<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------------------------------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO ______________
COMMISSION FILE NO. 0-27232
BENCHMARQ MICROELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2532442
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17919 WATERVIEW PARKWAY
DALLAS, TEXAS 75252
(Address of principal executive offices) (Zip code)
(214) 437-9195
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------- -------
As of August 8, 1996, there were 6,678,082 shares of the registrant's common
stock outstanding.
<PAGE>
CAUTIONARY STATEMENT
The Company wishes to caution readers that the following important factors,
in addition to others noted throughout this Form 10-Q, in some cases have
affected, and in the future could affect, the Company's actual results and could
cause the Company's actual results for the third quarter of 1996, and beyond, to
differ materially from those expressed in any forward-looking statements made
by, or on behalf of, the Company, including, without limitation, those regarding
litigation made in Part II, Item 1; future product sales made in Part I, Item
2, in the section entitled "Overview", gross margins made in Part I, Item 2, in
--------
the section entitled "Results of Operations-Gross Margin", selling, general and
----------------------------------
administrative expenses made in Part I, Item 2, in the section entitled "Results
-------
of Operations-Selling, General and Administrative", research and development
- - -------------------------------------------------
expenses made in Part I, Item 2, in the section entitled "Results of
----------
Operations-Research and Development", and capital expenditures made in Part I,
- - -----------------------------------
Item 2, in the section entitled "Liquidity and Capital Resources":
-------------------------------
--an accelerated decline in the average selling prices for the Company's
battery management products, NVSRAM (as defined herein) products and RTC
(as defined herein) products;
--insufficient expansion of the Company's production capacity to meet the
sales demand for battery management products;
--slower or declining acceptance of battery management products, NVSRAM
products or RTC products;
--increases in the prices of materials and components, especially wafers
and batteries;
--timing or delay of new product introductions by the Company or its
competitors;
--loss of key personnel;
--excess production capacity;
--inability to achieve acceptable margins on the non-proprietary components
included in certain battery management products;
--timing and size of significant orders;
--changes in product mix;
--advances in technologies;
--growth of selling, general and administrative expense at a rate faster
than that of sales and revenues;
--adverse rulings in patent infringement and product liability litigation;
--labor disputes; and
--failure to comply with government regulations.
In addition, the Company refers readers to the discussion of certain risk
factors pertaining to the Company contained in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 and in the Company's
Registration Statement on Form S-1 (Registration No. 33-06896) filed with the
Securities and Exchange Commission on September 13, 1995.
2
<PAGE>
BENCHMARQ MICROELECTRONICS, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Balance Sheets at June 30, 1996 (unaudited) and
December 31, 1995........................................ 4
Statements of Income (unaudited) for the Three
and Six Months Ended June 30, 1996 and 1995.............. 5
Statements of Cash Flows (unaudited) for the Six
Months Ended June 30, 1996 and 1995...................... 6
Notes to Financial Statements (unaudited).................. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............ 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................... 17
Item 6. Exhibits and Reports on Form 8-K........................... 17
Signatures.......................................................... 18
3
<PAGE>
BENCHMARQ MICROELECTRONICS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
--------------------------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents................................ $ 2,199,931 $ 12,653,260
Short-term investments................................... 9,703,654 -
Receivables, net of allowance for doubtful accounts and
returns of $107,891 and $179,923 at June 30, 1996
and December 31, 1995................................. 3,933,264 4,156,598
Inventories.............................................. 4,455,355 3,150,594
Prepaid expenses......................................... 149,062 161,840
------------ ------------
Total current assets............................... 20,441,266 20,122,292
Property and equipment, at cost:
Furniture and fixtures................................... 726,212 578,453
Equipment................................................ 3,205,769 2,366,890
Computer software........................................ 370,212 342,404
------------ ------------
4,302,193 3,287,747
Accumulated depreciation................................. 2,179,310 1,629,890
----------- ------------
2,122,883 1,657,857
Equipment under capital lease obligations................... 3,941,940 2,704,511
Accumulated amortization................................. 792,626 638,820
------------ ------------
3,149,314 2,065,691
Prepayment for product purchases............................ 5,880,000 -
Lease deposits and other assets............................. 20,756 39,181
------------ ------------
Total assets....................................... $ 31,614,219 $ 23,885,021
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ 2,173,002 $ 2,403,842
Note payable............................................. 3,380,000 -
Payroll and related benefits............................. 155,211 257,000
Sales commissions payable................................ 229,452 187,372
Income taxes payable..................................... 175,628 107,931
Other accrued liabilities................................ 381,564 297,822
Deferred income on shipments to distributors............. 1,226,252 670,336
Current obligations under capital leases................. 1,239,227 814,869
----------- ------------
Total current liabilities.......................... 8,960,336 4,739,172
Obligations under capital leases, less current obligations.. 1,453,882 890,540
Stockholders' equity........................................
