SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended October 1, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission File No. 1-4236
M/A-COM, Inc.
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2090644
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
100 Chelmsford Street, Lowell, MA 01853-3294
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(Address of principal executive offices) (Zip Code)
(508) 442-5000
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- -----------------------------------------------------------------------------
Common Stock, New York Stock Exchange
$1.00 par value Boston Stock Exchange
9 1/4% Convertible Subordinated New York Stock Exchange
Debentures due May 15, 2006 Boston Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
<PAGE>
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes: (X) No: ( )
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference to Part III of this Form 10-K or any amendment to
this Form 10-K. (X)
As of December 19, 1994, M/A-COM, Inc. had outstanding 26,085,522 shares of
Common Stock (exclusive of 17,920,187 shares held in its treasury), and the
aggregate market value (based upon the closing price of such stock on
December 19, 1994, as reported under the New York Stock Exchange - Composite
Transaction Reporting System) of the shares of Common Stock held by non-
affiliates was approximately $179,737,000.
Portions of the registrant's Definitive Proxy Statement for the February 15,
1995 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A
are incorporated by reference into Part III.
Page 2
<PAGE>
M/A-COM, INC.
INDEX
PART I 4
Item 1. Business 4
General 4
Marketing and Distribution 4
New Orders and Backlog 5
Products 5
Research and Development 7
Patents 8
Manufacturing Operations 8
Competition 8
General Development of Business 8
Sources of Raw Materials 10
Environmental Protection 10
Employees 10
Item 2. Properties 11
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 4.1. Executive Officers of the Registrant 11
PART II 13
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 13
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Item 8. Financial Statements and Supplementary Data 24
Consolidated Statement of Operations 24
Consolidated Balance Sheet 25
Consolidated Statement of Cash Flows 27
Notes to Consolidated Financial Statements 28
Report of Independent Accountants 45
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 46
PART III 46
Item 10. Directors and Executive Officers of the Registrant 46
Item 11. Executive Compensation 46
Item 12. Security Ownership of Certain Beneficial Owners
and Management 46
Item 13. Certain Relationships and Related Transactions 46
PART IV 47
Item 14. Exhibits, Financial Statement Schedules, Reports on Form 8-K 47
Signature of the Registrant 54
Signature of the Directors 54
Page 3
<PAGE>
PART I
Item 1. Business
General. M/A-COM, Inc. (the "Company" or "M/A-COM"), a Massachusetts
corporation founded in 1950 as Microwave Associates, Inc., adopted its
present name in 1978. M/A-COM is primarily a supplier to the wireless
telecommunications, surveillance and the defense-related industries of radio
frequency ("RF"), microwave and millimeter wave semiconductors, components
and subsystems, utilizing advanced circuit and semiconductor technologies,
for systems applications in wireless communications, sensor systems, radar,
navigation, missile guidance, electronic warfare and surveillance in air,
ground, sea and space environments. M/A-COM's products are used in a
substantial variety of commercial applications and defense systems. The
Company also manufactures surveillance products used in intelligence
collection applications.
The Company reports its operations within one principal industry segment:
electronic components and equipment.
Marketing and Distribution. The principal customers for M/A-COM's products
are manufacturers and users of electronic equipment based upon the
transmission and reception of RF waves, microwaves (including millimeter
waves) and light waves. M/A-COM supplies a customer base ranging from the
commercial and civil sectors to the military and defense sectors in a variety
of electronic equipment applications including mobile, ground-fixed,
shipboard, airborne, satellite-borne and space vehicle-borne systems.
Commercial applications extend to cellular telephone networks, personal
communications services ("PCS"), wireless communications, wireless computer
networking, intelligent vehicle highway systems, global positioning systems,
satellite data links, microwave sensors, motion detection sensors and medical
sensors, among others. Defense systems applications include radar,
electronic countermeasures, missile guidance and missile fuses. The Company
considers its commercial business to consist of all products not specifically
manufactured for direct or indirect use by the U.S. Department of Defense,
other U.S. Government agencies or foreign governments.
The original equipment manufacturers comprising the majority of the Company's
customer base include suppliers to telecommunications equipment companies,
other communications carriers, automotive and computer industries, U.S.
Government agencies (particularly, the Department of Defense) and government
agencies of U.S. allies. The Company's largest single source of revenue is
the U.S. Government and its agencies, whose direct purchases from M/A-COM and
indirect purchases through prime contractors and subcontractors accounted for
31%, 38% and 43% of M/A-COM's consolidated net sales in 1994, 1993 and 1992,
respectively. No other customer accounted for more than 10% of consolidated
net sales for those periods. All of the U.S. Government prime contracts and
subcontracts are subject to termination for convenience of the Government, in
which event M/A-COM normally would be entitled to receive the contract price
for completed items plus any costs incurred with respect to incomplete items
and, in general, a reasonable profit on work done as provided in applicable
government regulations.
Page 4
<PAGE>
Domestic sales of the Company's products to customers other than the U.S.
Government are made through the Company's sales force, through field offices
located in key areas and through distributors and manufacturers'
representatives. Certain products are marketed directly to customers by
technical and marketing personnel, in some instances with the support of
field offices and independent sales representatives.
Sales of M/A-COM's products to foreign customers (which are located primarily
in Western Europe and the Pacific Rim) are made principally through
subsidiaries, including direct sales personnel and independent sales
representatives and distributors. Domestic export sales were $38.5, $44.2 and
$46.0 million in 1994, 1993 and 1992, respectively, while sales of foreign
operations amounted to approximately $94.1, $82.4 and $67.9 million,
respectively, for those years. Total sales to foreign customers were
approximately $132.6, $126.6 and $113.9 million in 1994, 1993 and 1992,
respectively. M/A-COM does not believe that its foreign sales activities
entail materially greater risks than its domestic activities.
The amounts of net sales, operating profit or loss and identifiable assets
attributable to each of the Company's geographic areas for the last three
years are shown in Note 15 to the Company's consolidated financial statements
contained in Part II, Item 8 of this annual report on Form 10-K.
New Orders and Backlog. New orders for 1994 and 1993 were $328.3 and $345.6
million, respectively. New orders in 1994 are net of debookings of $17.0
million as further discussed in Part II, Item 7 of this annual report on Form
10-K. The backlog at October 1, 1994 was $200.1 million compared with $213.5
million at October 2, 1993. Approximately $32.7 million of the backlog at
October 1, 1994 is expected to be recorded as revenue by the Company after
1995. A substantial portion of the backlog pertains to U.S. Government and
other orders which permit termination.
Products. M/A-COM has a broad range of technologies and product lines
addressing a multitude of RF and microwave (including millimeter wave)
requirements, from basic semiconductors and components to monolithic
integrated circuits, complex subsystems and specialized equipment. The
Company's products are used for diverse commercial, civil and defense
applications -- based upon wireless communications, radar and other radio-
type principles -- in systems that are mobile, ground-fixed, shipboard,
airborne, satellite-borne or space vehicle-borne. These systems applications
range from cellular telephones and base stations, PCS, wireless local area
networks, vehicular sensor systems, satellite data links and MRI (magnetic
resonance imaging) to global positioning systems, electronic countermeasures,
solid-state phased-array radars and missile guidance. The broad range of
products and technologies is integrated vertically within the Company such
that the more basic are used in the design and manufacture of the more
complex. Starting with a semiconductor material fabrication capability, the
vertical integration progresses from substrates to devices to components to
subsystems and, in certain applications, to equipment.
Page 5
<PAGE>
M/A-COM is a leading supplier of semiconductors to the microwave industry. In
addition, the Company utilizes semiconductor technology in the majority of
its other products for the generation, transmission, reception, control and
processing of RF and microwave energy. The Company's semiconductor products
include a wide variety of discrete semiconductors utilizing both silicon and
gallium arsenide ("GaAs") materials. The basic RF and microwave semiconductor
products include PIN diodes, used to control the passage of electrical
signals through circuits; varactor diodes, used to modulate electrical
signals and also to generate them; Schottky barrier and point-contact diodes,
used to detect electrical signals; transistors, used to amplify electrical
signals; and Gunn and Impatt diodes, used to generate microwave power. In
addition, the Company is also a supplier of basic semiconductor materials,
such as silicon epitaxial wafers and gallium arsenide substrates.
In its advanced semiconductor activities, M/A-COM develops and produces GaAs
and silicon microwave monolithic integrated circuits ("MMICs") and hybrid
integrated circuits. MMICs are among the fundamental building blocks in many
microwave and wireless systems, and GaAs semiconductors, in general, have
become increasingly important in high-volume production and high-performance
and portable applications in commercial and military markets. Advanced
semiconductor products constitute important elements in the design of M/A-
COM's own component and subsystem product lines.
The Company's broad range of component products performs a wide variety of RF
and microwave functions. Among M/A-COM's component products are miniature,
subminiature and microminiature connectors, essential for interconnecting RF
and microwave components and subsystems. Also essential for interconnecting
microwave components, subsystems and systems are cable assemblies, which the
Company manufactures particularly for high-performance avionics applications.
M/A-COM also manufactures fiber optic cable assemblies (singlemode and
multimode), connectors and attenuators primarily for commercial
telecommunications applications.
The Company's passive components, used for directing RF and microwave
signals, include a multitude of coaxial and waveguide products including
ferrite isolators and circulators, power splitters and combiners,
attenuators, filters and rotary joints. The control components, used to
change the direction of or to time-vary RF and microwave signals, include
solid-state switches, attenuators, phase shifters and limiters which are used
to automatically prevent damage from high power signals. Receiver
components, used to detect and convert RF and microwave signals and extract
information and data from them, include mixers, detectors and low-noise and
IF (Intermediate Frequency) amplifiers; similar components are used to
impress information and data on transmitted signals.
The component lines include products used as sources for RF and microwave
signals, such as solid-state oscillators, frequency synthesizers and
frequency multipliers. The Company manufactures a broad line of small signal
and medium power solid-state amplifiers, as well as antennas including
dipole/colinear, conformal and helical types and horns and blades for
commercial and government markets.
M/A-COM's vertical product integration continues into RF and microwave
subsystems, which exploit all the technologies of the semiconductor and
component products. The RF and microwave subsystems combine the individual
circuit functions of basic devices and components into multifunction
assemblies, which allow system manufacturers to produce smaller-size, lighter-
weight equipment, while reducing interface problems.
Page 6
<PAGE>
In addition, M/A-COM manufactures certain specialized equipment for
surveillance applications, the sales of which are included with multifunction
assemblies in the table below. These products include receivers, signal
distribution networks, off-line signal processors, receiver-to-tape
converters, demodulators, displays and associated test equipment for use in
intelligence collection to determine the source, magnitude, frequency and
profile of electronic signals.
The Company's main product lines have generated revenue for each of the last
three years as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Semiconductors $ 92,928 $ 87,663 $ 85,253
Components 197,914 187,115 200,198
Multifunction assemblies 50,472 61,519 100,102
Other 282 3,593 2,265
-------- -------- --------
Total revenues $341,596 $339,890 $387,818
======== ======== ========
</TABLE>
Research and Development. Research and development is undertaken by the
Company both on its own initiative and on specific customer requests. In the
latter case, the customer may pay all or a portion of the expenses incurred.
In addition, the Company undertakes research contracts which are reimbursed
by the U.S. Government, such as Title III of the Defense Production Act
("Title III") to support world-class, domestic GaAs production capabilities
with commercial and defense applications. In addition, during 1994, the
Company received a grant under the U.S. Government's Technology Reinvestment
Program ("TRP") for the development of dual use technology and products that
will have applications for wireless communications and automotive sensors.
The technology involved in many of the Company's products is complex and
technological change may affect some of the products which the Company
currently produces or may develop. In order to compete successfully, the
Company must attract and retain qualified personnel and maintain a program of
improvement and refinement of existing products, as well as the development
of new products.
Research and development expenditures during the last three years are stated
below (amounts in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Company sponsored $21,676 $19,400 $19,631
Customer sponsored 7,868 14,836 19,748
Other* 1,965 3,635 3,598
Total research and --------- --------- ---------
development expenditures $31,509 $37,871 $42,977
========= ========= =========
</TABLE>
*Non-reimbursed costs incurred by the Company on customer sponsored
engineering contracts.
Page 7
<PAGE>
Patents. M/A-COM holds numerous domestic and foreign patents and paid-up
licenses for the use of certain patents, trade secrets, inventions, know-how
and technical data for the manufacture and sale of various products. While
patents are an important part of its business, M/A-COM does not deem any one
of its patents or licenses to be material to the conduct of its business. M/A-
COM regards as more important its general technological know-how and
experience, including certain proprietary information which it has developed
and maintains as trade secrets.
Manufacturing Operations. M/A-COM's manufacturing operations range from
complete assembly of a particular component or product by one individual or a
small group of individuals to manufacture by semi-automated, computer-aided
production lines. Because many of M/A-COM's products are precision components
requiring close tolerances, M/A-COM strives to maintain rigorous and exacting
test and inspection procedures designed to prevent production error. M/A-COM
continues to invest significantly in its manufacturing operations and
production techniques to achieve competitive levels of efficiency, quality,
productivity and reliability as evidenced by its recent move to a new
facility in Lowell, Massachusetts. This new facility provides the Company
with additional high volume automated production capabilities for use in
commercial and defense business.
Competition. The Company believes that all of its markets are highly
competitive. The commercial marketplace for the Company's products and
technologies requires high quality at competitive prices. The defense
electronics marketplace has been particularly competitive since United States
defense spending has decreased. Over recent years the Company has seen an
increased emphasis on competitive bidding for contracts, a decline in the
number of new programs, a decline in defense spending and delays in funding.
As anticipated, the above factors have continued to produce downward pressure
on prices and correspondingly on profit margins. To respond to this
anticipated pressure, the Company has continued to formulate and implement
plans for lowering costs and making its production efforts more efficient and
of higher quality.
The Company's subsystems products compete with those of larger companies, as
well as smaller, specialized companies. In semiconductors and component
products, the Company's competition consists of smaller, specialized
companies, as well as divisions of larger organizations, and in some cases
certain of its customers may perform certain activities in-house rather than
through subcontracts with third parties. The principal elements of
competition in the markets that the Company serves are technical superiority,
price, delivery schedules and reliability.
General Development of Business. During 1994, the Company continued its
transition from a government to a commercial customer base. Commercial
orders now approximate 50% of total orders and the Company has become a key
supplier of microwave technology and products to the industry leaders of the
wireless infrastructure, or base station market. This transformation of the
business has resulted in a number of actions in recent years, including the
divestiture of several businesses, rationalization and restructuring of the
Company's core operations, and other cost structure improvements.
During 1990, the Company began implementing the strategic repositioning of
its business, including a redeployment of its assets and the divestiture of
certain businesses engaged in military satellite communications, development
and production of subassemblies, microwave high power amplifiers,
transmission equipment and radar antenna assemblies.
Page 8
<PAGE>
As part of the strategic restructuring plan, the Company decided to contract
certain continuing operations in which the level of technical risk and
required investment was determined not to be commensurate with the potential
return. It also decided to consolidate certain businesses and facilities and
to implement other cost reduction actions, including severance and early
retirement. The results of operations for 1990 include charges approximating
$32.2 million relating to these decisions. During 1991, the Company provided
an additional $3.0 million in continuing operations relating to this
restructuring plan.
During 1990, the Company also recorded an estimated loss from discontinued
operations of $73.9 million, which consisted of an operating loss of $15.5
million and a loss on the disposal of discontinued operations of $58.4
million. The loss on disposal included estimated operating losses through
the phase-out period, provisions to reduce the related assets to estimated
realizable value and provisions for anticipated disposal costs. In the third
quarter of 1991, the Company reversed $14.1 million of reserves previously
provided for estimated losses on disposals and liabilities of discontinued
operations. This reversal was due to the favorable progress of the ongoing
divestiture program, the collection of an outstanding note and the settling
of certain matters in prior tax years. The Company completed its divestiture
program in 1992.
As part of its strategy, in 1992 the Company decided to further consolidate
and restructure several of its core operations to take advantage of certain
administrative and operational efficiencies, resulting in a $20.4 million
charge. This strategy included the physical consolidation of six separate
operations into the newly created Microelectronics Division. The physical
consolidation of facilities related to this plan was completed during the
last half of 1993. In connection with its strategic restructuring plans, the
Company announced its decision to restore its Advanced Semiconductor facility
to its original state and to occupy that facility with operations which
utilize its special purpose technological features and reversed certain
previously established reserves related to excess lease costs and other
restructuring actions of $20.4 million.
During the third quarter of 1992, the Company acquired Greenpar Connectors
Limited ("Greenpar"), a United Kingdom manufacturer of coaxial connectors and
cable assemblies for the commercial marketplace, for approximately $12.6
million to further its presence in the commercial and international markets.
In 1993, based primarily on the continued decline in its defense business,
the Company determined the need for further consolidation of its operations
to reduce operating costs and to enhance its competitive position in the
commercial and defense electronics markets. In addition, as a result of a
change in marketing strategy, the Company determined that a writedown in the
estimated realizable value of facilities held for sale at the end of 1992 was
warranted. To accomplish these actions, the Company provided $27.5 million
in restructuring charges in 1993. Additionally in the fourth quarter, the
Company decided to refocus the direction of its commercial business to
products with a broader application to existing and emerging markets,
resulting in a charge of $5.3 million for anticipated losses on technically
complex development programs related to existing commercial contracts.
Page 9
<PAGE>
During 1994, the Company continued its progress in the execution of its 1993
restructuring plan, incurring charges of $11.0 million for involuntary
employee terminations, further consolidation of manufacturing and office
space, carrying costs associated with previously vacated facilities and the
disposition of abandoned assets. This progress also included successfully
negotiating the termination of three technically complex development
contracts which had limited future market potential, thereby enabling the
Company to refocus the direction of its commercial business.
