agreement), or
-2-
<PAGE> 3
result in the creation of any mortgage, pledge, lien, encumbrance or charge upon
the Interest being transferred.
(vi) No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority on the part of ADI is
required in connection with the valid execution and delivery of this Agreement,
the sale of the Interest hereunder or the consummation of any other transaction
contemplated hereby.
(vii) (a) ADI has consulted its own independent tax advisors with
respect to the transactions contemplated by this Agreement to the extent it
deemed necessary and advisable; (b) ADI is not relying in any respect on
WaferTech or any Managing Member, employee or other agent or representative of
WaferTech to provide any advice with respect to the Federal, state, local or
foreign tax consequences of the transactions contemplated hereby; and (c) ADI
shall bear its own tax consequences, if any, associated with the transactions
contemplated hereby and shall not seek any reimbursement in connection with any
such tax consequences from Altera, WaferTech or any of their affiliates.
5. ALTERA'S REPRESENTATIONS AND WARRANTIES.
Altera hereby represents and warrants to ADI that:
(i) Altera has the full right, power, and authority to execute this
Agreement and to purchase the Interest from ADI.
(ii) Altera understands and acknowledges that any further transfer of
the Interest by Altera is restricted under the LLC Agreement.
(iii) Altera is acquiring the Interest for its own account for
investment, and not with a view to distribution.
6. EFFECT ON ANCILLARY AGREEMENTS.
The parties acknowledge and agree that the transfer of the Interest
pursuant to this Agreement will affect the Percentage Interests of ADI and
Altera and, consequently, their respective rights and obligations under the
Purchase Agreement, as well as their respective rights and obligations under the
LLC Agreement, including under Section 19.2 thereof with respect to Future
Purchase Agreements.
-3-
<PAGE> 4
7. MISCELLANEOUS.
(a) FURTHER ASSURANCES. Each of the parties agrees to promptly execute
and deliver any and all further agreements, documents, or instruments necessary
to effectuate this Agreement and the transaction referred to herein or
reasonably requested by the other party to perfect or evidence its rights
hereunder.
(b) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in this Agreement shall survive the transfer of the
Interest made pursuant to this Agreement.
(c) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument, binding on the parties,
and the signature of any party to any counterpart shall be deemed a signature
to, and may be appended to, any other counterpart.
(d) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
ANALOG DEVICES, INC.
By: /s/ Joseph E. McDonough
-----------------------------
Name Joseph E. McDonough
Its V.P. Finance, C.F.O.
ALTERA CORPORATION
By: /s/ Nathan M. Sarkisian
-----------------------------
Name Nathan M. Sarkisian
Its Senior V.P. Finance, C.F.O.
-4-
<PAGE> 5
Exhibit A
RECEIPT
Analog Devices, Inc. ("ADI") hereby acknowledges receipt of the sum of
Thirty-Seven Million Five Hundred Thousand Six Hundred Forty United States
Dollars (U.S. $37,500,640) from Altera Corporation ("Altera") constituting full
payment of the purchase price payable under the Assignment and Assumption
Agreement between ADI and Altera dated as of January 21, 1999. Accordingly the
transfer of the Interest contemplated by the aforesaid Assignment and Assumption
Agreement is effective as of the date hereof.
IN WITNESS WHEREOF, this Receipt has been executed as of the date set
forth below.
Date: January 29, 1999 ANALOG DEVICES, INC.
By: /s/ Joseph E. McDonough
-----------------------------
Name Joseph E. McDonough
Its V.P. Finance, C.F.O.
-5-
<PAGE> 1
EXHIBIT 10.3
AMENDMENT TO
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
THIS AMENDMENT, dated as of November 30, 1998 modifies that certain Second
Amended and Restated Limited Liability Company Agreement of WaferTech, LLC (the
"LLC Agreement") dated as of October 28, 1997, by and among TSMC Development,
Inc., a Delaware corporation ("TSMC"), Analog Devices, Inc., a Massachusetts
corporation ("ADI"), Altera Corporation, a Delaware corporation ("Altera"), and
Integrated Silicon Solutions Inc., a Delaware corporation ("ISSI").
WHEREAS, ADI proposes to transfer 9% and 5% interest in WaferTech, LLC (the
"Company") to TSMC and Altera respectively.
WHEREAS, ISSI proposes to transfer around 1.33% interest in the Company
(equivalent to US $10 million worth of ISSI's interest in the Company) to TSMC.
WHEREAS, the parties hereto recognize that, upon consummation of the
aforementioned transfers, resulting ownership in the Company may no longer
reflect the original intent of the supermajority voting provisions set forth in
Section 6.4.2 of the LLC Agreement.
WHEREAS, the parties desire to amend the LLC Agreement in order to properly
reflect each remaining Member's interest as originally intended.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follow:
1. Pursuant to Section 16.1 of the LLC Agreement, the undersigned Members,
representing not less than 87% Percentage Interest, agree that the LLC
Agreement shall be amended as follows:
a. Section 6.4.2 of the LLC Agreement is amended by deleting subsections
6.4.2.1, 6.4.2.2, 6.4.2.5, 6.4.2.10 and 6.4.2.11 in their entirety.
b. Section 6.4.3 of the LLC Agreement is amended by adding the following
subsections.