Common stock, $ .001 par value, 50,000,000 shares
authorized; 6,711,374 and 6,500,496 shares issued
at June 30, 1996 and December 31, 1995, respectively.. 6,711 6,501
Additional paid-in capital............................... 24,569,116 23,931,866
Accumulated deficit...................................... (3,353,784) (5,670,258)
Unrealized loss on short-term investments, net........... (9,242) -
Treasury stock, 64,000 common shares, at cost............ (12,800) (12,800)
----------- ------------
Total stockholders' equity......................... 21,200,001 18,255,309
----------- ------------
Total liabilities and stockholders' equity......... $31,614,219 $ 23,885,021
=========== ============
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
BENCHMARQ MICROELECTRONICS, INC.
STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1996 1995 1996 1995
-------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net revenues.............................. $ 9,067,648 $ 7,150,242 $17,542,763 $13,837,729
Cost of sales............................. 5,079,605 3,995,430 10,133,730 7,694,942
---------- ----------- ----------- -----------
Gross margin.............................. 3,988,043 3,154,812 7,409,033 6,142,787
Operating expenses:
Research and development............... 699,792 565,170 1,290,227 1,068,017
Selling, general, and administrative... 2,026,631 1,467,841 3,845,952 2,898,181
---------- ----------- ----------- -----------
Total operating expenses............... 2,726,423 2,033,011 5,136,179 3,966,198
---------- ----------- ----------- -----------
Income from operations.................... 1,261,620 1,121,801 2,272,854 2,176,589
Other income (expense):
Interest income........................ 170,193 95,892 342,054 190,222
Interest expense....................... (51,207) (89,209) (94,135) (176,973)
Other.................................. (22,832) 1,282 (37,999) 1,282
---------- ----------- ----------- -----------
Income before provision for income taxes.. 1,357,774 1,129,766 2,482,774 2,191,120
Provision for income taxes................ 98,800 87,800 166,300 170,400
---------- ----------- ----------- -----------
Net income................................ $1,258,974 $ 1,041,966 $ 2,316,474 $ 2,020,720
========== =========== =========== ===========
Net income per common and
common equivalent share................ $ 0.17 $ 0.17 $ 0.32 $ 0.32
========== =========== =========== ===========
Shares used in computing net income per
common and common equivalent share..... 7,358,842 6,350,407 7,292,154 6,349,181
========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
BENCHMARQ MICROELECTRONICS, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1995
--------------------------------
<S> <C> <C>
Operating Activities:
Net income......................................................... $ 2,316,474 $ 2,020,720
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................... 740,399 456,605
Loss on disposition of fixed assets............................. 37,999 -
Changes in operating assets and liabilities:
Receivables................................................ 223,334 193,268
Inventories................................................ (1,304,761) (835,652)
Prepaid expenses and other assets.......................... 31,203 (142,348)
Accounts payable........................................... (230,840) (101,885)
Income taxes payable....................................... 67,697 9,956
Deferred income on shipments to distributors............... 555,916 290,353
Accrued liabilities........................................ 24,033 (117,384)
------------ -----------
Net cash provided by operating activities.......................... 2,461,454 1,773,633
Investing Activities:
Prepayment for product purchases................................... (2,500,000) -
Investment in short-term investments............................... (20,023,985) -
Maturities of short-term investments............................... 10,311,089 -
Capital expenditures............................................... (697,401) (492,114)
------------ -----------
Net cash used by investing activities.............................. (12,910,297) (492,114)