In the fourth quarter of 1994, based on operating issues encountered during
the execution of the restructuring plan, the Company determined its estimate
of cost savings would not be achieved from outsourcing certain manufacturing
operations at its Microelectronics Division and, as a result, reversed its
prior decision to outsource certain manufacturing operations. In connection
with this decision, the Company determined that approximately 100 planned
involuntary terminations would not take place. Also, the Company decided
that it would continue to use certain assets under operating leases, which it
had previously decided to abandon. As a result of these fourth quarter
decisions the Company reversed to income $2.8 million of the restructuring
reserve.
In the fourth quarter of 1994, the Company committed to undertake a plan to
reduce general and administrative expenses, including the consolidation of
its semiconductor operations into its Microelectronics Division, as well as
corporate level involuntary employee terminations. In connection with this
plan, the Company has provided $2.5 million in selling, general and
administrative expenses ("SG&A") for severance and related benefit costs for
the termination of these employees.
Sources of Raw Materials. M/A-COM has a number of sources of supply for
materials and components for the production of most of its products and
systems. M/A-COM has not experienced any significant difficulties in
obtaining these materials and does not anticipate any such difficulties in
the foreseeable future.
Environmental Protection. M/A-COM's manufacturing activities have generated
and continue to generate materials classified as hazardous wastes. The
Company devotes appropriate resources to compliance with legal and regulatory
requirements relating to minimization of the use of these materials, to their
proper disposal as wastes, and to the protection of the environment. Those
requirements include clean-up activities at various sites. The Company does
not believe that expenditures relating to these requirements will have a
material effect on the Company's financial condition or results of
operations. However, no assurance can be given that any future discovery of
new facts and the retroactive application of such legal and regulatory
requirements to those facts would not be material and would not change the
estimate of costs that the Company could be required to pay in any particular
situation.
Employees. The Company employed 3,585 persons at its various subsidiaries
and divisions as of October 1, 1994. None of the Company's employees is
represented by a union. The Company believes that its relations with its
employees are satisfactory.
Page 10
<PAGE>
Item 2. Properties
The Company's principal executive offices are located in Lowell,
Massachusetts. The Company's principal operating facilities consist of light
manufacturing and associated engineering and support facilities and currently
are located in several states, Puerto Rico, Ireland and the United Kingdom.
During 1993, the Company completed the relocation and consolidation of
several of its operations from both owned and leased facilities in Maine,
Massachusetts and New Hampshire to a newly leased facility and to an already
existing facility, both in Lowell, Massachusetts. Of its principal operating
facilities, the Company owns 412,743 square feet in the aggregate in Maryland
(Hunt Valley), Massachusetts (Amesbury, Burlington and Waltham) and New
Hampshire (Hudson) and leases 835,385 square feet in the aggregate in
California (Torrance), Massachusetts (Lowell and Watertown), Virginia
(Sterling), Ireland (Cork), Puerto Rico (Arecibo) and the United Kingdom
(Dunstable, Harlow and Milton Keynes). The Company also leases space in a
number of cities in the U.S. and foreign countries for sales and field
service operations.
The Company believes that it maintains its properties in good operating
condition and repair and considers its facilities to be suitable and adequate
for the present activities of the Company. Certain of the properties owned
by the Company are subject to mortgages. The Company also currently owns
407,370 square feet of space in facilities not being utilized in the
Company's operations, which space the Company anticipates selling or leasing
to third parties. For additional information with respect to mortgage
indebtedness and lease commitments see Notes 5 and 13 to the Company's
consolidated financial statements included in Part II, Item 8 of this annual
report on Form 10-K.
Item 3. Legal Proceedings
M/A-COM is a defendant in various legal proceedings incidental to the nature
of its business. However, the Company believes that the outcome of these
proceedings will not materially affect the Company's financial position or
results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 4.1. Executive Officers of the Registrant
The Company's executive officers and the capacities in which they serve as of
December 19, 1994 are listed on page 56 of this annual report.
Page 11
<PAGE>
The executive officers of the Company have held their current positions as
follows: Dr. Vanderslice since November 1994; Mr. Glaudel since February
1993; Mr. Mihalchik since September 1994; and Mr. Rice since January 1991.
Mr. Glaudel (age 54) served as Vice President, Human Resources of the Company
from January 1988 to February 1993. Mr. Mihalchik (age 47) has served as
Senior Vice President and Chief Financial Officer of the Company since
September 1993, and prior to joining M/A-COM, served as Executive Vice
President and Chief Financial Officer and Director of Loyalty Management
Group, Inc., a consumer promotion company, from 1991 to September 1993; and
as Senior Vice President and Chief Financial Officer and Director of The
Timberland Company, a footwear and apparel manufacturer and distributor, from
1986 to 1991. Mr. Rice (age 42) served as Vice President, Strategic Planning
and Business Analysis of the Company from 1990 to 1991 and, prior to joining
M/A-COM, served as Director of Financial Planning, Reporting and Analysis
with Apollo Computer, Inc., a computer equipment maker, from 1984 to 1990.
Dr. Vanderslice (age 62) has served as Chairman of the Board since November
1989, and also served as Chief Executive Officer of the Company from November
1989 to November 1993, and as President of the Company from May 1990 through
March 1991. Each of the Company's executive officers is a full time employee
of the Company, was elected by the Board of Directors and holds office until
the first meeting of the Board of Directors following the annual meeting of
Stockholders and until his successor is chosen and qualified.
Page 12
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The Company's Common Stock is listed for trading on the New York Stock
Exchange and the Boston Stock Exchange. For the fiscal periods indicated,
the high and low sales price for shares of M/A-COM Common Stock as reported
on the New York Stock Exchange-Composite Transaction Reporting System were as
follows:
<TABLE>
<CAPTION>
Fiscal 1994 High Low
- ----------- ---- ---
<S> <C> <C>
First Quarter 9 3/8 7 3/8
Second Quarter 9 1/4 5 7/8
Third Quarter 8 7/8 4 7/8
Fourth Quarter 8 3/4 7
<CAPTION>
Fiscal 1993 High Low
- ----------- ---- ---
<S> <C> <C>
First Quarter 4 7/8 4
Second Quarter 7 5/8 4 5/8
Third Quarter 9 3/8 6
Fourth Quarter 10 3/8 8
</TABLE>
There were 7,314 holders of record of the Company's Common Stock as of
December 19, 1994. Included in the number of stockholders of record are
stockholders who hold shares in "nominee" or "street" name. The closing
price per share of the Company's Common Stock as of December 19, 1994, as
reported under the New York Stock Exchange - Composite Transaction Reporting
System, was $7.00.
M/A-COM has not paid cash dividends on its Common Stock since fiscal 1989 and
intends to continue its policy of investing earnings in its business as an
alternative to paying dividends.
Page 13
<PAGE>
Item 6. Selected Financial Data
<TABLE>
M/A-COM, Inc. and Subsidiaries
(dollars in thousands, except per share amounts)
Fiscal Year
-------------------
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Operations
- ----------
Net sales $ 341,596 $ 339,890 $ 387,818 $ 391,354 $ 390,505
========= ========= ========= ========= =========
Income (loss) from continuing operations $ 3,392 $ (22,507) $ 8,933 $ 10,246 $ (33,079)
Discontinued operations, less income taxes - 1,000 3,064 20,864 (72,331)
Cumulative effect of changes in accounting 3,300 - - - (16,600)
--------- --------- --------- --------- ---------
Net income (loss) $ 6,692 $ (21,507) $ 11,997 $ 31,110 $(122,010)
========= ========= ========= ========= =========
Shares used in income (loss) per share
calculation (000's) 25,986 24,401 24,114 24,775 24,403
========= ========= ========= ========= =========
Income (loss) per share:
Continuing operations $ .13 $ (.92) $ .37 $ .41 $ (1.36)
Discontinued operations - .04 .13 .85 (2.96)
Cumulative effect of changes in
accounting .13 - - - (.68)
--------- --------- ---------- ---------- ---------
Net income (loss) per share $ .26 $ (.88) $ .50 $ 1.26 $ (5.00)
========= ========= ========== ========== =========
Financial Position
- ------------------
Total assets $ 308,632 $ 314,703 $ 327,300 $ 357,281 $ 364,922
Long-term obligations $ 91,718 $ 84,572 $ 85,830 $ 120,862 $ 132,091
Long-term debt $ 67,599 $ 68,352 $ 69,131 $ 82,428 $ 88,948
Total debt $ 74,117 $ 75,089 $ 74,518 $ 83,395 $ 90,215
Stockholders' equity $ 121,340 $ 107,875 $ 127,855 $ 116,180 $ 89,138
Shares outstanding at year end (000's) 25,889 25,160 23,972 24,362 24,477
Book value per share $ 4.69 $ 4.29 $ 5.33 $ 4.77 $ 3.64
Current ratio 1.6:1 1.2:1 1.5:1 1.7:1 1.3:1
Debt to capital ratio 37.9% 41.0% 36.8% 41.8% 50.3%
Other Selected Data*
- --------------------
New orders $ 328,291 $ 345,614 $ 344,464 $ 370,103 $ 351,822
Year-end backlog $ 200,141 $ 213,501 $ 213,340 $ 252,191 $ 273,086
Employees at year-end 3,585 3,932 4,404 4,886 5,031
Facilities (square feet)(000's) 1,248 1,272 1,520 1,583 1,622
</TABLE>
*Continuing operations. Facilities excludes those held for sale.
See also Item 1 and Notes 1, 2, 3, 5, and 7 for a description of certain
matters relevant to this Item 6.
Page 14
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Operations
The Company reported income from continuing operations of $3.4 million, or
$.13 per share, for 1994 compared with a loss of $22.5 million, or a loss of
$.92 per share for 1993. Net income for 1994 was $6.7 million and included
$3.3 million attributable to the cumulative effect of an accounting change
upon the adoption of Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. The net loss for 1993 was $21.5 million and
included $1.0 million of income from discontinued operations.
New orders for 1994 were $328.3 million compared with $345.6 million in 1993.
The decrease is mainly attributable to a decrease of $9.7 million in orders
from non-defense United States government and foreign government markets, a
$6.6 million decrease in United States defense-related orders, and a $1.1
million decrease in commercial orders. The decrease in non-defense United
States government and foreign government orders is attributable to spending
reductions in the U.S. agencies which the Company supplies. The decrease in
U.S. defense-related orders reflects the continued contraction of this
market. The decrease in commercial orders includes the negotiated
termination of three technically complex contracts totaling $10.8 million
during 1994, as well as debookings of $6.2 million relating mainly to the
amounts of blanket purchase orders with undefined delivery dates and to
adjustments of backlog due to customer modification of recorded amounts.
Absent these debookings, commercial orders increased by approximately $15.9
million.
During 1994, the Company continued its transition from dependence upon
defense business to becoming a key supplier of technology and products to
industry leaders in the commercial marketplace. Commercial orders now
approximate 50% of the Company's total orders. M/A-COM's fastest growing
product segments are those products introduced into wireless communication
applications such as cellular portable telephones, cellular infrastructure
and wireless data systems.
The Company's commitment to expansion into commercial markets is supported by
its research and development ("R&D") activities. During 1994, the Company
invested $21.7 million in R&D, an increase of $2.3 million from the prior
year. M/A-COM's emphasis on new product development and introduction brought
nearly 100 new product platforms to the market in 1994, the majority for
wireless applications.
In spite of its current efforts in transitioning to the commercial
marketplace, the Company remains committed to its governmental customers and
the portion of its business that is defense market related. This is
demonstrated by the Company's participation in government sponsored programs
such as Title III and TRP, as previously discussed.
Page 15
<PAGE>
In addition, the Company continues to focus on its consolidation and cost
reduction initiatives. During 1994, M/A-COM made significant progress in the
execution of its 1993 restructuring plan, including involuntary employee
terminations, further consolidation of manufacturing and office space and the
disposition of abandoned assets. The Company also refined this plan during
the year with its decision not to pursue certain manufacturing outsourcing
opportunities that were previously contemplated. Further, in an effort to
achieve greater operational synergies, the Company has decided to consolidate
all of its semiconductor operations into its Microelectronics Division and
has undertaken an initiative to reduce certain general and administrative
expenses.
Restructuring
The Company's restructuring reserve balances and activity for each of the
last three years are as follows (in millions):
<TABLE>
<CAPTION>
Leases
Severance and Facilities Carrying and and Other
Personnel and Equipment Closure Costs Restructuring
Related Write-downs of Buildings Costs Total
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at September 28, 1991 $ 6.8 $ 2.8 $ 6.0 $ .1 $ 15.7
Additions 10.5 3.5 1.4 - 15.4
Charges (11.3) (5.3) (2.1) - (18.7)
------------------------------------------------------------------------------
Balance at October 3, 1992 6.0 1.0 5.3 .1 12.4
Additions 9.5 9.6 6.0 2.4 27.5
Charges (6.9) (9.3) (6.2) .1 (22.3)
------------------------------------------------------------------------------
Balance at October 2, 1993 8.6 1.3 5.1 2.6 17.6
Additions 2.5 - - - 2.5
Charges (5.5) (1.3) (2.9) (1.3) (11.0)
Reversals (1.6) - (.3) (.9) (2.8)
------------------------------------------------------------------------------
Balance at October 1, 1994 $ 4.0 $ - $ 1.9 $ .4 $ 6.3
==============================================================================
</TABLE>
During 1992, the Company provided $20.4 million to execute its plans to
consolidate and restructure several of its operations. The Company also
reversed approximately $5.0 million in reserves established in prior years as
execution of the related restructuring actions was integrated into the 1992
restructuring decision. These plans included the physical consolidation of
six separate operations into the new Microelectronics Division facility in
Lowell, Massachusetts, reduction in the workforce of approximately 340
employees related to such operations and the planned sale of excess
facilities and equipment. The physical consolidation of facilities related
to this plan was completed during the last half of 1993 and has created
administrative and operational efficiencies, resulting from the elimination
of certain redundancies. Severance and related benefit charges incurred with
the workforce reduction totaled $11.3 million. Additionally, the Company
wrote off excess equipment and incurred expenses associated with disposition
of this equipment totaling $5.3 million. Carrying and closure costs of
vacant facilities totaled $2.1 million.
Page 16
<PAGE>
In 1993, based primarily on a continued decline in its defense business, the
Company initiated actions for additional consolidation and downsizing of its
business. In the second quarter of 1993, the Company recorded a charge to
selling, general and administrative expenses ("SG&A") of $4.0 million.
Approximately $2.0 million of this charge was attributable to a change in the
estimated realizable value of vacated facilities and additional expenses
associated with an extension of the period required for the disposal of these
facilities. These facilities had been vacated as part of the Company's 1992
restructuring program. The remainder of the charge related to incremental
workforce reductions of approximately 450 employees at the Company's
Microelectronics Division. In the fourth quarter of 1993, the Company
recorded a $23.5 million charge in SG&A. The actions contemplated in this
charge primarily included a workforce reduction of approximately 430
employees, the carrying and closure cost of a facility in Merrimack, New
Hampshire and vacating certain leased space in Massachusetts.
During 1993, the Company incurred severance and related benefit charges of
$6.9 million in connection with the workforce reductions included in this
plan as well as final payments on 1992 workforce reduction actions. Charges
for facilities and equipment write-downs consisted of $7.0 million for real
estate written down to net realizable value, and $2.3 million for the
disposal of redundant equipment in 1993. Additionally, the costs of closing,
preparing for sale and carrying the vacant buildings totaled $6.2 million in
1993.
During 1994, the Company continued its progress in the execution of the
actions contemplated by its 1993 restructuring plan. Charges incurred in
1994 were comprised of $5.5 million of severance and related benefit charges
for the termination of approximately 300 employees, write-offs of fixed
assets of $1.3 million associated with its vacated Merrimack, New Hampshire
facility, carrying and closure costs of $2.9 million associated with
facilities vacated by the Company, and operating lease payments for vacated
facilities and other charges of $1.3 million.
In the fourth quarter of 1994, based on operating issues encountered during
the execution of the restructuring plan, the Company determined its estimate
of cost savings would not be achieved from outsourcing certain manufacturing
operations at its Microelectronics Division and, as a result, reversed its
prior decision to outsource certain manufacturing operations. In connection
with this decision, the Company determined that approximately 100 planned
involuntary terminations would not take place. Also, the Company decided
that it would continue to use certain assets under operating leases, which it
had previously decided to abandon. As a result of these fourth quarter
decisions, the Company reversed to income approximately $2.8 million of the
restructuring reserve.
Also, in the fourth quarter of 1994, the Company committed to undertake a
plan of involuntary employee terminations in an effort to reduce general and
administrative expenses. In connection with the plan, the Company recorded,
in SG&A, a charge for expected termination benefits of $2.5 million. The
plan, which has been communicated to the Company's employees, calls for the
involuntary termination of approximately 175 employees, primarily comprised
of individuals functioning in a financial, general, or administrative
capacity. Through October 1, 1994 the Company has terminated 20 employees,
incurring severance charges of $.1 million.
Page 17
<PAGE>
At October 1, 1994, the remaining balance in the restructuring reserve of
$6.3 million is considered adequate to complete the remaining actions from
the 1993 fourth quarter restructuring plan and 1994 involutary termination
plan. Of the remaining reserve balance, $4.0 million will be used to
complete the remaining severance actions, $1.9 million will be used for
carrying and closure costs associated with vacated facilities held for sale
and $.4 million will cover the remaining lease costs (18 months) associated
with vacated office space. The Company expects to complete the severance
initiatives by the end of the second quarter of 1995 and anticipates
disposing of the facilities held for sale over the next two years.
The Company anticipates that the cash expenditures related to these actions
will approximate $5.1 million in 1995 and $1.2 million 1996.
