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UNITED STATES
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 June 27, 1998
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 _______________
COMMISSION FILE NUMBER 0-16538
MAXIM INTEGRATED PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2896096
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
120 San Gabriel Drive
Sunnyvale, California 94086
(Address of Principal Executive Offices, including Zip Code)
Registrant's telephone number, including area code: (408) 737-7600
---------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any Amendment to this
Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of August 3, 1998 was approximately $2,341,000,000*.
Number of shares outstanding of the registrant's Common Stock, $.001 par
value, as of August 3, 1998: 130,412,014.
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DOCUMENTS INCORPORATED BY REFERENCE:
Part II - Annual Report to Stockholders for the fiscal year ended June 27, 1998
Part III - Proxy Statement for the 1998 Annual Meeting of Stockholders
* Excludes the Common Stock held by executive officers, directors and
stockholders whose ownership exceeds 5% of the Common Stock outstanding at
August 3, 1998. Exclusion of such shares should not be construed to indicate
that each of such persons possesses the power, direct or indirect, to control
the Registrant, or that each such person is controlled by or under common
control with the Registrant.
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PART I
This Annual Report on form 10-K and the documents incorporated herein
by reference contain forward-looking statements that have been made pursuant to
and in reliance on the provisions of the Private Securities Litigation Reform
Act of 1995.
Forward-looking statements may include (a) projections relevant to
future revenue, income, earnings, capital expenditures, capital structure or
other financial items (b) statements of plans or objectives of the Company's
management for future operations, including plans or objectives relating to the
Company's products or services, (c) statements of future economic performance,
and (d) statements of any assumptions underlying or relating to any of the
foregoing. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates," and variations of such words and similar
expressions relating to the future operations are intended to identify
forward-looking statements.
All forward-looking statements are based on the Company's current
expectations, estimates, projections, beliefs and plans or objectives about its
business and its industry. These statements are not guarantees of future
performance and are subject to risk and uncertainty. Actual results may differ
materially from those predicted or implied in any such forward-looking
statement.
Risks and uncertainties that could cause actual results to differ
materially include those set forth throughout this Form 10-K and in the
documents incorporated herein by reference. Particular attention should be paid
to the section entitled "Risk Factors" at pages 11 through 16 below and to the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Company's Annual Report to Stockholders, which
is incorporated herein by reference.
The Company undertakes no obligation to update any forward-looking
statement, whether as a result of new information relating to existing
conditions, future events or otherwise. However, readers should carefully review
future reports and documents that the Company files from time to time with the
Securities and Exchange Commission, such as its quarterly reports on Form 10-Q
(particularly Management's Discussion and Analysis of Financial Condition and
Results of Operations) and any current reports on Form 8-K.
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ITEM 1. BUSINESS
Maxim Integrated Products, Inc., ("Maxim" or the "Company") designs,
develops, manufactures, and markets a broad range of linear and mixed-signal
integrated circuits, commonly referred to as analog circuits. The Company also
provides a range of high-frequency design processes and capabilities that can be
used in custom design. The analog market is highly fragmented and characterized
by many diverse applications, a great number of product variations, and
relatively long product life cycles. Maxim's objective is to develop and market
both proprietary and industry-standard analog integrated circuits that meet the
increasingly stringent quality standards demanded by customers. Maxim operates
three wafer fabrication facilities (See "Manufacturing" below). In addition, the
Company subcontracts the fabrication of a small portion of its silicon wafers to
outside silicon foundries. Based on product announcements by its competitors,
Maxim believes that in the past 15 years it has developed more products for the
analog market, including proprietary and second-source products, than any of its
competitors over the same period.
THE ANALOG INTEGRATED CIRCUIT MARKET
All electronic signals fall into one of two categories, linear or
digital. Linear (or analog) signals represent real world phenomena, such as
temperature, pressure, sound, or speed, and are continuously variable over a
wide range of values. Digital signals represent the "ones" and "zeros" of binary
arithmetic and are either on or off.
Three general classes of semiconductor products arise from this
partitioning of signals into linear or digital. There are those, such as
memories and microprocessors, that operate only in the digital domain. There are
linear devices such as amplifiers, references, analog multiplexers, and switches
that operate primarily in the analog domain. Finally, there are mixed-signal
devices that combine linear and digital functions on the same integrated circuit
and interface between the analog and digital worlds. Maxim targets both the
linear and mixed signal markets, often collectively referred to as the analog
market.
The Company believes that, compared to the digital integrated circuit
market, the analog market has generally been characterized by a wider range of
standard products used in smaller quantities by a large number of customers;
longer product life cycles; less competition from Japanese and other foreign
manufacturers; lower capital requirements as a result of using more mature
manufacturing technologies; and relatively more stable growth rates that are
less influenced by economic cycles. The Company believes that the widespread
application of low-cost microprocessor-based systems has affected the market for
analog integrated circuits by increasing the need for interfaces with the analog
world.
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The analog market is a highly fragmented group of niche markets,
serving numerous and widely differing applications for instrumentation,
industrial control, data processing, communications, military, video, and
selected medical equipment. For each application, different users may have
unique requirements for circuits with specific resolution, accuracy, linearity,
speed, power, and signal amplitude capability, which results in a high degree of
market complexity. Maxim's products can be used in a variety of applications,
but serve only certain segments of the total analog market.
PRODUCTS AND APPLICATIONS
The Company initially entered the analog market with a relatively
narrow portfolio of products as second sources for industry-standard parts for
which there was an existing customer base. After establishing a position in the
market, the Company began to introduce technically innovative proprietary
products. Although second sourcing continues to be a component of the Company's
product development program, current research and development emphasize
development of proprietary circuits. The Company believes it addresses the
requirements of the market by providing competitively priced products that add
value to electronic equipment with superior quality and reliability.
As of June 27, 1998, Maxim has introduced over 1,500 products. These
products are available with numerous packaging alternatives, including packages
for surface mount technology.
The following table illustrates the major industries served by the
Company and typical applications for which the Company's products can be used:
Industry Typical Application
Communications . . . . . . . . . . . Broadband Networks
Cable System
Central Office Switches
Direct Broadcast TV
Fiber Optics
Pagers
PBX
Phones
* Cellular
* Cordless
Satellite Communications
Transmission Systems
Video Communications
Wireless Communications
Industrial Control . . . . . . . . . . Control of
* Flow
* Position
* Pressure
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* Temperature
* Velocity
Robotics
Instrumentation . . . . . . . . . . . . Automatic Test Equipment
Analyzers
Data Recorders
Measuring Instruments
* Electrical
* Light
* Pressure
* Sound
* Speed
* Temperature
Testers
Data Processing . . . . . . . . . . . Bar-code Readers
Disk Drives
Mainframes
Minicomputers
Personal Computers
Printers
Point of Sale Terminals
Tape Drives
Workstations
The Company also sells products for military and selected medical
equipment.
While Maxim's proprietary products have received substantial market
acceptance, Maxim has experienced additional competition as Maxim's competitors
have developed second sources for Maxim's successful innovative proprietary
products. Typically in the semiconductor industry, when a proprietary product
becomes second sourced, the credibility of the original design is enhanced, and
there is an opportunity to increase total revenues as the potential customers'
reluctance to design in a sole-source product is removed, but gross margins may
be adversely affected due to increased price competition.
PRODUCT QUALITY
Maxim places strong emphasis on product quality from initial design
through final quality assurance. In the product design phase, Maxim applies a
set of circuit design rules that it believes results in enhanced product
reliability. Upon receipt from Maxim's own fabrication facilities or from
silicon foundries, a majority of processed wafers are tested for conformance
with specific parameters. Products are individually tested using specialized
test equipment and complex programs to ensure that they meet data sheet
performance levels. In addition, long-term operating life and mechanical stress
tests are routinely performed on samples to assure continued consistency.
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MANUFACTURING
Maxim uses its own wafer fabrication facilities and, to a small extent,
silicon foundries to produce wafers. The majority of processed wafers are
subjected to parametric and functional testing at the Company's facilities. As
is customary in the industry, the Company ships most of its processed wafers to
foreign assembly subcontractors, located in the Philippines, Malaysia, and South
Korea, where wafers are separated into individual integrated circuits and
assembled into a variety of packages.
During fiscal 1997, Maxim completed construction of a
141,000-square-foot manufacturing and test facility in the Philippines. At the
present time, this facility is operating as Maxim's offshore test facility,
testing the majority of Maxim's packaged units. The rest of the packaged units
are tested at its Sunnyvale, California and Beaverton, Oregon facilities upon
receipt from assembly subcontractors. At some time in the future, the
Philippines facility may also be used for part of Maxim's assembly requirements
in addition to, or in place of, assembly subcontractors.
The broad range of products demanded by the analog integrated circuit
market requires multiple manufacturing process technologies. Twenty different
process technologies are currently used for wafer fabrication of the Company's
products. Historically, wafer fabrication of analog integrated circuits has not
required the state-of-the-art processing equipment necessary for the fabrication
of advanced digital integrated circuits, although newer processes do utilize and
require some of these facilities and equipment.
In addition, hybrid products are manufactured using a complex multichip
technology featuring thin-film, thick-film, and laser-trimmed resistors.
For the majority of these technologies in multiple fabrication lines,
the Company relies on its three geographically separated fabrication facilities
in Sunnyvale and San Jose, California and Beaverton, Oregon and, to a small
extent, manufacturing subcontractors. The Company currently uses five
subcontract silicon foundries that represent less than 8% of wafer production.
Each of the subcontractors currently used by Maxim is unaffiliated with Maxim.
In December 1989, the Company acquired a wafer fabrication facility in
Sunnyvale, California capable of producing 3 micron CMOS and bipolar products.
Maxim leased the building housing the facility and purchased all manufacturing
assets required for its manufacturing operations. In May 1994, the Company
acquired a mixed-class wafer fabrication facility in Beaverton, Oregon capable
of producing CMOS and bipolar products. In November 1997, the company acquired a
sub-micron wafer fabrication facility in San Jose, California. (See "Item 2.
Properties" below).
As is typical in the semiconductor industry, the Company has
experienced disruptions in the supply of processed wafers due to quality
problems or failure to achieve satisfactory electrical yields. If the foundries
used by the Company were unwilling or the Company's own internal wafer
fabrication facilities were unable to produce adequate supplies of processed
wafers conforming to the Company's quality standards, the Company's business and
relationships with its customers could be adversely affected.
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Due to the relatively lengthy manufacturing cycle, the Company builds
some of its inventory in advance of receiving orders from its customers. As a
consequence of inaccuracies inherent in forecasting, inventory imbalances
periodically occur that result in surplus amounts of some Company products and
shortages of others. Such shortages can adversely affect customer relations and
surpluses can result in larger-than-desired inventory levels.
SALES AND MARKETING
In the United States and Canada, the Company sells its products through
a direct sales and applications organization in eight regional sales offices and
through various distribution channels. As is customary in the industry, domestic
distributors are entitled to certain price rebates and limited product return
privileges.
International sales are conducted by 13 Maxim sales offices and 36
sales representative organizations and distributors consisting of 60 office
locations. The Company sells in both United States dollars and various foreign
currencies. Over half of the Company's international sales are billed and
payable in United States dollars and are therefore not directly subject to
currency exchange fluctuations. A portion of the Company's sales from its United
Kingdom, French, and German affiliates is denominated in the local currencies.
The majority of the sales to customers and distributors located in Japan are
denominated in yen. The Company places foreign currency forward contracts to
protect the United States dollar value of its firm sales commitments and net
monetary assets. Changes in the relative value of the dollar, however, may
create pricing pressures for Maxim's products. In addition, various forms of
protectionist trade legislation have been proposed in the United States and
certain foreign countries. A change in current tariff structures or other trade
policies could adversely affect the Company's foreign marketing strategies. In
general, payment terms for foreign customers, distributors and others, are
longer than for U.S. customers, and certain major foreign customers habitually
pay for product well beyond the scheduled payment dates.
As is customary in the semiconductor industry, the Company's domestic
distributors may market products competitive with Maxim's. The Company's
independent sales representatives and international distributors may not
represent competitive product lines, although they are permitted to sell
non-competing products for other companies.
International sales accounted for approximately 56%, 57%, and 57% of
net revenues in fiscal 1998, 1997 and 1996, respectively. (See "Note 10 Notes to
Consolidated Financial Statements" as set forth in the Company's Annual Report
to Stockholders for the fiscal year ended June 27, 1998.)
The Company also sells product directly to original equipment
manufacturers. In particular, the Company has a long-term supply arrangement
with Tektronix, Inc. for the supply of products manufactured by Tektronix prior
to its sale in May 1994 of its integrated circuits operation ("ICO") to the
Company and for new designs created by Tektronix.
As of June 27, 1998, the Company's backlog was approximately $181
million as compared to approximately $152 million at June 30, 1997. The Company
includes in its backlog customer-released orders with firm schedules for
shipment within the next 12 months. As is customary in the
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semiconductor industry, these orders may be canceled in most cases without
penalty to the customers. In addition, the Company's backlog includes orders
from domestic distributors as to which revenues are not recognized until the
products are sold by the distributors. Such products when sold may result in
revenue lower than the stated backlog amounts as a result of discounts that are
authorized by the Company at the time of sale by the distributors. Accordingly,
the Company believes that its backlog at any time should not be used as a
measure of future revenues.
The Company warrants its products to its customers generally for 12
months from shipment, but in certain cases for longer periods. Warranty expense
to date has been minimal.
RESEARCH AND DEVELOPMENT
The Company believes that research and development is critical to its
future success. Objectives for the research and development function include
definition and design of innovative proprietary products that meet customer
needs, development of second-source products, design of parts for high yield and
reliability, and development of manufacturing processes and advanced packaging
to support an expanding product line.
Research and development expenses were approximately $72.2 million,
$51.3 million, and $47.5 million in fiscal 1998, 1997, and 1996, respectively.
COMPETITION
The analog integrated circuit industry is intensely competitive, and
virtually all major semiconductor companies presently compete with, or
conceivably could compete with, some segment of the Company's business. Maxim's
primary competitors are Analog Devices, Inc. and Linear Technology Corporation.
Other competitors with respect to some of the Company's products include
Burr-Brown Corporation, Harris Corporation, Lucent Technologies, Micrel Inc.,
Motorola Inc., National Semiconductor Corporation, Philips Electronics N.V.,
Rockwell Corporation, Siliconix Inc., Sipex Corporation, TelCom Semiconductor
Inc., and Texas Instruments Inc. While Japanese and other foreign manufacturers
have not played a major role in markets from which the Company currently derives
a majority of its revenue, they possess the necessary technical and financial
capabilities to participate in these markets, and there can be no assurance that
significant foreign competition will not develop in the future. Many of Maxim's
competitors have substantially greater financial, manufacturing, and marketing
resources than the Company, and some of Maxim's competitors have greater
technical resources. The Company believes it competes favorably with these
corporations primarily on the basis of technical innovation, product definition,
quality, and service. There can be no assurance that competitive factors will
not adversely affect the Company's future business.
PATENTS, LICENSES, AND OTHER INTELLECTUAL PROPERTY RIGHTS
The Company relies primarily upon know-how, rather than on patents, to
develop and maintain its competitive position. There can be no assurance that
others will not develop or patent similar technology or reverse engineer the
Company's products or that the confidentiality
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agreements with employees, consultants, silicon foundries and other suppliers
and vendors will be adequate to protect the Company's interests.
Maxim currently owns 71 U.S. patents and 27 foreign patents with
expiration dates ranging from 2001 to 2016. In addition, the Company has applied
for 52 U.S. patents, a large number of which have corresponding patent
applications in multiple foreign jurisdictions. It is the Company's policy to
seek patent protection for significant inventions that may be patented, though
the Company may elect, in appropriate cases, not to seek patent protection even
for significant inventions if other protection, such as maintaining the
invention as a trade secret, is considered more advantageous.
There can be no assurance that any patent will issue on pending
applications or that any patent issued will provide substantive protection for
the technology or product covered by it. In addition, the Company has registered
certain of its mask sets under the Semiconductor Chip Protection Act of 1984.
The Company believes that patent and mask work protection is of less
significance in its business than experience, innovation, and management skill.
Maxim has registered several of its trademarks with the U.S. Patent and
Trademark Office and in foreign jurisdictions.
Maxim is a party to a number of licenses, including patent licenses and
other licenses obtained from Tektronix in connection with its acquisition of
Tektronix's ICO in May 1994.
Due to the many technological developments and the technical complexity
of the semiconductor industry, it is possible that certain of the Company's
designs or processes may involve infringement of patents or other intellectual
property rights held by others. From time to time, the Company has received, and
in the future may receive, notice of claims of infringement by its products on
intellectual property rights of third parties. (See "Risk Factors-Intellectual
Property Litigation and Claims," and "Legal Proceedings") If any such
infringements were to exist, the Company might be obligated to seek a license
from the holder of the rights and might have liability for past infringement. In
the past, it has been common semiconductor industry practice for patent holders
to offer licenses on reasonable terms and rates. Although in some situations,
typically where the patent directly relates to a specific product or family of
products, patent holders have refused to grant licenses, the practice of
offering licenses appears to be generally continuing. However, no assurance can
be given that the Company will be able to obtain licenses as needed in all cases
or that the terms of any license that may be offered will be acceptable to
Maxim. In those circumstances where an acceptable license is not available, the
Company would need either to change the process or product so that it no longer
infringes or else stop manufacturing the product or products involved in the
infringement.
ENVIRONMENTAL REGULATION
Federal, state, and local regulations impose a variety of environmental
controls on the storage, handling, discharge and disposal of certain chemicals
and gases used in semiconductor manufacturing. The Company's facilities have
been designed to comply with these regulations, and it believes that its
activities are conducted in material compliance with such regulations. There can
be
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no assurance, however, that interpretation and enforcement of current or future
environmental regulations will not impose costly requirements upon the Company.
Any failure of the Company to control adequately the storage, use, and disposal
of regulated substances could result in future liabilities.
Increasing public attention has been focused on the environmental
impact of electronic manufacturing operations. While the Company to date has not
experienced any materially adverse effects on its business from environmental
regulations, there can be no assurance that changes in such regulations will not
impose costly equipment or other requirements.
EMPLOYEES
The supply of skilled analog designers and other engineers required for
Maxim's business is limited, and competition for such personnel is intense. The
Company's growth also requires the hiring or training of additional middle-level
managers. If the Company is unable to hire, retain, and motivate qualified
technical and management personnel, its operations and financial results will be
adversely affected.
None of the Company's employees is subject to a collective bargaining
agreement. The Company believes that its relations with its employees are good.
As of June 27, 1998, Maxim had 3,066 employees.
MAXTEK COMPONENTS CORPORATION
In connection with Maxim's 1994 purchase of the integrated circuits
business of Tektronix, Inc., Maxim and Tektronix jointly formed a new company,
which is equally owned, to operate Tektronix's hybrid circuit business. This
company, named Maxtek Components Corporation, is an independent company devoted
to design and production of multichip modules and hybrids. Maxtek's principal
customer, Tektronix, accounts for approximately 38% of its revenue. Under
Maxtek's supply agreements, all of its costs related to the Tektronix supply
agreement are reimbursed on a cost plus profit basis. High-frequency designs
often require a multitude of component technologies, and there are no monolithic
IC processes currently available that can combine the performance advantages of
all disparate technologies. High-frequency modules and hybrids are intended to
combine the optimum technologies and deliver maximum performance.
RISK FACTORS
An investment in the securities of Maxim involves certain risks. In
evaluating the Company and its business, prospective investors should give
careful consideration to the factors listed below, in addition to the
information provided elsewhere in this Annual Report on Form 10-K, in the
documents incorporated herein by reference and in other documents filed with the
Securities and Exchange Commission.
The statements contained in this Annual Report on Form 10-K that are
not purely historical are forward-looking statements, including statements
regarding the Company's beliefs,
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expectations, plans, or intentions regarding the future. All forward-looking
statements included in this document are made as of the date hereof, based on
information available to the Company as of the date hereof, and the Company
assumes no obligation to update any forward-looking statement. It is important
to note that the Company's actual results could differ materially from those in
such forward-looking statements. Forward-looking statements in this Annual
Report on Form 10-K involve risk and uncertainty, including risk factors
discussed below.
Factors Affecting Future Operating Results
The Company's future operating results are difficult to predict and may
be affected by a number of factors.
The semiconductor market has historically been cyclical and subject to
significant economic downturns at various times. After a period of increasing
demand, more recently the semiconductor industry, including the portions in
which the Company participates, has been experiencing reduced demand. Current
conditions are affected by the major economic problems in the Asian market. It
is uncertain what level of demand will prevail in the future for the industry
and for the markets targeted by the Company.
Other key factors affecting the Company's revenues and operating
results that could cause actual results to differ materially from past or
predicted results include the timing of new product announcements or
introductions by the Company and its competitors, competitive pricing pressures,
fluctuations in manufacturing yields and manufacturing efficiency, adequate
availability of wafers and manufacturing capacity, changes in product mix, and
economic conditions in the United States and international markets. As a result
of these and other factors, there can be no assurance that the Company will not
experience material fluctuations in its future operating results on a quarterly
or annual basis.
The Company's ability to realize its quarterly revenue goals and
projections is affected to a significant extent by its ability to match
inventory and current production mix with the product mix required to fulfill
orders on hand and orders received within a quarter for delivery in that quarter
(referred to as "turns business"). This issue, which has been one of the
distinguishing characteristics of the analog integrated circuit industry,
results from the very large number of individual parts offered for sale and the
very large number of customers combined with limitations on Maxim's and its
customers' ability to forecast orders accurately and relatively lengthy
manufacturing cycles. Because of this extreme complexity in the Company's
business, no assurance can be given that the Company will achieve a match of
inventory on hand, production units, and shippable orders sufficient to realize
quarterly revenue goals.