Financing Activities:
Proceeds from issuance of common stock upon exercise of options.... 53,076 13,818
Proceeds from issuance of common stock, net of offering costs...... 584,384 -
Principal payments under capital lease obligations................. (641,946) (394,789)
Principal payments on notes payable................................ - (8,271)
------------ -----------
Net cash used by financing activities.............................. (4,486) (389,242)
------------ -----------
Net change in cash and cash equivalents............................ (10,453,329) 892,277
Cash and cash equivalents at beginning of period................... 12,653,260 5,599,090
------------ ------------
Cash and cash equivalents at end of period......................... $ 2,199,931 $ 6,491,367
============ ===========
Supplemental Cash Flows Information
Cash paid for interest.......................................... $ 94,135 $ 176,973
============ ===========
Cash paid for income taxes...................................... $ 98,603 $ 160,444
============ ===========
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
BENCHMARQ MICROELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996
(unaudited)
1. INTERIM FINANCIAL INFORMATION
The accompanying unaudited financial statements have been prepared by
BENCHMARQ Microelectronics, Inc. (the "Company" or "BENCHMARQ") in accordance
with the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting solely of normal
recurring adjustments) necessary for a fair statement of the results for the
interim periods presented have been included. Operating results for the three
and six month periods ended June 30, 1996, are not necessarily indicative of the
results that may be expected for the year ended December 31, 1996. For further
information, refer to the financial statements and the footnotes thereto
included in the BENCHMARQ Microelectronics, Inc. annual report on Form 10-K for
the year ended December 31, 1995.
2. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per share amounts are computed using the weighted average number
of common and common equivalent shares. For the three and six months ended
June 30, 1996, common equivalent shares consisted of stock options and warrants
(using the treasury stock method). For the three and six months ended June 30,
1995, common equivalent shares consisted of convertible preferred stock (using
the if converted method) and stock options and warrants (using the modified
treasury stock method).
3. SHORT-TERM INVESTMENTS
Short-term investments consist of U. S. government debt securities
(carrying value of $956,206 at June 30, 1996), state and municipal debt
securities (carrying value of $1,032,000 at at June 30, 1996) and corporate debt
securities (carrying value of $7,715,448 at June 30, 1996). At June 30, 1996,
all of these securities were classified as available for sale. Accordingly,
these securities are stated at fair value, with unrealized gains and losses
reported as a separate component of stockholders' equity. Interest on all
securities is included in interest income.
The Company's Board of Directors has approved investment guidelines with
regard to diversification, quality, maturities and allowed investments. At the
time of purchase there can be no more than 10% of the portfolio invested per
issuer or guarantor with the exception of U. S. government backed securities,
and all securities must meet minimum investment grade standards.
7
<PAGE>
BENCHMARQ MICROELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996
(unaudited)
4. INVENTORIES
Inventories are stated at the lower of standard cost, which approximates
actual cost determined on a first-in, first-out basis, or market.
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
<S> <C> <C>
Finished goods....................... $1,307,254 $ 690,491
Work-in-process...................... 1,877,632 1,232,253
Raw materials........................ 1,270,469 1,227,850
---------- ----------
$4,455,355 $3,150,594
========== ==========
</TABLE>
5. COMMITMENTS
In May 1996, the Company entered into an Option Agreement with Taiwan
Semiconductor Manufacturing Co., Ltd. ("TSMC") (the "Option Agreement").