Other
In the fourth quarter of 1993, the Company decided to refocus the direction
of its commercial business and reallocated certain resources associated with
that aspect of its operations. As a result of these actions, the Company
recorded a $5.3 million reserve for anticipated losses relating to its
manufacturing obligations on certain technically complex commercial
contracts. Beginning in 1994, in connection with certain changes in
operational management, the Company embarked upon a new strategy of
negotiating the termination of these contracts in an effort to minimize the
anticipated losses and maximize the Company's resources. During 1994, the
Company successfully negotiated the termination of three technically complex
contracts resulting in the reversal of $3.1 million of the previously
established reserve. This reversal was reflected as a reduction of cost of
sales. The remainder of the reserve was used primarily to cover other
contract overruns and unusable inventory associated with a terminated
contract.
During the fourth quarter of 1994, the Company charged $2.6 million to cost
of sales due to an inventory valuation adjustment in one of the Company's
semiconductor operations. The adjustment was primarily the result of a
revaluation of current inventory production in excess of current backlog
requirements and anticipated future business. As previously discussed, this
operation will be consolidated into the Company's Microelectronics Division
in order to align its cost structure with current market conditions.
In the first quarter of 1994, the Company prospectively adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS
109"), effective as of October 3, 1993. The cumulative effect of adopting
SFAS 109 amounted to $3.3 million of income and is reflected in the
consolidated statement of operations for 1994 as the cumulative effect of a
change in accounting principle. It primarily represents the reversal of
deferred tax assets and liabilities resulting from the adoption of SFAS 109.
The deferred tax assets and liabilities were established in connection with a
previous acquisition and were recorded as reductions of the respective assets
and liabilities.
Page 18
<PAGE>
Results of continuing operations: 1994 compared with 1993
Net sales for 1994 increased by $1.7 million compared with 1993. The
increase is primarily attributable to a $28.2 million increase in sales to
commercial customers partially offset by a $21.8 million decrease in U.S.
Department of Defense ("DoD") related sales and a $4.7 million decrease in
sales to non-defense U.S. government agencies and foreign governments.
The change in sales mix reflects the Company's strategy of developing
products for the commercial marketplace in response to the continued decline
in demand by the U.S. defense market. Sales of commercial products in 1994
have increased by 20% in comparison with 1993. Domestic and international
commercial sales of telecommunications related products increased more than
$16.5 million in 1994.
The Company's gross margin, as a percent of sales, was 34.2% in 1994 compared
with 31.6% in 1993. The increase in gross margin percentage is attributable
to increased sales of higher margin connector and circulator products
resulting in margin growth of 2.0%, productivity improvement and cost savings
in the Company's Microelectronics Division of 1.2% and the reversal of
previously established inventory reserves due to contract terminations of .3%
partially offset by the previously described inventory valuation adjustment
of .8%, declines in the selling prices of semiconductor products of .7% and
the effect of volume declines in sales of power hybrid products of 1.0%. The
1993 gross margin also included the charges for anticipated losses on
technically complex commercial development programs which decreased 1993
gross margins by 1.6%.
The Company incurred costs, included in cost of sales, on customer sponsored
research and development of $9.8 million and $18.5 million in 1994 and 1993,
respectively. Of these costs, $2.0 million and $3.6 million in 1994 and
1993, respectively, were not recoverable under fixed price engineering
contracts. The decrease in customer sponsored research and development
expense reflects the change to a commercial business environment where
customer funding for research and development is less prevalent than in
government contracting and a decrease in development costs for contracts
which have moved from development stages into production.
Company sponsored research and development expense increased by $2.3 million
in 1994 compared with 1993. The increase in company sponsored research and
development is attributable to a reallocation of engineers from production to
research and development as the Company continues to invest in products with
significant potential in both commercial and defense applications.
Selling, general and administrative expenses decreased by $26.3 million
compared with 1993. The decrease is primarily attributable to a $27.5
million restructuring charge recorded in 1993, which was partially offset in
1993 by: (1) a gain on the sale of a product line of $2.3 million; (2)
recovery of insurance proceeds related to reimbursement of expenditures
incurred prior to 1993 of $2.5 million; and (3) $1.0 million attributable to
the excess of insurance recovery over the net book value of assets damaged by
a fire at a production facility. The 1994 results include the reversal of
restructuring accruals in excess of requirements totaling $2.8 million and
the accrual of $2.5 million for involuntary termination benefits related to
its 1994 plan to reduce general and administrative expenses. The remaining
decrease in SG&A is mainly attributable to efficiencies realized from the
Company's consolidation and downsizing actions of the past two years.
Page 19
<PAGE>
Interest expense increased by $.7 million in 1994 compared with 1993. This
increase is mainly attributable to increased borrowings and higher interest
rates.
Interest income decreased by $3.4 million in 1994 compared with 1993. The
decrease results from the recording of $2.8 million in interest income
associated with a tax refund claim in 1993 and lower invested cash balances
in 1994.
During 1994, the Company recognized tax benefits primarily associated with
certain current and prior year expenditures that were eligible for carryback
under provisions of Federal tax law (approximately $1.0 million in the third
quarter). The benefit was recognized as the result of the issuance, during
the third quarter, of a favorable revenue ruling by the Internal Revenue
Service as to the deductibility of such expenditures. Prior to the third
quarter, the Company had not recognized any tax benefit for such expenditures
due to the uncertainty of their deductibility. This benefit offset the
Company's tax provision for the third quarter, which was primarily
attributable to the Company's foreign and Puerto Rico operations.
During the second quarter of 1993, the Company reached initial resolution
with the Internal Revenue Service of certain prior years' tax returns. As a
result, the Company recorded a reversal, net of the second quarter tax
provision of $3.6 million of accrued liabilities ($1.0 million of which was
attributable to discontinued operations). This reversal of accrued
liabilities resulted in a tax benefit for 1993 which is net of tax provisions
for earnings, primarily of foreign subsidiaries.
The variance between the statutory federal tax rate of 35% and the Company's
effective tax rate of 25% is due to the differential in tax rates applied to
earnings of foreign subsidiaries and Puerto Rico operations, as well as the
previously discussed recognition of tax benefits of expenses eligible for
federal tax carryback refunds.
Results of continuing operations: 1993 compared with 1992
Net sales for 1993 decreased by $47.9 million in comparison with 1992. The
decrease was primarily attributable to final shipments on several large
defense programs which occurred in 1992 and were not replaced in 1993 ($37.2
million) and the sale of two product lines in 1992 ($9.6 million), partially
offset by the incremental sales of Greenpar Connectors Limited ($7.6 million)
which was acquired in the third quarter of 1992. The remaining decrease in
sales resulted from the general decline in demand for the Company's defense-
related products and the negative impact of business interruption related to
the execution of the previously described physical consolidation.
Gross margin, as a percent of sales, was 31.6% in 1993 compared with 32.5% in
1992. The decrease in gross margin is attributable to the previously
described charges taken in the fourth quarter for anticipated losses on
technically complex commercial development programs (1.6%) and lost margin on
certain defense programs on which final shipments occurred in 1992 (1.1%).
These decreases were partially offset by the improved operating performance
of M/A-COM's Power Hybrids Operation (1.0%) and the final shipments of a
technically complex defense contract that experienced favorable manufacturing
results, thus allowing the release of reserves that were previously
established (.6%).
Page 20
<PAGE>
The Company incurred costs, included in cost of sales, on customer sponsored
research and development of $18.5 million and $23.3 million in 1993 and 1992,
respectively. Of these costs, $3.6 million in each of the years were not
recoverable under fixed price engineering contracts. The decrease in
customer sponsored research and development expenses was due mainly to the
completion of a contract for block converters for a personal communication
network application and to a general decrease in funding for product
development as existing defense-related programs progressed from
developmental to mature production phases. Company sponsored research and
development was comparable with prior year amounts.
Selling, general and administrative expenses increased by $20.6 million
compared with 1992. The increase was caused mainly by provisions totaling
$27.5 million for additional consolidation and downsizing of the Company's
facilities and workforce and adjustments to the estimated realizable value of
property being held for sale as part of its restructuring program. The
increase in SG&A was partially offset by a $2.3 million gain on the sale of
the Company's high power, narrow band receiver protector product line, $2.5
million of insurance proceeds related to reimbursement of expenditures
incurred in prior periods and $1.0 million attributed to the excess of
insurance recovery over the net book value of assets damaged by a fire at a
production facility.
Interest expense decreased by $1.6 million in 1993 compared with 1992. The
decrease is mainly attributable to the retirement of the Company's 10 7/8%
Notes in the fourth quarter of 1992.
Interest income increased by $1.1 million in 1993 compared with 1992. The
increase was caused by the recording of $2.8 million of interest income on a
tax refund claim partially offset by reduced interest income due to lower
invested cash balances.
In the second quarter of 1993, the Company reached initial resolution with
the Internal Revenue Service on matters relating to certain prior years' tax
returns. As a result the Company recorded a reversal, net of the second
quarter tax provision of $3.6 million of accrued liabilities ($1.0 million of
which was attributable to discontinued operations). This reversal of accrued
liabilities resulted in a tax benefit for 1993 which is net of tax provisions
for earnings, primarily of foreign subsidiaries.
Liquidity and Capital Resources
The Company's cash and marketable securities position was $5.9 million at
October 1, 1994 compared with $11.3 million at October 2, 1993. The decrease
is mainly attributable to additions to plant assets and a reduction in cash
generated from operating activities. The Company's operating activities
generated $10.4 million of cash in 1994 as compared with $14.4 million in
1993. The decrease was mainly attributable to cash expenditures for
restructuring actions and payments of other current liabilities.
The Company expended $15.8 million during 1994 for additions to plant assets
to meet production and operating requirements. Further investments in plant
assets are necessary to meet future requirements. Additionally, continued
investments in research and development are necessary for the Company to
enhance its position in commercial markets and to maintain its position in
its defense and government markets.
Page 21
<PAGE>
As of October 1, 1994, the Company's accounts receivable, as measured by the
number of days sales outstanding, decreased to 61 days in comparison with 70
days at October 2, 1993. The decrease is due to an increased focus on
collections.
The Company's inventory balance increased by $2.2 million at October 1, 1994
in comparison with October 2, 1993. The increase is mainly attributable to
an increase in inventory balances for standard products (connectors and
semiconductors) to improve response time in fulfilling customer orders. This
increase was partially offset by reduced inventory levels in the Company's
Microelectronics Division resulting from improved manufacturing operations.
During 1994, the Company borrowed and repaid $39.0 million under its
revolving line of credit, however, the maximum amount outstanding at any
month end during the year did not exceed $7.5 million. Additionally, the
Company repaid $.7 million of long-term debt and $2.6 million of debt
attributable to a previously discontinued operation.
The Company's foreign subsidiaries have lines of credit available to fund
local working capital requirements. During 1994, these subsidiaries reduced
their borrowings by a net of $.5 million under these lines of credit.
Outstanding borrowings under these lines of credit were approximately $5.7
million at October 1, 1994 and unused lines of credit available aggregated
approximately $10.4 million at that time.
During 1994, the Company completed negotiations for a new unsecured revolving
line of credit. The new line of credit, which permits maximum borrowings of
$30.0 million, expires on August 30, 1995. The maximum borrowings are
restricted based on the amount of the Company's domestic accounts receivable
and also contains certain restrictive covenants including, but not limited
to, minimum levels of profitability and liquidity and restrictions related to
indebtedness, cash flow and capital expenditures. The agreement also
contains restrictions with respect to acquisitions and the repurchase of the
Company's public debt. As of October 1, 1994, there were no outstanding
borrowings under this agreement and the Company's borrowing availability
under this agreement was $26.1 million.
The Company has retained certain liabilities associated with the previously
discussed discontinued operations that were disposed of in prior years.
These liabilities include items such as taxes and contractual obligations
entered into by the Company in connection with the sale of the businesses.
The Company considers its reserves for these contingencies to be adequate.
Currently, the Company is unable to determine when these contingencies will
be fully resolved, but expects that the resolution of these matters will not
have a material negative effect on the Company's financial condition or
results of operations.
In February 1990, the Board of Directors authorized the repurchase of 5.0
million shares of the Company's common stock, from time to time as funds are
available, extending a previous stock repurchase program. At October 1,
1994, there remains authorization to acquire a further 2.1 million shares
under the stock repurchase program. The Company will continue to monitor its
repurchase program and evaluate the advantages offered by additional
repurchases.
Page 22
<PAGE>
The Company believes that its cash balances, funds to be generated by future
operations and available borrowing capacity are sufficient to finance the
previously described restructuring actions, to provide for ongoing capital
requirements, research and development expenditures and to take advantage of
further investment opportunities.
M/A-COM's manufacturing activities have generated and continue to generate
materials classified as hazardous wastes. The Company devotes appropriate
resources to compliance with legal and regulatory requirements relating to
minimization of the use of these materials, to their proper disposal as
wastes, and to the protection of the environment. Those requirements include
clean-up activities at various sites. The Company does not believe that
expenditures relating to these requirements will have a material effect on
the Company's financial condition or results of operations. However, no
assurance can be given that any future discovery of new facts and the
retroactive application of such legal and regulatory requirements to those
facts would not be material and would not change the estimate of the costs
that the Company could be required to pay in any particular situation.
Page 23
<PAGE>
Item 8. Financial Statements and Supplementary Data
<TABLE>
Consolidated Statement of Operations
M/A-COM, Inc. and Subsidiaries
(in thousands, except per share amounts)
<CAPTION>
Year Ended
------------------------------------------------------------------
October 1, 1994 October 2, 1993 October 3, 1992
------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 341,596 $ 339,890 $ 387,818
--------- --------- ---------
Costs and expenses:
Cost of sales 224,895 232,545 261,907
Company sponsored research and development 21,676 19,400 19,631
Selling, general and administrative expenses 81,905 108,163 87,541
Interest expense 9,159 8,412 10,024
Interest income (563) (3,917) (2,851)
--------- --------- ---------
337,072 364,603 376,252
--------- --------- ---------
Income (loss) from continuing operations before income taxes 4,524 (24,713) 11,566
Income tax provision (benefit) 1,132 (2,206) 2,633
--------- --------- ---------
Income (loss) from continuing operations 3,392 (22,507) 8,933
Discontinued operations, less income taxes -- 1,000 3,064
--------- --------- ---------
Income (loss) before cumulative effect 3,392 (21,507) 11,997
Cumulative effect of a change in accounting for income taxes 3,300 - -
--------- --------- ---------
Net income (loss) $ 6,692 $ (21,507) $ 11,997
========= ========= =========
Income (loss) per share:
Continuing operations $ .13 $ (.92) $ .37
Discontinued operations - .04 .13
Cumulative effect of a change in accounting
for income taxes .13 - -
--------- --------- ---------
Net income (loss) per share $ .26 $ (.88) $ .50
========= ========= =========
Shares used in net income (loss) per share calculation 25,986 24,401 24,114
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 24
<PAGE>
<TABLE>
Consolidated Balance Sheet
M/A-COM, Inc. and Subsidiaries
(in thousands)
<CAPTION>
October 1, 1994 October 2, 1993
---------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,631 $ 10,024
Marketable securities 1,250 1,250
Accounts receivable, less allowances
of $2,092 and $2,112, respectively 70,001 72,730
Unbilled revenue under customer contracts 1,926 1,744
Inventories 60,827 58,629
Other current assets 10,842 7,157
-------- ---------
Total current assets 149,477 151,534
-------- ---------
Plant assets:
Land and land improvements 3,440 3,463
Buildings and building equipment 39,988 47,379
Machinery and equipment 218,790 201,100
-------- ---------
262,218 251,942
Less - Accumulated depreciation (158,729) (145,235)
-------- ---------
103,489 106,707
-------- ---------
Other assets 55,666 56,462
-------- ---------
Total Assets $308,632 $ 314,703
======== =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 25
<PAGE>
<TABLE>
Consolidated Balance Sheet (Continued)
M/A-COM, Inc. and Subsidiaries
(in thousands)
<CAPTION>
October 1, 1994 October 2, 1993
--------------------------------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current portion of long-term debt $ 6,518 $ 6,737
Accounts payable-trade 14,968 21,255
Accrued liabilities 42,636 64,649
Accrued payroll and employee benefits 16,541 19,172
Income taxes 14,911 10,443
--------- ---------
Total current liabilities 95,574 122,256
--------- ---------
Long-term debt 67,599 68,352
--------- ---------
Other long-term liabilities 11,791 12,227
--------- ---------
Deferred income taxes 12,328 3,993
--------- ---------
Stockholders' equity:
Common stock, $1 par value:
Authorized - 100,000 shares
Issued - 44,006 shares 44,006 44,006
Capital in excess of par value 217,046 216,903
Retained earnings 72,626 65,975
--------- ---------
333,678 326,884
Less - Deferred compensation (4,568) (5,602)
- Cost of common stock held in treasury -
18,117 and 18,846 shares, respectively (207,770) (213,407)
--------- ---------
Total stockholders' equity 121,340 107,875
--------- ---------
Commitments and contingencies
Total Liabilities and Stockholders' Equity $ 308,632 $ 314,703
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 26
<PAGE>
<TABLE>
Consolidated Statement of Cash Flows
M/A-COM, Inc. and Subsidiaries
(in thousands)
<CAPTION>
Year Ended
-------------------------------------------------------------
October 1, 1994 October 2, 1993 October 3, 1992
-------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Income (loss) from continuing operations $ 3,392 $ (22,507) $ 8,933
Adjustments to reconcile income (loss) to
cash provided by operating activities:
Depreciation and amortization 24,773 24,218 26,995
Deferred compensation 1,640 2,008 1,712
Write-downs of abandoned plant assets -- 9,600 3,500
Decrease (increase) in:
Accounts receivable and unbilled revenue 2,815 (5,880) 7,815
Inventories (2,891) 510 14,532
Other current assets 462 (4,251) 929
Increase (decrease) in:
Accounts payable and accruals (21,652) 17,661 (14,444)
Income taxes 1,501 (5,650) 315
Long-term liabilities (197) (261) (22,764)
Other 586 (1,014) (1,154)
--------- --------- ---------
Cash provided by operating activities 10,429 14,434 26,369
--------- --------- ---------
Cash flows from investing activities:
Additions to plant assets (15,767) (39,414) (16,790)
Acquisitions, net of cash acquired -- - (12,601)
Investment in IVHS Technologies, Inc. -- (2,250) -
Proceeds from sales of marketable securities -- - 2,605
--------- --------- ---------
Cash applied to investing activities (15,767) (41,664) (26,786)
--------- --------- ---------
Cash flows from financing activities:
Repayment of debt (41,666) (2,906) (20,029)
Proceeds from borrowings 40,432 3,789 11,036
Repurchases of common stock -- (3,167) (6,890)
Stock options exercised 1,242 1,711 666
Other (41) (34) (43)
--------- --------- --------
Cash applied to financing activities (33) (607) (15,260)
--------- --------- --------
Cash provided by (applied to) discontinued operations (22) 1,725 5,483
--------- --------- ---------
Decrease in cash and cash equivalents (5,393) (26,112) (10,194)
Cash and cash equivalents at beginning of year 10,024 36,136 46,330
--------- --------- ---------
Cash and cash equivalents at end of year $ 4,631 $ 10,024 $ 36,136
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 27
<PAGE>
Notes to Consolidated Financial Statements
M/A-COM, Inc. and Subsidiaries
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of M/A-COM, Inc.
and all subsidiary companies. All significant intercompany transactions and
balances have been eliminated. The Company's charter specifies that its
fiscal year ends on the Saturday closest to September 30.