Dependence on New Products and Process Technologies
The Company's future success will depend very significantly on its
continued ability to introduce new products and to develop new process
technologies. Semiconductor design and process technology are subject to rapid
technological change, requiring a high level of expenditures for research and
development. Design and process development for the analog portion of the market
in which the Company participates are particularly challenging. The success of
new
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product introductions is dependent on several factors, including proper new
product selection, timely product introduction, achievement of acceptable
production yields, and market acceptance. From time to time, Maxim has not fully
achieved its new product introduction and process development goals. For
example, increasing manufacturing capacity and efficiency in its high-frequency
processes has advanced at a slower rate than planned. There can be no assurance
that the Company will successfully develop or implement new process technologies
or that new products will be introduced on a timely basis or receive substantial
market acceptance.
In addition, the Company's growth is dependent on its continued ability
to penetrate new markets such as the high-frequency communications segment of
the electronics market where the Company has limited experience and competition
is intense. There can be no assurance that the markets being served by the
Company will continue to grow; that the Company's existing and new products will
meet the requirements of such markets; that the Company's products will achieve
customer acceptance in such markets; that competitors will not force prices to
an unacceptably low level or take market share from the Company; or that the
Company can achieve or maintain profit in these markets.
Manufacturing Risks
The fabrication of integrated circuits is a highly complex and precise
process. Minute impurities, contaminants in the manufacturing environment,
difficulties in the fabrication process, defects in the masks used to print
circuits on a wafer, manufacturing equipment failures, wafer breakage, or other
factors can cause a substantial percentage of wafers to be rejected or numerous
die on each wafer to be nonfunctional. The Company has from time to time in the
past experienced lower-than-expected production yields, which have delayed
product shipments and adversely affected gross margins. There can be no
assurance that the Company will not experience a decrease in manufacturing
yields or that the Company will be able to maintain acceptable manufacturing
yields in the future.
The number of shippable die per wafer for a given product is critical
to the Company's results of operations. To the extent the Company does not
achieve acceptable manufacturing yields or experiences delays in its wafer
fabrication, assembly or final test operations, its results of operations could
be adversely affected. During periods of decreased demand, fixed wafer
fabrication costs could have an adverse effect on the Company's financial
condition, gross margins, and results of operations.
The Company manufactures over 92% of its wafer production requirements
at three internal wafer fabrication facilities. One fabrication facility is
currently operating at capacity. Given the nature of the Company's products, it
would be difficult to arrange for independent manufacturing facilities to supply
such products. Any prolonged inability to utilize one of the Company's
manufacturing facilities as a result of fire, natural disaster, or otherwise,
would have a material adverse effect on the Company's results of operations.
Competition
The Company experiences intense competition from a number of companies,
many of which
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have significantly greater financial, manufacturing, and marketing resources
than the Company and some of which have greater technical resources than the
Company. To the extent that the Company's proprietary products become more
successful, competitors will offer second sources for some of those products,
possibly causing some erosion of profit margins. Although Japanese and other
foreign manufacturers have not played a major role in the markets from which the
Company currently derives the bulk of its revenue, they possess the necessary
technical and financial capabilities to participate in these markets, and there
can be no assurance that significant foreign competition will not develop in the
future. See "Business-Competition."
Dependence on Independent Foundries, Subcontractors, and Philippines Test
Facility
Although the Company has an internal capability to fabricate most of
its wafers, Maxim remains dependent on outside silicon foundries for a small but
important portion of its wafer fabrication. Each of the foundries currently used
by Maxim are unaffiliated with Maxim and are relatively small operations. As is
typical in the semiconductor industry, from time to time the Company has
experienced disruptions in the supply of processed wafers from these foundries
due to quality problems, failure to achieve satisfactory electrical yields, and
capacity limitations. Procurement from foundries is done by purchase order and
long-term contracts. If these foundries are unable or unwilling to produce
adequate supplies of processed wafers conforming to the Company's quality
standards, the Company's business and relationships with its customers for the
limited quantities of products produced by these foundries would be adversely
affected. Finding alternate sources of supply or initiating internal wafer
processing for these products would be difficult and time consuming.
Maxim relies on subcontractors located in the Philippines, Malaysia,
and South Korea to separate wafers into individual integrated circuits and
package them. The Company also performs final testing for the majority of its
products at a facility owned by the Company in the Philippines. In the past,
South Korea and the Philippines have experienced relatively severe political
disorders, labor disruptions, and natural disasters. Although the Company has
been affected by these problems, none has materially affected the Company's
revenues or costs to date. However, similar problems in the future or more
aggravated consequences of current problems, could affect deliveries to Maxim of
assembled, tested product, possibly resulting in substantial delayed or lost
sales and/or increased expense. See "Business-Manufacturing."
Availability of Materials, Supplies, and Subcontract Services
Over the past few years, the semiconductor industry has experienced a
very large expansion of fabrication capacity and production worldwide. As a
result of increasing demands from semiconductor manufacturers, availability of
certain basic materials and supplies, such as polysilicon, silicon wafers, lead
frames and molding compounds, and of subcontract services, like epitaxial growth
and ion implantation and assembly of integrated circuits into packages, have
from time to time, over the past few years, been in short supply and may be
expected to come into short supply again if overall industry demand increases.
Maxim devotes continuous efforts to maintaining availability of all required
materials, supplies, and subcontract services. However, Maxim does not have
long-term agreements providing for all of these materials, supplies, and
services, and shortages could occur as a result of capacity limitations or
production constraints on
14
<PAGE> 15
suppliers that could have materially adverse effects on Maxim's ability to
achieve its planned production.
Dependence on Independent Distributors and Sales Representatives
A significant portion of the Company's sales is realized through
electronics distributors and independent sales representatives that are not
under the direct control of the Company. These independent sales organizations
generally represent product lines offered by several companies and thus could
reduce their sales efforts applied to the Company's products or terminate their
representation of the Company. Payment terms for foreign distributors are
substantially longer, either according to contract or by practice, than for U.S.
customers. The inability to collect open accounts could adversely affect the
Company's results of operation. Termination of a significant distributor,
whether at the Company's or the distributor's initiative, is disruptive to the
Company's current business. If the Company were unable to find suitable
replacements, terminations by significant distributors or representatives could
have a material adverse impact on the Company. See "Business-Sales and
Marketing."
Protection of Proprietary Information
The Company relies primarily upon know-how, rather than on patents, to
develop and maintain its competitive position. There can be no assurance that
others will not develop or patent similar technology or reverse engineer the
Company's products or that the confidentiality agreements upon which the Company
relies will be adequate to protect its interests. Other companies have obtained
patents covering a variety of semiconductor designs and processes, and the
Company might be required to obtain licenses under some of these patents or be
precluded from making and selling the infringing products. There can be no
assurance that Maxim would be able to obtain licenses, if required, upon
commercially reasonable terms. See "Business-Patents, Licenses and Other
Intellectual Property Rights," and "Risk Factors-Intellectual Property
Litigation and Claims."
Intellectual Property Litigation and Claims
The Company is subject to various legal proceedings (See Item 3, Legal
Proceedings) and other similar claims that involve possible infringement of
patent or other intellectual property rights of third parties. In addition, from
time to time, the Company receives notices that its products or processes may be
infringing the intellectual property rights of others. See "Patents, Licenses
and Other Intellectual Property Rights."
If one or more of the Company's products or processes were determined
to infringe any such intellectual property rights, the Company might be enjoined
by a court from further manufacture and/or sale of the affected products, the
Company would need to obtain a license from the holders of the rights and/or to
reengineer the Company's products or processes in such a way as to avoid the
alleged infringement. In any of those cases, there can be no assurance that the
Company would be able to obtain any necessary license on commercially reasonable
terms or that the Company would be able to reengineer its products or processes
to avoid infringement. An adverse result in litigation arising from such a claim
could involve an injunction to prevent the sales
15
<PAGE> 16
of a material portion of the Company's products, a reduction or the elimination
of the value of related inventories, and the assessment of a substantial
monetary award for damages related to past sales.
Foreign Trade and Currency Exchange
Many of the materials and manufacturing steps in the Company's products
are supplied by foreign companies or by the Company's operations abroad, such as
its test operations in the Philippines. Approximately 56% of the Company's net
revenues in fiscal 1998 were from foreign customers. Accordingly, both
manufacturing and sales of the Company's products may be adversely affected by
political or economic conditions abroad. In addition, various forms of
protectionist trade legislation have been proposed in the United States and
certain foreign countries. A change in current tariff structures or other trade
policies could adversely affect the Company's foreign manufacturing or marketing
strategies. Currency exchange fluctuations could also increase the cost of
components manufactured abroad and the cost of the Company's products to foreign
customers or decrease the costs of products from the Company's foreign
competitors. See "Business-Manufacturing" and "Business-Sales and Marketing."
Dependence on Key Personnel
The Company's success depends to a significant extent upon the
continued service of its president, John F. Gifford, its other executive
officers, and key management and technical personnel, particularly its
experienced analog design engineers, and on its ability to continue to attract,
retain, and motivate qualified personnel.
The Company does not maintain any key person life insurance policy on
any such person. The competition for such employees is very intense. The loss of
the services of Mr. Gifford, or of one or more of the Company's executive
officers, design engineers, other key personnel, or the inability to continue to
attract qualified personnel, could have a material adverse effect on the
Company.
16
<PAGE> 17
ITEM 2. PROPERTIES
Maxim's headquarters are located in a 63,000-square-foot building in
Sunnyvale, California, which the Company purchased in October 1987. Between
December 1989 and June 1998, the Company purchased 6 buildings adjacent to its
headquarters building in Sunnyvale with an aggregate of 95,000 square feet of
space. These buildings serve as the executive offices of the Company and also
provide space for engineering, manufacturing, administration, customer service
and other uses. In December 1989, in connection with acquiring one of its wafer
fabrication facilities, Maxim assumed the operating lease of the
30,000-square-foot building in Sunnyvale, California. This lease extends through
November 2003 and has a five-year lease extension option. In May 1994, Maxim
purchased the Tektronix integrated circuit operation. This facility, located in
Beaverton, Oregon, on 21 acres, totals 226,000 square feet and contains 71,000
square feet of wafer fabrication areas as well as engineering, manufacturing,
and general office space. A portion of the space is leased to an unrelated
party. In fiscal 1996, the Company acquired an approximately 9-acre parcel in
Sunnyvale, California, to support future expansion and currently is utilizing
30,000 square feet as office space. In 1997, the Company completed construction
of an approximate 141,000-square-foot facility at Gateway Business Park in
Cavite Province, Philippines. The facility is now operating as the Company's
principal final test operation, and it can provide future capacity for assembly
and other manufacturing operations for the Company. In November 1997, the
Company acquired a 67,000-square-foot building including a sub-micron wafer
fabrication facility in San Jose, California. The Company expects these
buildings and the contiguous land to be adequate for its purposes through fiscal
1999.
ITEM 3. LEGAL PROCEEDINGS
Maxim Integrated Products, Inc. vs. Analog Devices, Inc. and
Pioneer-Standard Electronics, Inc., Action Nos. C-92-20716-JW and C-96-20723 JW
EAI in the United States District Court for the Northern District of California.
These proceedings were completed in the fourth fiscal quarter of 1998 in favor
of both defendants and against Maxim. Judgment has not yet been entered.
Linear Technology Corporation vs. Maxim Integrated Products, Inc. et
al., Action No. C-98-1727 FMS in the Federal District Court for the Northern
District of California. On June 26, 1997, a complaint was filed by Linear
Technology Corporation ("LTC") naming the Company and certain other unrelated
parties as defendants. The complaint alleges that each of the defendants,
including the Company, has willfully infringed, induced infringement and
contributorily infringed LTC's United States Patent 5,481,178 relating to
control circuits and methods for maintaining high efficiencies over broad
current ranges in a switching regulator circuit, all of which has allegedly
damaged LTC in an unspecified amount.
The complaint further alleges that the Company's actions have been, and
continue to be, willful and deliberate and seeks a permanent injunction against
the Company as well as unspecified actual and treble damages including costs,
expenses, and attorneys fees.
17
<PAGE> 18
The Company answered the complaint on October 20, 1997, denying all of
LTC's substantive allegations and counterclaiming for a declaration that LTC's
patent is invalid and not infringed. The case is in its early stages with the
parties continuing to be involved in discovery proceedings. The case has been
bifurcated into separate liability and damages trials, with the issues of
liability and willfulness likely to go to jury trial in late 1999.
The Company has asserted in its answer, and continues to believe, that
the allegations in the complaint are without merit.
Although the case is still in its relatively early stages and the
outcome of a jury trial involving patents and intellectual property is
inherently uncertain, the Company does not believe that the ultimate outcome of
the matter will have a material adverse effect on the Company's financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference from
the Company's Annual Report to Stockholders for the fiscal year ended June 27,
1998 under the headings "Financial Information - Financial Highlights by
Quarter" and "Corporate Data, Stockholder Information."
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference from
the Company's Annual Report to Stockholders for the fiscal year ended June 27,
1998 under the heading "Financial Information - Selected Financial Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is incorporated by reference from
the Company's Annual Report to Stockholders for the fiscal year ended June 27,
1998 under the heading "Financial Information - Management's Discussion and
Analysis of Financial Condition and Results of Operations."
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
18
<PAGE> 19
The information required by this item is incorporated by reference from
the Company's Annual Report to Stockholders for the fiscal year ended June 27,
1998 under the subheading "Interest Income" under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations. "
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference from
the Company's Annual Report to Stockholders for the fiscal year ended June 27,
1998 under the headings "Financial Information - Consolidated Balance Sheets, -
Consolidated Statements of Income, - Consolidated Statements of Stockholders'
Equity, - Consolidated Statements of Cash Flows, - Notes to Consolidated
Financial Statements, - Report of Ernst & Young LLP, Independent Auditors and -
Financial Highlights by Quarter."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
19
<PAGE> 20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Other than as follows, the information required by this item is
incorporated by reference from the Company's Proxy Statement for the 1998 Annual
Meeting of Stockholders under the headings "Proposal 1 - Election of Directors"
and "Compliance with Section 16(A) of the Securities Exchange Act of 1934."
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
John F. Gifford 57 President, Chief Executive Officer
and Chairman of the Board
Frederick G. Beck 61 Vice President
Ziya G. Boyacigiller 46 Vice President
Michael J. Byrd 38 Vice President and
Chief Financial Officer
Tunc Doluca 40 Vice President
Richard C. Hood 48 Vice President
Kenneth J. Huening 37 Vice President
Carl W. Jasper 42 Corporate Controller and
Principal Accounting Officer
William N. Levin 57 Vice President
Nasrollah Navid 49 Vice President
Pirooz Parvarandeh 38 Vice President
Robert F. Scheer 45 Vice President
Vijay Ullal 40 Vice President
</TABLE>
20
<PAGE> 21
Mr. Gifford, a founder of the Company, has served as Maxim's President,
Chief Executive Officer and Chairman of the Board since its incorporation in
April 1983.
Mr. Beck, a founder of the Company, has served as Vice President since
May 1983, except for a medical leave between December 1991 and January 1994.
Mr. Boyacigiller joined Maxim in June 1983 and was promoted to Vice
President in April 1995. Prior to April 1995, he served in business management
and integrated circuits design positions.
Mr. Byrd joined Maxim in February 1994 as Vice President and Chief
Financial Officer. Prior to joining Maxim he was with Ernst & Young LLP from
August 1982 to February 1994 where he held various positions, including partner.
Mr. Doluca joined Maxim in October 1984 and was promoted to Vice
President in July 1994. Prior to July 1994, he served in a number of integrated
circuit development positions.
Mr. Hood, a founder of the Company, joined the Company in June 1983 and
was promoted to Vice President in February 1997. Prior to February 1997, he
served in a number of integrated circuit test positions.
Mr. Huening joined Maxim in December 1983 and was promoted to Vice
President in December 1993. Prior to December 1993, he served in a number of
quality assurance positions.
Mr. Jasper joined Maxim in May 1998 and was promoted to Principal
Accounting Officer in June 1998. Prior to joining Maxim, he was with Read-Rite
Corporation from November 1995 to April 1998 where he held the position of Vice
President, Corporate Controller and prior to that was with Ernst & Young LLP
from September 1983 to November 1995.
Mr. Levin joined Maxim in August 1990 as Vice President. From 1987 and
until joining Maxim, he was Vice President, Program Management, for Shugart
Corporation.
Dr. Navid joined Maxim in May 1997 as Vice President. Prior to joining
Maxim and since 1980, he was with Philips Semiconductors where he served in a
number of wireless product line management positions.
Mr. Parvarandeh joined Maxim in August 1988 and was promoted to Vice
President in July 1997. Prior to July 1997, he served in a number of integrated
circuit development positions.
Mr. Scheer joined Maxim in June 1983 and was promoted to Vice President
in June 1992.
Mr. Ullal joined Maxim in December 1989 and was promoted to Vice
President in March 1996. Prior to March 1996, he served in a number of wafer fab
operation positions.
21
<PAGE> 22
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from
the Company's Proxy Statement for the 1998 Annual Meeting of Stockholders under
the headings "Executive Compensation" and "Performance Graph."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from
the Company's Proxy Statement for the 1998 Annual Meeting of Stockholders under
the heading "Security Ownership of Certain Beneficial Owners and Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference from
the Company's Proxy Statement for the 1998 Annual Meeting of Stockholders under
the heading "Certain Relationships and Related Transactions".
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) The following financial statements are included in the Company's 1998
Annual Report to Stockholders and are incorporated herein by reference
pursuant to Item 8.
Consolidated Balance Sheets at June 27, 1998 and June 30, 1997.
Consolidated Statements of Income for each of the three years in the
period ended June 27, 1998.
Consolidated Statements of Stockholders' Equity for each of the three
years in the period ended June 27, 1998.
Consolidated Statements of Cash Flows for each of the three years in
the period ended June 27, 1998.
Notes to Consolidated Financial Statements
(a)(2) The following financial statement schedule is filed as part of this
Form 10-K.
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable, or
because the required
22
<PAGE> 23
information is included in the consolidated financial statements or
notes thereto.
(a)(3) Exhibits. See attached Exhibit Index.
(b) Reports on Form 8-K. None
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: September 25, 1998 MAXIM INTEGRATED PRODUCTS, INC.
By /s/ Michael J. Byrd
-------------------------------
Michael J. Byrd, Vice President
and Chief Financial
Officer (For the Registrant
and as Principal Financial
Officer)
By /s/ Carl W. Jasper
-------------------------------
Carl W. Jasper,
Corporate Controller (Principal
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, the report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ John F. Gifford President, Chief September 25, 1998
- ----------------------------- Executive Officer and
John F. Gifford Chairman of the Board
(Principal Executive Officer)
/s/ James R. Bergman Director September 25, 1998
- -----------------------------
James R. Bergman
/s/ B. Kipling Hagopian Director September 25, 1998
- -----------------------------
B. Kipling Hagopian
/s/ A.R. Wazzan Director September 25, 1998
- -----------------------------
A.R. Wazzan
</TABLE>
24
<PAGE> 25
MAXIM INTEGRATED PRODUCTS, INC.
SCHEDULE II - VALUATION AND QUALIFYING
ACCOUNTS
(amounts in thousands)
<TABLE>
<CAPTION>
Additions
Charged
Balance at to Costs Balance at
Beginning and End
of Period Expenses Deductions (1) of Period
--------- -------- -------------- ---------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended June 30, 1996 $1,145 $154 $ 9 $1,290
Year ended June 30, 1997 $1,290 $ 54 $ - $1,344
Year ended June 27, 1998 $1,344 $568 $20 $1,892
</TABLE>
(1) Uncollectible accounts written off.
25
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Numbered Page Description
- ------ ------------- -----------
<S> <C> <C>
3.1 0 Restated Certificate of Incorporation of the Company as filed
with the Delaware Secretary of State on September 21, 1995
3.3 Amendment to Restated Certificate of Incorporation of the
Company as filed with the Delaware Secretary of State
on December 3, 1997.
3.4 Q Amended and Restated Bylaws of the Company, as amended
10.1 X Form of the Company's Domestic Distributor Agreement
10.2 # Form of the Company's International Distributor Agreement
10.3 # Form of the Company's Domestic Sales Representative Agreement
10.4 # Form of the Company's International Representative Agreement
10.5 0 Agreement dated as of July 14, 1987, amended and restated
February 1994 between John F. Gifford and the Company(1)
10.6 X Agreement dated as of March 7, 1991 between John F. Gifford
and the Company(1)
10.8 * Form of Indemnity Agreement
10.9 Z Asset Purchase Agreement by and between the Company and
Tektronix, Inc., dated as of March 31,
</TABLE>
- --------
(1) Management contract or compensatory plan or arrangement.
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Numbered Page Description
- ------ ------------- -----------
<S> <C> <C>
1994, as amended, with certain attachments(2)
10.10 0 Technology Transfer Agreement dated May 27, 1994 by and between
the Company and Tektronix, Inc.(2)
10.11 0 Incentive Stock Option Plan, as amended(1)
10.12 1987 Supplemental Stock Option Plan, as amended(1)
10.13 Supplemental Nonemployee Stock Option Plan, as amended(1)
10.14 1987 Employee Stock Participation Plan, as amended(1)
10.15 1988 Nonemployee Director Stock Option Plan, as amended(1)
10.16 1996 Stock Incentive Plan(1)
10.17 Q Lease Agreement with Mathilda Development L.P., dated September
30, 1993
10.18 Bonus Plan(1)
13.1 Portions of the Annual Report to Stockholders for the fiscal year ended June
27, 1998 incorporated by reference into the Form 10-K
21 List of Subsidiaries
23 Consent of Ernst & Young LLP, Independent Auditors
27 Financial Data Schedules
</TABLE>
* Incorporated by Reference to the Company's Registration Statement on
Form S-1 No. 33-19561.
X Incorporated by Reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1991.
# Incorporated by Reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1992.
- --------------
(2) Schedules and certain attachments omitted pursuant to Item 601(b) of
Registration S-K. The Company hereby undertakes to furnish supplemental
copies of any of the omitted schedules upon request by the Commission.