6.4.3.6 borrow, guarantee or incur long term debt in any way
greater than the amount of US $100 million in the
aggregate;
<PAGE> 2
6.4.3.7 determine that a Member or an Affiliate of a Member is a
Prohibited Person;
6.4.3.8 authorize or call for any Additional Capital Contribution
in an amount exceeding US $200 million during any
12-month period and US $400 million during any 36-month
period;
6.4.3.9 make any material change or amendment to the most recent
capacity ramp up schedule incorporated in the Business
Plan, which change or amendment would result in the
Company not being profitable for the year 2000;
6.4.3.10 admit any new Member other than a participant in an
Incentive Plan.
2. This amendment shall become effective upon the consummation of the
aforementioned transfers.
3. All terms not otherwise defined herein shall have the meanings ascribed to
them in the LLC Agreement.
4. This Amendment may be signed in one or more counterparts, each of which
shall be an original but all of which together shall constitute one
instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
TSMC DEVELOPMENT, INC.
By: /s/ Morris Chang
-----------------------
Morris Chang
ANALOG DEVICES, INC.
By: /s/ Joseph E. McDonough
-----------------------
Joseph E. McDonough
ALTERA CORPORATION
By: /s/ Rodney Smith
-----------------------
Rodney Smith
INTEGRATED SILICON
SOLUTIONS, INC.
By: /s/ Jimmy S.M. Lee
-----------------------
Jimmy S.M. Lee
2
<PAGE> 1
EXHIBIT 10.4
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
THIS SECOND AMENDMENT, dated as of January 21, 1999, modifies that certain
Second Amended and Restated Limited Liability Company Agreement of WaferTech,
LLC, dated as of October 28, 1997, by and among TSMC Development, Inc., a
Delaware corporation ("TSMC"), Analog Devices, Inc., a Massachusetts corporation
("ADI"), Altera Corporation, a Delaware corporation ("Altera"), and Integrated
Silicon Solutions, Inc., a Delaware corporation ("ISSI"), as previously amended
by an Amendment dated as of November 30, 1998 (collectively, the "LLC
Agreement").
WHEREAS, ADI proposes to transfer 9% and 5% interest in WaferTech, LLC (the
"Company") to TSMC and Altera, respectively;
WHEREAS, ISSI proposes to transfer approximately 1.33% interest in the
Company to TSMC; and
WHEREAS, the parties desire to attach a new Exhibit A1 to the LLC Agreement
in order to properly reflect each Member's interest in the Company as a result
of the proposed transfers;
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
1. The undersigned Members acknowledge and agree that consummation of the
proposed transfers as discussed above will result in new Percentage
Interests as set forth in the new Exhibit A1 to the LLC Agreement, a copy
of which is attached hereto. Pursuant to Section 16.1 of the LLC Agreement,
the undersigned Members, representing not less than 87% in Percentage
Interest, agree that the LLC Agreement shall be amended by appending this
new Exhibit A1.
2. In addition, the undersigned Members acknowledge and agree that their
respective rights and obligations under the Purchase Agreement and the LLC
Agreement, including under Section 19.2 of the latter with respect to
Future Purchase Agreements, shall automatically be revised to reflect the
new Percentage Interests set forth in this new Exhibit A1.
3. This Amendment shall become effective upon the consummation of the proposed
transfers.
4. All terms not otherwise defined herein shall have the meanings ascribed to
them in the LLC Agreement.
<PAGE> 2
5. This Amendment may be signed in one or more counterparts, each of which
shall be an original but all of which together shall constitute one
instrument.
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of
the date first above written.
TSMC DEVELOPMENT, INC.
By /s/ Morris Chang
----------------------------
Morris Chang
ANALOG DEVICES, INC.
By /s/ Joseph E. McDonough
----------------------------
Joseph E. McDonough, V.P. Finance & C.F.O.
ALTERA CORPORATION
By /s/ Nathan Sarkisian
----------------------------
Nathan Sarkisian
INTEGRATED SILICON
SOLUTIONS, INC.