Cash Equivalents and Marketable Securities
Cash equivalents and marketable securities are stated at cost plus accrued
interest, which approximates market value. Cash equivalents consist of short
term investments in time deposits, municipal obligations and certificates of
deposit which aggregate $2.5 million and $5.6 million at October 1, 1994 and
October 2, 1993, respectively. The Company considers all highly liquid
securities purchased with an original maturity of three months or less to be
cash equivalents, while those having maturities in excess of three months are
classified as marketable securities and generally consist of municipal
obligations.
Revenue Recognition
Revenue is recognized generally when a product is shipped and services are
performed. Certain long-term contracts are accounted for using the percentage-
of-completion method, whereby revenue and profit are recognized throughout
the performance period of the contract. The effects of changes in estimates
of contract costs are recorded currently. If estimates of cost, including
general and administrative costs, indicate a loss, provision is made
currently for the total loss anticipated.
Unbilled revenue under customer contracts represents revenue earned under the
percentage-of-completion method but not yet billable under the terms of the
contract. These amounts are billable based on the terms of the contract which
include shipment of the product, achievement of milestones or completion of
the contract.
Inventories
Inventories are stated at the lower of cost or market. Cost, which includes
engineering and production costs only, is determined principally on a first-
in, first-out basis.
Environmental Matters
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current
or future revenue generation, are expensed. Liabilities are recorded without
regard to possible recoveries from third parties, including insurers, when
environmental assessments and/or remedial efforts are probable and the costs
can be reasonably estimated.
Page 28
<PAGE>
Plant Assets and Depreciation
Plant assets are stated at cost. Depreciation is provided on the straight-
line method over the estimated useful lives.
Other Assets
Other assets include the excess of cost over the net assets of acquired
companies (goodwill) which is being amortized on a straight-line basis over
periods ranging from twenty to forty years. Goodwill amounted to
approximately $30.6 million and $30.8 million at October 1, 1994 and October
2, 1993, respectively, which is net of accumulated amortization of
approximately $5.0 million and $3.7 million, respectively.
Income Taxes
As more fully discussed in Note 6, in the first quarter of 1994, the Company
prospectively adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes ("SFAS 109"), effective as of October 3, 1993.
SFAS 109 is an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences
of events that have been recognized in the Company's financial statements or
tax returns. In estimating future tax consequences, SFAS 109 generally
considers all expected future events other than enactments of changes in the
tax law or rates. The measurement of deferred tax assets is reduced, if
necessary, by a valuation allowance. Previously the Company used the SFAS 96
asset and liability approach that gave no recognition to future events other
than the recovery of assets and settlement of liabilities at their carrying
amounts. Accordingly, amounts shown for 1993 and 1992 reflect income tax
accounting under SFAS 96.
The Company has not provided deferred taxes on the undistributed earnings of
its foreign subsidiaries as such earnings are expected to be reinvested for
an indefinite period of time.
Income (Loss) Per Share
Income per share has been calculated using the weighted average number of
shares outstanding during each year, adjusted for the impact of the Company's
stock option and deferred compensation plans. Conversion of the Convertible
Debentures has not been assumed as the impact would be anti-dilutive. Loss
per share has been calculated using only the weighted average number of
shares outstanding.
NOTE 2 - CHANGES IN BUSINESS:
Continuing Operations
In the first quarter of 1993 the Company sold its high power, narrow band
receiver protector product line for $5.1 million in cash, resulting in a gain
of $2.3 million which was recorded as a reduction of selling, general and
administrative expenses ("SG&A") in the accompanying consolidated statement
of operations.
Page 29
<PAGE>
In the second quarter of 1993, the Company made an investment approximating
7% of the equity of IVHS Technologies, Inc. ("IVHS") for $2.3 million. IVHS
is in the business of innovating, designing and manufacturing specialized
electronic products that enhance the safety and efficiency of vehicles,
drivers and roadways. The investment is accounted for by the cost method.
During the third quarter of 1992, the Company acquired Greenpar Connectors
Limited ("Greenpar"), a United Kingdom manufacturer of coaxial connectors and
cable assemblies for the commercial marketplace, for approximately $12.6
million. The acquisition has been accounted for as a purchase and,
accordingly, the Company's consolidated statement of operations includes the
operating results of Greenpar from the date of acquisition. The excess of
purchase price over the fair value of the net assets acquired, which
approximated $8.8 million, is being amortized on a straight-line basis over
20 years.
Discontinued Operations
In the first quarter of 1993, the Company decided to retain its M/A-COM Power
Hybrids Operation ("PHO") as part of the Company's continuing operations.
The decision to retain this business resulted from PHO's improved operating
performance and market potential. PHO was identified for disposition in 1990
and had been accounted for as a discontinued operation since that time. The
accompanying consolidated statements of operations and of cash flows for the
year ended October 3, 1992 have been reclassified to present PHO within
continuing operations.
As a result of the 1990 decision to dispose of PHO, the Company had recorded
a loss from discontinued operations of $10.5 million for estimated operating
losses during the phase out period and to reduce the related assets to
estimated realizable value. PHO's actual operating losses during the period
that it was accounted for as a discontinued operation were $10.5 million.
Accordingly, there were no remaining discontinued operations accrued losses
associated with PHO as of October 3, 1992.
In 1992 the Company completed its divestiture program initiated in 1990 with
the sale of its Microwave Design and Manufacturing, Inc. subsidiary for $6.4
million in cash. This sale had no effect on the results of discontinued
operations.
Liabilities of the Company incurred in connection with the discontinued
businesses of $7.4 million and $8.0 million at October 1, 1994 and October 2,
1993, respectively, are included in accrued liabilities. In addition, long-
term debt related to discontinued businesses of $2.6 million at October 2,
1993 is also included in accrued liabilities. This amount was repaid in
1994.
Page 30
<PAGE>
NOTE 3 - RESTRUCTURING COSTS AND UNUSUAL ITEMS:
Restructuring
During 1992 the Company provided $20.4 million to execute its plans to
consolidate and restructure several of its operations. The Company also
reversed approximately $5.0 million in reserves established in prior years as
execution of the related restructuring actions was integrated into the 1992
restructuring decision. These plans included the physical consolidation of
six separate operations into the new Microelectronics Division facility in
Lowell, Massachusetts, reduction in the workforce of approximately 340
employees related to such operations and the planned sale of excess
facilities and equipment. The physical consolidation of facilities related
to this plan was completed during the last half of 1993 and has created
administrative and operational efficiencies, resulting from the elimination
of certain redundancies. Severance and related benefit charges incurred with
the workforce reduction totaled $11.3 million. Additionally, the Company
wrote off excess equipment and incurred expenses associated with disposition
of this equipment totaling $5.3 million. Carrying and closure costs of
vacant facilities totaled $2.1 million.
In 1993, based primarily on a continued decline in its defense business, the
Company initiated actions for additional consolidation and downsizing of its
business. In the second quarter of 1993, the Company recorded a charge to
SG&A of $4.0 million. Approximately $2.0 million of this charge was
attributable to a change in the estimated realizable value of vacated
facilities and additional expenses associated with an extension of the period
required for the disposal of these facilities These facilities had been
vacated as part of the Company's 1992 restructuring program. The remainder
of the charge related to incremental workforce reductions of approximately
450 employees at the Company's Microelectronics Division. In the fourth
quarter of 1993, the Company recorded a $23.5 million charge in SG&A. The
actions contemplated in this charge primarily included a workforce reduction
of approximately 430 employees, the carrying and closure cost of a facility
in Merrimack, New Hampshire and vacating certain leased space in
Massachusetts. The restructuring charges taken by the Company in 1993
related to the consolidation and downsizing are comprised of the following:
severance and personnel related costs of $9.5 million; facilities and
equipment write-downs of $9.6 million; carrying and closure costs of vacated
buildings of $6.0 million; and leases and other restructuring costs of $2.4
million.
During 1993, the Company incurred severance and related benefit charges of
$6.9 million in connection with the workforce reductions included in this
plan as well as final payments on 1992 workforce reduction actions. Charges
for facilities and equipment write-downs consisted of $7.0 million for real
estate written down to net realizable value, and $2.3 million for the
disposal of redundant equipment in 1993. Additionally, the costs of closing,
preparing for sale and carrying the vacant buildings totaled $6.2 million in
1993.
Page 31
<PAGE>
During 1994, the Company continued its progress in the execution of the
actions contemplated by its 1993 restructuring plan. Charges incurred in
1994 were comprised of $5.5 million of severance and related benefit charges
for the termination of approximately 300 employees, write-offs of fixed
assets of $1.3 million associated with its vacated Merrimack, New Hampshire
facility, carrying and closure costs of $2.9 million associated with
facilities vacated by the Company, and operating lease payments for vacated
facilities and other charges of $1.3 million.
In the fourth quarter of 1994, based on operating issues encountered during
the execution of the restructuring plan, the Company determined its estimate
of cost savings would not be achieved from outsourcing certain manufacturing
operations at its Microelectronics Division and, as a result, reversed its
prior decision to outsource certain manufacturing operations. In connection
with this decision, the Company determined that approximately 100 planned
involuntary terminations would not take place. Also, the Company decided
that it would continue to use certain assets under operating leases, which it
had previously decided to abandon. As a result of these fourth quarter
decisions, the Company reversed to income approximately $2.8 million of the
restructuring reserve.
Also, in the fourth quarter of 1994, the Company committed to undertake a
plan of involuntary employee terminations in an effort to reduce general and
administrative expenses. In connection with the plan, the Company recorded,
in SG&A, a charge for expected termination benefits of $2.5 million. The
plan, which has been communicated to the Company's employees, calls for the
involuntary termination of approximately 175 employees, primarily comprised
of individuals functioning in a financial, general, or administrative
capacity. Through October 1, 1994 the Company has terminated 20 employees,
incurring severance charges of $.1 million.
The facilities held for sale as a result of the previously described
restructurings have been stated at an estimated net realizable value of $10.5
and $11.4 million at October 1, 1994 and October 2, 1993, respectively, and
are included in other assets in the accompanying consolidated balance sheet.
Additionally, $3.9 million and $17.6 million of accrued liabilities related
to the Company's restructuring program are included in the accompanying
consolidated balance sheet at October 1, 1994 and October 2, 1993,
respectively.
Other Unusual Items
In the fourth quarter of 1993, the Company decided to refocus the direction
of its commercial business and reallocated certain resources associated with
that aspect of its operations. As a result of these actions, the Company
recorded a $5.3 million reserve for anticipated losses relating to its
manufacturing obligations on certain technically complex commercial
contracts. Beginning in 1994, in connection with certain changes in
operational management, the Company embarked upon a new strategy of
negotiating the termination of these contracts in an effort to minimize the
anticipated losses and maximize the Company's resources. During 1994, the
Company successfully negotiated the termination of three technically complex
contracts resulting in the reversal of $3.1 million of the previously
established reserve. Such reversals were reflected as reductions of cost of
sales. The remainder of the reserve was used primarily to cover other
contract overruns and unusable inventory associated with a terminated
contract.
Page 32
<PAGE>
During the fourth quarter of 1994, the Company charged $2.6 million to cost
of sales due to an inventory valuation adjustment in one of the Company's
semiconductor operations. The adjustment was primarily the result of a
revaluation of current inventory production in excess of current backlog
requirements and anticipated future business.
During the second quarter of 1993, the Company benefited from the recovery of
$2.2 million in insurance proceeds. The proceeds represent the reimbursement
of expenditures made for certain liabilities at a site previously occupied by
the Company and were recorded as a reduction of SG&A. The expenditures had
been charged to the results of operations in previous periods.
In the first quarter of 1993, a production facility of a foreign subsidiary
was damaged by fire. The Company recorded a gain of approximately $1.0
million related to the excess of the insurance recovery over the net book
value of the assets damaged by the fire. The gain was recorded as a
reduction of SG&A during the quarter.
The Company recorded charges to cost of sales of $3.2 million in 1994 related
to cost overruns on fixed price defense contracts ($5.5 million in each of
1993 and 1992). These charges relate mainly to complex multifunction
assembly programs.
NOTE 4 - INVENTORIES:
Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
October 1, 1994 October 2, 1993
--------------------------------------------
<S> <C> <C>
Raw materials $ 21,762 $ 22,829
Work in process 27,964 26,291
Finished products 11,101 9,509
--------- ---------
$ 60,827 $ 58,629
========= =========
</TABLE>
Page 33
<PAGE>
NOTE 5 - INDEBTEDNESS AND LINES OF CREDIT:
Long-term debt is summarized as follows (in thousands):
<TABLE>
<CAPTION>
October 1, 1994 October 2, 1993
------------------------------------------
<S> <C> <C>
9-1/4% Convertible Subordinated
Debentures Due May 15, 2006 $ 65,836 $ 65,836
5.8% - 6.0% industrial facility
revenue bonds, payable
through 2000 1,269 1,811
9-1/4% mortgage notes,
secured by land & buildings,
payable through 1999 1,291 1,483
--------- ---------
Total debt 68,396 69,130
Less - Amount due within one year 797 778
--------- ---------
Total long-term debt $ 67,599 $ 68,352
========= =========
</TABLE>
The Subordinated Debentures are convertible into common stock at $36.50 per
share, subject to adjustment. As of May 15, 1992, the Company is required to
redeem $5.0 million face value of Debentures annually. Debentures with a
face value of $34.2 million have been acquired through October 1, 1994, $15.0
million of which have been retired since their acquisition and the remainder
of which can be credited to future sinking fund requirements. At the
Company's option, the Debentures are redeemable at any time, in whole or in
part, currently at 101.2% of par, declining annually to par on May 15, 1996.
The fair market value for the Debentures approximated carrying value at
October 1, 1994.
The aggregate maturities during the next five years of long-term debt
outstanding at October 1, 1994 are as follows (in thousands): 1995-$797; 1996-
$570; 1997-$396; 1998-$1,289; and 1999-$5,238.
In the first quarter of 1994, the Company repaid $2.6 million of an
Industrial Revenue Bond ("IRB") associated with a previously discontinued
operation. The IRB was included in accrued liabilities in the accompanying
consolidated balance sheet at October 2, 1993.
During 1994, the Company completed negotiations for a new unsecured revolving
line of credit. During the term of the agreement, the Company can borrow at
the bank's base rate (7.75% at October 1, 1994) or an adjusted Eurodollar
rate, plus one and one-half percent. The new line of credit, which permits
maximum borrowings of $30.0 million, expires on August 30, 1995. The maximum
borrowings are restricted based on the amount of the Company's domestic
accounts receivable and also contains certain restrictive covenants
including, but not limited to, minimum levels of profitability and liquidity
and restrictions related to indebtedness, cash flow and capital expenditures.
The agreement also contains restrictions with respect to acquisitions and the
repurchase of the Company's public debt. As of October 1, 1994, there were
no outstanding borrowings under this agreement and the Company's borrowing
availability under this agreement was $26.1 million.
Page 34
<PAGE>
Additionally, certain of the Company's foreign subsidiaries have lines of
credit available to fund local working capital requirements. The lines of
credit provide for borrowings aggregating approximately $16.1 million. At
October 1, 1994, total borrowings outstanding under these lines of credit
approximated $5.7 million at interest rates ranging from 3.0% to 11.5%.
NOTE 6 - INCOME TAXES:
In the first quarter of 1994, the Company prospectively adopted SFAS 109,
effective as of October 3, 1993. The cumulative effect of adopting SFAS 109
amounted to $3.3 million of income. This amount is reflected in the
consolidated statement of operations for 1994 as the cumulative effect of a
change in accounting principle. It primarily represents the reversal of
deferred tax assets and liabilities resulting from the adoption of SFAS 109.
The deferred tax assets and liabilities were established in connection with a
previous acquisition and were recorded as reductions of the respective assets
and liabilities.
The sources of income (loss) from continuing operations before income taxes
and the components of the related provision for (benefit from) domestic,
including Puerto Rico, and foreign income taxes are shown below (in
thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------------
<S> <C> <C> <C>
Income (loss) from continuing
operations before income taxes:
Domestic $ (3,785) $ (30,426) $ 6,520
Foreign 8,309 5,713 5,046
--------- --------- ---------
$ 4,524 $(24,713) $ 11,566
========= ========= =========
Income taxes:
Federal:
Currently payable $ (2,215) $ (4,543) $ 212
Deferred 21 28 (198)
--------- --------- ---------
(2,194) (4,515) 14
--------- --------- ---------
State 100 (100) 657
--------- --------- ---------
Foreign:
Currently payable 3,039 2,409 1,977
Deferred 187 - (15)
--------- --------- ---------
3,226 2,409 1,962
--------- --------- ---------
Tax provision (benefit) $ 1,132 $ (2,206) $ 2,633
========= ========= =========
</TABLE>
Page 35
<PAGE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes and operating
loss carryforwards.