Certain material omitted pursuant to the request for confidential treatment
by the Company.
<PAGE> 28
+ Incorporated by Reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1993.
Z Incorporated by Reference to the Company's Form 8-K filed with the
Commission on June 11, 1994.
0 Incorporated by Reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1995.
P Incorporated by Reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1996.
Q Incorporated by Reference to the Company's Annual Report on Form 10-K
for the year ended June 30, 1997.
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
MAXIM INTEGRATED PRODUCTS, INC.
John F. Gifford and Michael J. Byrd each hereby certifies that:
1. They are the President and Assistant Secretary, respectively, of Maxim
Integrated Products, Inc. (the "Corporation"), a Delaware corporation, the
original Restated Certificate of Incorporation of which was filed with the
Secretary of State of the State of Delaware on September 21, 1995.
2. At a meeting of the Board of Directors of the Corporation, resolutions
were duly adopted setting forth a proposed amendment of the Restated
Certificate of Incorporation of the Corporation, declaring that amendment to be
advisable and directing that the amendment proposed be considered at the next
annual meeting of the stockholders. The resolution setting forth the proposed
amendment is as follows:
RESOLVED that the second and third sentences of Section A of Article
FOURTH of the Restated Certificate of Incorporation of the Corporation are
hereby amended to read in full as follows:
"The total number of shares of all classes of stock which
the Corporation has the authority to issue is 242,000,000
shares. The number of shares of Common Stock which the
Corporation is authorized to issue is 240,000,000, and the
number of shares of Preferred Stock which the Corporation
is authorized to issue is 2,000,000."
3. Thereafter, the annual meeting of stockholders of the Corporation was
called and held upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware. At that annual meeting a vote of the
stockholders entitled to vote thereon was taken for and against the proposed
amendment. A majority of the outstanding Common Stock, being the only class of
stock outstanding, entitled to vote thereon was voted in favor of the proposed
amendment.
4. This Certificate of Amendment of Restated Certificate of Incorporation
has been duly adopted, in accordance with Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment of Restated Certificate of Incorporation this 3rd day of December,
1997.
/s/ JOHN F. GIFFORD
--------------------------
John F. Gifford, President
ATTEST:
/s/ MICHAEL J. BYRD
- ------------------------------------
Michael J. Byrd, Assistant Secretary
<PAGE> 2
RESTATED CERTIFICATE OF INCORPORATION
OF
MAXIM INTEGRATED PRODUCTS, INC.
MAXIM INTEGRATED PRODUCTS, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware DOES HEREBY CERTIFY:
FIRST:
(a) The present name of this corporation is Maxim Integrated
Products, Inc.
(b) The name under which this corporation was originally incorporated
was Maxim Integrated Products, Inc. (Delaware).
(c) The original Certificate of Incorporation of Maxim Integrated
Products, Inc. (Delaware) was filed with the Secretary of State of the State of
Delaware on August 19, 1987.
SECOND: The Restated Certificate of Incorporation of Maxim Integrated
Products, Inc. in the form attached hereto as Exhibit A has been duly adopted
in accordance with the provisions of Section 245 of the General Corporation Law
of the State of Delaware by the directors of the Corporation.
THIRD: The Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the corporation's
Certificate of Incorporation as heretofore amended or supplemented, and there
is no discrepancy between those provisions and the provisions of the Restated
Certificate.
FOURTH: The Restated Certificate of Incorporation so adopted reads in full
as set forth in Exhibit A attached hereto and hereby incorporated by reference.
IN WITNESS WHEREOF, Maxim Integrated Products, Inc. has caused this
Certificate to be signed by John F. Gifford, its President, this 20th day of
September, 1995.
MAXIM INTEGRATED PRODUCTS, INC.
By: /s/ JOHN F. GIFFORD
---------------------------
John F. Gifford, President
<PAGE> 3
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
MAXIM INTEGRATED PRODUCTS, INC.
FIRST: The name of the corporation (hereinafter called the "Corporation")
is MAXIM INTEGRATED PRODUCTS, INC.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, County
of Kent, and the name or the registered agent of the Corporation in the State
of Delaware at such address as the United States Corporation Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH:
A. The Corporation is authorized to issue two classes of shares
designated respectively "Common Stock" and "Preferred Stock", and referred to
herein as Common Stock and either Preferred Stock or Preferred Shares,
respectively. The total number of shares of all classes of stock which the
Corporation has the authority to issue is 62,000,000 shares. The number of
shares of Common Stock which the Corporation is authorized to issue is
60,000,000, and the number of shares of Preferred Stock which the Corporation
is authorized to issue is 2,000,000. Each share of Common stock shall have a
par value of $0.001, and each share of Preferred Stock shall have a par value
of $0.001.
B. The Preferred Shares may be issued from time to time in one or more
series. The Board of Directors is authorized to fix the number of shares of any
series of Preferred shares and to determine the designation of any such series.
The Board of Directors is also authorized to determine the rights, preferences,
privileges and restrictions granted to or imposed upon any wholly unissued
series of Preferred shares and, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting any series, to increase or decrease (but not below the
number of shares of such series, then outstanding) the number of shares of any
series subsequent to the issue of shares of that series.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors shall have the power to adopt, amend, repeal or
otherwise alter the bylaws without any action on the part of the stockholders;
provided, however, that any bylaws made by
<PAGE> 4
the Board of Directors and any and all powers conferred by any of said bylaws
may be amended, altered or repealed by the stockholders.
SIXTH: A director of the Corporation shall, to the full extent permitted
by the Delaware General Corporation Law, as the same exists or may hereafter be
amended, not be liable to the Corporation or its stockholders for monetary
damages for breach of his fiduciary duty as a director.
SEVENTH:
(a) Vote Required for Certain Business Combinations.
(1) Higher Vote for Certain Business Combinations. In addition to
any affirmative vote required by law or this Restated Certificate of
Incorporation, and except as otherwise expressly provided in paragraph (b) of
this Article Seventh:
(i) any merger or consolidation of this Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested Stockholder (as
hereinafter defined) or (b) any other corporation (whether or not itself an
Interested Stockholder) which is, or after such merger or consolidation would
be, an Affiliate (as hereinafter defined) of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or with
any Interested Stockholder or any Affiliate of any Interested Stockholder of
any assets of this Corporation or any Subsidiary having an aggregate Fair
Market Value equal to or greater than 10% of the Corporation's assets as set
forth on the Corporation's most recent audited, consolidated financial
statements filed with the Securities and Exchange Commission; or
(iii) the adoption of any plan or proposal for the liquidation or
dissolution of this Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(iv) any reclassification of securities (including any reverse
stock split) or recapitalization of this Corporation, or any merger or
consolidation of this Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of increasing the
proportionate shares of the outstanding shares of any class of equity or
convertible securities of this Corporation or any Subsidiary which is directly
or indirectly owned by any Interested Stockholder or any affiliate of any
Interested Stockholder;
shall require the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the voting power of the then outstanding shares
of capital stock of the Corporation entitled to vote generally in the election
of directors (the "Voting Stock"), voting together as a single class. Such
affirmative vote shall be required notwithstanding the fact that no vote may
2.
<PAGE> 5
be required, or that a lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(2) Definition of "Business Combination." The term "Business
Combination" as used in this Article Seventh shall mean any transaction which
is referred to in any one or more clauses (i) through (iv) or subparagraph (1)
of this paragraph (a).
(b) When Higher Vote is Not Required. The provisions of paragraph (a) of
this Article Seventh shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such affirmative
vote as is required by law and any other provision of this Restated Certificate
of Incorporation, if all of the conditions specified in either of the following
subparagraphs (b)(1) or (b)(2) are met:
(1) Approval by Disinterested Directors. The Business Combination
shall have been approved by a majority of the Disinterested Directors (as
hereinafter defined).
(2) Price and Procedure Requirements. All of the following
conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market Value
(as hereinafter defined) as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share by
holders of Common Stock in such Business Combination shall be at least equal
to the higher of the following:
(A) (if applicable) the highest per share price paid by the
Interested Stockholder for any shares of Common Stock acquired by it (1) within
the two-year period immediately prior to the first public announcement of the
proposal of the Business Combination (the "Announcement Date") or (2) in the
transaction in which it became an Interested Stockholder, whichever is higher;
and
(B) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder became an
Interested Stockholder (such latter date is referred to in this Article Seventh
as the "Determination Date"), whichever is higher.
(ii) The aggregate amount of the cash and the Fair Market Value
as of the date of consummation of the Business Combination of consideration
other than cash to be received per share by holders of shares of any other class
of outstanding Voting Stock shall be at least equal to the highest of the
following (it being intended that the requirements of this subparagraph
(b)(2)(ii) shall be required to be met with respect to every class of
outstanding Voting Stock, whether or not the Interested Stockholder has
previously acquired any shares of a particular class of Voting Stock):
3.
<PAGE> 6
(A) (if applicable) the highest preferential amount
per share to which the holders of shares of such class of Voting Stock are
entitled in the event of any voluntary or involuntary liquidation, dissolution
or winding up of this corporation; and
(C) the Fair Market Value per share of such class of
Voting Stock on the Announcement Date or on the Determination Date, whichever is
higher.
(iii) The consideration to be received by holders of any
particular class of outstanding Voting Stock (including Common Stock) shall be
in cash or in the same form as the Interested Stockholder has previously paid
for shares of such class of Voting Stock. If the Interested Stockholder has
paid for shares of any class Voting Stock with varying forms of consideration,
the form of consideration for such class of Voting Stock shall be either cash
or the form used to acquire the largest number of shares of such class of
Voting Stock previously acquired by it. The price determined in accordance with
subparagraphs (b)(2)(i) and (b)(2)(ii) shall be subject to appropriate
adjustment in the event of any stock dividend, stock split, combination of
shares or similar event.
(iv) A proxy or information statement describing the
proposed Business Combination and complying with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder (or any subsequent provisions replacing the Exchange
Act or such rules or regulations) shall be mailed to public stockholders of this
corporation at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is required to
be mailed pursuant to such Act or subsequent provisions).
(c) Certain Definitions. For the purposes of this Article Seventh:
(1) A "person" shall mean any individual, firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean any person (other than this
Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of more
than 20% of the voting power of the outstanding Voting Stock; or
(ii) is an Affiliate of this corporation and at any time within
the two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 20% or more of the voting power of
the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Voting Stock that were at any time within the two-year period
immediately prior to the date in question beneficially owned by any Interested
Stockholder, if such assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving public offering within
the meaning of the Securities Act of 1933.
4.
<PAGE> 7
(3) A person shall be a "beneficial owner" of any Voting Stock:
(i) that such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(ii) that such person or any of its Affiliates or Associates has
(A) the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to an agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise; provided, however, that a person shall not be
deemed the beneficial owner of securities tendered pursuant to a tender or
exchange offer made by or on behalf of such person or any of such person's
Affiliates or Associates until such tender securities are accepted for purchase;
of (B) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a person shall not be deemed the
beneficial owner of any security of the agreement, arrangement or understanding
to vote such security (I) arises solely from a revocable proxy or consent given
to such person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and (II) is not also then
reportable on Schedule 13D under the Exchange Act (or a comparable or successor
report); or
(iii) that are beneficially owned, directly or indirectly, by
any other person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting (except to the extent permitted by the proviso of subparagraph
(c)(3)(ii)(B) above) or disposing of any shares of Voting Stock.
(4) For the purposes of determining whether a person is an Interested
Stockholder pursuant to subparagraph (c)(2), the number of shares of Voting
Stock deemed to be outstanding shall include shares deemed owned through
application of subparagraph (c)(3), but shall not include any other shares of
Voting Stock that may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights warrants or options, or
otherwise.
(5) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on August 15, 1987.
(6) "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by this Corporation;
provided, however, that for the purposes of the definition of Interested
Stockholder set forth in subparagraph (c)(2), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity security is
owned, directly or indirectly by this Corporation.
(7) "Disinterested Director" means any member of the Board of
Directors of this Corporation (the "Board") who is unaffiliated with the
Interested Stockholder and was a member of the Board prior to the time that the
Interested Stockholder became an Interested Stockholder, and any successor of a
Disinterested Director who is unaffiliated with the Interested Stockholder
5.
<PAGE> 8
and is recommended to succeed a Disinterested Director by a majority of
Disinterested Directors then on the Board.
(8) "Fair Market Value" means: (i) in the case of stock, the average
of the closing sale prices during the 10-day period immediately preceding the
date in question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite
Tape, on the New York Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is listed, or, if the
stock is not listed on any such exchange but is listed as a National Market
System stock in the National Association of Securities Dealers, Inc. Automated
Quotation System, as reported in that National Market System, if such stock is
not listed on any such exchange or reported in such system the average of the
closing bid quotations with respect to a share of such stock during the 10-day
period preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use, or if no
such quotations are available, the fair market value on the date in question of
a share of such stock as determined by the Board in good faith; and (ii) in the
case of property other than cash or stock, the fair market value of such
property on the date in question as determined by the Board in good faith.
(9) In the event of any Business Combination in which the corporation
survives, the phase "consideration other than cash to be received" as used in
subparagraphs (b)(2)(i) and (ii) of this Article Seventh shall include the
shares of Common Stock and/or the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
(d) Powers of the Board of Directors. A majority of the Disinterested
Directors of this Corporation shall have the power and duty to determine for the
purposes of this Article Seventh on the basis of information known to them after
reasonable inquiry (i) whether a person is an Interested Stockholder, (ii) the
number of shares of Voting Stock beneficially owned by any person, (iii) whether
a person is an Affiliate or Associate of another, and (iv) the Fair Market Value
of the assets that are the subject of any Business Combination. A majority of
the Disinterested Directors of this Corporation shall have the further power to
interpret all of the terms and provisions of this Article Seventh.
(e) No Effect on Fiduciary Obligations of Interested Stockholders. Nothing
contained in this Article Seventh shall be construed to relieve any Interested
Stockholder from any fiduciary obligation imposed by law.
(f) Amendment, Repeal, etc. Notwithstanding any other provisions of this
Certificate of Incorporation or the bylaws of this corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Restated Certificate of Incorporation or the bylaws of this Corporation), the
affirmative vote of the holders of sixty-six and two-thirds percent (66-2/3%) or
more of the outstanding Voting Stock, voting together as a single class, shall
be required to amend or repeal, or adopt any provisions inconsistent with this
Article Seventh.
6.
<PAGE> 9
EIGHTH: At all elections of directors of the Corporation, each holder of
shares of the Corporation's stock shall be entitled to as many votes as shall
equal the number of votes which (except for this provision as to cumulative
voting) he would be entitled to cast for the election of directors with respect
to his shares of stock multiplied by the number of directors to be elected by
him, and such holder may cast all of such votes for a single director or may
distribute them among the number to be voted for, or for any two or more of
them as he may see fit.
7.
<PAGE> 1
EXHIBIT 10.12
MAXIM INTEGRATED PRODUCTS, INC.
1987 SUPPLEMENTAL STOCK OPTION PLAN
Adopted June 2, 1987
As amended by the Board of Directors on August 26, 1987
Approved by Shareholders October 19, 1987
As further amended on January 29 and August 23, 1988
Approved by Stockholders on October 26, 1988
As further amended on August 24, 1988
Approved by Stockholders on November 3, 1989
As further amended on August 9, 1990
Approved by Stockholders on October 26, 1990
As further amended on May 8, 1991
Approved by Stockholders on November 7, 1991
As further amended on August 13, 1992
Approved by Stockholders on November 5, 1992
As further amended on August 25, 1993
Approved by Stockholders on November 5, 1993
As further amended on February 17, 1994,
March 23, 1994, April 21, 1994 and May 12, 1994
Approved by Stockholders on November 10, 1994
As further amended on August 10, 1995
Approved by Stockholders on November 16, 1995
As further amended on May 14, 1998
1.
<PAGE> 2
1. PURPOSE
(a) The purpose of the Plan is to provide a means by which employees of
Maxim Integrated Products, Inc., a Delaware corporation (the "Company"), and its
Affiliates, as defined in subparagraph 1(b), may be given an opportunity to
purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now employed by the Company, to secure and retain the services of
persons capable of filling such positions and to provide incentives for such
persons to exert maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan not be
incentive stock options as that term is used in Section 422 of the Code.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted options; when and how the option shall
be granted; the provisions of each option granted (which need not be identical),
including the time or times during the term of each option within which all or
portions of such option may be exercised; and the number of shares for which an
option shall be granted to each such person.
(2) To construe and interpret the Plan and options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan as provided in paragraph 10.
2.
<PAGE> 3
(4) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than three (3) persons (who may, but need not, be members
of the Board) (the "Committee"), all of the members of which Committee shall be
disinterested persons, if required and as defined by the provisions of
subparagraph 2(d), and may also be, in the discretion of the Board, outside
directors, as defined by the provisions of subparagraph 2(f). If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan to the extent permitted by law, the powers
theretofore possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan. Notwithstanding anything in this
paragraph 2 to the contrary, the Board or the Committee may delegate to a
committee of one or more members of the Board the authority to grant options to
eligible persons who (1) are not then subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and/or (2) are either (i)
not then covered employees (as defined by the provisions of subparagraph 2(e))
and are not expected to be covered employees at the time of recognition of
income resulting from such option, or (ii) not persons with respect to whom the
Company wishes to comply with Section 162(m) of the Code.
(d) The term "disinterested person," as used in this Plan, shall mean
an administrator of the Plan, whether a member of the Board or of any Committee
to which responsibility for administration of the Plan has been delegated
pursuant to subparagraph 2(c), meets the definition of a "disinterested person"
set forth in Securities and Exchange Commission ("SEC") Rule 16b-3 or any
successor to such Rule.
(e) The term "covered employee," as used in this Plan, means the Chief
Executive Officer and the four (4) other highest compensated officers of the
Company.
(f) The term "outside director," as used in this Plan, means a director
who either (i) is not a current employee of the Company or an "affiliated
corporation" (as defined in the Treasury regulations promulgated under Section
162(m) of the Code), is not a former employee of the Company or an affiliated
corporation receiving compensation for prior services (other than benefits under
a tax qualified pension plan), was not an officer of the Company or an
affiliated corporation at any time, and is not currently receiving compensation
for personal services in any capacity other than as a director, or (ii) is
otherwise considered an "outside director" for purposes of Section 162(m) of the
Code.
(g) Any requirement that an administrator of the Plan be a
"disinterested person" shall not apply if the Board or the Committee expressly
declares that such requirement shall not apply.
3.
<PAGE> 4
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 9 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate ninety-one million one hundred
and twenty thousand (91,120,000) shares [adjusted to reflect all stock dividends
through December 5, 1997] of the Company's common stock; provided, however, that
such aggregate number of shares shall be reduced to reflect the number of shares
of the Company's common stock which has been sold under, or may be sold pursuant
to outstanding options granted under, the Company's Incentive Stock Option Plan,
1987 Employee Stock Participation Plan and Supplemental Nonemployee Stock Option
Plan to the same extent as if such sales had been made or options had been
granted pursuant to this Plan. If any option granted under this Plan shall for
any reason expire or otherwise terminate without having been exercised in full,
the stock not purchased under such option shall again become available for this
Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
(c) There is no maximum limit on the aggregate fair market value of the
stock for which any eligible person may be granted options under the Plan in any
calendar year.
4. ELIGIBILITY
(a) Options may be granted only to employees (including officers) of
the Company or its Affiliates. A director of the Company shall not be eligible
for the benefits of the Plan unless such director is also an employee (including
an officer) of the Company or any Affiliate.
(b) A director shall in no event be eligible for the benefits of the
Plan unless and until such director is expressly declared eligible to
participate in the Plan by action of the Board or the Committee, and only if, at
any time discretion is exercised by the Board in the selection of a director as
a person to whom options may be granted, or in the determination of the number
or maximum number of shares which may be covered by options granted to a
director, a majority of the Board and a majority of the directors acting in such
matter are disinterested persons, as defined in subparagraph 2(d). The Board
shall otherwise comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, as from time to time in effect.
(c) No person shall be eligible for the grant of an option under the
Plan if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more then ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the option price is at least one hundred ten
4.
<PAGE> 5
percent (110%) of the fair market value of such stock at the date of grant and
the term of the option does not exceed five (5) years from the date of grant.
(d) Subject to the provisions of paragraph 9 relating to adjustments
upon changes in stock, no person shall be eligible to be granted options
covering more than six million thousand (6,000,000) shares (adjusted to reflect
all stock dividends through December 5, 1997) of the Company's common stock in
any calendar year.
5. OPTION PROVISIONS
Each option shall be in such form and shall contain such terms and
conditions as the Board or the Committee shall deem appropriate. The provisions
of separate options need not be identical, but each option shall include
(through incorporation of provisions hereof by reference in the option or
otherwise) the substance of each of the following provisions:
(a) The term of any option shall not be greater than ten (10) years
from the date it was granted.
(b) The exercise price of each option shall be not less than
eighty-five percent (85%) of the fair market value of the stock subject to the
option on the date the option is granted; provided, however, that no option may
be granted at less than one hundred percent (100%) of the fair market value
except as follows: (1) Any grant at less than one hundred percent (100%) of fair
market value requires the approval of the Committee; (2) the Committee shall not
grant such option unless it records in the minutes of its meeting or action by
written consent its good faith determination that the following conditions have
been satisfied: grants of this nature are to be made only infrequently and only
where good business reasons outweigh a normal presumption in favor of grants at
one hundred percent (100%) of fair market value; and (3) the total number of
shares of stock subject to grant at less than one hundred percent (100%) of the
fair market value shall not exceed five percent (5%) of the Total Shares Subject
to the Plan. The Total Shares Subject to the Plan shall mean the aggregate
number of shares initially reserved for issuance under the Plan plus all
increases in shares reserved for issuance after the initial reservation.