Pursuant to the Option Agreement, the Company agreed to pay $5,880,000 as an
advance payment for certain quantities of wafers, of which $2,500,000 was paid
in May 1996 and the Company issued a promissory note due March 31, 1997 for the
remaining $3,380,000. Under the terms of the Option Agreement, which is
essentially a take or pay arrangement, the Company has committed to purchase
from TSMC and TSMC has committed to provide to the Company certain quantities
of wafers through 2000. Additionally, in July 1996, the Company entered into a
Wafer Production Agreement (the "Wafer Agreement") with TSMC which primarily
governs the production and supply process relating to the wafers to be purchased
under the Option Agreement.
6. COMMON STOCK
In December 1995, the Company sold 1,000,000 shares of its common
stock pursuant to an initial public offering ("IPO"). In January 1996, the
underwriters of the Company's IPO purchased an additional 85,000 shares of the
Company's common stock to cover over-allotments on the same terms and conditions
as set forth in the prospectus for the IPO dated December 1, 1995. The Company
received net proceeds of $584,384 from the sale of the additional shares.
8
<PAGE>
7. CONTINGENCY
In December 1995, the Company filed a lawsuit against Dallas Semiconductor
Corporation in the United States District Court for the Eastern District of
Texas, Sherman Division (the "Court"). In the lawsuit, the Company was seeking
a declaratory judgment of non-infringement of eight United States patents issued
to Dallas Semiconductor. The lawsuit was filed by the Company in response to
Dallas Semiconductor's allegation of patent infringement. In June 1996, the
Court dismissed the lawsuit against Dallas Semiconductor for lack of subject
matter jurisdiction. Because the Court ruled it did not have jurisdiction over
the matter, no decision as to the merits of the case was reached.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
BENCHMARQ was incorporated in 1989 and is engaged in the design,
development and marketing of mixed-signal integrated circuits ("ICs") and
electronic modules for portable and power-sensitive electronic systems. The
Company introduced its first products in October 1990, and made its first
shipments, principally of nonvolatile static random access memory ("NVSRAM")
modules, in December 1990. In August 1991, the Company shipped its initial
battery management product and in December 1991 shipped its first real-time-
clock ("RTC") product.
BENCHMARQ currently is directing the majority of its research and
development efforts to the development of battery management products. The
Company believes that its revenues from RTC products and NVSRAM products will
not increase materially in the future and may decline due to competitive
pressure or continued softness in demand from customers in the desk- top
personal computer ("PC") and networking markets, respectively. Accordingly, the
Company expects that favorable future operating results will be substantially
dependent upon its ability to expand sales of battery management products. The
Company has experienced significant growth in sales of battery management
products in the last three quarters primarily due to increased sales of battery
capacity monitoring devices (gas gauge ICs) into portable PC applications.
Consequently, the Company is in the process of adding test capacity principally
to address increased demand for gas gauge ICs. The Company's objective is to
continue to grow battery management revenues, which have been the Company's
largest revenue product line for the last three consecutive quarters, to a more
dominant position within the Company's revenue structure. There can be no
assurance that the Company will be successful in substantially increasing sales
of battery management products or that sales of RTC products or NVSRAM products
will not decline.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996, Compared with Three Months Ended June 30, 1995
Net Revenues. Total net revenues in second quarter 1996 were approximately
$9.1 million, a 27% increase over the same period in 1995. Revenues generated
by product sales accounted for $9.0 million of total net revenues in second
quarter 1996, an increase of 34% compared to the same period in 1995. This
increase was due principally to increased sales of gas gauge ICs into the
portable PC market, and to a lesser extent sales of higher density NVSRAM
modules, which are sold into telecom and networking markets.
10
<PAGE>
Revenue generated from RTC royalties and other miscellaneous sources was
0.9% of total revenue in second quarter 1996, compared with 6.4% in second
quarter 1995. This reduction, which reflects a materially lower dependence on
these non-strategic activities, is due principally to the fourth quarter 1995
termination of a third party design contract and significantly lower third
party shipments of products that incorporate the Company's RTC technology under
license agreement.