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of October 1, 1994 (in thousands):
Deferred Tax Assets:
- -------------------
Inventory capitalization and reserves $ 9,779
Capitalized research and development 7,221
Deferred compensation 3,193
Net operating loss carryovers 32,448
Restructuring reserve 6,473
Other accruals and reserves 13,788 72,902
--------
Deferred Tax Liabilities:
- ------------------------
Depreciation and amortization (18,793)
Other (5,968) (24,761)
--------
Valuation allowance (53,092)
--------
Net deferred tax liability $ (4,951)
========
The net deferred tax liability above is comprised of a net current deferred
tax asset of $7.4 million, included in other current assets and a net non-
current deferred tax liability of $12.3 million in the consolidated balance
sheet at October 1, 1994.
The difference between the provision for (benefit from) taxes on income
(loss) from continuing operations and the amount computed by applying the
United States Federal income tax rate is reconciled below:
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------
<S> <C> <C> <C>
Statutory federal income tax rate 35.0 % (34.0)% 34.0 %
State income taxes 2.2 (.4) 5.7
Utilization of U.S. federal
book loss carryforward - - (5.9)
U.S. federal loss without tax effect 16.5 44.4 -
Accrued liability reversal (37.6) (16.2) -
Effect of earnings of Puerto Rico
operations .6 (3.7) (12.8)
Foreign losses without tax benefit
and foreign rate differential 7.0 1.9 2.1
Other, net 1.3 (.9) (.3)
-------------------------------------
25.0 % (8.9)% 22.8 %
=====================================
</TABLE>
Page 36
<PAGE>
The Company has U.S. Federal net operating loss carryforwards amounting to
approximately $60.0 million at October 1, 1994. The net operating loss
carryforwards expire primarily in 2005 through 2009.
During 1994, the Company recognized tax benefits primarily associated with
certain current and prior year expenditures that were eligible for carryback
under provisions of Federal tax law (approximately $1.0 million in the third
quarter. The benefit was recognized as the result of the issuance, during
the third quarter, of a favorable revenue ruling by the Internal Revenue
Service as to the deductibility of such expenditures. Prior to the third
quarter, the company had not recognized any tax benefit for such expenditures
due to the uncertainty as to their deductibility.
In the second quarter of 1993, the Company reached initial resolution with
the Internal Revenue Service of certain prior years' tax returns. As a
result, the Company recorded $2.8 million of interest income on a tax refund
claim at that time. Additionally, the Company recorded a reversal, net of
the second quarter's tax provision, of $3.6 million of accrued tax
liabilities ($1.0 million of which was applicable to discontinued
operations).
NOTE 7 - STOCKHOLDERS' EQUITY:
Changes in components of stockholders' equity were as follows (in thousands):
<TABLE>
<CAPTION>
Capital in
Common Excess of Retained Deferred Treasury
Stock Par Value Earnings Compensation Stock
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at September 28, 1991 $ 44,006 $223,533 $ 75,017 $ (6,975) $(219,401)
Net income - - 11,997 - -
Issuances under employee plans, net - (2,150) 543 (668) 6,451
Repurchases of common stock - - - - (6,890)
Amortization of deferred compensation - - - 1,837 -
ESOT loan payment - 88 - - -
Other - 522 (43) - (12)
--------- --------- --------- --------- ---------
Balance at October 3, 1992 44,006 221,993 87,514 (5,806) (219,852)
Net loss - - (21,507) - -
Issuances under employee plans, net - (3,042) - (1,822) 9,612
Repurchases of common stock - - - - (3,167)
Amortization of deferred compensation - - - 2,026 -
Other - (2,048) (32) - -
--------- --------- --------- --------- ---------
Balance at October 2, 1993 44,006 216,903 65,975 (5,602) (213,407)
Net income - - 6,692 - -
Issuances under employee plans, net - (908) - (606) 5,637
Amortization of deferred compensation - - - 1,640 -
Other - 1,051 (41) - -
--------- --------- --------- --------- ----------
Balance at October 1, 1994 $ 44,006 $ 217,046 $ 72,626 $ (4,568) $ (207,770)
========= ========= ========= ========= ==========
</TABLE>
Page 37
<PAGE>
The Company repurchased .5 million shares of its common stock in 1993 and 1.2
million shares in 1992.
The Company has outstanding a class of Common Share Purchase Rights, which
are currently attached to and trade with the common stock. The rights were
issued to help ensure that all stockholders receive fair and equal treatment
in the event of any proposal to acquire control of the Company. Each right
entitles the holder to purchase eight-tenths of one share of common stock at
an exercise price of $60 per share, subject to adjustment.
The rights will trade separately and become exercisable only if a person or
group acquires or announces an offer to acquire 10% or more of the common
stock. Thereafter, if such an acquisition is made, each holder with certain
exceptions would be entitled, upon exercise of each right, to receive shares
of common stock (or, if the Company were acquired, of the acquiring company's
common stock) having a market value equal to 1.6 times the exercise price of
the right.
The Company may lower the 10% threshold, exempt certain acquisitions, or
redeem the rights at one cent per right under certain circumstances. The
rights will expire on August 7, 1996.
NOTE 8 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash receipts and expenditures related to interest and income taxes from
continuing operations are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Interest received $ 564 $ 1,170 $ 2,937
Interest paid $ 9,067 $ 8,340 $ 10,863
Income tax payments (refunds) $ (445) $ 2,017 $ 2,671
</TABLE>
Cash flows from discontinued activities are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash provided by (applied to):
Discontinued operating activities $ 2,269 $ (934) $ (1,237)
Investing activities 309 4,459 8,520
Financing activities (2,600) (1,800) (1,800)
-------- --------- --------
Cash provided by (applied to)
discontinued operations $ (22) $ 1,725 $ 5,483
======== ======== ========
</TABLE>
Non-cash activity relating to the Company's matching contribution to the
domestic defined contribution retirement plan was $3.7 million, $3.5 million
and $3.0 million for 1994, 1993 and 1992, repectively.
Page 38
<PAGE>
NOTE 9 - EMPLOYEE STOCK PLANS:
Stock Award Plans
The M/A-COM Long Term Incentive Plan (the "Incentive Plan"), adopted in 1990,
authorizes an aggregate of 1.2 million shares of the Company's common stock
for the granting of non-qualified and incentive stock options, outside
Directors' options, stock appreciation rights ("SARs") and restricted stock.
The Incentive Plan replaced all existing stock award plans but the awards
outstanding under such existing plans were not affected. At October 1, 1994,
.1 million stock awards were available for grant under the Incentive Plan.
A summary of the status of the Company's stock option plans follows (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------------
<S> <C> <C> <C>
Options outstanding - beginning 2,526 2,737 2,905
Granted 72 316 207
Exercised (226) (313) (253)
Terminated (58) (214) (122)
----- ----- -----
Options outstanding - ending 2,314 2,526 2,737
===== ===== =====
Option price per share - ending $3.88 - 10.00 $3.88 - 10.00 $3.88 - 10.00
============= ============= =============
</TABLE>
All outstanding options are non-qualified and have been granted at option
prices per share not less than the then fair market value of the Company's
common stock. Options become exercisable over a four-year period and expire
ten years after the date granted. Options for 1.9 million and 1.7 million
shares were exercisable at October 1, 1994 and October 2, 1993, respectively.
Of the outstanding options at October 1, 1994, 1.1 million SARs, with an
option price of $5.69 per share, were granted in tandem with 1.1 million of
the stock options. Based on past experience, the expressed intent of the two
holders not to elect the SAR option and the underlying economics to the
holders, management's opinion is that SARs will not be exercised and,
therefore, no compensation expense has been recognized.
At October 1, 1994, there were .2 million stock units issued and outstanding.
These units were granted prior to the adoption of the Incentive Plan. Stock
units are convertible into shares of common stock on a one-for-one basis upon
the lapsing of certain restrictions. In 1994, .2 million units were converted
to shares (.2 million in each of 1993 and 1992).
Page 39
<PAGE>
Restricted Treasury Stock Plan
The M/A-COM, Inc. 1990 Restricted Treasury Stock Plan (the "Stock Plan") was
approved by the Company's stockholders at its Annual Meeting on February 20,
1991.
The Stock Plan reserved 2.0 million shares of the Company's common stock for
granting share allocations as an incentive to officers and key employees.
After receiving an allocation of restricted shares of common stock, a
participant in the Stock Plan is awarded specified portions of such share
allocation on subsequent dates based on the achievement of performance
targets representing increases in the average market value of the Company's
common stock above the initial stock price of such allocation (the "Stock
Price Increase") as follows: if the Stock Price Increase (in terms of
multiple of initial stock price) is .5, the participant would be awarded 50%
of such share allocations, and if the Stock Price Increase is 1.0, the
participant would be awarded 100% of such allocations.
The awarded restricted shares become unrestricted over a three-year period
commencing on the date on which the target share price is achieved.
Contingent upon continued employment with the Company through September 19,
2000, all granted share allocations are awarded and become unrestricted on
that date.
A summary of the status of the Company's Stock Plan follows (in thousands,
except per share amounts):
<TABLE>
<CAPTION>
Market Restricted
Price at Date Share Shares
of Grant Allocations Awarded
------------- ------------- -------------
<S> <C> <C> <C>
Balance at September 28, 1991 918 592
Granted $4.875 - 7.00 275 -
Forfeited (98) (96)
------------- -------------
Balance at October 3, 1992 1,095 496
Granted $4.375 - 9.625 320 -
Awarded (633) 633
Forfeited (225) (135)
------------- -------------
Balance at October 2, 1993 557 994
Granted $7.375 30 --
Forfeited -- (134)
------------- -------------
Balance at October 1, 1994 587 860
============= =============
</TABLE>
At October 1, 1994, .6 million shares were available for grant allocations
under the Stock Plan.
The fair market value of the share allocations, based on the market price at
date of grant, is recorded as deferred compensation, a component of
stockholders' equity. Deferred compensation is amortized over the periods to
be benefited.
Page 40
<PAGE>
NOTE 10 - RETIREMENT PLANS:
The Company and its subsidiaries have defined contribution retirement plans
covering substantially all employees. The expense for these plans related to
continuing operations was $3.9 million in 1994 ($4.2 million in 1993 and $4.5
million in 1992).
In addition, the Company has a supplemental defined benefit pension plan for
certain employees to replace retirement benefits which were reduced as a
result of limitations in the Tax Reform Act of 1986. Plan benefits are to be
paid from the general funds of the Company. Amounts charged to continuing
operations expense for 1994, 1993 and 1992 related to this supplemental plan
were $.4, $.5 and $.4 million, respectively. The projected benefit
obligation associated with this plan is not significant in relation to the
consolidated financial statements.
During the second quarter of 1992, the Company began matching employee
contributions to the Company's domestic defined contribution retirement plan
(the "retirement plan") with the Company's common stock. A total of .5
million and .6 million shares were contributed to the retirement plan during
1994 and 1993, respectively.
NOTE 11 - EMPLOYEE STOCK OWNERSHIP PLAN:
The Company has an Employee Stock Ownership Plan ("ESOP") which enables
employees to accumulate shares of the Company's common stock. The cost of the
Plan is borne by the Company through contributions to the ESOP. Shares of
common stock are allocated to each employee and are held in trust until the
employee's termination, retirement or death. The Company's ESOP contribution
related to continuing operations amounted to $.1 million for 1994, $.1
million for 1993 and $.4 million for 1992.
At October 1, 1994, the M/A-COM Employee Stock Ownership Trust owned .9
million shares of common stock, of which .8 million have been allocated to
employees. Employees are entitled to vote allocated shares and the Trustees
are entitled to vote unallocated shares.
NOTE 12 - LITIGATION:
M/A-COM is a defendant in various legal proceedings incidental to the nature
of its business. However, the Company believes that the outcome of these
proceedings will not materially affect the Company's financial position or
results of operations.
On October 27, 1993, at the request of the Company's insurance carrier, the
Company entered into a Stipulation of Settlement in connection with the class
action entitled Rand, et al. v. M/A-COM, Inc., et al. On February 1, 1994,
the court approved the Stipulation of Settlement. Pursuant to the
Stipulation of Settlement the Company's insurance carrier has paid into a
settlement fund the amount of $3.9 million in full settlement of all claims
in the action. The Company is not required to make any payment to the
plaintiffs out of its own funds, and the Company's insurance carrier has paid
the Company $325,000 to compensate the Company for certain costs associated
with the litigation.
Page 41
<PAGE>
NOTE 13 - COMMITMENTS AND CONTINGENCIES:
Certain office and production space and equipment used in continuing
operations were rented at an annual net cost of approximately $8.1 million in
1994 ($6.7 million in 1993 and $5.1 million in 1992). At October 1, 1994, the
Company was committed under noncancelable operating leases which provide for
the following rentals: 1995-$8.5 million; 1996-$7.8 million; 1997-$7.2
million; 1998-$6.6 million; 1999-$6.3 million and $53.4 million thereafter.
At October 1, 1994 outstanding letters of credit totaled approximately $3.2
million.
In the fourth quarter of 1992, the Company paid $2.9 million and agreed to be
responsible for certain possible additional environmental liabilities
relating to a site occupied until 1971 by a division of the Company. The
Company had previously established reserves for this matter and does not
believe that the resolution of the remaining possible liabilities will have a
material effect on its financial condition or results of operations (see Note
1).
M/A-COM's manufacturing activities have generated and continue to generate
materials classified as hazardous wastes. The Company devotes appropriate
resources to compliance with legal and regulatory requirements relating to
minimization of the use of these materials, to their proper disposal as
wastes, and to the protection of the environment. Those requirements include
clean-up activities at various sites. The Company does not believe that
expenditures relating to these requirements will have a material effect on
the Company's financial condition or results of operations. However, no
assurance can be given that any future discovery of new facts and the
retroactive application of such legal and regulatory requirements to those
facts would not be material and would not change the estimate of the costs
that the Company could be required to pay in any particular situation.
Page 42
<PAGE>
NOTE 14 - QUARTERLY INFORMATION (Unaudited):
The following is a summary of selected quarterly financial data (in
thousands, except per share amounts). Refer to Notes 1, 2, 3 and 5 for
matters relating to this note.
<TABLE>
1994
--------------------------------------------------------------------------
<CAPTION>
January 1, 1994 April 2, 1994 July 2, 1994 October 1, 1994
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 79,120 $ 83,851 $ 85,212 $ 93,413
========= ========= ========= =========
Gross margin $ 27,400 $ 29,205 $ 31,320 $ 28,776
========= ========= ========= =========
Income before cumulative effect $ 770 $ 472 $ 1,578 $ 572
Cumulative effect of a change in
accounting for income taxes 3,300 - - -
--------- --------- --------- ---------
Net income $ 4,070 $ 472 $ 1,578 $ 572
========= ========= ========= =========
Income per share:
Income before cumulative effect $ .03 $ .02 $ .06 $ .02
Cumulative effect of a change in
accounting for income taxes .13 - - -
--------- --------- --------- ---------
Net income per share $ .16 $ .02 $ .06 $ .02
========= ========= ========= =========
1993
--------------------------------------------------------------------------
<CAPTION>
January 2, 1993 April 3, 1993 July 3, 1993 October 2, 1993
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 79,135 $ 87,111 $ 84,520 $ 89,124
========= ========= ========= =========
Gross margin $ 23,461 $ 27,142 $ 31,127 $ 25,615
========= ========= ========= =========
Income (loss) from:
Continuing operations $ 374 $ 2,730 $ 1,710 $ (27,321)
Discontinued operations - 1,000 - -
--------- --------- --------- ---------
Net income (loss) $ 374 $ 3,730 $ 1,710 $ (27,321)
========= ========= ========= =========
Income (loss) per share:
Continuing operations $ .02 $ .11 $ .07 $ (1.09)
Discontinued operations - .04 - -
--------- --------- --------- ---------
Net income (loss) per share $ .02 $ .15 $ .07 $ (1.09)
========= ========= ========= =========
</TABLE>
Page 43
<PAGE>
NOTE 15 - FINANCIAL INFORMATION BY GEOGRAPHIC AREA AND MAJOR CUSTOMER:
(in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------
<S> <C> <C> <C>
Net Sales
United States $ 279,294 $ 289,092 $ 343,627
Europe 75,510 63,739 53,853
Pacific Rim 18,550 18,635 14,018
Eliminations (31,758) (31,576) (23,680)
--------- --------- ---------
Consolidated net sales $ 341,596 $ 339,890 $ 387,818
========= ========= =========
Operating Profit (Loss)
United States $ 15,261 $ (19,017) $ 25,853
Europe 6,191 6,167 3,142
Pacific Rim 2,386 1,675 1,222
--------- --------- ---------
Operating profit (loss) 23,838 (11,175) 30,217
General corporate expense (10,718) (9,043) (11,478)
Interest, net (8,596) (4,495) (7,173)
--------- --------- ---------
Income (loss) from continuing
operations before income taxes $ 4,524 $ (24,713) $ 11,566
========= ========= =========
Identifiable Assets
United States $ 224,376 $ 236,856 $ 246,444
Europe 55,080 49,588 41,843
Pacific Rim 7,590 6,050 4,600
General corporate assets 21,586 22,209 30,136
Net assets of discontinued
operations - - 4,277
--------- --------- ---------
Total assets $ 308,632 $ 314,703 $ 327,300
========= ========= =========
</TABLE>
Eliminations represent transfers from the United States to foreign field
offices and European operating facilities. Such transfers are generally at
inventory cost of the selling location plus a margin. United States sales
include export sales of approximately $38.5, $44.2 and $46.0 million in 1994,
1993 and 1992, respectively.