(c) The purchase price of stock acquired pursuant to an option shall be
paid, to the extent permitted by applicable statutes and regulations, either (i)
in cash at the time the option is exercised, or (ii) at the discretion of the
Board or the Committee, either at the time of grant or exercise of the option
(A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the option is granted or to whom the option is
transferred pursuant to subparagraph 5(d), or (C) in any other form of legal
consideration that may be acceptable to the Board or the Committee.
Deferred payment arrangements may be interest free or may provide for
interest at any rate deemed appropriate by the Board or the Committee.
5.
<PAGE> 6
(d) Except as may be permitted by the Board or the Committee either in
individual cases or by general rule or policy, an option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the option is
granted only by such person or his guardian or legal representative.
(e) The total number of shares of stock subject to an option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). From time to time during each of such installment periods, the option
may be exercised with respect to some or all of the shares allotted to that
period, and/or with respect to some or all of the shares allotted to any prior
period as to which the option was not fully exercised. During the remainder of
the term of the option (if its term extends beyond the end of the installment
periods), the option may be exercised from time to time with respect to any
shares then remaining subject to the option. The provisions of this subparagraph
5(e) are subject to any option provisions governing the minimum number of shares
as to which an option may be exercised.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 5(d), as a condition of exercising any
such option: (1) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the option; and (2) to give
written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the option for such person's own account and not
with a view to or for sale in connection with any distribution of the stock.
These requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (i) the issuance of the shares upon the exercise of the
option has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii), as to any particular requirement, a determination is made by counsel
for the Company that such requirement need not be met in the circumstances under
the then applicable securities laws.
(g) An option shall terminate three (3) months after termination of the
optionee's employment with the Company or an Affiliate, unless (i) the
termination of employment of the optionee is due to such person's permanent and
total disability, within the meaning of Section 422(c)(6) of the Code, in which
case the option may, but need not, provide that it may be exercised at any time
within one (1) year following such termination of employment; or (ii) the
optionee dies while in the employ of the Company or an Affiliate, or within not
more than three (3) months after termination of such employment, in which case
the option may, but need not, provide that it may be exercised at any time
within eighteen (18) months following the death of the optionee by the person or
persons to whom the optionee's rights under such option pass by will or by the
laws of descent and distribution; or (iii) the option
6.
<PAGE> 7
by its terms specifies either (a) that it shall terminate sooner than three (3)
months after termination of the optionee's employment, or (b) that it may be
exercised more than three (3) months after termination of the optionee's
employment with the Company or an Affiliate. This subparagraph 5(g) shall not be
construed to extend the term of any option or to permit anyone to exercise the
option after expiration of its term, nor shall it be construed to increase the
number of shares as to which any option is exercisable from the amount
exercisable on the date of termination of the optionee's employment.
(h) The option may, but need not, include a provision whereby the
optionee may elect at any time during the term of his or her employment with the
Company or any Affiliate to exercise the option as to any part or all of the
shares subject to the option prior to the stated vesting date of the option or
of any installment or installments specified in the option. Any shares so
purchased from any unvested installment or option may be subject to a repurchase
right in favor of the Company or to any other restriction the Board or the
Committee determines to be appropriate.
(i) In connection with each option granted pursuant to this Plan, at
any time when the Company could have any withholding obligation (whether for
Federal, state, local or foreign income, disability, Medicare, employment or
other taxes or otherwise) as a result of exercise of an option, the lapse of any
substantial risk of forfeiture to which the shares are subject at the time of
exercise, or the disposition of shares acquired upon such exercise, the Company
shall have no obligation to permit exercise of such option or to issue any
shares upon exercise of the option unless and until either the exercise of the
option is accompanied by sufficient payment, as determined by the Company in its
absolute discretion, to meet those withholding obligations on such exercise,
lapse or disposition or other arrangements are made that are satisfactory to the
Company in its absolute discretion to provide otherwise for such payment. The
Company shall have no liability to any optionee or transferee for exercising the
foregoing right not to permit exercise or issue shares.
6. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority that counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to
7.
<PAGE> 8
issue and sell stock upon exercise of such options unless and until such
authority is obtained.
7. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
8. MISCELLANEOUS
(a) The Board or the Committee shall have the power to accelerate the
time during which an option may be exercised or the time during which an option
or any portion thereof will vest pursuant to subparagraph 5(e), notwithstanding
the provisions in the option stating the time during which it may be exercised
or the time during which it will vest.
(b) Neither an optionee nor any person to whom an option is transferred
under subparagraph 5(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(c) Throughout the term of any option granted pursuant to the Plan, the
Company shall make available to the holder of such option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal years
during the option term, upon request, such financial and other information
regarding the Company as comprises the annual report to the shareholders of the
Company provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or option granted
pursuant thereto shall confer upon any eligible person or optionee any right to
continue in the employ of the Company or any Affiliate or shall affect the right
of the Company or any Affiliate to terminate the employment of any eligible
person or optionee with or without cause.
(e) Outstanding options may be Repriced (as defined below) only subject
to the following conditions: (1) Repricing may be approved as to a number of
shares subject to outstanding options equal to not more than five percent (5%)
of the Total Shares Subject to the Plan (defined below) in any twelve (12) month
period; (2) Repricing requires the approval of a majority of the Board or the
Committee; and (3) the Board or the Committee shall not Reprice options unless
it records in the minutes of its meeting or action by written consent its good
faith determination that the following conditions have been satisfied: Repricing
is to occur only infrequently and the determination to approve Repricing derives
principally from conditions other than poor operating performance by the
Company. To "Reprice" for purposes of this Plan shall mean to amend an
outstanding option to reduce its exercise price or to issue a new option with a
lower exercise price to replace an outstanding option with a higher exercise
price, in either case
8.
<PAGE> 9
without a material adverse (to the optionee) change in the other terms of the
outstanding option. The Total Shares Subject to the Plan shall mean the
aggregate number of shares initially reserved for issuance under the Plan plus
all increases in shares reserved for issuance after the initial reservation.
9. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then, at the sole discretion of the
Board and to the extent permitted by applicable law: (i) any surviving
corporation shall assume any options outstanding under the Plan or shall
substitute similar options for those outstanding under the Plan, or (ii) the
time during which such options may be exercised shall be accelerated and the
option terminated if not exercised prior to such event, or (iii) such options
shall continue in full force and effect.
10. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the vote of a
majority of the shares of the Company represented and voting at a duly held
meeting within twelve (12) months before or after the adoption of the amendment,
where the amendment will:
(i) Increase the number of shares reserved for options under
the Plan;
(ii) Materially modify the requirements as to eligibility for
participation in the Plan; or
(iii) Materially increase the benefits accruing to
participants under the Plan except to the extent permitted by Rule 16b-3
promulgated under the Exchange Act, as those rules are in effect at the time the
amendment is adopted by the Board.
(b) The Board may in its sole discretion submit any other amendment to
the
9.
<PAGE> 10
Plan for stockholder approval, including, but not limited to, amendments to
the Plan intended to satisfy the requirements of Section 162(m) of the Code and
the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) Rights and obligations under any option granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom the option was granted.
11. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
12. EFFECTIVE DATE OF PLAN
The Plan as amended and restated herein shall become effective as
determined by the Board, but no options granted after the date of this amendment
and restatement of the Plan shall be exercised unless and until this amended and
restated Plan has been approved by the vote or written consent of the holders of
a majority of the outstanding shares of the Company entitled to vote, and, if
required, an appropriate permit has been issued by the Commissioner of
Corporations of the State of California.
10.
<PAGE> 1
EXHIBIT 10.13
MAXIM INTEGRATED PRODUCTS, INC.
SUPPLEMENTAL NONEMPLOYEE STOCK OPTION PLAN
Adopted October 20, 1983
As Amended by the Board of Directors on August 14, 1986
Approved by the Shareholders on October 19, 1987
As Further Amended by the Board of Directors on January 29 and April 22, 1988
As Further Amended by the Board of Directors on August 9, 1990
As Further Amended by the Board of Directors on May 8, 1991
As Further Amended by the Board of Directors on August 13, 1992
As Further Amended by the Board of Directors on August 25, 1993
As Further Amended by the Board of Directors
on February 17, 1994, March 23, 1994, April 21, 1994, and May 12, 1994
As Further Amended by the Board of Directors on August 10, 1995
As Further Amended by the Board of Directors on May 14, 1998
1. PURPOSE
(a) The purpose of the Plan is to provide a means by which selected
consultants, advisors, independent contractors, vendors, customers and other
persons (which term shall include, for purposes of this Plan, individuals,
partnerships, corporations and other entities) having a past, current or
prospective business relationship with Maxim Integrated Products, Inc., a
Delaware corporation (the Company"), or any of its affiliates, as defined in
subparagraph 1(b), may be given an opportunity to purchase stock of the Company.
The Company, by means of the Plan, seeks to secure, retain and enhance the
benefits of relationships with such persons.
(b) The word "affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Section 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
1.
<PAGE> 2
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted options; when, how and for what price,
if any, the option shall be granted; the provisions of each option granted
(which need not be identical), including the time or times during the term of
each option within which all or portions of such option may be exercised; and
the number of shares for which an option shall be granted to each such person.
(2) To construe and interpret the Plan and options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a committee of
the Board. If administration is delegated to a committee, the committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board. The Board may abolish the committee at any time and revest in the Board
the administration of the Plan.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 9 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate ninety-one million one hundred
and twenty thousand (91,120,000) shares [adjusted to reflect all stock dividends
through December 5, 1997] of the Company's Common Stock; provided, however, that
such aggregate number of shares shall be reduced to reflect the number
2.
<PAGE> 3
of shares of the Company's common stock which has been sold under, or may be
sold pursuant to outstanding options granted under, the Company's Incentive
Stock Option Plan, 1987 Employee Stock Participation Plan and 1987 Supplemental
Stock Option Plan to the same extent as if such sales had been made or options
had been granted pursuant to this Plan. If any option granted under the Plan
shall for any reason expire or otherwise terminate without having been exercised
in full, the stock not purchased under such option shall again become available
for the Plan. In addition, if options granted under the Plan are exercised in
accordance with the option prior to the full vesting thereof, and shares of the
stock so acquired are thereafter repurchased by the Company in accordance with
the terms of such option, the stock so repurchased shall again become available
for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY
Options may be granted to any person having a past, current or
prospective business relationship with the Company or any of its affiliates as
to whom the Board or the committee has determined that providing such person an
opportunity for an equity interest in the Company is likely to be beneficial to
the Company or any of its affiliates. Eligible persons may include, without
limiting the generality of the foregoing, consultants, advisors, independent
contractors, suppliers and customers. Persons eligible under this Plan shall not
include (a) any person who is an employee of the Company or any of its
affiliates at the time of grant (but such person's subsequently becoming an
employee of the Company or an affiliate during the term of the option shall not
affect the option, and the exercisability of an option may be conditioned upon
an optionee's becoming and/or remaining an employee of the Company or an
affiliate), (b) any director of the Company, or (c) any person in which or whom
any director of the Company has any material financial interest. It shall be a
condition precedent to the effectiveness of any option grant hereunder that the
prospective optionee shall certify (A) as to what, if any, material financial
interest in such optionee is held by any director or officer of the Company and
(B) that the grantee has made whatever disclosures as to the option grant and
effected all other compliances that may be required by him by law or by his
employer, partners or other persons to whom he may owe a duty of disclosure as
to the option grant.
5. OPTION PROVISIONS
Each option shall be in such form and shall contain such terms and
conditions as the Board or the committee shall deem appropriate. The provisions
of separate options need not be identical, but each option shall include
(through incorporation of provisions hereof by reference in the option or
otherwise) the substance of each of the following provisions:
(a) The price to be paid upon acquisition of the option, provided that
such price may
3.
<PAGE> 4
be equal to zero. Any such acquisition price shall be paid in cash or in any
other form of legal consideration that may be acceptable to the Board or the
committee in their discretion.
(b) The term of any option shall not be greater than ten (10) years
from the date it was granted.
(c) The exercise price of each option shall be not less than one
hundred percent (100%) of the fair market value of the stock subject to the
option on the date the option is granted.
(d) The purchase price of stock acquired pursuant to an option shall be
paid, as specified in the option, either (i) in cash at the time the option is
exercised, or (ii) at the discretion of the Board or the committee, (A) by
delivery to the Company of other common stock of the Company, (B) according to a
deferred payment or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other common stock of the Company) with
the person to whom the option is granted or to whom the option is transferred
pursuant to subparagraph 5(e), or (C) in any other form of legal consideration
that may be acceptable to the Board or the committee in their discretion, either
at the time of grant or exercise of the option.
In the case of any deferred payment arrangement specified at the time
of grant, an interest rate shall be stated which is not less than the rate then
specified which will prevent any imputation of higher interest under Section 483
of the Code.
(e) Except as may be permitted by the Board or the Committee either in
individual cases or by general rule or policy, an option shall not be
transferable except by will or by the laws of descent and distribution or, as to
a person other than an individual, in connection with a merger or a sale or
transfer of all or substantially all the assets of the optionee.
(f) The total number of shares of stock subject to an option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). From time to time during each of such installment periods, the option
may be exercised with respect to some or all of the shares allotted to that
period, and/or with respect to some or all of the shares allotted to any prior
period as to which the option was not fully exercised. During the remainder of
the term of the option (if its term extends beyond the end of the installment
periods), the option may be exercised from time to time with respect to any
shares then remaining subject to the option. The provisions of this subparagraph
5(f) are subject to any option provisions governing the minimum number of shares
as to which an option may be exercised.
(g) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 5(e), as a condition of exercising any
such option: (1) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters and/or
to employ a purchaser representative who has such
4.
<PAGE> 5
knowledge and experience in financial and business matters that he is capable of
evaluating, alone or together with the optionee, the merits and risks of
exercising the option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise of the option has been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii), as to any particular requirement, a
determination is made by counsel for the Company that such requirement is not
required in the circumstances under the then applicable federal securities laws.
(h) In connection with each option granted pursuant to this Plan, at
any time when the Company could have any withholding obligation (whether for
Federal, state, local or foreign income, disability, Medicare, employment or
other taxes or otherwise) as a result of exercise of an option, the lapse of any
substantial risk of forfeiture to which the shares are subject at the time of
exercise, or the disposition of shares acquired upon such exercise, the Company
shall have no obligation to permit exercise of such option or to issue any
shares upon exercise of the option unless and until either the exercise of the
option is accompanied by sufficient payment, as determined by the Company in its
absolute discretion, to meet those withholding obligations on such exercise,
lapse or disposition or other arrangements are made that are satisfactory to the
Company in its absolute discretion to provide otherwise for such payment. The
Company shall have no liability to any optionee or transferee for exercising the
foregoing right not to permit exercise or issue shares.
6. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan or any stock issued or issuable pursuant to any such option. If the Company
is unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such options unless and until
such authority is obtained.
5.
<PAGE> 6
7. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
8. MISCELLANEOUS
(a) The Board or the committee shall have the power to accelerate the
time during which an option may be exercised, notwithstanding the provisions in
the option stating the time during which it may be exercised.
(b) Neither an optionee nor any person to whom an option is transferred
under subparagraph 5(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
9. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Board may make
appropriate adjustments in the maximum number of shares subject to the Plan and
the number of shares and price per share of stock subject to outstanding
options.
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, any outstanding options under the Plan
shall terminate, unless another corporation assumes such options or substitutes
similar options for those under the Plan or the Board determines in its sole
discretion that such options shall continue in full force and effect.
10. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan.
(b) Rights and obligations under any option granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom the option was granted.
6.
<PAGE> 7
11. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on August 12, 2002. No options may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
12. EFFECTIVE DATE OF PLAN
The Plan as amended and restated herein shall become effective as
determined by the Board.
7.
<PAGE> 1
EXHIBIT 10.14
MAXIM INTEGRATED PRODUCTS, INC.
1987 EMPLOYEE STOCK PARTICIPATION PLAN
Adopted August 26, 1987
Approved by Shareholders on October 19, 1987
Amended January 29 and August 23, 1988
Approved by Stockholders on October 26, 1988
Amended August 24, 1989
Approved by Stockholders on November 3, 1989
Amended August 9, 1990
Approved by Stockholders on October 26, 1990
Amended May 8, 1991
Approved by Stockholders on November 7, 1991
Amended August 13, 1992
Approved by Stockholders on November 5, 1992
Amended August 25, 1993
Approved by Stockholders on November 5, 1993
Amended February 17, 1994, March 23, 1994,
April 21, 1994, and May 12, 1994
Approved by Stockholders on November 10, 1994
Amended November 10, 1994
Amended August 10, 1995
Approved by Stockholders on November 16, 1995
Amended August 16, 1996
Approved by Stockholders on November 14, 1996
Amended August 13, 1998
1. PURPOSE
(a) The purpose of the Plan is to provide a means by which employees of
Maxim Integrated Products, Inc., a Delaware corporation (the "Company"), and its
Affiliates, as defined in subparagraph 1(b), which are designated as provided in
subparagraph 2(b), may be given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph
1.
<PAGE> 2
2(c). Whether or not the Board has delegated administration, the Board shall
have the final power to determine all questions of policy and expediency that
may arise in the administration of the Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13
(v) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than three (3) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate one hundred and thirteen
million one hundred and twenty thousand (113,120,000) shares [adjusted to
reflect the stock dividends effective November 23, 1994, November 29, 1995 and
December 5, 1997] of the Company's $.001 par value common stock (the "Common
Stock"); provided, however, that such aggregate number of shares shall be
reduced to reflect the number of shares of the Company's Common Stock which has
been sold under, or may be sold pursuant to outstanding options granted under,
the 1996 Stock Incentive Plan, the Incentive Stock Option Plan, 1987
Supplemental Stock Option Plan and Supplemental Nonemployee Stock Option Plan to
the same extent as if such sales had been made or options had been granted
pursuant to this Plan. If any right granted under the Plan shall for any reason
terminate without having been exercised, the Common Stock not purchased under
such right shall again become available for the Plan.
4. GRANT OF RIGHTS; OFFERING
The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate. If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised. The provisions of
separate Offerings need not be identical, but each Offering shall
2.
<PAGE> 3
include (through incorporation of the provisions of this Plan by reference in
the Offering or otherwise) the substance of the provisions contained in
paragraphs 5 through 8, inclusive.
5. ELIGIBILITY
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or the
Committee and set forth in the Offering, no employee of the Company or any
Affiliate shall be eligible to be granted rights under the Plan, unless, on the
Offering Date, such employee's customary employment with the Company or such
Affiliate is at least twenty (20) hours per week and at least five (5) months
per calendar year.
(b) The Board or the Committee may provide that, each person who,
during the course of an Offering, first becomes an eligible employee of the
Company or designated Affiliate will, on a date or dates specified in the
Offering which coincides with the day on which such person becomes an eligible
employee or occurs thereafter, receive a right under that Offering, which right
shall thereafter be deemed to be a part of that Offering. Such right shall have
the same characteristics as any rights originally granted under that Offering,
as described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right;
(ii) the Purchase Period (as defined below) for such right
shall begin on its Offering Date and end coincident with the end of such
Offering; and
(iii) the Board or the Committee may provide that if such
person first becomes an eligible employee within a specified period of time
before the end of the Purchase Period (as defined below) for such Offering, he
or she will not receive any right under that Offering.
(c) Directors and executive officers of the Company or an Affiliate who
are highly compensated employees within the meaning of Section 423(b)(4)(D) of
the Code are not eligible to be granted rights under the Plan.
(d) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(d), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
(e) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
3.
<PAGE> 4
6. RIGHTS; PURCHASE PRICE
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase the number
of shares of Common Stock of the Company purchasable with up to twenty percent
(20%) of such employee's Compensation (as defined in Section 7(a)) during the
period which begins on the Offering Date (or such later date as the Board
determines for a particular Offering) and ends on the date stated in the
Offering, which date shall be no more than twenty-seven (27) months after the
Offering Date (the "Purchase Period"). In connection with each Offering made
under this Plan, the Board or the Committee shall specify a maximum number of
shares which may be purchased by any employee as well as a maximum aggregate
number of shares which may be purchased by all eligible employees pursuant to
such Offering. In addition, in connection with each such Offering, the Board or
the Committee may specify the maximum fair market value of Common Stock which
may be purchased by any employee pursuant to such Offering as well as a maximum
aggregate number of shares which may be purchased by all eligible employees on
any given Exercise Date (as defined in the Offering) under the Offering. If the
aggregate purchase of shares upon exercise of rights granted under the Offering
would exceed any such maximum aggregate number, the Board or the Committee shall
make a pro rata allocation of the shares available in as nearly a uniform manner
as shall be practicable and as it shall deem to be equitable.
(b) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Exercise Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION
(a) An eligible employee may become a participant in an Offering by
delivering an agreement to the Company within the time specified in the
Offering, in such form as the Company provides. Each such agreement shall
authorize payroll deductions of up to twenty percent (20%) of such employee's
Compensation during the Purchase Period. Compensation is defined as total cash
compensation, including commissions, bonuses, overtime and other cash
compensation, and amounts elected to be deferred by the employee (that would
otherwise have been paid) under the Company's Cash or Deferred Savings Plan. The
payroll deductions made for each participant shall be credited to an account for
such participant under the Plan and shall be deposited with the general funds of
the Company. At any time during the Purchase Period a participant may terminate
his or her payroll deductions. A participant may reduce, increase or begin such
payroll deductions after the beginning of any Purchase Period only as provided
for in the Offering. If specifically allowed pursuant to the terms of an
Offering, a participant may make direct payments into his or her account to the
extent that such participant has not had the maximum amount withheld during the
Purchase Period.
(b) If a participant terminates his or her payroll deductions, such
participant may withdraw from the Offering by delivering to the Company a notice
of withdrawal in such form as the Company provides. Such withdrawal may be
elected at any time prior to the end of the Purchase Period. Upon such
withdrawal from the Offering by a participant, the Company shall distribute to
such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in other Offerings under the Plan.