By /s/ Jimmy S.M. Lee
----------------------------
Jimmy S.M. Lee
<PAGE> 3
REVISED WAFERTECH LLC EQUITY INTERESTS
PER JANUARY 29, 1999, PARTIAL TRANSFER OF
ADI AND ISSI EQUITY INTERESTS TO TSMC AND ALTERA
<TABLE>
<CAPTION>
Percentage Interest
Agreed Total Value of Following Number of
Name/Address/Fax Number Capital Contribution Transfer Adjustment Adj. Capital Contr. Transfer Preferred Shares
- ----------------------- --------------------- ------------------- ------------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
TSMC Development, Inc. U.S.$ 446,403,200 77,501,153 523,904,353 67.5645% 152,012,653
1740 Technology Drive
Suite 660
San Jose, CA 95110
Phone: (408) 437-8762
Fax: (408) 441-7713
Analog Devices, Inc. U.S.$ 140,400,000 (105,001,793) 35,398,207 4% 9,000,000
1 Technology Way
P.O. Box 9106
Norwood, MA 02062
Phone: (781) 329-4700
Fax: (781) 461-2491
Altera Corporation U.S.$ 140,400,000 37,500,640 177,900,640 23% 51,750,000
101 Innovation Drive
San Jose, CA 95134
Phone: (408) 544-7000
Fax: (408) 544-8000
Integrated Silicon U.S.$ 31,200,000 (10,000,000) 21,200,000 2.6667% 6,007,500
Solutions, Inc,
2231 Lawson Lane
Santa Clara, CA 95054
Phone: (408) 588-0800
Fax: (408) 588-0805
THIRD PARTY U.S.$ 21,596,800 21,596,800 2.7688% 6,229,847
INVESTORS:
TOTAL CAPITAL U.S.$ 780,000,000 $780,000,000 100% 225,000,000
CONTRIBUTION
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-30-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JAN-30-1999
<EXCHANGE-RATE> 1
<CASH> 332,403
<SECURITIES> 129,670
<RECEIVABLES> 213,727
<ALLOWANCES> 0
<INVENTORY> 270,336
<CURRENT-ASSETS> 1,058,774
<PP&E> 1,377,726
<DEPRECIATION> 696,475
<TOTAL-ASSETS> 1,894,553
<CURRENT-LIABILITIES> 313,258
<BONDS> 309,871
0
0
<COMMON> 27,448
<OTHER-SE> 1,138,707
<TOTAL-LIABILITY-AND-EQUITY> 1,894,553
<SALES> 300,500
<TOTAL-REVENUES> 300,500
<CGS> 162,805
<TOTAL-COSTS> 162,805
<OTHER-EXPENSES> 98,765
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,688
<INCOME-PRETAX> 37,361
<INCOME-TAX> 7,467
<INCOME-CONTINUING> 29,894
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,894
<EPS-PRIMARY> .19
<EPS-DILUTED> .18
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-02-1997
<PERIOD-END> JAN-31-1998
<EXCHANGE-RATE> 1
<CASH> 217,198
<SECURITIES> 76,546
<RECEIVABLES> 261,272
<ALLOWANCES> 0
<INVENTORY> 241,508
<CURRENT-ASSETS> 898,242
<PP&E> 1,290,443
<DEPRECIATION> 595,922
<TOTAL-ASSETS> 1,857,793
<CURRENT-LIABILITIES> 362,949
<BONDS> 310,000
0
0
<COMMON> 27,053
<OTHER-SE> 1,065,593
<TOTAL-LIABILITY-AND-EQUITY> 1,857,793
<SALES> 317,791
<TOTAL-REVENUES> 317,791
<CGS> 154,332
<TOTAL-COSTS> 154,332
<OTHER-EXPENSES> 110,621
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,429
<INCOME-PRETAX> 52,015
<INCOME-TAX> 11,756
<INCOME-CONTINUING> 40,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (37,080)
<NET-INCOME> 3,179
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-02-1997
<PERIOD-END> MAY-02-1998
<EXCHANGE-RATE> 1
<CASH> 286,105
<SECURITIES> 33,819
<RECEIVABLES> 255,872
<ALLOWANCES> 0
<INVENTORY> 266,979
<CURRENT-ASSETS> 949,387
<PP&E> 1,340,026
<DEPRECIATION> 619,059
<TOTAL-ASSETS> 1,937,079
<CURRENT-LIABILITIES> 387,778
<BONDS> 309,989
0
0
<COMMON> 27,264
<OTHER-SE> 1,118,469
<TOTAL-LIABILITY-AND-EQUITY> 1,937,079
<SALES> 637,221
<TOTAL-REVENUES> 637,221
<CGS> 315,325
<TOTAL-COSTS> 315,325
<OTHER-EXPENSES> 210,725
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,532
<INCOME-PRETAX> 108,652
<INCOME-TAX> 24,608
<INCOME-CONTINUING> 84,044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (37,080)
<NET-INCOME> 46,964
<EPS-PRIMARY> .30
<EPS-DILUTED> .28
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-02-1997
<PERIOD-END> AUG-01-1998
<EXCHANGE-RATE> 1
<CASH> 261,705
<SECURITIES> 38,792
<RECEIVABLES> 224,434
<ALLOWANCES> 0
<INVENTORY> 272,370
<CURRENT-ASSETS> 906,915
<PP&E> 1,358,875
<DEPRECIATION> 644,907
<TOTAL-ASSETS> 1,879,179
<CURRENT-LIABILITIES> 352,127
<BONDS> 309,985
0
0
<COMMON> 27,322
<OTHER-SE> 1,096,904
<TOTAL-LIABILITY-AND-EQUITY> 1,879,179
<SALES> 932,921
<TOTAL-REVENUES> 932,921
<CGS> 477,140
<TOTAL-COSTS> 477,140
<OTHER-EXPENSES> 331,015
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,198
<INCOME-PRETAX> 119,481
<INCOME-TAX> 26,329
<INCOME-CONTINUING> 93,152
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (37,080)
<NET-INCOME> 56,072
<EPS-PRIMARY> .35
<EPS-DILUTED> .34
</TABLE>