General corporate assets are principally cash, marketable securities and
assets held for sale.
The largest source of revenue for the Company is the United States Government
and its agencies (primarily the Department of Defense), whose direct
purchases accounted for 6% of consolidated net sales in 1994 (7% in 1993 and
9% in 1992). In addition, United States Government subcontract sales
approximated 25% in 1994 (31% in 1993 and 34% in 1992) of consolidated net
sales. The Company does not believe that accounts receivable from these
sales involve a material degree of credit risk.
Page 44
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
November 15, 1994
To the Board of Directors and
Stockholders of M/A-COM, Inc.
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14 (a)(1) and (2) on page 47 present fairly, in all
material respects, the financial position of M/A-COM, Inc. and its
subsidiaries at October 1, 1994 and October 2, 1993, and the results of their
operations and their cash flows for each of the three years in the period
ended October 1, 1994 in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1994 in accordance with
the requirements of Statement of Financial Accounting Standards No. 109.
PRICE WATERHOUSE LLP
Page 45
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning the directors of the Company is incorporated by
reference from the section entitled "Election of Directors" in the Company's
Definitive Proxy Statement for the Annual Meeting of Stockholders to be held
on February 15, 1995, to be filed pursuant to Regulation 14A. Information
concerning the executive officers of the Company appears in Part I of this
annual report on Form 10-K and the directors and executive officers and the
capacities in which they serve are listed on page 56.
Item 11. Executive Compensation
Incorporated by reference from the sections entitled "Election of Directors"
and "Executive Compensation" in the Company's Definitive Proxy Statement for
the Annual Meeting of Stockholders to be held on February 15, 1995, to be
filed pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference from the sections entitled "Voting Securities" and
"Election of Directors" in the Company's Definitive Proxy Statement for the
Annual Meeting of Stockholders to be held on February 15, 1995, to be filed
pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference from the section entitled "Election of Directors"
in the Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on February 15, 1995, to be filed pursuant to
Regulation 14A.
Page 46
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, Reports on Form 8-K
(a)(1) Consolidated Financial Statements Page
Consolidated Statement of Operations -
Years Ended October 1, 1994, October 2, 1993
and October 3, 1992 24
Consolidated Balance Sheet - October 1, 1994
and October 2, 1993 25
Consolidated Statement of Cash Flows - Years Ended
October 1, 1994, October 2, 1993
and October 3, 1992 27
Notes to Consolidated Financial Statements 28
Report of Independent Accountants 45
(a)(2) Financial Statement Schedules for the Three Years
Ended October 1, 1994
Schedule II - Amounts Receivable from Directors,
Officers and Employees 48
Schedule V - Plant Assets 49
Schedule VI - Accumulated Depreciation 51
Schedule VIII - Valuation and Qualifying Accounts and
Reserves 52
Schedule IX - Short-Term Borrowings 53
Schedule X - Supplementary Income Statement Information 53
All other Schedules are omitted because they are not applicable or required,
or because the required information is included in the consolidated financial
statements or notes thereto.
Separate financial statements of the registrant have been omitted since it is
primarily an operating company and the minority interests in subsidiaries and
long-term debt of the subsidiaries held by entities other than the registrant
are less than five percent of consolidated total assets.
(a)(3) List of Exhibits. Exhibits required as part of this report are listed
in the exhibit index beginning on page 57.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the last
quarter of the period covered by this report.
Page 47
<PAGE>
<TABLE>
M/A-COM, Inc. and Subsidiaries
Schedule II - Amounts Receivable from Directors, Officers and Employees (1):
(in thousands)
<CAPTION>
Year Ended October 1, 1994
- -------------------------------------------------------------------------------------------------------------------
Balance at Balance at end
Name of Debtor Beginning of Year Additions Deductions of Year
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard J. Perko $ 45 $ - $ (45) $ -
- -------------------------------------------------------------------------------------------------------------------
$ 45 $ - $ (45) $ -
===================================================================================================================
Year Ended October 2, 1993
- -------------------------------------------------------------------------------------------------------------------
Balance at Balance at end
Name of Debtor Beginning of Year Additions Deductions of Year
- -------------------------------------------------------------------------------------------------------------------
Richard J. Perko $ 90 - $ (45) $ 45
- -------------------------------------------------------------------------------------------------------------------
$ 90 - $ (45) $ 45
===================================================================================================================
<CAPTION>
Year Ended October 3, 1992
- -------------------------------------------------------------------------------------------------------------------
Balance at Balance at end
Name of Debtor Beginning of Year Additions Deductions of Year
- -------------------------------------------------------------------------------------------------------------------
Richard J. Perko $ 135 - $ (45) $ 90
- -------------------------------------------------------------------------------------------------------------------
$ 135 - $ (45) $ 90
===================================================================================================================
</TABLE>
(1) Loan related to relocation.
Page 48
<PAGE>
<TABLE>
M/A-COM, Inc. and Subsidiaries
Schedule V - Plant Assets
(in thousands)
<CAPTION>
Year Ended October 1, 1994
- ----------------------------------------------------------------------------------------------------------------
Balance at Balance
Beginning Additions Retirements Other at End
of Year at Cost or Sales Changes of Year
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land and land improvements $ 3,463 $ 1 $ (24) $ - $ 3,440
Buildings and building equipment 47,379 3,534 (6,480) 117 (2)
(4,562) (1) 39,988
Machinery and equipment 201,100 12,232 (9,347) 1,267 (2)
4,562 (1)
285 (7)
8,691 (6) 218,790
- ----------------------------------------------------------------------------------------------------------------
$ 251,942 $ 15,767 $ (15,851) $ 10,360 $ 262,218
================================================================================================================
<CAPTION>
Year Ended October 2, 1993
- ----------------------------------------------------------------------------------------------------------------
Balance at Balance
Beginning Additions Retirements Other at End
of Year at Cost or Sales Changes of Year
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land and land improvements $ 4,964 $ 13 $ (1,420) $ (94)(7) $ 3,463
Buildings and building equipment 39,732 17,485 (19,057) 9,696 (3)
(672)(2)
195 (1) 47,379
Machinery and equipment 185,215 21,916 (8,652) 6,676 (3)
(4,133)(2)
(195)(1)
273 (7) 201,100
- ----------------------------------------------------------------------------------------------------------------
$ 229,911 $ 39,414 $ (29,129) $ 11,746 $ 251,942
================================================================================================================
</TABLE>
Page 49
<PAGE>
<TABLE>
<CAPTION>
Year Ended October 3, 1992
- ----------------------------------------------------------------------------------------------------------------
Balance at Balance
Beginning Additions Retirements Other at End
of Year at Cost or Sales Changes of Year
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land and land improvements $ 6,202 $ 1 $ - $ 34 (1)
3 (7)
(1,276)(5) $ 4,964
Buildings and building equipment 55,440 1,370 (566) 2,952 (4)
(18,038)(5)
(12)(2)
(1,414)(1) 39,732
Machinery and equipment 183,000 13,786 (19,153) 12,072 (4)
(8,535)(5)
(20)(2)
1,380 (1)
2,685 (7) 185,215
- ----------------------------------------------------------------------------------------------------------------
$ 244,642 $ 15,157 $ (19,719) $ (10,169) $ 229,911
================================================================================================================
</TABLE>
(1) Inter-account transfers.
(2) Impact of change in foreign exchange rates on translation of foreign
subsidiaries fixed asset balances.
(3) Reclassification to/from discontinued operations, which includes
additions and retirements or sales of discontinued businesses in the current
year.
(4) Increases due to the acquisition of Greenpar.
(5) Assets held for sale.
(6) Impact of adoption of SFAS 109.
(7) Other.
Ranges of Useful Lives Years
Land improvements 5-35
Building and building equipment 3-40
Machinery and equipment 3-12
Page 50
<PAGE>
<TABLE>
M/A-COM, Inc. and Subsidiaries
Schedule VI - Accumulated Depreciation (in thousands)
<CAPTION>
Year Ended October 1, 1994
- ----------------------------------------------------------------------------------------------------------------
Balance at Balance
Beginning Retirements Other at End
of Year Additions or Sales Changes of Year
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land and land improvements $ 322 $ 23 $ - $ - $ 345
Buildings and building equipment 16,056 1,679 (6,204) 10 (2)
10,015 (1) 21,556
Machinery and equipment 128,857 21,016 (7,607) 679 (2)
(10,015) (1)
3,653 (6)
245 (7) 136,828
- ----------------------------------------------------------------------------------------------------------------
$ 145,235 $ 22,718 $ (13,811) $ 4,587 $ 158,729
================================================================================================================
<CAPTION>
Year Ended October 2, 1993
- ----------------------------------------------------------------------------------------------------------------
Balance at Balance
Beginning Retirements Other at End
of Year Additions or Sales Changes of Year
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land and land improvements $ 363 $ 34 $ - $ (79)(1)
4 (7) $ 322
Buildings and building equipment 17,275 2,439 (3,727) 91 (1)
3 (2)
(25)(7) 16,056
Machinery and equipment 119,415 20,007 (19,729) 12,027 (3)
205 (7)
(3,056)(2)
(12)(1) 128,857
- ----------------------------------------------------------------------------------------------------------------
$ 137,053 $ 22,480 $ (23,456) $ 9,158 $ 145,235
================================================================================================================
</TABLE>
Page 51
<PAGE>
<TABLE>
<CAPTION>
Year Ended October 3, 1992
- ----------------------------------------------------------------------------------------------------------------
Balance at Balance
Beginning Retirements Other at End
of Year Additions or Sales Changes of Year
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land and land improvements $ 462 $ 46 $ - $ (321)(5)
176 (1) $ 363
Buildings and building equipment 20,281 2,527 (113) 2,372 (1)
(7,792)(5) 17,275
Machinery and equipment 111,267 21,834 (15,871) 9,765 (4)
(4,916)(5)
(31)(2)
(2,548)(1)
(85)(7) 119,415
- ----------------------------------------------------------------------------------------------------------------
$ 132,010 $ 24,407 $ (15,984) $ (3,380) $ 137,053
================================================================================================================
</TABLE>
(1) Inter-account transfers.
(2) Impact of change in foreign exchange rates on translation of foreign
subsidiaries' accumulated depreciation balances.
(3) Reclassification to/from discontinued operations, which includes
additions and retirements or sales of discontinued businesses in the current
year.
(4) Increases due to the acquisition of Greenpar.
(5) Assets held for sale.
(6) Impact of adoption of SFAS 109.
(7) Other.
<TABLE>
M/A-COM, Inc. and Subsidiaries
Schedule VIII - Valuation and Qualifying Accounts and Reserves
Accounts Receivable Allowances
- ----------------------------------------------------------------------------------------------
<CAPTION>
Change in
Balance at Reserve Charged Balance
Beginning (Credited) at End
(in thousands) of Period to Income Other of Period
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended October 1, 1994 $ 2,112 $ (20) - $ 2,092
Year ended October 2, 1993 $ 1,593 $ 519 - $ 2,112
Year ended October 3, 1992 $ 2,404 $ (811) - $ 1,593
</TABLE>
Page 52
<PAGE>
<TABLE>
M/A-COM, Inc. and Subsidiaries
Schedule IX - Short-Term Borrowings
<CAPTION>
Year Ended
- -------------------------------------------------------------------------------------------------
(in thousands) October 1, 1994 October 2, 1993 October 3, 1992
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Notes payable to banks
Balance at end of period $ 5,721 $ 5,959 $ 4,629
Weighted average interest rate 8.2 % 7.7 % 8.8 %
Maximum amount outstanding during
the period (1) $ 14,753 $ 10,638 $ 10,770
Average amount outstanding during
the period (2) $ 10,926 $ 5,440 $ 9,018
Weighted average interest rate
during the period (3) 7.5 % 6.2 % 10.1 %
</TABLE>
(1) Based on month-end balances.
(2) Average of month-end balances.
(3) Calculated by dividing the actual short-term interest expense by the
average amount outstanding during the period.
<TABLE>
M/A-COM, Inc. and Subsidiaries
Schedule X - Supplementary Income Statement Information
<CAPTION>
Charged to Cost
and Expenses (1) Year Ended
- -------------------------------------------------------------------------------------------
(in thousands) October 1, 1994 October 2, 1993 October 3, 1992
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maintenance and Repairs $ 6,250 $ 6,796 $ 7,020
Travel and Entertainment $ 5,773 $ 6,230 $ 6,241
</TABLE>
(1) Amounts for other captions required by this schedule have been omitted
since they are less than one percent of sales or disclosed elsewhere in the
Consolidated Financial Statements. Amounts are for the Company's continuing
operations only.
Page 53
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this Annual Report to be signed on its
behalf by the undersigned thereunto duly authorized, on December 23, 1994.
M/A-COM, Inc.
By: PETER J. RICE
---------------------------
Peter J. Rice
Vice President,
Chief Accounting Officer
and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated below.
Signature Title Date
- -----------------------------------------------------------------------------
THOMAS A. VANDERSLICE Chairman of the Board, December 23, 1994
- --------------------- President, Chief Executive
Thomas A. Vanderslice Officer and Director
(Principal Executive Officer)
LARRY L. MIHALCHIK Senior Vice President, Chief December 23, 1994
- --------------------- Administrative Officer and
Larry L. Mihalchik Chief Financial Officer
(Principal Financial Officer)
PETER J. RICE Vice President, Chief December 23, 1994
- --------------------- Accounting Officer and Controller
Peter J. Rice (Principal Accounting Officer)
* Director
- ---------------------
Daniel J. Fink
* Director
- ---------------------
George N. Hutton, Jr.
* Director
- ---------------------
Robert E. La Blanc
* Director
- ---------------------
Dr. James D. Meindl
* Director
- ---------------------
E. James Morton
Page 54
<PAGE>
* Director
- ---------------------
Raymond F. Pettit
* Director
- ---------------------
Dr. William F. Pounds
* Director
- ---------------------
Hon. Paul E. Tsongas
*By: THOMAS A. VANDERSLICE December 23, 1994
---------------------
Thomas A. Vanderslice
(Attorney-in-Fact)
Page 55
<PAGE>
EXECUTIVE OFFICERS
Thomas A. Vanderslice
Chairman of the Board, President
and Chief Executive Officer
Robert H. Glaudel
Senior Vice President, Human Resources
Larry Mihalchik
Senior Vice President, Chief
Administrative Officer and
Chief Financial Officer
Peter J. Rice
Vice President,
Chief Accounting Officer
and Controller
DIRECTORS
Thomas A. Vanderslice
Daniel J. Fink
President, D. J. Fink Associates, Inc.
George N. Hutton, Jr.
Private Investor
Robert E. La Blanc
President, Robert E. La Blanc Associates, Inc.
Dr. James D. Meindl
J.M. Pettit Chaired Professor, Microelectronics Research Center,
Georgia Institute of Technology
E. James Morton
Director and Former Chairman of the Board and Chief Executive Officer
John Hancock Mutual Life Insurance Co.
Raymond F. Pettit
Retired, the Rockefeller Group
Dr. William F. Pounds
Professor of Management
Alfred P. Sloan School of Management
Massachusetts Institute of Technology
Paul E. Tsongas
Partner, Foley, Hoag & Eliot
Page 56
<PAGE>
EXHIBIT INDEX
Exhibit Description
Number
3.1 Amended and Restated Articles of Organization of
M/A-COM, Inc., incorporated by reference to Exhibit
3.1 to Annual Report for fiscal year ended September
30, 1989 (File No. 1-4236).
3.2 By-laws, as amended through September 10, 1992, of
M/A-COM, Inc., incorporated by reference to Exhibit
3.2 to Annual Report for fiscal year ended October 3,
1992 (File No. 1-4236).
4.1 Amended and Restated Articles of Organization of
M/A-COM, Inc., incorporated by reference to Exhibit
3.1 to Annual Report for fiscal year ended September
30, 1989 (File No. 1-4236).
4.2 By-laws, as amended through September 10, 1992, of
M/A-COM, Inc., incorporated by reference to Exhibit
3.2 to Annual Report for fiscal year ended October 3,
1992 (File No. 1-4236).
4.3 Indenture dated May 1, 1981 between M/A-COM, Inc. and
State Street Bank and Trust Company, incorporated
by reference to Exhibit 4 to Amendment No. 1 to
Registration Statement No. 2-72072.
4.4 Rights Agreement between M/A-COM, Inc. and The First
National Bank of Boston, as amended and restated as of
May 16, 1990, incorporated by reference to Exhibit
4.6 to Annual Report for fiscal year ended September
29, 1990 (File No. 1-4236).
10.1 Revolving Credit Agreement among M/A-COM, Inc. and
The First National Bank of Boston, et al., dated as of
March 15, 1994, incorporated by reference to Exhibit 10.1
to Quarterly Report for quarterly period ended April 2,
1994 (File No. 1-4236).
10.2 Unlimited Guaranty made by M/A-COM Government Products,
Inc., M/A-COM Light Control Systems, Inc., M/A-COM Omni
Spectra, Inc., M/A-COM PHI, Inc. and M/A-COM Puerto Rico,
Inc. in favor of The First National Bank of Boston, et al.,
dated as of March 15, 1994, incorporated by reference to
Exhibit 10.2 to Quarterly Report for quarterly period ended
April 2, 1994 (File No. 1-4236).
10.3 Indenture dated May 1, 1981 between M/A-COM, Inc. and
State Street Bank and Trust Company, incorporated
by reference to Exhibit 4 to Amendment No. 1 to
Registration Statement No. 2-72072.
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10.4 Lease dated July 29, 1972 between Brixton Estate
Limited and Microwave Associates Limited,
incorporated by reference to Exhibit 10.43 to
Registration Statement No. 2-70255.
10.5 Lease dated May 3, 1979 between Sevan Associates
and Power Hybrids Incorporated, incorporated by
reference to Exhibit 10.46 to Annual Report for
fiscal year ended October 3, 1981 (File No. 1-4236).