4.
<PAGE> 5
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company or an Affiliate, for any reason, and the Company shall
distribute to such terminated employee all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the terminated employee), without interest.
(d) Rights granted under the Plan shall not be transferable, and shall
be exercisable only by the person to whom such rights are granted.
8. EXERCISE
(a) On each exercise date, as defined in the relevant Offering (an
"Exercise Date"), each participant's accumulated payroll deductions (without any
increase for interest) will be applied to the purchase of whole shares of stock
of the Company, up to the maximum number of shares permitted pursuant to the
terms of the Plan and the applicable Offering, at the purchase price specified
in the Offering. No fractional shares shall be issued upon the exercise of
rights granted under the Plan. The amount, if any, of accumulated payroll
deductions remaining in each participant's account after the purchase of shares
which is less than the amount required to purchase one share of stock on the
final Exercise Date of an Offering shall be held in each such participant's
account for the purchase of shares under the next Offering under the Plan,
unless such participant withdraws from such next Offering, as provided in
subparagraph 7(b), or is no longer eligible to be granted rights under the Plan,
as provided in paragraph 5, in which case such amount shall be distributed to
such participant after such Exercise Date, without interest. The amount, if any,
of accumulated payroll deductions remaining in any participant's account after
the purchase of shares which is equal to the amount required to purchase whole
shares of stock on the final Exercise Date of an Offering shall be distributed
in full to such participant after such Exercise Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act"). If, on an Exercise Date of any Offering hereunder, the Plan
is not so registered, no rights granted under the Plan or any Offering shall be
exercised and all payroll deductions accumulated during the Purchase Period
(reduced to the extent, if any, such deductions have been used to acquire stock
for the participants) shall be distributed to the participants, without
interest.
9. COVENANTS OF THE COMPANY
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the rights granted under the
Plan. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such rights unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
5.
<PAGE> 6
11. RIGHTS AS A STOCKHOLDER
A participant shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until certificates representing such shares shall have
been issued.
12. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
rights will be appropriately adjusted in the class(es) and the maximum number of
shares subject to the Plan and the class(es) and the number of shares and price
per share of stock subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then, as determined by the Board in its
sole discretion, any surviving corporation shall assume outstanding rights or
substitute similar rights for those under the Plan, such rights shall continue
in full force and effect, or such rights shall be exercised immediately prior to
such event.
13. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the vote of a
majority of the shares of the Company represented and voting at a duly held
meeting within 12 months before or after the adoption of the amendment, where
the amendment will:
(i) Increase the number of shares reserved for rights under
the Plan;
(ii) Modify the provisions as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to obtain employee stock purchase plan treatment
under Section 423 of the Code); or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code. It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible employees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to employee stock purchase plans and/or to bring
the Plan and/or rights granted under it into compliance therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted.
14. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner
6.
<PAGE> 7
terminated, the Plan shall terminate on August 25, 2007. No rights may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom such rights were granted.
15. EFFECTIVE DATE OF PLAN
The Plan as amended and restated herein shall become effective as
determined by the Board, but no rights granted after the date of this amendment
and restatement of the Plan shall be exercised unless and until this amended and
restated Plan has been approved by the vote of the holders of a majority of the
outstanding shares of the Company entitled to vote or by the written consent of
the holders of the outstanding shares of the Company entitled to vote to the
extent necessary to obtain employee stock purchase plan treatment under Section
423 of the Code, and, if required, an appropriate permit has been issued by the
Commissioner of Corporations of the State of California.
7.
<PAGE> 1
EXHIBIT 10.15
MAXIM INTEGRATED PRODUCTS, INC.
1988 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
Adopted August 23, 1988
Approved by Stockholders on October 26, 1988
Amended by the Board of Directors on August 9, 1990
Approved by Stockholders on October 26, 1990
Amended by the Board of Directors on May 8, 1991 and August 14, 1991
Approved by Stockholders on November 7, 1991
Amended by the Board of Directors on February 23, 1995
Amended by the Board of Directors on February 29, 1996 and August 16, 1996
Approved by Stockholders on November 14, 1996
Amended by the Board of Directors on May 14, 1998
1. PURPOSE
(a) The purpose of the Maxim Integrated Products, Inc. 1988 Nonemployee
Director Stock Option Plan (the "Plan") is to provide a means by which each
director of MAXIM INTEGRATED PRODUCTS, INC. (the "Company") who is not an
employee of the Company and has not prior to August 23, 1988 been granted an
option by the Company (each such person being hereafter referred to as a
"Non-Employee Director") will be given an opportunity to purchase stock of the
Company.
(b) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b).
(b) The Board may delegate administration of the Plan to a committee
composed of not fewer than three (3) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
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provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 10 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
options granted under the Plan shall not exceed in the aggregate one million two
hundred and eighty thousand (1,280,000) shares [adjusted to reflect all stock
dividends through December 5, 1997] of the Company's Common Stock. If any option
granted under the Plan shall for any reason expire or otherwise terminate
without having been exercised in full, the stock not purchased under such option
shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY
Options shall be granted only to Non-employee Directors of the Company.
5. AUTOMATIC GRANTS
(a) Each person who is, after the date of the approval of the Plan by
the Board (the "Adoption Date"), elected for the first time to be a Non-employee
Director shall, upon the date of his initial election to be a Non-employee
Director by the Board or stockholders of the company, automatically be granted
an option to purchase sixty thousand (60,000) shares [adjusted to reflect all
stock dividends through December 5, 1997] of the Company's Common Stock (subject
to adjustment as provided in paragraph 10 hereof) on such date upon the terms
and conditions set forth herein.
(b) Each Non-employee Director who serves on the Company's Board of
Directors on the Adoption Date shall automatically be granted an option to
purchase twenty thousand (20,000) shares [adjusted to reflect all stock
dividends through December 5, 1997] of the Company's Common Stock (subject to
adjustment as provided in Paragraph 10 hereof) on such date upon the terms and
conditions set forth herein.
(c) Each Non-employee Director who was elected to the Company's Board
of directors prior to October 26, 1990 and who has been nominated by the Board
of Directors for election at the Company's 1991 Annual Meeting of Stockholders
to be held on November 7, 1991 (the "1991 Election Date") shall automatically be
granted an option to purchase twenty thousand (20,000) shares of the Company's
Common Stock (subject to adjustment as provided in Paragraph 10 hereof) on
August 14, 1991 upon the terms and conditions set forth herein.
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<PAGE> 3
(d) Each Non-employee Director initially elected to the Company's Board
of Directors on or before October 26, 1990 shall automatically be granted an
option to purchase five thousand (5,000) shares of Common Stock (subject to
adjustment as provided in Paragraph 10 hereof) on the 1991 Election Date, and
shall automatically be granted an option to purchase seven thousand five hundred
(7,500) shares of (adjusted to reflect the stock dividend effective November 23,
1994) Common Stock (subject to adjustment as provided in Paragraph 10 hereof) on
each anniversary of the 1991 Election Date if he is on such anniversary a
Non-employee Director. Each Non-employee Director initially elected to the
Company's Board of Directors after October 26, 1990 shall automatically be
granted an option to purchase seven thousand five hundred (7,500) shares
(adjusted to reflect the stock dividend effective November 23, 1994) of Common
Stock (subject to adjustment as provided in Paragraph 10 hereof) on each
anniversary of the date of his initial election to the Board of Directors if he
is on such anniversary a Non-employee Director.
6. OPTION PROVISIONS
Each option shall contain the following terms and conditions:
(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ("Expiration
Date") five years from the date of grant. The term of each option may terminate
sooner than such Expiration Date if the optionee's service as a Non-employee
Director of the Company terminates for any reason or for no reason. In the event
of such termination of service, the option shall terminate on the earlier of the
Expiration Date or the date seven (7) months following the date of termination
of service; provided, however, that if such termination of service is due to the
optionee's death, the option shall terminate on the earlier of the Expiration
Date or twelve (12) months following the date of the optionee's death. In any
and all circumstances, an option may be exercised following termination of the
optionee's service as a Non-employee Director of the Company only as to that
number of shares as to which it was exercisable on the date of termination of
such service under the provisions of subparagraph 6(e). Notwithstanding the
foregoing, if exercise within the foregoing periods is prohibited under
paragraph 13 below, the term of the option shall be extended to a date thirty
days following the first date on which the condition of paragraph 13 of the Plan
has been met, and the option shall be exercisable as to the number of shares
that could have been exercised on the date of termination of service had the
condition of paragraph 13 been satisfied on that date.
(b) The exercise price of each option shall be one hundred percent
(100%) of the fair market value of the stock subject to such option on the date
such option is granted.
(c) Payment of the exercise price of each option is due in full in cash
upon any exercise when the number of shares being purchased upon such exercise
is less than 1,000 shares; but when the number of shares being purchased upon an
exercise is 1,000 or more shares, the optionee may
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<PAGE> 4
elect to make payment of the exercise price under one of the following
alternatives:
(i) Payment of the exercise price per share in cash at the time of
exercise; or
(ii) Provided that at the time of exercise the Company's common
stock is publicly traded and quoted regularly in The Wall Street Journal,
payment by delivery of already-owned shares of common stock of the Company owned
by the optionee for at least six (6) months and owned free and clear of any
liens, claims, encumbrances or security interests, which Common Stock shall be
valued at fair market value on the date of exercise; or
(iii) Payment by a combination of the methods of payment specified
in subparagraph 6(c)(i) and 6(c)(ii) above.
(d) Except as may be permitted by the Board or the Committee either in
individual cases or by general rule or policy, an option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the option is
granted only by such person or by his guardian or legal representative.
(e) (i) The options described in paragraph 5(a) shall become
exercisable (vest) in installments as follows: eight and three hundred
thirty-four thousandths percent (8.334%) of the shares covered by the option on
the date three (3) months after the date of grant, and eight and three hundred
thirty-four thousandths percent (8.334%) of the shares covered by the option at
the end of every subsequent three-month period thereafter until all the shares
have become vested on the date three (3) years from the date of grant; provided
that shares shall become exercisable (vest) on any relevant vesting date only if
the optionee is a Non-employee Director of the Company on that vesting date.
(ii) The options described in paragraph 5(b) shall become
exercisable (vest) in installments as follows: twelve and one-half percent
(12.5%) of the shares covered by the option on the date three (3) months after
the date of grant, and twelve and one-half percent (12.5%) of the shares covered
by the option at the end of every subsequent three-month period thereafter until
all the shares have become vested on the date two (2) years after the date of
the grant; provided that shares shall become exercisable (vest) on any relevant
vesting date only if the optionee is a Non-employee Director of the Company on
that vesting date.
(iii) The options described in paragraph 5(c) shall become
exercisable (vest) in installments as follows: eight and three hundred
thirty-four thousandths percent (8.334%) of the shares covered by the option on
the date three (3) months after the date of grant, and eight and three hundred
thirty-four thousandths percent (8.334%) of the shares covered by the option at
the end of every subsequent three-month period thereafter until all the shares
have become vested on the date
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<PAGE> 5
three (3) years after the date of grant; provided that shares shall become
exercisable (vest) on any relevant vesting date only if the optionee is a
Non-employee Director of the Company on that vesting date.
(iv) The options described in paragraph 5(d) shall become
exercisable (vest) in installments as follows: twenty-five percent (25%) of the
shares covered by the option on the date three (3) months after all previously
granted automatic options under this Plan have vested, and twenty-five percent
(25%) of the shares covered by the option at the end of every subsequent three
(3) month period thereafter until all the shares have become vested one year
after all previously granted automatic options under this Plan have vested;
provided that shares shall become exercisable (vest) on any relevant vesting
date only if the optionee is Non-employee Director of the Company on that
vesting date.
(v) Subject to the limitations contained herein including,
without limitation, those contained in subparagraph 13(b), each option shall be
exercisable with respect to each installment on or after the date of vesting
applicable to such installment.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if, as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then-applicable securities laws.
(g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
(h) In connection with each option granted pursuant to this Plan, at
any time when the Company could have any withholding obligation (whether for
Federal, state, local or foreign income, disability, Medicare, employment or
other taxes or otherwise) as a result of exercise of an option, the lapse of any
substantial risk of forfeiture to which the shares are subject at the time of
exercise, or the disposition of shares acquired upon such exercise, the Company
shall have no obligation to permit exercise of such option or to issue any
shares upon exercise of the option unless and until either the exercise of the
option is accompanied by sufficient payment, as determined by the Company in its
absolute discretion, to meet those withholding obligations on such exercise,
lapse or disposition or other arrangements are made that are satisfactory to the
Company in its absolute discretion to provide otherwise for such payment. The
Company shall have no liability to any optionee or transferee for exercising the
foregoing right not to permit exercise or issue shares.
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<PAGE> 6
7. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such options.
8. USE OF PROCEEDS FROM STOCK
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
9. MISCELLANEOUS
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-employee Director any right to continue in the service
of the Company or shall affect any right of the Company, its Board or
stockholders to terminate the service of any Non-employee Director with or
without cause.
(c) No Non-employee Director, individually or as a member of a group,
and no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.
(d) In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer shares
to a Non-employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal or other withholding tax
required to be withheld with respect to such sale or transfer, or such removal
or lapse, is made available to the Company for timely payment of such tax.
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<PAGE> 7
10. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of: (1) a dissolution or liquidation of the company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then all outstanding options shall
become exercisable in full for a period of at least ten (10) days prior to such
event. Outstanding options which have not been exercised prior to such event
shall terminate on the date of such event unless assumed by a successor
corporation.
11. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 10 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the vote of a
majority of the shares of the Company represented and voting at a duly held
meeting within twelve (12) months before or after the adoption of the amendment,
where the amendment will:
(i) Materially increase the number of shares which may be
issued under the Plan;
(ii) Materially modify the requirements as to eligibility
for participation in the Plan; or
(iii) Materially increase the benefits accruing to
participants under the Plan, whether by increasing
the number of shares for which an option may be
granted to an optionee or otherwise.
(b) Rights and obligations under any option granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom the option was granted.
12. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated,
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the Plan shall terminate ten (10) years from the date the Plan is adopted by the
Board. No options may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
(c) The Plan shall terminate upon the occurrence of any of the events
described in Section 10(b) above.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE
The Plan shall become effective upon adoption by the Board of
Directors, subject to the condition subsequent that the Plan is approved by the
vote or written consent of the holders of a majority of the shares of the
Company represented and voting at the next special or annual meeting of
stockholders of the Company.
No option granted under the Plan shall be exercised or exercisable
unless and until the condition of paragraph 13 has been met.
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<PAGE> 1
EXHIBIT 10.16
MAXIM INTEGRATED PRODUCTS, INC.
1996 STOCK INCENTIVE PLAN
Adopted August 16, 1996
Approved by Shareholders November 14, 1996
As further amended by the Board of Directors on
April 16, 1997 and May 15, 1997
Approved by Shareholders November 13, 1997
As further amended by the Board of
Directors on March 10, 1998, May 14,
1998, and August 13, 1998
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants of the Company and its Subsidiaries and to promote the success of
the Company's business.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of the Committees
appointed to administer the Plan.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.
(c) "Applicable Laws" means the legal requirements relating to the
administration of stock incentive plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Options granted to residents therein.
(d) "Board" means the Board of Directors of the Company.
(e) "Change in Control" means a change in ownership or control of
the Company effected through either of the following transactions:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such stockholders accept, or
(ii) a change in the composition of the Board over a period
of thirty-six (36) months or less such that a majority of the Board members
(rounded up to the next whole
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number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who are Continuing Directors.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means any committee appointed by the Board to
administer the Plan.
(h) "Common Stock" means the common stock of the Company.
(i) "Company" means Maxim Integrated Products, Inc., a Delaware
corporation.
(j) "Consultant" means any person who is a consultant, advisor,
independent contractor, vendor, customer or other person having a past, current
or prospective business relationship with the Company or any Parent or
Subsidiary.
(k) "Continuing Directors" means members of the Board who either
(i) have been Board members continuously for a period of at least thirty-six
(36) months or (ii) have been Board members for less than thirty-six (36) months
and were elected or nominated for election as Board members by at least a
majority of the Board members described in clause (i) who were still in office
at the time such election or nomination was approved by the Board.
(l) "Continuous Status as an Employee, Director or Consultant"
means that the employment, director or consulting relationship with the Company,
any Parent, or Subsidiary, is not interrupted or terminated. Continuous Status
as an Employee, Director or Consultant shall not be considered interrupted in
the case of (i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. A leave of absence approved by the Company shall
include sick leave, military leave, or any other personal leave approved by an
authorized representative of the Company. For purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract.
(m) "Corporate Transaction" means any of the following
stockholder-approved transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with complete liquidation
or dissolution of the Company, or
(iii) any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger.
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(n) "Covered Employee" means any person who is a "covered
employee" under Section 162(m)(3) of the Code.
(o) "Director" means a member of the Board.
(p) "Employee" means any person, including an Officer or Director,
who is an employee of the Company or any Parent or Subsidiary of the Company for
purposes of Section 422 of the Code. The payment of a director's fee by the
Company shall not be sufficient to constitute "employment" by the Company.
Except for purposes of grants of Incentive Stock Options, "Employee" also
includes any person whom an officer identifies as a prospective employee of the
Company or any Parent or Subsidiary of the Company.
(q) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(r) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) Where there exists a public market for the Common Stock,
the Fair Market Value of a share of Common Stock shall be (A) the closing sale
price of the Common Stock for the last market trading day prior to the date of
the determination or on the date of the determination, as determined by the
Administrator at the time of the determination (or, if no sales were reported on
either such date, on the last trading date on which sales were reported) on the
stock exchange determined by the Administrator to be the primary market for the
Common Stock or the Nasdaq National Market, whichever is applicable or (B) if
the Common Stock is not traded on any such exchange or national market system,
the closing price of a Share on the Nasdaq Small Cap Market for the day prior to
the time of the determination (or, if no such price was reported on that date,
on the last date on which such price was reported), in each case, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable; or
(ii) In the absence of an established market of the type
described in (i), above, for the Common Stock, the Fair Market Value thereof
shall be determined by the Administrator in good faith.
(s) "Grantee" means an Employee, Director or Consultant who
receives an Option under the Plan.
(t) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(u) "Non-Qualified Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(v) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(w) "Option" means a stock option granted pursuant to the Plan.
(x) "Option Agreement" means the written agreement evidencing the
grant of
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an Option executed by the Company and the Grantee, including any amendments
thereto.
(y) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(z) "Performance-Based Compensation" means compensation qualifying
as "performance-based compensation" under Section 162(m) of the Code.
(aa) "Plan" means this 1996 Stock Incentive Plan.
(bb) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor thereto.
(cc) "Share" means a share of the Common Stock.
(dd) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(ee) "Subsidiary Disposition" means the disposition by the Company
of its equity holdings in any subsidiary corporation effected by a merger or
consolidation involving that subsidiary corporation, the sale of all or
substantially all of the assets of that subsidiary corporation or the Company's
sale or distribution of substantially all of the outstanding capital stock of
such subsidiary corporation.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10 below, the maximum
aggregate number of Shares which may be issued pursuant to this Plan is
22,000,000 Shares [adjusted to reflect the stock dividend effective December 5,
1997]; provided, however, that such maximum aggregate number of Shares shall be
increased by the number of Shares or options returned to the Company's Incentive
Stock Option Plan, 1987 Employee Stock Participation Plan, and Supplemental
Nonemployee Stock Option Plan. Notwithstanding the foregoing, the maximum
aggregate number of Shares available for grant of Incentive Stock Options shall
be 22,000,000 Shares, and such number shall not be subject to adjustment as
described above. The Shares to be issued pursuant to the Plan may be authorized,
but unissued, or reacquired Common Stock.
(b) If an Option expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an Option exchange
program, or if any unissued Shares are retained by the Company upon exercise of
an Option in order to satisfy the exercise price for such Option or any
withholding taxes due with respect to such Option, such unissued or retained
Shares shall become available for future grant under the Plan (unless the Plan
has terminated). Shares that actually have been issued under the Plan pursuant
to an Option shall not be returned to the Plan and shall not become available
for future distribution under the Plan, except that if unvested Shares are
forfeited, or repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.
4. Administration of the Plan.
(a) Plan Administrator.
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(i) Administration with Respect to Directors and Officers.
With respect to grants of Options to Directors or Employees who are also
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit
such grants and related transactions under the Plan to be exempt from Section
16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board.
(ii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Options to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. The Board may authorize one or more
Officers to grant such Options and may limit such authority by requiring that
such Options must be reported to and ratified by the Board or a Committee within
six (6) months of the grant date, and if so ratified, shall be effective as of
the grant date.
(iii) Administration With Respect to Covered Employees.
Notwithstanding the foregoing, grants of Options to any Covered Employee
intended to qualify as Performance-Based Compensation shall be made only by a
Committee (or subcommittee of a Committee) which is comprised solely of two or
more Directors eligible to serve on a committee making Options qualifying as
Performance-Based Compensation. In the case of such Options granted to Covered
Employees, references to the "Administrator" or to a "Committee" shall be deemed
to be references to such Committee or subcommittee.
(iv) Administration Errors. In the event an Option is granted
in a manner inconsistent with the provisions of this subsection (a), such Option
shall be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws.