The following table sets forth for the periods indicated the amount (in
thousands) and percentage of total net revenues by type of product:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-------------------------------
1996 1995
-------------- --------------
<S> <C> <C> <C> <C>
Battery Management Products $4,125 45.5% $1,750 24.5%
NVSRAM Products 2,678 29.5 2,263 31.7
RTC Products 2,181 24.1 2,677 37.4
RTC Royalties/Other 84 0.9 460 6.4
------ ----- ------ -----
Total Net Revenue $9,068 100.0% $7,150 100.0%
====== ===== ====== =====
</TABLE>
The Company's revenues from international customers accounted for
approximately $5.8 million, or 64% of total net revenues, for the quarter ended
June 30, 1996, compared to $3.7 million, or 51% of total net revenues, for the
comparable period in 1995. During the second quarter of 1996, approximately 58%
of the Company's total net revenues was derived from customers in the Asia-
Pacific region. The Company's distributor in Taiwan accounted for approximately
$1.6 million, or 18%, of total net revenues in the second quarter of 1996. The
Company's distributor in South Korea accounted for approximately $1.0 million,
or 11%, of total net revenues in the second quarter of 1996. No other customer
directly accounted for greater than 10% of the total net revenues.
Export sales are subject to a variety of risks, including those
arising from fluctuations in currency exchange rates, tariffs, import
restrictions and other trade barriers, unexpected changes in regulatory
requirements, longer accounts receivable payment cycles, potentially adverse tax
consequences and export license requirements. Because the Company's
international sales have to date been denominated in U.S. dollars, increases in
the value of the U.S. dollar could increase the price in local currencies of the
Company's products in foreign markets and make the Company's products relatively
more expensive than competitors' products that are denominated in local
currencies.
Gross Margin. The Company's gross margin represented 44% of total net
revenues for both three month periods ended June 30, 1996 and 1995. Gross
Margin increased approximately $833,000, or 26%, to approximately $4.0 million
for the second quarter 1996, compared to $3.2 million in the second quarter
1995. Excluding the impact of royalties and design fees, the gross margin
percentage would have been approximately 43% and 40% in the second quarter 1996
and 1995, respectively.
11
<PAGE>
The Company expects that average selling prices, primarily with respect to
its RTC and NVSRAM products will continue to decline. To maintain or increase
its gross margin and gross margin percentage, the Company believes that it will
be required to increase its sales of battery management products, achieve lower
wafer costs and continue its efforts to improve manufacturing costs.
Accordingly, the Company entered into the Option and Wafer Agreements with its
principal wafer supplier, pursuant to which it should (subject to certain
currency exchange related adjustments) achieve generally lower wafer costs for
the remainder of 1996 and in 1997 as compared to the first half of 1996. There
can be no assurance, however, that the Company will be able to achieve these
objectives.
Research and Development. The Company's research and development
expense increased approximately 24% to $700,000 in the second quarter 1996,
compared to $565,000 in second quarter 1995. This increase was due primarily to
increased compensation and payroll related expenses. As a percentage of total
revenues, research and development expense decreased to approximately 7.7% in
second quarter 1996 from 7.9% in second quarter 1995.
The Company intends to continue to make a significant investment in
research and development, particularly with respect to battery management
product opportunities, and believes that research and development expense will
therefore increase in absolute dollars.
Selling, General and Administrative. Selling, general and
administrative expense increased approximately $559,000 to $2.0 million in
second quarter 1996 as compared to the same period in 1995. This increase was
due primarily to increases in compensation, external sales commissions,
depreciation, legal, and other general expenses. Although general legal
expenses were up, much of the increase in legal expenses was due to the
litigation proceedings against Dallas Semiconductor Corporation. Selling,
general and administrative expense represented approximately 22.4% and 20.5% of
total net revenues in second quarter 1996 and 1995, respectively. Selling,
general and administrative expense in absolute dollars is expected to continue
to increase as the Company expands its business.
Other Income (Expense). Other income (expense), consists primarily of
interest earned on short-term investments, net of interest expense on capital
lease obligations, and a $2.0 million subordinated note payable in 1995. In
second quarter 1996, the Company realized net other income of approximately
$96,000, compared to $8,000 in second quarter 1995. This improvement primarily
reflects higher average balances of invested funds and the retirement of the
$2.0 million subordinated note payable in December 1995. Proceeds from the
Company's IPO contributed significantly to the increase in funds available for
investment.