10.6 Lease Contract made as of the 30th day of November,
1982 between Puerto Rico Industrial Development
Authority and M/A-COM Puerto Rico, Inc., incorporated
by reference to Exhibit 10.34 to Annual Report for
fiscal year ended October 1, 1983 (File No. 1-4236),
together with Supplement and Amendment to Lease Contract,
dated November 4, 1987 between Puerto Rico Industrial
Development Company and M/A-COM Puerto Rico, Inc., and
a Second Supplement and Amendment to Lease Contract dated
February 11, 1988, incorporated by reference to Exhibit
10.34 to Annual Report for fiscal year ended October 1,
1988 (File No. 1-4236).
10.7 Indenture of Lease dated May 31, 1983 between
Northwest Associates and M/A-COM, Inc. together
with Lease Extension Agreement dated May 20, 1988,
incorporated by reference to Exhibit 10.35 to
Annual Report for fiscal year ended October 1,
1988 (File No. 1-4236).
10.8 Ground Lease dated as of May 15, 1984 between
M/A-COM, Inc. and Lowell Investors Associates
Limited Partnership, together with Realty Sublease
and Sub-sublease Agreement dated as of May 15,
1984 between Lowell Real Estate Corporation and
M/A-COM, Inc., and Deed of Improvements dated
as of May 15, 1984 from M/A-COM, Inc. to Lowell
Investors Associates Limited Partnership,
incorporated by reference to Exhibit 10.46 to
Annual Report for fiscal year ended September 29,
1984 (File No. 1-4236).
10.9 Lease dated September 1, 1984 between Barry Wright
Corporation and M/A-COM Omni Spectra, Inc.,
incorporated by reference to Exhibit 10.31 to
Annual Report for fiscal year ended September 28,
1985 (File No. 1-4236), together with Amendment to
Lease dated September 24, 1990 between Bridge
Street Realty Trust and M/A-COM Omni Spectra, Inc.,
incorporated by reference to Exhibit 10.39 to
Annual Report for fiscal year ended September 29,
1990 (File No. 1-4236).
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10.10 Lease dated November 19, 1985 between M/A-COM, Inc.
and Raymond A. Carye and Barbara F. Carye as
Trustees of First Altid Realty Trust, incorporated
by reference to Exhibit 10.41 to Annual Report
for fiscal year ended October 3, 1987 (File No.
1-4236), together with Amendment to Lease dated
November 21, 1990 between M/A-COM, Inc. and Raymond
A. Carye and Barbara F. Carye as Trustees of First
Altid Realty Trust, incorporated by reference to
Exhibit 10.41 to Annual Report for fiscal year
ended September 29, 1990 (File No. 1-4236).
10.11 Lease dated July 20, 1986 between Milton Keynes
Development Corporation and Microwave Associates
Limited, incorporated by reference to Exhibit
10.38 to Annual Report for fiscal year ended
October 3, 1987 (File No. 1-4236).
10.12 Indenture of Lease dated November 24, 1980 between
Philip Pagliazzo and Adams-Russell Co., Inc.,
incorporated by reference to Exhibit 10.47 to
Annual Report for fiscal year ended September 30,
1989 (File No. 1-4236).
10.13 Equipment Sublease Agreement dated as of May 15,
1984 between Lowell Real Estate Corporation and
M/A-COM, Inc., incorporated by reference to
Exhibit 10.47 to Annual Report for fiscal year
ended September 29, 1984 (File No. 1-4236).
10.14 Rights Agreement between M/A-COM, Inc. and
The First National Bank of Boston, as amended
and restated as of May 16, 1990, incorporated by
reference to Exhibit 4.6 to Annual Report for
fiscal year ended September 29, 1990 (File No.
1-4236).
10.15 Letter Agreement regarding Regulation S-K, Item
601(b)(4)(iii)(A) Agreement, dated December 15,
1988 from M/A-COM, Inc. to Securities and Exchange
Commission, incorporated by reference to Exhibit
10.49 to Annual Report for fiscal year ended
October 1, 1988 (File No. 1-4236).
Management Contracts, Compensatory Plans and Arrangements
10.16 Form of Indemnification Agreement between M/A-COM,
Inc. and directors and officers of M/A-COM, Inc.,
incorporated by reference to Exhibit 10.6 to Annual
Report for fiscal year ended September 30, 1989
(File No. 1-4236), together with a schedule
listing the names of the current directors and
officers who have entered such Agreement and the
dates thereof, filed herewith.
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10.17 M/A-COM, Inc. Long Term Incentive Plan dated as of
October 18, 1989, as amended on May 16,1990,
incorporated by reference to Exhibit 10.11 to
Annual Report for fiscal year ended September
29, 1990 (File No. 1-4236), together with amendments
adopted on May 7, 1991 and November 10, 1993, incorporated
by reference to Exhibit 10.16 to Annual Report for fiscal
year ended October 2, 1993 (File No. 1-4236).
10.18 M/A-COM, Inc. 1980 Stock Option and Performance
Incentive Stock Option Plan (formerly entitled
the "M/A-COM, Inc. 1980 Stock Option Plan") dated
December 15, 1980, as amended and restated November
12, 1981, as amended as of January 1, 1987 and as
amended and restated as of September 25, 1987,
incorporated by reference to Exhibit 10.20 to
Annual Report for fiscal year ended October 3, 1987
(File No. 1-4236).
10.19 M/A-COM, Inc. 1981 Stock Option and Performance
Incentive Stock Option Plan (formerly entitled
the "M/A-COM, Inc. 1981 Stock Option Plan") dated
November 12, 1981, as amended as of January 1,
1987 and amended and restated as of September 25,
1987, incorporated by reference to Exhibit 10.21
to Annual Report for fiscal year ended October 3,
1987 (File No. 1-4236).
10.20 M/A-COM, Inc. 1983 Stock Option and Performance
Incentive Stock Option Plan (formerly entitled
the "M/A-COM, Inc. 1983 Stock Option Plan") dated
November 17, 1983, as amended as of January 1,
1987 and amended and restated as of September
25, 1987, incorporated by reference to Exhibit
10.22 to Annual Report for fiscal year ended
October 3, 1987 (File No. 1-4236).
10.21 Annual Executive Performance Incentive Plan
(formerly entitled the "M/A-COM, Inc. Contingent
Compensation Plan") dated January 15, 1952, as
amended on December 21, 1953, September 22,
1955, November 21, 1974, November 18, 1976,
October 13, 1977, November 18, 1980, December
15, 1980, November 12, 1981 and September 25,
1987, incorporated by reference to Exhibit
10.26 to Annual Report for fiscal year ended
October 3, 1987 (File No. 1-4236).
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10.22 M/A-COM, Inc. Supplemental Executive Retirement
Plan dated March 4, 1986 and Amendment No. 1
adopted May 6, 1987, incorporated by reference
to Exhibit 10.27 to Annual Report for fiscal
year ended October 3, 1987 (File No. 1-4236),
together with Amendment No. 2 adopted August 19,
1988, incorporated by reference to Exhibit 10.22
to Annual Report for fiscal year ended October
1, 1988 (File No. 1-4236), and Amendment No. 3
adopted as of April 1, 1989, incorporated by
reference to Exhibit 10.21 to Annual Report for
fiscal year ended September 30, 1989 (File No.
1-4236).
10.23 M/A-COM, Inc. Long Term Executive Performance
Incentive Plan (formerly entitled the "M/A-COM, Inc.
Executive Stock Unit Plan") dated November 17, 1983,
incorporated by reference to Exhibit 10.41 to Annual
Report for fiscal year ended September 29, 1984
(File No. 1-4236).
10.24 Microwave Associates, Inc. Split-Dollar
Insurance Plan, effective as of September 28,
1976, incorporated by reference to Exhibit
10.21 to Annual Report for fiscal year ended
September 29, 1990 (File No. 1-4236), together
with Amendment to M/A-COM, Inc. Split Dollar
Insurance Plan, effective as of November 18, 1985,
incorporated by reference to Exhibit 10.24 to
Annual Report for fiscal year ended September 30,
1989 (File No. 1-4236).
10.25 M/A-COM, Inc. Split Dollar Insurance Plan
Agreement with Thomas A. Vanderslice, effective
as of November 28, 1989, incorporated by reference
to Exhibit 10.23 to Annual Report for fiscal year
ended September 29, 1990 (File No. 1-4236).
10.26 M/A-COM, Inc. 1990 Restricted Treasury Stock
Plan, effective as of September 19, 1990,
incorporated by reference to Exhibit 10.17 to
Annual Report for fiscal year ended September
28, 1991 (File No. 1-4236).
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10.27 Stock Option Plan and Agreement and Deferred Compensation
Trust Agreement, all dated as of November 28, 1989,
between M/A-COM, Inc. and Dr. Thomas A.
Vanderslice, incorporated by reference to Exhibit
10 to the registrant's Current Report on Form
8-K dated December 15, 1989 (File No. 1-4236),
together with Stock Option Plan and Agreement
as corrected and restated as of September 11,
1991, incorporated by reference to Exhibit 10.18
to Annual Report for fiscal year ended
September 28, 1991 (File No. 1-4236).
10.28 M/A-COM, Inc. Retirement Plan for Directors,
effective as of October 18, 1989, as amended
and restated as of May 7, 1991, incorporated
by reference to Exhibit 10.19 to Annual Report
for fiscal year ended September 28, 1991 (File
No. 1-4236), together with amendments adopted on
June 1, 1994, filed herewith.
10.29 Severance Agreement dated November 20, 1991 between
M/A-COM, Inc. and Robert Glaudel, incorporated by reference
to Exhibit 10.22 to Annual Report for fiscal year ended
October 3, 1992 (File No. 1-4236).
10.30 M/A-COM, Inc. 1992 Supplemental Executive Retirement
Plan dated April 1, 1992, incorporated by reference to
Exhibit 10.30 to Annual Report for fiscal year ended
October 2, 1993 (File No. 1-4236).
10.31 Form of Trust Agreement between M/A-COM, Inc. and Boston
Harbor Trust Company, N.A., incorporated by reference
to Exhibit 10.30 to Annual Report for fiscal year ended
October 2, 1993 (File No. 1-4236), together with a schedule
listing the beneficiaries of such Agreements, filed herewith.
10.32 Severance Agreement dated July 1, 1993 between M/A-COM,
Inc. and J. Kermit Birchfield, Jr., incorporated by reference
to Exhibit 10.32 to Annual Report for fiscal year ended
October 2, 1993 (File No. 1-4236), together with Amendment
to Severance Agreement dated as of October 31, 1994, filed
herewith.
10.33 Severance Agreement dated September 1, 1993 between
M/A-COM, Inc. and Larry L. Mihalchik, incorporated by reference
to Exhibit 10.33 to Annual Report for fiscal year ended
October 2, 1993 (File No. 1-4236).
10.34 Severance Agreement dated November 23, 1993 between
M/A-COM, Inc. and Peter J. Rice, incorporated by reference
to Exhibit 10.34 to Annual Report for fiscal year ended
October 2, 1993 (File No. 1-4236).
10.35 Severance Agreement dated March 20, 1994 between M/A-COM, Inc.
and Allan L. Rayfield, incorporated by reference to Quarterly
Report for quarterly period ended April 2, 1994
(File No. 1-4236).
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10.36 Severance Agreement dated November 30, 1994 between
M/A-COM, Inc. and Thomas A. Vanderslice, filed herewith.
- -------------------------
11 Calculation of Earnings Per Share.
21 Subsidiaries of M/A-COM, Inc.
23 Consent of Price Waterhouse LLP.
24 Power of Attorney.
27 Financial Data Schedule.
Page 63
Exhibit 10.16
SCHEDULE OF INDEMNIFICATION AGREEMENTS
The following current directors and officers have entered into
Indemnification Agreements in the form set forth at Exhibit 10.16 with M/A-
COM, Inc. as of the date indicated.
NAME POSITION DATE
Fink, Daniel J. Director 2/20/91
Glaudel, Robert H. Senior Vice President, 11/10/93
Human Resources
Helman, Irving J. Clerk 2/23/89
Hutton, George N. Jr. Director 2/23/89
LaBlanc, Robert E. Director 2/23/89
Meindl, James D. Director 2/23/89
Mihalchik, Larry L. Senior Vice President, 11/10/93
Chief Administrative Officer
and Chief Financial Officer
Morton, E. James Director 2/23/89
Pettit, Raymond F. Director 11/10/93
Pounds, Dr. William F. Director 2/23/89
Rice, Peter J. Vice President and 2/20/91
Controller
Tsongas, Paul E. Director 2/23/89
Vanderslice, Thomas A. Chairman of the Board, 11/28/89
President and
Chief Executive Officer
Exhibit 10.28
AMENDMENT TO THE M/A-COM, INC. RETIREMENT PLAN FOR DIRECTORS
ADOPTED BY THE BOARD OF DIRECTORS ON JUNE 1, 1994
VOTED: That the M/A-COM, Inc. Retirement Plan for the Directors dated
October, 1989, as amended May 7, 1991, be and the appropriate
Officers of the Corporation are hereby authorized to further amend
such Plan such that the Plan provide that retirement under the Plan
be amended from the age of seventy (70) to the age of sixty-five (65)
with full vesting occurring at the age of sixty-five (65) and that
any Director meeting the other provisions of the Plan who retires
voluntarily before the age of 65 shall be entitled to retirement
benefits thereunder actuarially reduced to reflect such Director's
actual age on the date of such voluntary retirement.
FURTHER, that the vesting provisions of the Plan be amended to
reflect the following:
100% vesting after five (5) years of serving as a director;
100% vesting upon death or total disability prior to the age of 65;
and
100% vesting in the event of a Change of Control as such term is
defined in the Plan; and that the Plan provide for the creation of a
trust similar to that trust entered into under the Corporation's
current SERP and that the appropriate Officers of the Corporation be
and they are hereby authorized to enter into such a trust agreement
with Boston Harbor Trust Company, N.A. or such successor as is
appropriate to provide for the payment of director retirement
benefits upon a Change of Control as such term is defined in the Plan
and to take such other action, acting on advice of counsel, to give
proper effect to the above.
Exhibit 10.31
SCHEDULE OF TRUST AGREEMENTS
The following present and former executive officers are beneficiaries of the
Trust Agreements between M/A-COM, Inc. and Boston Harbor Trust Company, N.A.
referred to in Exhibit 10.31.
NAME POSITION
Glaudel, Robert H. Senior Vice President, Human
Resources
Vanderslice, Thomas A. Chairman of the Board, President and
Chief Executive Officer
Birchfield, J. Kermit, Jr.
Rayfield, Allan L.
Exhibit 10.32
AMENDMENT TO SEVERANCE AGREEMENT
PARTIES
The parties to this Amendment are M/A-COM, Inc., a Massachusetts
corporation (the "Corporation"), and J. Kermit Birchfield, Jr., an individual
residing in Gloucester, Massachusetts ("Executive").
RECITALS
1. Reference is made to that certain Severance Agreement dated as of
July 1, 1993 between the Corporation and Executive (the "Severance
Agreement"). All defined terms therein shall have the same meanings herein
unless otherwise defined herein or unless the context otherwise requires.
2. As of the effective date of this Amendment, Executive ceased to be
Senior Vice President, Secretary and General Counsel of the Corporation. In
connection therewith, the parties desire to amend the Severance Agreement as
hereinafter provided.
AGREEMENT
In consideration of the mutual promises, covenants, terms and conditions
hereof, the parties hereto agree as follows:
1. Amendment to Section 5: Section 5 of the Severance Agreement is
hereby amended in its entirety to read as follows:
"If Executive shall be removed from, or shall cease to be elected to,
the position of Senior Vice President, Secretary and General Counsel of
the Corporation, with the powers and responsibilities generally
pertaining to that position, except for Cause or Change of Control, then
beginning on the date on which Executive shall so cease to be Senior
Vice President, Secretary and General Counsel, Executive shall have the
option, exercisable by him for a period of three (3) months from such
date, upon written notice to the Corporation, to terminate this
Agreement, in which event the Corporation shall pay Executive a sum
equal to Two Hundred Eighty-Three Thousand Dollars ($283,000), which
shall be paid in twelve (12) equal monthly installments beginning on
November 15, 1994, and continuing until the last installment is paid on
October 16, 1995. All such payments shall be subject to any and all
applicable federal, state and local withholding taxes. The required
payments shall not be offset by any services income of Executive from
other sources, and Executive shall have no duty to mitigate damages.
During the term from the effective date of termination of this Agreement
by Executive pursuant to this Section 5 through and including October
31, 1995, Executive shall continue to be an employee of the Corporation
for certain purposes, including his participation in certain group
health and dental plans, group life insurance plan, M/A-COM Employee
Retirement Income Trust (MERIT) plan and Supplemental Executive
Retirement Plan, M/A-COM Employee Stock Ownership Plan (ESOP); and the
M/A-COM Long Term Incentive Plan dated October 18, 1989, as amended,
with respect to all options and awards under the plan that were
exercisable or vested on or prior to October 31, 1994; and the M/A-COM,
Inc. 1990 Restricted Treasury Stock Plan with respect to all shares of
restricted stock that were awarded pursuant to Section 3.2 of the plan
on or prior to October 31, 1994."
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2. Amendment to Section 8: Section 8 of the Severance Agreement is
hereby amended to add the following at the end thereof:
"For the avoidance of doubt, the Protected Period shall continue from
November 1, 1994 through October 31, 1995."
3. Survival of Provisions: The Severance Agreement is hereby amended
to add the following Section thereto:
"14. The provisions of Sections 5, 6 and 8 through 14 and the last two
sentences of Section 7 shall survive any termination of this Agreement
by Executive pursuant to Section 5."
4. Relationship to Severance Agreement: Except as expressly amended
hereby, the Severance Agreement remains in full force and effect and all
references therein to "this Agreement," "herein," and "hereof," and words of
like import shall refer to the Severance Agreement as amended hereby.
DATED effective as of October 31, 1994:
CORPORATION:
M/A-COM, Inc.