(b) Powers of the Administrator. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:
(i) to select the Employees, Directors and Consultants to
whom Options may be granted from time to time hereunder;
(ii) to determine whether and to what extent Options are
granted hereunder;
(iii) to determine the number of Shares or the amount of
other consideration to be covered by each Option granted hereunder;
(iv) to determine the Fair Market Value of the Common Stock
in accordance with Section 2(r) of the Plan;
(v) to approve forms of Option Agreement for use under the
Plan;
(vi) to determine the terms and conditions of any Option
granted
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hereunder;
(vii) to amend the terms of any outstanding Option granted
under the Plan, provided that any amendment that would adversely affect the
Grantee's rights under an outstanding Option shall not be made without the
Grantee's written consent;
(viii) to reduce the exercise price of any Option to reflect
a reduction in the Fair Market Value of the Common Stock since the grant date of
the Option without a material adverse impact on the Grantee; provided, however,
that (A) such reductions in the aggregate do not apply to Options covering more
than five percent (5%) of the maximum aggregate number of Shares available under
Section 0(0), above (as amended from time to time), in any twelve (12) month
period, (B) such reduction is approved by a majority of the members of the
Administrator, and (C) the Administrator determines in good faith and in writing
that such reductions occur only infrequently and principally in response to
conditions other than poor operating performance by the Company. For purposes of
this subsection (0), the issuance of an Option in replacement of an existing
Option with a lower exercise price (or a lower base amount on which appreciation
is measured) without a material adverse impact on the Grantee shall be deemed to
be a reduction in the exercise price of the earlier granted Option;
(ix) to construe and interpret the terms of the Plan and
Options granted pursuant to the Plan;
(x) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such laws; provided, however,
that no Option shall be granted under any such additional terms, conditions,
rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan; and
(xi) to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems appropriate.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be conclusive and
binding on all persons.
5. Eligibility. Non-Qualified Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee, Director or Consultant who has been granted an
Option may, if otherwise eligible, be granted additional Options. Options may be
granted to such Employees of the Company and its subsidiaries who are residing
in foreign jurisdictions as the Administrator may determine from time to time.
6. Terms and Conditions of Options.
(a) Designation of Option. Each Option shall be designated in the
Option Agreement as either an Incentive Stock Option or a Non-Qualified Stock
Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by a Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby
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in excess of the foregoing limitation, shall be treated as Non-Qualified Stock
Options. For this purpose, Incentive Stock Options shall be taken into account
in the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the date the Option with respect to such Shares is
granted.
(b) Conditions of Option. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms and conditions of each
Option including, but not limited to, the Option vesting schedule, form of
payment upon exercise of the Option and satisfaction of any performance
criteria.
(c) Individual Option Limit. The maximum number of Shares with
respect to which Options may be granted to any individual in any fiscal year of
the Company shall be 6,000,000 [adjusted to reflect the stock dividend effective
December 5, 1997]. The foregoing limitation shall be adjusted proportionately in
connection with any change in the Company's capitalization pursuant to Section
10, below. To the extent required by Section 162(m) of the Code or the
regulations thereunder, in applying the foregoing limitation with respect to an
individual, if any Option is canceled, the canceled Option shall continue to
count against the maximum number of Shares with respect to which Options may be
granted to the individual. For this purpose, the repricing of an Option shall be
treated as the cancellation of the existing Option and the grant of a new
Option.
(d) Term of Option. The term of each Option shall be ten (10)
years from the date of grant for all Grantees other than Directors who are not
Employees, in whose case the term shall be five (5) years from the date of
grant. However, in the case of an Incentive Stock Option granted to a Grantee
who, at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5)
years from the date of grant thereof or such shorter term as may be provided in
the Option Agreement.
(e) Transferability of Options. Incentive Stock Options may not be
sold, pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent or distribution, and may be
exercised during the lifetime of the Grantee only by the Grantee. Non-Qualified
Stock Options shall be transferable to the extent provided in the Option
Agreement.
(f) Time of Granting Options. The date of grant of an Option shall
for all purposes be the date on which the Administrator makes the determination
to grant such Option, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
(g) Vesting During Leave of Absence. During any leave of absence
from employment, directorship or consulting arrangement with the Company or any
Parent or Subsidiary, vesting of such Grantee's Options shall cease, and shall
resume upon the Grantee's return to his or her relationship with the Company,
Parent or Subsidiary. The dates on which such Grantee's Options vest shall
thereafter be adjusted by the duration of the leave of absence.
7. Option Exercise Price, Consideration and Taxes.
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(a) Exercise Price. The exercise price for an Option shall be as
follows:
(i) In the case of an Incentive Stock Option:
(a) granted to an Employee who, at the time of the grant
of such Incentive Stock Option owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be not less than one hundred
ten percent (110%) of the Fair Market Value per Share on the date of grant.
(b) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per
Share exercise price shall be not less than eighty-five percent (85%) of the
Fair Market Value per Share on the date of grant unless otherwise determined by
the Administrator; provided, however, that in the case the per Share exercise
price is less than one hundred percent (100%) of the Fair Market Value per Share
on the date of the grant, the Administrator determines in writing and in good
faith that (A) such grants are made infrequently, (B) there is a good business
reason for the grant that outweighs the normal presumption of a per Share
exercise price of not less than one hundred percent (100%) of the Fair Market
Value per Share on the date of grant, and (C) the aggregate number of Shares
subject to such Options does not exceed five percent (5%) of the aggregate
maximum number of Shares under Section 0(0), above, as amended from time to
time.
(iii) In the case of Options intended to qualify as
Performance-Based Compensation, the per Share exercise price shall be not less
than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant.
(b) Consideration. Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued upon exercise of an Option including the
method of payment, shall be determined by the Administrator (and, in the case of
an Incentive Stock Option, shall be determined at the time of grant). In
addition to any other types of consideration the Administrator may determine,
the Administrator is authorized to accept as consideration for Shares issued
under the Plan the following:
(i) cash;
(ii) check;
(iii) delivery of Grantee's promissory note with such
recourse, interest, security, and redemption provisions as the Administrator
determines as appropriate;
(iv) surrender of Shares (including withholding of Shares
otherwise deliverable upon exercise of the Option) which have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised (but only to the extent that
such exercise of the Option would not result in an accounting compensation
charge with respect to the Shares used to pay the exercise price unless
otherwise determined by the Administrator);
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(v) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
(vi) any combination of the foregoing methods of payment.
(c) Taxes. In connection with each option granted pursuant to this
Plan, at any time when the Company could have any withholding obligation
(whether for Federal, state, local or foreign income, disability, Medicare,
employment or other taxes or otherwise) as a result of exercise of an option,
the lapse of any substantial risk of forfeiture to which the shares are subject
at the time of exercise, or the disposition of shares acquired upon such
exercise, the Company shall have no obligation to permit exercise of such option
or to issue any shares upon exercise of the option unless and until either the
exercise of the option is accompanied by sufficient payment, as determined by
the Company in its absolute discretion, to meet those withholding obligations on
such exercise, lapse or disposition or other arrangements are made that are
satisfactory to the Company in its absolute discretion to provide otherwise for
such payment. The Company shall have no liability to any optionee or transferee
for exercising the foregoing right not to permit exercise or issue shares.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder.
(i) Any Option granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Option Agreement.
(ii) An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to Shares subject to an Option, notwithstanding the exercise of an Option. The
Company shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in the Option Agreement or Section 10, below.
(b) Exercise of Option Following Termination of Employment,
Director or Consulting Relationship.
(i) An Option may not be exercised after the termination date
of such Option set forth in the Option Agreement and may be exercised following
the termination of a Grantee's Continuous Status as an Employee, Director or
Consultant only to the extent that the Grantee was entitled to exercise it at
the date of such termination (but in no event later than the expiration of the
term of such option as set forth in the Option Agreement). Options shall be
exercisable for a period of ninety (90) days following termination generally,
and for a period of
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five hundred forty-seven (547) days following termination due to death of the
Grantee or three hundred sixty-five (365) days following termination due to the
disability of the Grantee (or, in each case, such other period of time as is
determined by the Administrator, which such determination in the case of an
Incentive Stock Option shall be made at the time of grant of the Option).
(ii) All Options shall terminate to the extent not exercised
on the last day of the period specified in paragraph (i) above or the last day
of the original term of the Option, whichever occurs first.
(iii) Any Option designated as an Incentive Stock Option to
the extent not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee's Continuous
Status as an Employee, Director or Consultant shall convert automatically to a
Non-Qualified Stock Option and thereafter shall be exercisable as such to the
extent exercisable by its terms for the period specified in the Option
Agreement.
(c) Exercise of Option Following Termination of Employment,
Director or Consulting Relationship. In the event of termination of a Grantee's
Continuous Status as an Employee, Director or Consultant with the Company for
any reason other than disability or death (but not in the event of an Grantee's
change of status from Employee to Consultant or from Consultant to Employee),
such Grantee may, but only within ninety (90) days after the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise his or her Option to the
extent that the Grantee was entitled to exercise it at the date of such
termination or to such other extent as may be determined by the Administrator.
If the Grantee should die within ninety (90) days after the date of such
termination, the Grantee's estate or the person who acquired the right to
exercise the Option by bequest or inheritance may exercise the Option to the
extent that the Grantee was entitled to exercise it at the date of such
termination within five hundred forty-seven (547) days of the Grantee's date of
death, but in no event later than the expiration date of the term of such Option
as set forth in the Option Agreement. In the event of an Grantee's change of
status from Employee to Consultant, an Employee's Incentive Stock Option shall
convert automatically to a Non-Qualified Stock Option on the ninety-first (91st)
day following such change of status. If the Grantee does not exercise such
Option to the extent so entitled within the time specified herein, the Option
shall terminate.
(d) Disability of Grantee. In the event of termination of a
Grantee's Continuous Status as an Employee, Director or Consultant as a result
of his or her disability, Grantee may, but only within three hundred sixty-five
(365) days from the date of such termination (and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination; provided, however, that if such disability is
not a "disability" as such term is defined in Section 22(e)(3) of the Code, in
the case of an Incentive Stock Option such Incentive Stock Option shall
automatically convert to a Non-Qualified Stock Option on the day three (3)
months and one day following such termination. To the extent that Grantee is not
entitled to exercise the Option at the date of termination, or if Grantee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(e) Death of Grantee. In the event of the death of a Grantee, the
Option may
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be exercised at any time within five hundred forty-seven (547) days following
the date of death (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement), by the Grantee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Grantee was entitled to exercise the Option at
the date of death. If, at the time of death, the Grantee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the
Grantee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate.
(f) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Grantee at the time that such offer is made.
9. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all Applicable Laws, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.
10. Adjustments Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Option, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan, as well as the price per share of Common
Stock covered by each such outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other similar event resulting in
an increase or decrease in the number of issued shares of Common Stock. Except
as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Option.
11. Corporate Transactions/Changes in Control/Subsidiary Dispositions.
(a) The Administrator shall have the authority, exercisable either in
advance of any actual or anticipated Corporate Transaction, Change in Control or
Subsidiary Disposition or at the time of an actual Corporate Transaction, Change
in Control or Subsidiary Disposition and exercisable at the time of the grant of
an Option under the Plan or any time while an Option remains outstanding, to
provide for the full automatic vesting and exercisability of one or more
outstanding unvested Options under the Plan and the release from restrictions on
transfer
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and repurchase or forfeiture rights of such Options in connection with a
Corporate Transaction, Change in Control or Subsidiary Disposition, on such
terms and conditions as the Administrator may specify. The Administrator also
shall have the authority to condition any such Option vesting and exercisability
or release from such limitations upon the subsequent termination of the
Continuous Status as an Employee or Consultant of the Grantee within a specified
period following the effective date of the Change in Control or Subsidiary
Disposition. The Administrator may provide that any Options so vested or
released from such limitations in connection with a Change in Control or
Subsidiary Disposition, shall remain fully exercisable until the expiration or
sooner termination of the Option. Effective upon the consummation of a Corporate
Transaction, all outstanding Options under the Plan shall terminate unless
assumed by the successor company or its Parent.
(b) The portion of any Incentive Stock Option accelerated under this
Section 11 in connection with a Corporate Transaction, Change in Control or
Subsidiary Disposition shall remain exercisable as an Incentive Stock Option
under the Code only to the extent the $100,000 dollar limitation of Section
422(d) of the Code is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated excess portion of such Option shall be exercisable as
a Non-Qualified Stock Option.
12. Term of Plan. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated.
13. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the
Plan. To the extent required to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such manner and to such a
degree as required.
(b) No Option may be granted during any suspension of the Plan or
after termination of the Plan.
(c) Any amendment, suspension or termination of the Plan shall not
affect Options already granted, and such Options shall remain in full force and
effect as if the Plan had not been amended, suspended or terminated, unless
mutually agreed otherwise between the Grantee and the Administrator, which
agreement must be in writing and signed by the Grantee and the Company.
14. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
15. No Effect on Terms of Employment. The Plan shall not confer upon
any Grantee
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any right with respect to continuation of employment or consulting relationship
with the Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.
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EXHIBIT 10.18
BONUS PLAN
1. This Bonus Plan has been adopted by Maxim Integrated Products, Inc.
(the "Company") for the determination of annual incentive bonuses payable to the
Company's executive officers. This Bonus Plan shall be administered by the
Company's Compensation Committee. This Bonus Plan shall be in effect for the
Company's fiscal years 1998-2002, for payment of bonuses with respect to each
such fiscal year but to be determined and paid in the immediately following
fiscal year.
2. With respect to each fiscal year, there shall be created a pool (the
"Bonus Pool") in an amount of up to 3% of the Company's pre-tax earnings,
determined as follows:
(a) If the Company's earnings per share for that fiscal year are at
least 30% greater than the Company's earnings per share for the immediately
preceding fiscal year, an amount equal to 1.5% of the Company's pre-tax
earnings shall be available in the Bonus Pool. If the growth in the Company's
earnings per share for such period is less than 30%, then the amount available
in the pool shall equal 1.5% times the actual percentage growth in earnings per
share for such period divided by 30%.
(b) If the closing price for the Company's Common Stock on the last
trading day of that fiscal year is at least 30% greater than the closing price
for the Company's Common Stock on the last trading day of the immediately
preceding fiscal year, an amount equal to 1.5% of the Company's pre-tax earnings
shall be available in the Bonus Pool. If the growth in the Company's stock price
for such period is less than 30%, then the amount available in the pool shall
equal 1.5% times the actual percentage growth in the Company's stock price for
such period divided by 30%.
3. Within 90 days of the beginning of each fiscal year during the term of
this Bonus Plan, the Compensation Committee is to determine a formula for the
amount of the bonus payable to each executive officer, based on the same
performance criteria as set forth in paragraphs 2(a) and (b) above. The maximum
bonus payable to any executive officer in respect of any fiscal year is one half
of the Bonus Pool for that year.
4. After the end of each fiscal year, the Compensation Committee shall
determine and certify the performance of the Company and each executive officer
against the performance criteria set forth in paragraphs 2 and 3 above, and
shall determine the amount available in the Bonus Pool and the amount of the
bonus payable to each executive officer hereunder for such fiscal year.
5. The Compensation Committee reserves the right to pay any executive
officer for any fiscal year a bonus in an amount less than the bonus determined
pursuant to paragraphs 2 and 3, based on the Compensation Committee's
determination of that executive officer's individual performance during the
fiscal year. In making such determination, the Compensation Committee may
consult with such parties, including the Company's Chief Executive Officer,
seek such other input and take into account such factors as the Compensation
Committee, in its sole discretion, may determine.
<PAGE> 1
EXHIBIT 13.1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Net Revenues Maxim Integrated Products, Inc. (the Company) reported net revenues
of $560.2 million in fiscal 1998, $433.7 million in fiscal 1997, and $421.6
million in fiscal 1996. The increases in net revenues for fiscal 1998 and fiscal
1997 are related primarily to higher unit shipments resulting from continued
introduction of new proprietary products and increased market acceptance of the
Company's proprietary and second-source products.
Net Revenues
(dollars in millions)
[GRAPH TO COME]
Approximately 56% of the Company's fiscal 1998 net revenues was derived from
customers outside the U.S., primarily in Europe and the Pacific Rim (57% for
both fiscal 1997 and 1996). While a majority of the Company's sales are
denominated in U.S. dollars, the Company enters into foreign currency forward
contracts to mitigate its risk on firm commitments and net monetary assets
denominated in foreign currencies; as a result, the impact of changes in foreign
exchange rates on revenues and the Company's results of operations for 1998 was
minimal.
Gross Margin The Company's gross margin as a percentage of net revenues was
67.2%, 66.5%, and 65.3% in fiscal 1998, 1997, and 1996, respectively. The
continued improvements in gross margin are principally due to production
efficiencies obtained through economies of scale offset to some extent by a
$10.5 million increase in inventory reserves and $8.2 million in charges related
to equipment writedowns in fiscal 1998.
Gross Margin
(percentage of net revenues)
[GRAPH TO COME]
Research and Development The Company is continuously working to introduce new
products through its research and development efforts. Research and development
expenses were 12.9%, 11.8%, and 11.3% of net revenues in fiscal 1998, 1997, and
1996, respectively. The increase in research and development expenses as a
percentage of net revenues was due to continued investments in new product
development efforts and $3.1 million in charges related to equipment writedowns
in fiscal 1998.
Research & Development
(dollars in millions)
[GRAPH TO COME]
12
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Selling, General & Administrative
(dollars in millions)
[GRAPH TO COME]
Selling, General and Administrative Selling, general and administrative
expenses were 8.8%, 8.8%, and 9.9% of net revenues in fiscal 1998, 1997, and
1996, respectively. Selling, general and administrative expenses increased in
absolute dollars as a result of increased headcount and related expenses
primarily associated with the Company's direct sales efforts, and $1.0 million
in charges related to equipment writedowns in fiscal 1998. Selling, general and
administrative expenses decreased in absolute dollars in fiscal 1997 from fiscal
1996 as a result of savings realized through the establishment of a direct sales
force in the United States during the latter half of fiscal 1996.
Interest Income, Net Interest income, net increased to $14.9 million in fiscal
1998 from $8.6 million in fiscal 1997 and $4.6 million in fiscal 1996, primarily
due to higher levels of invested cash, cash equivalents, and short-term
investments. The Company's exposure to market risk for changes in interest rates
relates primarily to the Company's investment portfolio. The Company does not
use derivative financial instruments in its investment portfolio. Under its
investment policy, the Company invests exclusively in U.S. Treasury and Federal
Agency debt securities with a maturity of one year or less. Investments mature
at frequent intervals during the year, at which time the funds are available for
use in the business, or for reinvestment, as cash demands dictate. This policy
is intended to reduce default risk, market risk, and reinvestment risk. The fair
value of the Company's investment portfolio or related interest income would not
be significantly impacted by a material change in interest rates, due to the
short-term nature of the Company's investment portfolio. At June 27, 1998, the
Company's investment portfolio had an expected weighted average return of 5.5%
and a weighted maturity of 219 days.
Provision for Income Taxes The effective tax rate was 34% for both fiscal 1998
and 1997, and 35% for fiscal 1996. The decrease in the effective tax rate from
fiscal 1996 was primarily due to restoration of the Federal Research and
Development Tax Credit and the California Manufacturers' Investment Credit.
13
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OUTLOOK:
Both end-market bookings and net bookings on the Company were lower in the last
quarter of fiscal 1998 than in prior quarters during the year. These lower
booking levels reflected softer demand for the Company's products in the United
States, Europe, and the Pacific Rim and changes made in the Company's U.S.
distribution channels.
At the end of the fourth quarter of fiscal 1998, backlog shippable within the
next twelve months was $181 million. Because the Company's backlog of orders at
any point is not necessarily based on firm, noncancelable orders, and because
the Company's customers do in fact routinely cancel orders for their own
convenience with little notice, opening backlog has limited value as a predictor
of future revenues.
The Company's ability to increase its revenues and earnings in the first quarter
of fiscal 1999 and beyond depends on resumption of bookings growth.
FINANCIAL CONDITION:
Overview Total assets grew to $769.5 million at the end of fiscal 1998, up from
$556.4 million at the end of fiscal 1997. The increase is primarily due to
favorable operating results for the year. Accounts receivable increased to
$101.9 million at the end of fiscal 1998 from $91.6 million at the end of fiscal
1997, primarily due to an overall increase in sales volume and an increase in
direct sales to international OEM customers, which generally have longer payment
cycles. Inventory increased to $44.7 million at the end of fiscal 1998 from
$36.8 million at the end of fiscal 1997, due to higher manufacturing production
levels to support the Company's higher revenue levels.
Liquidity and Capital Resources The Company's primary source of funds for
fiscal 1998, 1997, and 1996 has been from net cash generated from operating
activities of approximately $295.5 million, $187.1 million, and $119.5 million,
respectively. In addition, the Company received approximately $37.2 million,
$31.2 million, and $19.7 million of proceeds from the exercises of stock options
during fiscal 1998, 1997, and 1996, respectively.
Cash, Cash Equivalents &
Short-Term Investments
(dollars in millions)
[GRAPH TO COME]
Another source of cash from the Company's option programs is the tax deductions
that arise from exercise of options. These tax benefits amounted to $74.3
million, $52.4 million, and $32.7 million in fiscal 1998, 1997, and 1996,
respectively. It has been the Company's policy
14
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
to reduce the dilution effect from stock options by repurchasing its common
stock from time to time in amounts based on estimates of proceeds from future
stock option exercises and of tax benefits related to such exercises. The
Company plans to continue this policy and, at management's discretion, may
repurchase its common stocks in amounts significantly in excess of such
estimates.
The principal uses of funds for fiscal 1998, 1997, and 1996 were repurchases of
$123.1 million, $80.7 million, and $27.4 million of the Company's common stock,
and purchases of property, plant and equipment of $109.4 million, $44.2 million,
and $75.1 million, respectively. In fiscal 1998, $42.0 million of the $109.4
million in capital purchases was for a sub-micron wafer fabrication facility
located in San Jose, California.
As of June 27, 1998, the Company's available funds consisted of approximately
$322.9 million in cash, cash equivalents, and short term U.S. Treasury and
Federal Agency debt securities.
The Company anticipates that the available funds and cash generated from
operations will be sufficient to meet cash and working capital requirements,
including its anticipated level of capital equipment expenditures, through the
end of fiscal 1999.
YEAR 2000 ISSUE:
As a result of certain computer programs being written using two digits rather
than four to define the applicable year, any of the Company's computer programs
that have date-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000 (the "Year 2000 Issue"). This could result in a
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send
invoices, or engage in normal business activities.