Provision for Income Taxes. The Company generated pre-tax income
during the second quarter 1996 and 1995, which was substantially offset by net
operating loss carryforwards from prior operating periods. Provisions for
income taxes of $98,800 and $87,800 were recorded in the three months ended June
30, 1996 and 1995, respectively, consisting of alternative minimum tax and state
income tax.
12
<PAGE>
Six Months Ended June 30, 1996, Compared with Six Months Ended June 30, 1995
Net Revenues. Total net revenues for the six months ended June 30,
1996 were approximately $17.5 million, a 27% increase over the same period in
1995. Revenues generated by product sales accounted for $17.3 million of total
net revenues for the six months ended June 30, 1996, an increase of 35% compared
to the same period in 1995. This increase was due principally to increased
sales of gas gauge ICs into the portable PC market, and to a lesser extent sales
of higher density NVSRAM modules, which are sold into telecom and networking
markets. Revenue generated from RTC royalties and other miscellaneous sources
was 1.3% of total revenue for the six months ended June 30, 1996, compared with
7.5% for the six months ended June 30, 1995.
The following table sets forth for the periods indicated the amount (in
thousands) and percentage of total net revenues by type of product:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
---------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C> <C> <C>
Battery Management Products $ 7,188 41.0% $ 3,538 25.6%
NVSRAM Products 5,297 30.2 4,274 30.9
RTC Products 4,825 27.5 4,982 36.0
RTC Royalties/Other 233 1.3 1,044 7.5
------- ----- ------- -----
Total Net Revenue $17,543 100.0% $13,838 100.0%
======= ===== ======= =====
</TABLE>
The Company's revenues from international customers accounted for
approximately $11.0 million, or 63% of total net revenues, for the six months
ended June 30, 1996, compared to $7.5 million, or 54% of total net revenues, for
the comparable period in 1995. During the six months ended June 30, 1996,
approximately 56% of the Company's total net revenues was derived from customers
in the Asia-Pacific region. The Company's distributor in Taiwan accounted for
approximately $3.1 million, or 18%, of total net revenues for the six months
ended June 30, 1996. The Company's distributor in South Korea accounted for
approximately $1.8 million, or 10%, of total net revenues for the six months
ended June 30, 1996. No other customer directly accounted for greater than 10%
of the total net revenues.
Gross Margin. The Company's gross margin represented 42% and 44% of
total net revenues for the six month periods ended June 30, 1996 and 1995,
respectively. Gross Margin increased approximately $1.3 million, or 21%, to
approximately $7.4 million for the six month period ended June 30, 1996,
compared to $6.1 million for the six month period ended June 30, 1995. The
decrease in gross margin percentage is attributable primarily to lower royalty
revenues and no design contract fees for the six months ended June 30, 1996.
Excluding the impact of royalties and design fees, the gross margin percentage
would have been approximately 42% and 40% for the six months ended June 30, 1996
and 1995, respectively.
13
<PAGE>
Research and Development. The Company's research and development
expense increased approximately 21% to $1.3 million for the six months ended
June 30, 1996 as compared to approximately $1.1 million for the six months ended
June 30, 1995. This increase was due primarily to increased compensation and
payroll related expenses. As a percentage of total revenues, research and
development expense decreased to approximately 7.4% for the six months ended
June 30, 1996 from 7.7% for the comparable period in 1995.
Selling, General and Administrative. Selling, general and
administrative expense increased approximately $948,000 to $3.8 million for the
six months ended June 30, 1996 as compared to the same period in 1995. This
increase was due primarily to increases in compensation, external sales
commissions, depreciation, legal, and other general expenses. Although general
legal expenses were up, much of the increase in legal expenses was due to the
litigation proceedings against Dallas Semiconductor Corporation. Selling,
general and administrative expense represented approximately 21.9% and 20.9% of
total net revenues for the six months ended June 30, 1996 and 1995,
respectively.