By: /s/ Robert H. Glaudel
Robert H. Glaudel
Senior Vice President,
Human Resources
EXECUTIVE:
/s/ J. Kermit Birchfield, Jr.
J. Kermit Birchfield, Jr.
Page 2
Exhibit 10.36
M/A-COM, INC.
SEVERANCE AGREEMENT
AGREEMENT entered into as of the 30th day of November, 1994 by and
between M/A-COM, Inc., a Massachusetts Corporation (hereinafter referred to
as the "Corporation"), and Thomas A. Vanderslice of Osterville, MA 02655
(hereinafter referred to as "Executive").
The parties hereto, each in consideration of the premises and of the
joinder of the other herein, hereby agree as follows:
1. This will serve to confirm our agreement (the "Agreement") relative
to your employment as a senior executive (the "Executive") of M/A-COM, Inc.
(the "Corporation"), employed at will by the Corporation and acting in such
capacity as may be designated by the Board of Directors of the Corporation.
Your current title and role will be Chairman, President and Chief Executive
Officer of the Corporation.
2. All services which Executive shall perform for the Corporation and
its subsidiaries shall be deemed to be services covered by this Agreement.
3. If Executive shall be removed from the position of Chairman,
President and Chief Executive Officer of the Corporation for cause (as
defined below) pursuant to the procedures of Section 51 of c. 156 B of the
Massachusetts General Laws, or any successor provision, then effective upon
the date of such termination or removal, Executive's Base Salary shall be
prorated to the date of such removal or termination. Executive shall be
entitled to vested rights under restricted stock, stock options, deferred
compensation, and any other Corporate benefit plans to the extent provided in
such plans or agreements. For the purpose of this Agreement, "cause" shall
mean (i) commission of a material act against the Corporation involving moral
turpitude or (ii) gross negligence or material willful misconduct by the
Executive in the discharge of his duties hereunder.
4. If a Change of Control (as defined below) shall occur, then,
beginning on the effective date of the Change of Control, Executive shall
have the option, exercisable by him for a period of one (1) year from the
Change of Control upon written notice to the Corporation, to terminate this
Agreement, in which event the Corporation shall pay Executive, within fifteen
(15) days after the effective date of termination, a sum of money equal to
one (1) year's Base Salary at the Executive's then current Base Salary rate.
Executive shall be entitled to vested rights under restricted stock, stock
options, deferred compensation, and any other corporate benefit plans to the
extent provided in such plans or agreements. The required payment shall not
be offset by any services income of Executive from other sources, and
Executive shall have no duty to mitigate damages.
As used in this Agreement, a "Change of Control" shall be deemed to have
occurred if
(i) the Corporation shall reorganize, merge or consolidate with any
corporation and the Corporation shall not be the surviving corporation (as
defined below); or
(ii) the Corporation shall sell or exchange all or substantially all of
its assets (determined without regard to its receivables); or
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(iii) any individual, entity or group (within the meaning of Section 13
(d) (3) or 14 (d) (2) of the Securities Exchange Act of 1934, as amended)
possesses (through acquisition, issuer repurchase or otherwise) beneficial
ownership of shares of the Corporation's capital stock conferring upon the
holder 40% or more of the power to vote for the election of directors of the
Corporation, excluding any such possession by one or more employee benefit
plans maintained by the Corporation and its subsidiaries and excluding any
such possession arising from the holding of revocable proxies; or
(iv) persons who serve as directors of the Corporation on the date
hereof (the "Incumbent Directors") shall cease for any reason to constitute
at least two-thirds of the Board of Directors of the Corporation; provided
that any person who becomes a director of the Corporation after the date
hereof shall be deemed to be an Incumbent Director if his or her nomination
for election as a director was approved by a majority vote of the Board of
Directors then in office, unless such nomination was the result of an actual
or threatened election contest of the type contemplated by Regulation 14a-11
promulgated under the Securities Exchange Act of 1934, as amended, or any
successor provision.
As used herein, the Corporation shall be deemed to be the "surviving
corporation" following a reorganization, merger or consolidation if,
following such transaction, the persons who were the beneficial owners of the
Corporation's voting securities prior to the transaction beneficially own
securities having a majority of the aggregate voting power represented by all
outstanding securities of the Corporation or other entity resulting from such
reorganization, merger or consolidation.
5. If Executive shall be removed from, or shall cease to be elected to,
the position of Chairman, President and Chief Executive Officer of the
Corporation, with the powers and responsibilities generally pertaining to
that position, except for Cause or Change of Control, then beginning on the
date on which Executive shall so cease to be Chairman, President and Chief
Executive Officer, Executive shall have the option, exercisable by him for a
period of three (3) months from such date, upon written notice to the
Corporation, to terminate this Agreement, in which event the Corporation
shall pay Executive, within fifteen (15) days after the effective date of
termination, a sum of money equal to one (1) year's Base Salary at
Executive's then current Base Salary rate. Executive shall be entitled to his
vested rights under restricted stock, stock options, deferred compensation,
and any other corporate benefit plans to the extent provided in such plans or
agreements. The required payment shall not be offset by any services income
of Executive from other sources, and Executive shall have no duty to mitigate
damages.
6. If any invention, discovery, patent, formula, improvement or process
is created, conceived, developed or discovered by Executive, either solely or
jointly with others during the term hereof, he shall forthwith disclose the
same to the Corporation and assign, grant and convey to the Corporation, and
does hereby assign, grant and convey to the Corporation, any and all
inventions, discoveries, patents, formulae, improvements or processes or his
rights thereto. At any time, whether during the term hereof or thereafter,
upon request by the Corporation, Executive will execute and deliver to the
Corporation an assignment of his entire right, title, and interest in and to
and under any and all such inventions, discoveries, patents, formulae,
improvements, and processes, and applications for Letters Patent thereon; he
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<PAGE>
will execute and similarly deliver application papers for Letters Patent in
any and all countries for any and all such inventions, discoveries, patents,
formulae, improvements, and processes as may be required by the Corporation;
he will execute and similarly deliver any and all other papers and documents,
including assignments, affidavits and oaths of fact within his knowledge and
do such other acts as may, in the option of the Corporation, be desirable or
necessary more effectually to convey or vest in the Corporation the rights,
titles, benefits and privileges intended to be conveyed; he will aid and
assist the Corporation, including the giving of testimony and depositions in
the prosecution or defense of any interference or litigation involving any of
and all said inventions, discoveries, patents, formulae, improvements and
processes and applications for Letters Patent and Letters Patent therefor or
reissues thereof; provided, however, that the Corporation shall pay any and
all expenses incurred by Executive in connection with the services described
herein.
7. Executive agrees to devote his full business time and efforts to the
performance of his designated duties in furtherance of the Corporation's
business. However, Executive may act as a director or trustee of business
corporations, foundations or charities and may participate in reasonable
amounts of public interest and related work. Executive acknowledges that the
Corporation has rights to protect trade secrets and other confidential and
proprietary information relating to its products, services, customers,
processes and other aspects of its business, whether produced by it or
otherwise owned by it, and acknowledges that the Corporation has not waived
any of those rights in favor of Executive.
8. Executive further agrees that, during the Protected Period (as
defined below), he will not compete, directly or indirectly, with the
business of the Corporation. The phrase "compete, directly or indirectly,
with the business of the Corporation" as used herein, shall mean engaging or
having an interest, directly or indirectly, as owner, employee, partner,
through stock ownership (other than less than 5% of the outstanding stock of
a publicly-traded corporation), investment of capital, lending of money or
property, rendering of services, or otherwise, either alone or in association
with others, in the formation, funding or operation of any type of group,
business or enterprise ten percent (10%) or more of the revenue of which (in
the four most recent fiscal quarters) is derived from the manufacture and/or
sale of products similar to those manufactured and sold by the Corporation or
its subsidiaries or partnerships in which the Corporation has an interest at
the time of the alleged competition or which performs similar functions to
those performed by such products, or which are improvements or replacements
therefor. The Protected Period shall be the period during which the
Executive is employed by the Corporation plus, if the Executive's employment
with the Corporation ends for Cause or breach by Executive, one (1) year
after the Executive's employment so ends.
9. The parties hereto agree that the services of Executive are of a
personal, special, unique and extraordinary character and cannot be replaced
by the Corporation, that the violation by Executive of his agreements in
Paragraphs 6, 7, and 8 may cause the Corporation irreparable harm which could
not reasonably or adequately be compensated in damages in an action at law,
and that his agreements in Paragraphs 6, 7, and 8, hereof, shall therefore be
enforceable both at law and in equity, by injunction and otherwise. The
remedies of the Corporation hereunder, and at law and in equity, shall be
cumulative and not alternative, and shall not be exhausted by any one or more
uses thereof.
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<PAGE>
10. Any notice hereunder shall be effective when mailed by REGISTERED
or CERTIFIED MAIL, postage and other charges prepaid, in the case of
Executive addressed to him at 280 Grand Island Drive, Osterville, MA 02655,
or such other address as is recorded of record with the Corporation, from
time to time, and in the case of the Corporation, addressed to it at 100
Chelmsford Street, Lowell, MA 01853-3294, Attention: General Counsel, or at
such other address as either of the parties shall have last designated by
notice given in like manner to the other of them.
11. No provisions of this Agreement shall be modified or amended except
by an instrument in writing duly executed by the parties hereto, and no
custom, act, payment, favor or indulgence shall grant any additional right to
Executive or be deemed a waiver by the Corporation of any of Executive's
obligations hereunder or release Executive therefrom or impose any additional
obligation upon the Corporation, nor shall any assent, express or implied, by
the Corporation to, or waiver by the Corporation of, any breach by Executive
of any term or provision hereof be deemed to be an assent or waiver by the
Corporation to or of any succeeding breach of the same or any other term or
provision. Every term and provision of this Agreement shall be deemed to be
of the essence hereof and every breach thereof material. This Agreement is
personal to and shall not be assignable by Executive, but shall inure to the
benefit of the respective parties hereto and their respective heirs,
successors, and assigns.
12. If any term or provision of this Agreement or the application
thereof to any person or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Agreement or the application of such
term or provision to persons or circumstances other than those to which it is
invalid or unenforceable shall not be affected thereby, and each term and
provision of this Agreement shall be valid and be enforced to the fullest
extent permitted by law; provided, however, that if the provisions of
Paragraphs 6 and 7 shall be held to be unenforceable and if Executive shall
not voluntarily abide by said provisions in all respects, then this Agreement
shall ipso facto terminate with the same effect as if terminated pursuant to
Paragraph 3, hereof.
13. This Agreement shall be construed and enforced in all respects in
accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to the conflict of laws principles thereof.
WITNESS the execution hereof under seal the day and year first above
written.
M/A-COM, Inc.
By: /s/ E. James Morton
E. James Morton
Chairman, Compensation Committee
By: /s/ Thomas A. Vanderslice
Thomas A. Vanderslice
Page 4
Exhibit 11
M/A-COM, INC. AND SUBSIDIARIES
Calculation of Earnings Per Share
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------
1994 1993 1992
---------------------------
<S> <C> <C> <C>
Calculation of primary earnings per common share:
Income (loss) from continuing operations 3,392 (22,507) 8,933
Income (loss) from discontinued operations - 1,000 3,064
Income (loss) from cumulative effect 3,300 - -
--------------------------
Net income (loss) 6,692 (21,507) 11,997
Weighted average shares outstanding 25,623 24,401 24,114
Incremental common stock equivalents
various employee plans 363 - -
--------------------------
Total shares - primary 25,986 24,401 24,114
==========================
Primary earnings per share: (1)
Income (loss) from continuing operations $0.13 ($0.92) $0.37
Income (loss) from discontinued operations - $0.04 $0.13
Income (loss) from cumulative effect $0.13 - -
--------------------------
Net income (loss) per share $0.26 ($0.88) $0.50
Calculation of fully diluted earnings per common
share:
Income (loss) from continuing operations 3,392 (22,507) 8,933
Reduction of interest expense, net of
income taxes, assuming conversion of
debentures 6,090 6,090 4,776
--------------------------
Income (loss) from continuing operations -
fully diluted basis 9,482 (16,417) 13,709
--------------------------
Income (loss) from discontinued operations - 1,000 3,064
Reduction of interest expense, net of
income taxes, assuming conversion of
debentures - - 218
--------------------------
Income (loss) from discontinued operations -
fully diluted basis 0 1,000 3,282
--------------------------
Cumulative effect of a change in accounting 3,300 - -
--------------------------
Net income (loss) 12,782 (15,417) 16,991
Page 1
<PAGE>
Weighted average shares outstanding 25,623 24,401 24,114
Incremental shares:
Common stock equivalents from
various employee plans 363 - -
Conversion of debentures 1,804 1,804 1,804
--------------------------
Total shares - fully diluted 27,790 26,205 25,918
==========================
Fully diluted earnings per share: (1)
Income (loss) from continuing operations $0.37 ($0.63) $0.53
Income (loss) from discontinued operations $0.00 $0.04 $0.13
Income (loss) from cumulative effect $0.13 - -
--------------------------
Net income (loss) per share $0.50 ($0.59) $0.66
==========================
</TABLE>
(1) Earning per share for 1993 has been computed using only the weighted
average shares due to the net loss.
Page 2
Exhibit 21
Subsidiaries of Registrant
As of October 1, 1994, M/A-COM, Inc., had the following principal
subsidiaries:
<TABLE>
<CAPTION>
Name Percentage Jurisdiction of
of Ownership Incorporation or
Organization
<S> <C> <C>
Dubilier GmbH 100 Germany
Filcom Microwave, Inc. 80 Massachusetts
M/A-COM Eurotec B.V. 100 Netherlands
M/A-COM France S.A. 100 France
M/A-COM GmbH 100 Germany
M/A-COM Government Products, Inc. 100 Massachusetts
M/A-COM Greenpar Limited 100 England
M/A-COM Iscom Ltd. 100 Israel
M/A-COM Italia S.p.A. 100 Italy
M/A-COM Light Control Systems, Inc. 100 Massachusetts
M/A-COM Limited 100 England
M/A-COM PHI, Inc. 100 California
M/A-COM Puerto Rico, Inc. 100 Massachusetts
M/A-COM Sales Ltd. 100 England
M/A-COM Transport, Inc. 100 Massachusetts
M/A-COM (U.K.) Limited 100 England
MIH, Inc. 100 Delaware
NIHON M/A-COM K.K. 100 Japan
</TABLE>
Notes:
1. The "Percentage of Ownership" column includes ownership by M/A-COM, Inc.,
both direct and indirect through one or more intermediate subsidiaries. The
indirect ownership is indicated in the notes below. Ownership through a
nominee is stated in the name of the beneficial owner.
2. MIH, Inc., owns all of the capital stock of M/A-COM (U.K.) Limited. M/A-
COM (U.K.) Limited owns all of the capital stock of M/A-COM Limited, M/A-COM
Sales Ltd. and M/A-COM Greenpar Limited.
3. M/A-COM GmbH owns all of the capital stock of Dubilier GmbH.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 2-99637) and
in the Registration Statements on Form S-8 (Nos. 2-17757; 2-25410; 2-31632; 2-
47195; 2-53255; 2-53257; 2-68734; 2-68809; 2-69195; 2-69202; 2-69259; 2-
70247; 2-71043; 2-72234; 2-72235; 2-76292; 2-81497; 2-81907; 2-92614; 2-
92616; 2-92617; 33-10913; 33-10916; 33-33372; 33-35845; 33-36846; 33-44212)
of M/A-COM, Inc. of our report dated November 15, 1994, which appears on page
45 of this Form 10-K.
PRICE WATERHOUSE LLP
December 21, 1994
Exhibit 24
M/A-COM, INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors of M/A-
COM, Inc., a Massachusetts corporation (the "Company"), hereby constitutes
and appoints Thomas A. Vanderslice and Larry L. Mihalchik, and each of them,
with full power to act without the other, his true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities (until revoked in
writing) to sign the Company's Annual Report on Form 10-K for the fiscal year
ended October 1, 1994, and any and all amendments thereto, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully for
all intents and purposes as he might or could do in person, thereby ratifying
and confirming all that said attorneys-in-fact and agents or either of them,
or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto signed his name on
the 30th day of November, 1994.
DANIEL J. FINK
- ---------------
Daniel J. Fink
GEORGE N. HUTTON, JR.
- ---------------------
George N. Hutton, Jr.
ROBERT E. LABLANC
- ------------------
Robert E. LaBlanc
JAMES D. MEINDL
- ----------------
Dr. James D. Meindl
E. JAMES MORTON
- ----------------
E. James Morton
RAYMOND F. PETTIT
- ------------------
Raymond F. Pettit
WILLIAM F. POUNDS
- ------------------
Dr. William F. Pounds
PAUL E. TSONGAS
- ----------------
Hon. Paul E. Tsongas
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-01-1994
<PERIOD-START> OCT-03-1993
<PERIOD-END> OCT-01-1994
<CASH> 4,631
<SECURITIES> 1,250
<RECEIVABLES> 72,093
<ALLOWANCES> 2,092
<INVENTORY> 60,827
<CURRENT-ASSETS> 149,477
<PP&E> 262,218
<DEPRECIATION> 158,729
<TOTAL-ASSETS> 308,632
<CURRENT-LIABILITIES> 95,574
<BONDS> 67,599
<COMMON> 44,006
0
0
<OTHER-SE> 77,334
<TOTAL-LIABILITY-AND-EQUITY> 308,632
<SALES> 341,596
<TOTAL-REVENUES> 341,596
<CGS> 224,895
<TOTAL-COSTS> 224,895
<OTHER-EXPENSES> 21,676
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,159
<INCOME-PRETAX> 4,524
<INCOME-TAX> 1,132
<INCOME-CONTINUING> 3,392
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 3,300
<NET-INCOME> 6,692
<EPS-PRIMARY> .26
<EPS-DILUTED> 0
</TABLE>