The Company is in the process of evaluating the modifications to both new and
existing software and hardware required to mitigate the Year 2000 Issue. The
Company has also initiated formal communications with its significant suppliers
and large customers to determine the extent to which the Company is vulnerable
to those third parties' failure to minimize their own Year 2000 Issue. The
Company expects to have any required modifications completed prior to December
31, 1999. However, if such modifications are not made, or are not completed in a
timely fashion, the Year 2000 Issue could have a material impact on the
operations of the Company. In addition, there can be no assurance that the
systems of other companies on which the Company's systems rely will be timely
converted, or that a failure to convert by another company, or a conversion that
is incompatible with the Company's systems, would not have a material adverse
effect on the Company. The Company currently has no contingency plan in the
event it or third parties are unable to complete system modification to address
the Year 2000 Issue. Costs incurred through June 27, 1998, addressing the Year
2000 Issue have been minimal. While the Company has not fully completed the
evaluation of its Year 2000 Issue, it does not anticipate that the future cost
of these efforts will be material.
The date on which the Company plans to complete any necessary Year 2000
modifications is based on management's best estimates, which were derived
utilizing numerous assumptions of future events, including the continued
availability of certain resources, third party modification plans, and other
factors. However, there can be no assurance that these estimates will be
achieved, and actual results could differ materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.
15
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING INFORMATION:
Forward-looking statements in this Annual Report, including this Management's
Discussion and Analysis section, involve risk and uncertainty. There are
numerous factors that could cause the Company's actual results to differ
materially from results predicted or implied. Important factors affecting the
Company's ability to achieve future revenue growth include whether, and the
extent to which, demand for the Company's products increases and reflects real
end-user demand; whether customer cancellations and delays of outstanding orders
increase; and whether the Company is able to manufacture in a correct mix to
respond to orders on hand and new orders received in the future; whether the
Company is able to achieve its new product development and introduction goals,
including, without limitation, goals for recruiting, retaining, training, and
motivating engineers, particularly design engineers, and goals for conceiving
and introducing timely new products that are well received in the marketplace;
and whether the Company is able to successfully commercialize its new
technologies, such as its new second-generation high frequency technologies,
that it has been investing in by designing and introducing new products based on
these new technologies.
Other important factors that could cause actual results to differ materially
from those predicted include overall economic conditions, such as the currency
and other economic issues affecting Asian countries; demand for electronic
products and semiconductors generally; demand for the end-user products for
which the Company's semiconductors are suited; timely availability of raw
material, equipment, supplies and services; unanticipated manufacturing
problems; technological and product development risks; competitors' actions; and
other risk factors described in the Company's filings with the Securities and
Exchange Commission.
All forward-looking statements included in this document are made as of the date
hereof, based on the information available to the Company as of the date hereof,
and the Company assumes no obligation to update any forward-looking statement.
16
<PAGE> 6
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
(Amounts in thousands, except share data) JUNE 27, 1998 June 30, 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,739 $ 18,562
Short-term investments 306,209 205,391
- -------------------------------------------------------------------------------------------------
Total cash, cash equivalents and
short-term investments 322,948 223,953
- -------------------------------------------------------------------------------------------------
Accounts receivable (net of allowance for doubtful
accounts of $1,892 in 1998 and $1,344 in 1997) 101,921 91,642
Inventories 44,707 36,833
Deferred income taxes 34,400 21,500
Other current assets 4,039 3,079
- -------------------------------------------------------------------------------------------------
Total current assets 508,015 377,007
- -------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost, less
accumulated depreciation 255,453 174,508
Other assets 6,024 4,871
- -------------------------------------------------------------------------------------------------
Total assets $ 769,492 $ 556,386
- -------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- -------------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 35,169 $ 25,249
Income taxes payable 27,412 10,916
Accrued salaries 21,421 16,408
Accrued expenses 22,604 16,312
Deferred income on shipments to distributors 23,686 16,336
- -------------------------------------------------------------------------------------------------
Total current liabilities 130,292 85,221
- -------------------------------------------------------------------------------------------------
Other liabilities 4,000 4,000
Deferred income taxes 4,200 1,600
Commitments and contingencies
- -------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, $0.001 par value;
Authorized: 2,000,000 shares;
Issued and outstanding: none -- --
Common stock, $0.001 par value;
Authorized: 240,000,000 shares;
Issued and outstanding: 130,752,346 in 1998
and 127,458,504 in 1997 131 127
Additional paid-in capital 81,118 92,774
Retained earnings 551,914 373,770
Translation adjustment (2,163) (1,106)
- -------------------------------------------------------------------------------------------------
Total stockholders' equity 631,000 465,565
- -------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 769,492 $ 556,386
- -------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to Consolidated Financial Statements.
17
<PAGE> 7
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
(Amounts in thousands, except per share data)
For the years ended JUNE 27, 1998 June 30, 1997 June 30, 1996
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenues $560,220 $433,710 $421,626
Cost of goods sold 183,724 145,307 146,253
- -------------------------------------------------------------------------------------------------------
Gross margin 376,496 288,403 275,373
- -------------------------------------------------------------------------------------------------------
Operating expenses:
Research and development 72,204 51,264 47,532
Selling, general and administrative 49,256 38,194 41,951
- -------------------------------------------------------------------------------------------------------
Total operating expenses 121,460 89,458 89,483
- -------------------------------------------------------------------------------------------------------
Operating income 255,036 198,945 185,890
Interest income, net 14,879 8,590 4,567
- -------------------------------------------------------------------------------------------------------
Income before provision
for income taxes 269,915 207,535 190,457
Provision for income taxes 91,771 70,561 67,112
- -------------------------------------------------------------------------------------------------------
Net income $178,144 $136,974 $123,345
- -------------------------------------------------------------------------------------------------------
Earnings per share:
Basic $ 1.37 $ 1.09 $ 1.03
Diluted $ 1.18 $ 0.94 $ 0.87
- -------------------------------------------------------------------------------------------------------
Shares used in the calculation of earnings per share:
Basic 129,838 125,430 120,204
Diluted 150,661 145,754 141,854
- -------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to Consolidated Financial Statements.
18
<PAGE> 8
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock Additional
-------------------------- Paid-In Retained Translation
(Amounts in thousands, except share data) Shares Par Value Capital Earnings Adjustment Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1995 117,746,316 $ 118 $ 64,838 $113,451 $ 303 $ 178,710
Exercise of stock options under
the Stock Option and Purchase
Plans 6,798,722 7 19,673 -- -- 19,680
Repurchase of common stock (1,654,000) (2) (27,369) -- -- (27,371)
Tax benefit on exercise of
non-qualified stock options
and disqualifying dispositions
under stock plans -- -- 32,736 -- -- 32,736
Translation adjustment -- -- -- -- (1,675) (1,675)
Net income -- -- -- 123,345 -- 123,345
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1996 122,891,038 123 89,878 236,796 (1,372) 325,425
Exercise of stock options under
the Stock Option and
Purchase Plans 8,448,466 8 31,200 -- -- 31,208
Repurchase of common stock (3,881,000) (4) (80,701) -- -- (80,705)
Tax benefit on exercise of
non-qualified stock options
and disqualifying
dispositions under stock
plans -- -- 52,397 -- -- 52,397
Translation adjustment -- -- -- -- 266 266
Net income -- -- -- 136,974 -- 136,974
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1997 127,458,504 127 92,774 373,770 (1,106) 465,565
Exercise of stock options under
the Stock Option and Purchase
Plans 6,939,982 7 37,222 -- -- 37,229
Repurchase of common stock and
other (3,646,140) (3) (123,131) -- -- (123,134)
Tax benefit on exercise of
non-qualified stock options
and disqualifying dispositions
under stock plans -- -- 74,253 -- -- 74,253
Translation adjustment -- -- -- -- (1,057) (1,057)
Net income -- -- -- 178,144 -- 178,144
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 27, 1998 130,752,346 $ 131 $ 81,118 $551,914 $(2,163) $ 631,000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to Consolidated Financial Statements.
19
<PAGE> 9
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
(Amounts in thousands)
Increase (decrease) in cash and cash equivalents
For the years ended June 27, 1998 June 30, 1997 June 30, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 178,144 $ 136,974 $ 123,345
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization, and other 15,082 17,013 12,899
Reduction of equipment value 12,342 -- 1,344
Changes in assets and liabilities:
Accounts receivable (10,279) (10,978) (52,950)
Inventories (7,874) (6,362) (11,366)
Other current assets (960) 409 (2,279)
Accounts payable 9,920 (4,489) 4,953
Income taxes payable 90,749 43,990 50,254
Deferred income taxes (10,300) 775 (4,755)
Deferred income on shipments to distributors 7,350 1,805 7,020
All other accrued liabilities 11,305 7,943 (8,926)
- ------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 295,479 187,080 119,539
- ------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment, net (109,426) (44,187) (75,061)
Other non-current assets (1,153) 1,304 211
Purchase of held-to-maturity securities -- (24,313) (137,882)
Purchases of available-for-sale securities (384,305) (239,437) --
Proceeds from maturities of held-to-maturity
securities 5,800 95,122 106,241
Proceeds from sales/maturities of available-for-
sale securities 277,687 32,207 --
- ------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (211,397) (179,304) (106,491)
- ------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Issuance of common stock 37,229 31,208 19,680
Principal payments on capital lease obligations -- -- (40)
Repurchase of common stock, and other (123,134) (80,705) (27,371)
- ------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (85,905) (49,497) (7,731)
- ------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (1,823) (41,721) 5,317
Cash and cash equivalents:
Beginning of year 18,562 60,283 54,966
- ------------------------------------------------------------------------------------------------------------
End of year $ 16,739 $ 18,562 $ 60,283
- ------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
- ------------------------------------------------------------------------------------------------------------
Income taxes $ 8,293 $ 19,967 $ 19,381
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to Consolidated Financial Statements.
20
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Operations:
Maxim Integrated Products, Inc. (the Company) designs, develops, manufactures,
and markets linear and mixed-signal integrated circuits. Products include data
converters, interface circuits, microprocessor supervisors, operational
amplifiers, power supplies, multiplexers, switches, battery chargers, battery
management circuits, RF circuits, fiber optic transceivers, and voltage
references. Maxim Integrated Products, Inc., is a global company with
manufacturing facilities in the United States, testing facilities in the
Philippines, and sales offices throughout the world. The Company's products are
sold to customers in numerous markets, including data processing,
telecommunications, networking, industrial control, instrumentation, and
military markets.
2. Summary of Significant Accounting Policies:
Basis of presentation:
The consolidated financial statements include the accounts of Maxim Integrated
Products, Inc., and all of its wholly owned subsidiaries. Intercompany balances
and transactions have been eliminated. Effective July 1, 1997, the Company
adopted a 52-to-53-week fiscal year that ends on the last Saturday in June, and
in which each accounting quarter will end on the last Saturday of the quarter.
Cash equivalents and short-term investments:
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents. Short-term investments consist of U.S. Treasury and
Federal Agency debt securities with original maturities beyond three months and
within one year.
Securities designated as held-to-maturity are carried at amortized cost which
approximates market value. The original cost of debt securities in this category
is adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization is included in interest income. Realized gains and losses and
declines in value judged to be other-than-temporary on held-to-maturity
securities are included in interest income. Securities identified as
available-for-sale are carried at fair market value based on market quotes.
Unrealized gains and losses, net of tax, on securities in this category are
reportable as a separate component of stockholders' equity. The cost of
securities sold is based on the specific identification method. Interest earned
on securities is included in interest income.
Derivative financial instruments held for purposes other than trading:
The Company enters into forward exchange contracts to hedge certain firm sales
commitments denominated in foreign currencies and the net monetary assets and
liabilities of its foreign subsidiaries. The purpose of the Company's foreign
currency hedging activities is to protect the Company from the risk that the
eventual dollar cash flows resulting from the sale of products to international
customers and its subsidiaries will be adversely affected by changes in exchange
rates. Gains and losses related to these contracts are deferred and included in
operating income to match with the overall gains or losses from the underlying
transactions. Any gain or loss realized from early termination of a forward
contract is included in operating income upon termination.
Inventories:
Inventories are stated at the lower of standard cost (which approximates first
in, first out) or market.
21
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property, plant and equipment:
Property, plant and equipment are stated at cost and depreciation is computed on
the straight line method over estimated useful lives of 1 to 40 years. Leased
machinery and equipment and leasehold improvements are amortized over the lesser
of their useful lives or the remaining term of the related lease.
The Company evaluates property, plant and equipment in accordance with SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of."
Revenue recognition:
Revenue from product sales direct to customers is generally recognized upon
shipment. A portion of the Company's sales are made to domestic distributors
under agreements which provide for certain price rebates and limited product
return privileges. As a result, the Company defers recognition of such sales
until the merchandise is sold by the domestic distributors.
Foreign currency translation and remeasurement:
For foreign operations with the local currency as the functional currency,
assets and liabilities are translated at year-end exchange rates, and statements
of operations are translated at the average exchange rates during the year.
Exchange gains or losses arising from the translation of foreign currency
denominated assets and liabilities are included as a component of stockholders'
equity.
For foreign operations with the U.S. dollar as the functional currency, monetary
assets and liabilities are remeasured at the year-end exchange rates. Certain
non-monetary assets and liabilities are remeasured using historical rates.
Statements of operations are remeasured at the average exchange rates during the
year. Net gains and losses from foreign currency remeasurements have been
minimal and are included in selling, general and administrative expenses.
Employee stock plans:
The Company accounts for its stock option and employee stock purchase plans in
accordance with provisions of the Accounting Principles Board's Opinion No. 25
(APB 25), "Accounting for Stock Issued to Employees." In 1995, the Financial
Accounting Standards Board released the Statement of Financial Accounting
Standard No. 123 (SFAS 123), "Accounting for Stock Based Compensation." SFAS 123
provides an alternative to APB 25 and is effective beginning fiscal year 1997.
The Company has elected to continue to account for its employee stock plans in
accordance with the provisions of APB 25. The Company has provided additional
pro forma disclosures as required under SFAS 123 in Note 7.
Earnings per share:
In the second quarter of fiscal 1998, the Company adopted Statement of Financial
Accounting Standard No. 128 (SFAS 128), "Earnings Per Share." SFAS 128 requires
dual presentation of basic earnings per share (EPS) and diluted EPS. All prior
periods have been restated. Basic earnings per share is computed using the
weighted average number of common shares outstanding during the period. Diluted
earnings per share incorporates the incremental shares issuable upon the assumed
exercise of stock options and other convertible securities. Diluted earnings per
share does not differ from the Company's previously reported earnings per common
and common equivalent share.
22
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
New accounting pronouncements:
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (SFAS) 130, "Reporting Comprehensive Income," and SFAS 131,
"Disclosures About Segments of an Enterprise and Related Information." Statement
130 establishes new rules for the reporting and display of comprehensive income
and its components. Statement 131 establishes annual and interim
reporting standards for an enterprise's operating segments and related
disclosures about its products, services, geographic areas, and major customers.
These standards will be effective for fiscal year 1999. Adoption of these
standards will only impact the form and content of the Company's financial
statement disclosures.
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and for Hedging Activities." Statement
133 provides a comprehensive and consistent standard for the recognition and
measurement of derivatives and hedging activities. Statement 133 is effective
for fiscal year 2000.
Use of estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Such estimates
relate to the useful lives of fixed assets, allowances for doubtful accounts and
customer returns, inventory reserves, potential reserves relating to litigation
matters, accrued liabilities, and other reserves. Actual results may differ from
those estimates, and such differences may be material to the financial
statements.
Concentration of credit risk:
Due to the Company's credit evaluation and collection process, bad debt expenses
have been insignificant. Credit risk with respect to trade receivables is
limited because a large number of geographically diverse customers make up the
Company's customer base, thus spreading the credit risk. While a significant
portion of the Company's revenues are made through domestic and international
distributors, no single customer has accounted for greater than 10% of net
revenues in the last three fiscal years.
The Company places its investments with government entities and high credit
quality financial institutions and limits the amount of credit exposure to any
one financial institution.
Stock Split:
On December 5, 1997, the Company effected a two-for-one stock split in the form
of a stock dividend, thereby doubling the number of outstanding shares of common
stock. All share, per share, common stock, and stock option amounts for the
prior periods have been adjusted to reflect the split.
Concentration of other risks:
The semiconductor industry is characterized by rapid technological change,
competitive pricing pressures, and cyclical market patterns. The Company's
results of operations are affected by a wide variety of factors, including
general economic conditions, both at home and abroad, economic conditions
specific to the semiconductor industry and to the analog portion of that
industry, demand for the Company's products, the
23
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
timely introduction of new products, implementation of new manufacturing
technologies, the ability to manufacture efficiently, the ability to safeguard
patents and intellectual property in a rapidly evolving market, and reliance on
assembly and wafer fabrication subcontractors and on independent distributors
and sales representatives. As a result, the Company may experience substantial
period-to-period fluctuations in future operating results due to the factors
mentioned above or other factors.
3. Financial Instruments:
Investments:
Short-term investments in held-to-maturity and available-for-sale securities are
as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
(Amounts in thousands) June 27, 1998 June 30, 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury held-to-maturity securities at cost $ -- $ 5,753
U.S. Treasury available-for-sale securities at market value 147,880 199,638
Federal Agency Debt available-for-sale securities at market value 158,329 --
- ----------------------------------------------------------------------------------------------------
$306,209 $205,391
- ----------------------------------------------------------------------------------------------------
</TABLE>
Due to short maturity terms and relative price insensitivity to market interest
rates, amortized cost approximates fair market value, and no unrealized gains or
losses have been recorded at June 27, 1998 and June 30, 1997. Fair market values
are calculated based upon prevailing market quotes at the end of each fiscal
year. Gross realized gains or losses for the fiscal years ended June 1998, 1997,
and 1996 were immaterial.
Foreign Exchange Contracts:
At June 27, 1998, the Company held forward exchange contracts, all having
maturities of less than one year, to exchange various foreign currencies for
U.S. dollars in the amount of $52.5 million. Gains and losses related to these
contracts are deferred and matched with the overall gains or losses from the
underlying transactions. The table below summarizes, by currency, the notional
amounts of the Company's forward exchange contracts and net unrealized gain or
loss at June 27, 1998 and June 30, 1997. The net unrealized gain or loss
approximates carrying value of these contracts.
<TABLE>
<CAPTION>
1998 1997
----------------------------------------------------
Notional Unrealized Notional Unrealized
(Amounts in thousands) Amounts Gain/(Loss) Amounts Gain/(Loss)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Currency:
Japanese Yen $33,158 $2,162 $46,404 $ 84
British Pound Sterling 6,463 (37) 7,920 (276)
German Mark 8,870 77 7,307 290
French Franc 3,982 (1) 2,881 134
- --------------------------------------------------------------------------------
$52,473 $2,201 $64,512 $232
- --------------------------------------------------------------------------------
</TABLE>
The net unrealized gain is potentially subject to credit risk as it represents
appreciation of the hedge position over spot exchange rates at year end. The
Company controls credit risk through credit approvals and monitoring procedures.
24
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Inventories:
The components of inventories were:
<TABLE>
<CAPTION>
(Amounts in thousands) June 27, 1998 June 30,1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 4,826 $ 5,058
Work-in-process 29,575 22,349
Finished goods 10,306 9,426
- --------------------------------------------------------------------------------
$44,707 $36,833
- --------------------------------------------------------------------------------
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consists of:
<TABLE>
<CAPTION>
(Amounts in thousands) June 27, 1998 June 30,1997
- ---------------------------------------------------------------------------------
<S> <C> <C>
Land $ 26,817 $ 16,817
Buildings 47,923 28,899
Building improvements 33,082 19,126
Machinery and equipment 231,380 176,767
- ---------------------------------------------------------------------------------
339,202 241,609
- ---------------------------------------------------------------------------------
Less accumulated depreciation
and amortization (83,749) (67,101)
- ---------------------------------------------------------------------------------
$ 255,453 $ 174,508
- ---------------------------------------------------------------------------------
</TABLE>
During fiscal 1998, the Company recorded charges of $12.3 million to reduce the
carrying value of certain pieces of capital equipment, of which $8.2 million was
charged to cost of goods sold, $3.1 million was charged to research and
development expenses, and $1.0 million was charged to selling, general and
administrative expenses.
6. Commitments and Contingencies:
The Company is a defendant in a patent infringement lawsuit that alleges that
certain of the Company's products infringe a United States patent owned by the
plaintiff in the lawsuit. The lawsuit is in the discovery phase, with a jury
trial on the issues of liability and willfulness likely to occur late in 1999.
In addition, the Company is subject to other legal proceedings and claims that
arise in the normal course of its business. The Company does not believe that
the ultimate outcome of these matters will have a material adverse effect on the
financial position of the Company.
The Company leases certain facilities, including a wafer fabrication facility
for which the lease expires in November 2003. Under that lease, the Company has
a five-year lease extension option and is responsible for maintenance, taxes,
and insurance on the facility.
Future annual minimum lease payments for all leased facilities are as follows:
<TABLE>
<CAPTION>
Fiscal Year ending (Amounts in thousands)
- --------------------------------------------------------------------------------
<S> <C>
1999 $1,207
2000 1,063
2001 770
2002 643
2003 643
2004-2009 941
- --------------------------------------------------------------------------------
$5,267
- --------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Rent expense was approximately $1.4 million, $1.4 million and $1.3 million, in
fiscal 1998, 1997, and 1996, respectively.
7. Stockholders' Equity:
Stock option and purchase plans:
At June 27, 1998, the Company has reserved a total of 45,849,602 of its common
shares for issuance to employees and certain others under its 1996 Stock
Incentive Plan, 1987 Supplemental Stock Option Plan, 1983 Incentive Stock Option
Plan, 1987 Employee Stock Participation Plan, 1988 Nonemployee Director Stock
Option Plan, and Supplemental Nonemployee Stock Option Plan. Under the plans,
options are generally granted at a price not less than fair market value as
determined by the Board at the date of grant. Subject to certain limitations,
the Board has authority to make grants at prices less than fair market value.