Other Income (Expense). Other income (expense), consists primarily of
interest earned on short-term investments, net of interest expense on capital
lease obligations, and a $2.0 million subordinated note payable in 1995. For
the six months ended June 30, 1996, the Company realized net other income of
approximately $210,000, compared to $15,000 for the same period in 1995. This
improvement primarily reflects higher average balances of invested funds and the
retirement of the $2.0 million subordinated note payable in December 1995.
Proceeds from the Company's IPO contributed significantly to the increase in
funds available for investment.
Provision for Income Taxes. The Company generated pre-tax income
during the six month periods ended June 30, 1996 and 1995, which was
substantially offset by net operating loss carryforwards from prior operating
periods. Provisions for income taxes of $166,300 and $170,400 were recorded in
the six months ended June 30, 1996 and 1995, respectively, consisting of
alternative minimum tax and state income tax.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital needs are to finance accounts
receivable, inventories and additions of capital assets. Approximately $2.5
million of cash was generated by operating activities during the six month
period ended June 30, 1996 as compared to $1.8 million in the comparable period
in 1995.
Net cash used in investing activities of approximately $12.9 million
during the six month period ended June 30, 1996 was attributable primarily to
the investment of much of the Company's cash equivalents into short-term
investments to improve interest income. In addition, approximately $2.5 million
was used for a prepayment for certain quantities of wafers pursuant to the
Option Agreement under which TSMC is committed to supply and the Company is
committed to purchase wafers. Finally, approximately $697,000 was used for
capital expenditures consisting primarily of assembly and test capacity
expansion. Net cash used in investing activities during the
14
<PAGE>
six month period ended June 30, 1995 amounted to approximately $492,000 and
consisted of capital expenditures.
Financing activities have consisted primarily of the issuance of
equity and payments under capital lease obligations. Financing activities used
cash during the six month period ended June 30, 1996 of approximately $4,000
consisting of proceeds of approximately $638,000 from issuances of stock and
payments of approximately $642,000 under capital lease obligations. During the
six month period ended June 30, 1995, financing activities used net cash of
approximately $389,000, primarily due to payments under capital lease
obligations.
The Company's principal sources of liquidity are cash generated from
operations as well as cash and cash equivalents and short-term investments of
approximately $11.9 million at June 30, 1996. The Company's short-term
investments are primarily in government debt securities and corporate debt
securities. In addition, the Company has a lease line with BancBoston Leasing,
Inc., which was recently increased by $1.5 million. During the six month period
ended June 30, 1996, the Company used approximately $1.6 million of credit under
its outstanding lease line primarily for additions of assembly and test
equipment. As of July 31, 1996, approximately $1.5 million was available for
additional purchases. However, as of such date, equipment purchase orders
totaling approximately $280,000 were outstanding against the available lease
line of credit.
The Company anticipates capital asset additions to range between $1.5
million and $2.5 million for the remainder of 1996, primarily to expand test
capacity for certain of its battery management products, a portion of which may
be financed under the Company's lease line. To secure access to a supply of
wafers the Company entered into the Option and Wafer Agreements with TSMC under
which TSMC is commited to supply and the Company is committed to purchase
wafers. Pursuant to the Option Agreement, the Company made a cash payment of
$2.5 million and issued a short-term note payable for $3.38 million (payable by
March 31, 1997) as prepayment of certain quantities of wafers.
The Company believes that existing cash balances and other capital
resources will be sufficient to meet the Company's cash requirements at least
through 1996. However, the Company may also seek to establish additional lines
of credit to augment its funding of operating activities during 1996. There can
be no assurance that such additional financing, if required, will be available
on terms acceptable to the Company if at all.
In addition, the Company may, from time to time, as market and
business conditions warrant, invest in or acquire complementary businesses,
products, technologies and additional sources of wafer supply. The Company also
may seek additional equity or debt financing to fund such activities. The sale
of additional equity or convertible debt securities could result in dilution to
the Company's stockholders. There can be no assurance that such additional
financing, if required, will be available on terms acceptable to the Company, if
at all.