Options granted under the stock option plans described above generally vest
within 5 years and expire from 5 to 10 years from the date of the grant or such
shorter term as may be provided in the agreement. Under the 1987 Employee Stock
Participation Plan, employees of the Company may purchase shares of common stock
at a price not less than the lesser of 85% of the fair market value of the stock
on the date the purchase right is granted or the date the right is exercised.
During fiscal 1998, the Company received $74,253,000 of tax benefit on the
exercise of nonqualified stock options and on disqualifying dispositions under
stock plans ($52,397,000 in fiscal 1997 and $32,736,000 in fiscal 1996).
Information with respect to activity under the stock option plans is set forth
below:
<TABLE>
<CAPTION>
Outstanding Options
------------------------------
Shares Weighted Average
Available Number of Price
for Grant Shares Per Share
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, June 30, 1995 1,001,744 46,605,028 $ 4.16
Shares reserved 5,900,000 -- --
Options granted (7,272,002) 7,272,002 $15.75
Options terminated 1,228,082 (1,228,082) $11.17
Options exercised -- (6,798,722) $ 2.90
- --------------------------------------------------------------------------------
Balance, June 30, 1996 857,824 45,850,226 $ 5.93
Shares reserved 14,530,000 -- --
Options granted (8,931,886) 8,931,886 $18.94
Options terminated 1,172,966 (1,172,966) $12.70
Options exercised -- (8,448,466) $ 3.71
- --------------------------------------------------------------------------------
Balance, June 30, 1997 7,628,904 45,160,680 $ 8.64
Options granted (7,883,730) 7,883,730 $31.13
Options terminated 1,408,924 (1,408,924) $15.14
Options exercised -- (6,939,982) $ 5.36
- --------------------------------------------------------------------------------
Balance, June 27, 1998 1,154,098 44,695,504 $12.97
- --------------------------------------------------------------------------------
</TABLE>
At June 27, 1998, options to purchase 17,308,790 shares of common stock were
exercisable (options exercisable at June 30, 1997 and 1996 were 16,217,762 and
16,263,204, respectively).
26
<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes information about options outstanding at June 27,
1998:
<TABLE>
<CAPTION>
Outstanding Options Options Exercisable
--------------------------------------------- ----------------------------
Weighted Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding at Contractual Exercise Exercisable at Exercise
Prices June 27, 1998 Life (Years) Price June 27, 1998 Price
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 0.80-$ 4.45 9,808,590 3.7 $ 2.19 9,118,534 $ 2.11
$ 4.84-$ 7.25 10,321,507 5.9 $ 5.99 4,519,621 $ 5.86
$ 7.47-$15.27 9,728,135 6.7 $12.12 2,552,149 $ 9.55
$15.31-$29.06 10,426,752 8.5 $22.88 985,900 $19.52
$29.25-$38.50 4,410,520 9.3 $33.23 132,586 $32.88
- -------------------------------------------------------------------------------------------------
$ 0.80-$38.50 44,695,504 6.5 $12.97 17,308,790 $ 5.55
- -------------------------------------------------------------------------------------------------
</TABLE>
Pro forma information:
Under SFAS 123, the Company may elect to continue to account for the grant of
stock options under APB Opinion 25, in which options granted with an exercise
price equal to the fair market value on the date of grant do not require
recognition of expense in the Company's financial statements. Under SFAS 123,
the Company is, however, required to provide pro forma disclosure regarding net
income and earnings per share as if the Company had accounted for its employee
stock options (including shares issued under the 1996 Stock Incentive Plan, 1987
Supplemental Stock Option Plan, 1998 Nonemployee Director Stock Option Plan, and
Supplemental Nonemployee Stock Option Plan, collectively called "options")
granted subsequent to June 30, 1995, under the methodology prescribed by that
statement. Since the Company has elected to account for the grant of options
under APB Opinion No. 25, the following information is for disclosure purposes
only and it will not affect the current or future earnings of the Company.
The valuation of options granted in fiscal 1998, 1997, and 1996 reported below
has been estimated at the date of grant using the Black-Scholes option pricing
model with the following weighted average assumptions:
<TABLE>
<CAPTION>
Stock Option Plans Employee Stock Participation Plan
Year ended June 1998 1997 1996 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expected option holding period (in years) 4.0 4.4 4.4 0.5 0.5 0.5
Risk-free interest rate 6.0% 6.4% 6.0% 5.3% 5.4% 5.3%
Stock price volatility 0.48 0.47 0.47 0.48 0.47 0.47
Dividend yield -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Black-Scholes option pricing model was developed for use in estimating the
value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions can
materially affect the estimate of value, in the opinion of management, the
existing models do not necessarily provide a reliable single measure of the
value of the options. The following is a summary of weighted average grant date
values generated by application of the Black-Scholes model:
Weighted Average Grant Date Value
Year ended June 1998 1997 1996
- --------------------------------------------------------------------------------
Stock Option Plans $14.59 $ 9.83 $ 7.77
Employee Stock Participation Plan $ 7.12 $ 5.99 $ 4.73
- --------------------------------------------------------------------------------
As required under SFAS 123, the reported net income and earnings per share have
been presented to reflect the impact had the Company been required to include
the amortization of the Black-Scholes option value as an expense. The adjusted
amounts are as follows:
<TABLE>
<CAPTION>
Year ended June 1998 1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pro forma net income adjusted for SFAS 123 (in thousands) $145,204 $121,190 $116,249
Pro forma diluted earnings per share
adjusted for SFAS 123 $ 0.96 $ 0.83 $ 0.82
- ---------------------------------------------------------------------------------------------------
</TABLE>
The effects of the disclosures above relate only to options granted after June
30, 1995. Therefore, the impact on net income recalculated under SFAS 123 is not
likely to be representative of similar disclosures in future years as additional
option grants will impact future disclosures.
8. Earnings Per Share:
Under SFAS 128, the Company provides dual presentation of EPS on a basic and
diluted basis. The Company's granting of certain stock options resulted in
potential dilution of basic EPS. The following summarizes the effect of the
assumed issuance of dilutive securities on weighted average shares for basic
EPS.
The number of incremental shares from the assumed issuance of stock
options is calculated applying the treasury stock method.
<TABLE>
<CAPTION>
(Amounts in thousands)
Year ended June 1998 1997 1996
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Numerator for basic earnings per share
and diluted earnings per share
Net Income $178,144 $136,974 $123,345
- ------------------------------------------------------------------------------------
Denominator for basic earnings per share 129,838 125,430 120,204
Effect of dilutive securities:
Stock options and warrants 20,823 20,324 21,650
------------------------------------
Denominator for diluted earnings per share 150,661 145,754 141,854
- ------------------------------------------------------------------------------------
Earnings per share:
Basic $ 1.37 $ 1.09 $ 1.03
Diluted $ 1.18 $ 0.94 $ 0.87
- ------------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Income Taxes:
The provision for income taxes consists of the following:
(Amounts in thousands)
<TABLE>
<CAPTION>
Year ended June 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal
Current $ 87,461 $54,976 $ 58,732
Deferred (9,200) 4,015 (3,730)
State
Current 9,305 8,225 9,113
Deferred (1,100) 595 (410)
Foreign
Current 5,305 2,750 3,407
- --------------------------------------------------------------------------------
$ 91,771 $70,561 $ 67,112
- --------------------------------------------------------------------------------
</TABLE>
Pretax income from foreign operations was approximately $18.0 million, $6.4
million, and $8.1 million, for the years ended June 27, 1998 and June 30, 1997
and 1996, respectively.
The Company enjoys a tax holiday with respect to its operations in Cavite,
Philippines, which will expire in fiscal 2002. The impact of this holiday was to
increase net income by approximately $1,274,000 ($0.01 diluted earnings per
share) during fiscal 1998. At June 27, 1998, accumulated pretax earnings of
approximately $3,747,000 are intended to be permanently reinvested outside the
United States, and no federal tax has been provided on these earnings.
The provision for income taxes differs from the amount computed by applying the
statutory rate as follows:
<TABLE>
<CAPTION>
Year ended June 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0%
State tax, net of
federal benefit 2.0 2.8 3.0
General business credits (1.0) (0.7) --
Exempt earnings of Foreign
Sales Corporation (2.0) (2.5) (2.7)
Other -- (0.6) (0.1)
- --------------------------------------------------------------------------------
34.0% 34.0% 35.2%
- --------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. The components of the
Company's deferred tax assets and liabilities as of June 27, 1998 and June 30,
1997 are as follows:
<TABLE>
<CAPTION>
(Amounts in thousands) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Inventory valuation and reserves $ 8,958 $ 5,301
Distributor related accruals 8,943 6,296
Accrued compensation 4,783 5,079
Other reserves and accruals not
currently deductible for tax reporting 13,502 7,331
- --------------------------------------------------------------------------------
Total deferred tax assets 36,186 24,007
- --------------------------------------------------------------------------------
Deferred tax liabilities-fixed assets
cost recovery (5,986) (4,107)
- --------------------------------------------------------------------------------
Net deferred tax assets $ 30,200 $ 19,900
- --------------------------------------------------------------------------------
</TABLE>
10. Segment Information:
The Company designs, develops, manufactures and markets a broad range of linear
and mixed-signal integrated circuits for the analog market, and its business
falls into one industry segment. Operations of the Company`s overseas
subsidiaries consist primarily of a test facility and sales, marketing, and
distribution centers.
During fiscal 1998, approximately 56% of the Company`s net revenues (including
both U.S. export sales and direct sales from foreign subsidiaries) were derived
from customers outside of the U.S., primarily in Europe and the Pacific Rim, as
compared to 57% of net revenues in fiscal 1997 and fiscal 1996. Pacific Rim
consists primarily of Japan. Intercompany transfers between geographic areas are
accounted for at prices that approximate arm's length transactions.
Information regarding geographic areas at and for the years then ended is as
follows:
<TABLE>
<CAPTION>
June 27, 1998 Geographic Area
------------------------------------------
(Amounts in thousands) United States Europe Pacific Rim Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues from unaffiliated customers $420,374 $85,864 $53,982 $560,220
- ------------------------------------------------------------------------------------------------------
Operating income $237,221 $ 8,861 $ 8,954 $255,036
- ------------------------------------------------------------------------------------------------------
Identifiable assets $704,594 $28,675 $36,223 $769,492
- ------------------------------------------------------------------------------------------------------
Liabilities $131,067 $ 4,593 $ 2,832 $138,492
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
June 30, 1997 Geographic Area
------------------------------------------
(Amounts in thousands) United States Europe Pacific Rim Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues from unaffiliated customers $334,772 $62,634 $36,304 $433,710
- ------------------------------------------------------------------------------------------------------
Operating income $192,734 $ 4,039 $ 2,172 $198,945
- ------------------------------------------------------------------------------------------------------
Identifiable assets $499,064 $23,344 $33,978 $556,386
- ------------------------------------------------------------------------------------------------------
Liabilities $ 86,463 $ 3,115 $ 1,243 $ 90,821
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
June 30, 1996 Geographic Area
-------------------------------------------
(Amounts in thousands) United States Europe Pacific Rim Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues from unaffiliated customers $344,922 $57,523 $19,181 $421,626
- ------------------------------------------------------------------------------------------------------
Operating income $177,975 $ 4,871 $ 3,044 $185,890
- ------------------------------------------------------------------------------------------------------
Identifiable assets $373,341 $28,616 $15,837 $417,794
- ------------------------------------------------------------------------------------------------------
Liabilities $ 89,634 $ 1,835 $ 900 $ 92,369
- ------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE> 20
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Maxim Integrated Products, Inc.
We have audited the accompanying consolidated balance sheets of Maxim Integrated
Products, Inc., as of June 27, 1998 and June 30, 1997, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three fiscal years in the period ended June 27, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Maxim Integrated
Products, Inc., at June 27, 1998 and June 30, 1997, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended June 27, 1998, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
San Jose, California
July 31, 1998
31
<PAGE> 21
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
(Amounts in thousands, except per share data)
- --------------------------------------------------------------------------------------------------------
Fiscal Year 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenues $560,220 $433,710 $421,626 $250,820 $153,932
- --------------------------------------------------------------------------------------------------------
Cost of goods sold $183,724 $145,307 $146,253 $103,598 $ 64,250
Gross margin % 67.2% 66.5% 65.3% 58.7% 58.3%
- --------------------------------------------------------------------------------------------------------
Operating income $255,036 $198,945 $185,890 $ 57,234 $ 35,574
% of net revenues 45.5% 45.9% 44.1% 22.8% 23.1%
- --------------------------------------------------------------------------------------------------------
Net income $178,144 $136,974 $123,345 $ 38,906 $ 24,082
- --------------------------------------------------------------------------------------------------------
Earnings per share:
Basic $ 1.37 $ 1.09 $ 1.03 $ 0.34 $ 0.21
Diluted $ 1.18 $ 0.94 $ 0.87 $ 0.29 $ 0.19
- --------------------------------------------------------------------------------------------------------
Shares used in the calculation
of earnings per share:
Basic 129,838 125,430 120,204 115,703 113,137
Diluted 150,661 145,754 141,854 133,004 127,256
- --------------------------------------------------------------------------------------------------------
Cash, cash equivalents
and short-term investments $322,948 $223,953 $129,253 $ 92,295 $ 48,430
Working capital $377,723 $291,786 $176,182 $ 95,978 $ 56,045
Total assets $769,492 $556,386 $417,794 $256,133 $178,523
Long-term debt, less
current portion $ -- $ -- $ -- $ -- $ 40
Stockholders' equity $631,000 $465,565 $325,425 $178,710 $130,192
- --------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 22
FINANCIAL HIGHLIGHTS BY QUARTER
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Unaudited
(Amounts in thousands, except per share data)
- ----------------------------------------------------------------------------------------
Quarter Ended
1998 6/27/98 3/28/98 12/27/97 9/27/97
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $155,181 $145,039 $135,000 $125,000
- ----------------------------------------------------------------------------------------
Cost of goods sold $ 50,424 $ 47,250 $ 44,550 $ 41,500
Gross margin % 67.5% 67.4% 67.0% 66.8%
- ----------------------------------------------------------------------------------------
Operating income $ 70,082 $ 66,242 $ 61,626 $ 57,086
% of net revenues 45.2% 45.7% 45.6% 45.7%
- ----------------------------------------------------------------------------------------
Net income $ 49,201 $ 46,150 $ 42,829 $ 39,964
- ----------------------------------------------------------------------------------------
Earnings per share:
Basic $ 0.37 $ 0.35 $ 0.33 $ 0.31
Diluted $ 0.33 $ 0.31 $ 0.29 $ 0.26
- ----------------------------------------------------------------------------------------
Shares used in calculation of
earnings per share:
Basic 131,546 130,510 128,733 128,564
Diluted 150,862 151,223 149,749 150,810
- ----------------------------------------------------------------------------------------
Market price range - High $ 40.62 $ 42.00 $ 38.19 $ 37.50
- Low $ 27.62 $ 28.50 $ 28.50 $ 27.94
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Quarter Ended
1997 6/30/97 3/31/97 12/31/96 9/30/96
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $117,019 $111,005 $104,686 $101,000
- ----------------------------------------------------------------------------------------
Cost of goods sold $ 39,313 $ 37,437 $ 35,530 $ 33,027
Gross margin % 66.4% 66.3% 66.1% 67.3%
- ----------------------------------------------------------------------------------------
Operating income $ 52,992 $ 51,178 $ 48,646 $ 46,129
% of net revenues 45.3% 46.1% 46.5% 45.7%
- ----------------------------------------------------------------------------------------
Net income $ 36,865 $ 35,403 $ 33,314 $ 31,392
- ----------------------------------------------------------------------------------------
Earnings per share:
Basic $ 0.29 $ 0.28 $ 0.27 $ 0.26
Diluted $ 0.25 $ 0.24 $ 0.23 $ 0.22
- ----------------------------------------------------------------------------------------
Shares used in calculation of
earnings per share:
Basic 127,610 127,474 124,551 122,150
Diluted 148,652 148,750 144,844 140,768
- ----------------------------------------------------------------------------------------
Market price range - High $ 29.62 $ 28.31 $ 24.12 $ 19.44
- Low $ 22.75 $ 21.06 $ 15.12 $ 10.31
- ----------------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 23
BOARD OF DIRECTORS AND CORPORATE OFFICERS
BOARD OF DIRECTORS
John F. Gifford
Chairman of the Board, President
and Chief Executive Officer
James R. Bergman
Director
General Partner of DSV Partners
Robert F. Graham
Director
Retired Chairman of the Board of Novellus Systems, Inc.
B. Kipling Hagopian
Director
Special Limited Partner of Brentwood Venture Capital
Partner, Apple/Oaks Partners LLC
Dr. A. R. Frank Wazzan
Director
Dean of Engineering & Applied Sciences at
University of California, Los Angeles
CORPORATE OFFICERS
John F. Gifford
Chairman of the Board, President
and Chief Executive Officer
Frederick G. Beck
Vice President
Ziya G. Boyacigiller
Vice President
Michael J. Byrd
Vice President and Chief Financial Officer
Tunc Doluca
Vice President
Anthony C. Gilbert
Corporate Secretary
Richard C. Hood
Vice President
Kenneth J. Huening
Vice President
Carl W. Jasper
Corporate Controller and
Principal Accounting Officer
William N. Levin
Vice President
Nasrollah Navid, Ph.D.
Vice President
Pirooz Parvarandeh
Vice President
Robert F. Scheer
Vice President
Vijay Ullal
Vice President
34
<PAGE> 24
CORPORATE DATA
STOCKHOLDER INFORMATION
INDEPENDENT AUDITORS
Ernst & Young LLP
San Jose, California
LEGAL COUNSEL
Morrison & Foerster LLP
Palo Alto, California
REGISTRAR/TRANSFER AGENT
Boston EquiServe
Boston, Massachusetts
CORPORATE HEADQUARTERS
120 San Gabriel Drive
Sunnyvale, California 94086
(408) 737-7600
FORM 10-K
A copy of the Company's Form 10-K filed with the Securities & Exchange
Commission, without exhibits, is available without charge upon writing to:
Stockholder Relations
Maxim Integrated Products, Inc.
120 San Gabriel Drive
Sunnyvale, California 94086
STOCK LISTING
At June 27, 1998, there were approximately 1,233 stockholders of record of the
Company's common stock. Maxim common stock is traded on the NASDAQ National
Market under the symbol MXIM. The Company has never paid cash dividends on its
common stock and has no present plans to do so.
ANNUAL MEETING
The annual meeting of stockholders will be on Thursday, November 19, 1998 at
11:00 a.m. at the Company's Event Center, 433 Mathilda Avenue, Sunnyvale,
California 94086.
35
<PAGE> 1
EXHIBIT 21
EXHIBIT 21
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
Name of Subsidiary Jurisdiction of Incorporation
- ------------------ -----------------------------
<S> <C>
Maxim Integrated Products England
UK Limited
Maxim International Inc. Virgin Islands
Maxim GmbH Germany
Maxim SARL France
Maxim Japan Japan
Maxim Integrated Products Korea, Inc. Korea
Maxim Phil. Operating Corporation Philippines
Maxim Phil. Holding Corporation Philippines
These Subsidiaries are 100% owned by the Registrant.
Maxtek Components Corporation Oregon
This Subsidiary is 50% owned by the Registrant.
Maxim Phil. Land Corporation Philippines
This Subsidiary is 40% owned by the Registrant.
</TABLE>
29
<PAGE> 1
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Maxim Integrated Products, Inc. of our report dated July 31, 1998, included
in the 1998 Annual Report to Stockholders of Maxim Integrated Products, Inc.
Our audits also included the consolidated financial statement schedule of Maxim
Integrated Products, Inc. listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, the consolidated financial
statement schedule referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos.33-57849, 33-72186, 33-54026, 33-44485, 33-37470, 33-37469,
33-34728, and 33-34519) pertaining to the 1993 Incentive Stock Option Plan, the
1983 Supplemental Nonemployee Stock Option Plan, the 1987 Supplemental Stock
Option Plan, the 1987 Employee Stock Option Participation Plan, and the 1988
Nonemployee Director Stock Option Plan of our report dated July 31, 1998, with
respect to the consolidated financial statements incorporated herein by
reference, and our report included in the preceding paragraph with respect to
the consolidated financial statement schedule included in this Annual Report
(Form 10-K) of Maxim Integrated Products, Inc.
/s/ ERNST & YOUNG LLP
---------------------------------
Ernst & Young LLP
San Jose, California
September 24, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET, STATEMENT OF INCOME AND NOTES THERETO FOR
ITS FISCAL YEAR END JUNE 27, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH STATEMENTS AND NOTES IN ITS ANNUAL REPORT ON FORM 10-K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-27-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-27-1998
<CASH> 322,948
<SECURITIES> 0
<RECEIVABLES> 103,813
<ALLOWANCES> (1,892)
<INVENTORY> 44,707
<CURRENT-ASSETS> 508,015
<PP&E> 339,202
<DEPRECIATION> (83,749)
<TOTAL-ASSETS> 769,492
<CURRENT-LIABILITIES> 130,292
<BONDS> 0
0
0
<COMMON> 131
<OTHER-SE> 630,869<F1>
<TOTAL-LIABILITY-AND-EQUITY> 769,492
<SALES> 560,220
<TOTAL-REVENUES> 560,220
<CGS> 183,724
<TOTAL-COSTS> 183,724
<OTHER-EXPENSES> 121,460
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (14,879)<F2>
<INCOME-PRETAX> 269,915
<INCOME-TAX> 91,771
<INCOME-CONTINUING> 178,144
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178,144
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.18
<FN>
<F1>Additional paid in capital, retain earnings and translation.
<F2>For purposes of this exhibit, Expense means Income.
</FN>
</TABLE>