15
<PAGE>
INFLATION
The Company believes that inflation has not had and is not likely to
have a material impact on the Company's operations during the foreseeable
future.
SEASONALITY
Certain of the Company's product revenues and related profits may be
subject to traditional semiconductor industry seasonality factors that may act
to soften sales demand in the three month period ending September 30.
16
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In December 1995, the Company filed a lawsuit against Dallas
Semiconductor Corporation in the United States District Court for the Eastern
District of Texas, Sherman Division (the "Court"). In the lawsuit, the Company
was seeking a declaratory judgment of non-infringement of eight United States
patents issued to Dallas Semiconductor. The lawsuit was filed by the Company in
response to Dallas Semiconductor's allegation of patent infringement. In June
1996, the Court dismissed the lawsuit against Dallas Semiconductor for lack of
subject matter jurisdiction. Because the Court ruled it did not have
jurisdiction over the matter, no decision as to the merits of the case was
reached.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
The exhibits filed as a part of this report are listed below.
Exhibit No. Description
----------- -----------
10.1 Option Agreement between Taiwan Semiconductor
Manufacturing Co., Ltd. and BENCHMARQ
Microelectronics Inc., dated as of
May 31, 1996
10.2 Wafer Production Agreement between Taiwan
Semiconductor Co., Ltd. and BENCHMARQ
Microelectronics Inc. dated as of July 30,
1996
11 Statement Regarding Computation of Per Share
Earnings
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended June 30, 1996.
17
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
BENCHMARQ MICROELECTRONICS, INC.
AUGUST 12, 1996 /S/ DERRELL C. COKER
------------------------------------------
DERRELL C. COKER
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
AUGUST 12, 1996 /S/ REGINALD B. MCHONE
------------------------------------------
REGINALD B. MCHONE
VICE PRESIDENT, FINANCE AND
ADMINISTRATION, CHIEF FINANCIAL
OFFICER AND SECRETARY (PRINCIPAL
FINANCIAL AND ACCOUNTING OFFICER)
18
<PAGE>
EXHIBIT 10.1
OPTION AGREEMENT
BETWEEN
TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
AND
BENCHMARQ MICROELECTRONICS, INC.
MAY 31, 1996
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS....................................... 3
2. VOLUME COMMITMENT................................. 4
3. WAFER PRICE....................................... 5
4. OTHER PURCHASE TERMS AND CONDITIONS............... 5
5. OBLIGATION TO PAY OPTION FEE FOR OPTION CAPACITY.. 5
6. FAILURE TO PURCHASE THE OPTION CAPACITY;.......... 6
7. TERM AND TERMINATION.............................. 7
8. BOARD APPROVAL.................................... 8
9. LIMITATION OF LIABILITY........................... 8
10. NOTICE............................................ 8
11. ENTIRE AGREEMENT.................................. 9
12. GOVERNING LAW..................................... 9
13. ARBITRATION....................................... 9
14. ASSIGNMENT........................................ 12
15. CONFIDENTIALITY................................... 12
16. FORCE MAJEURE..................................... 12
EXHIBIT A............................................. 14
EXHIBIT B............................................. 15
EXHIBITC.............................................. 16
EXHIBIT D............................................. 17
EXHIBIT E............................................. 18
2
<PAGE>
OPTION AGREEMENT
----------------
THIS AGREEMENT is made and becomes effective as of May 31, 1996 (the
"Effective Date"), by Taiwan Semiconductor Manufacturing Co., Ltd. ("TSMC"), a
company organized under the laws of the Republic of China with its registered
address at No. 121, Park Ave. 3, Science-Based Industrial Park, Hsinchu, Taiwan,
and, Benchmarq Microelectronics, Inc. ("Customer"), a company organized under
the laws of Delaware, with its corporate headquarters at 17919 Waterview
Parkway, Dallas, Texas 75252.
RECITALS
WHEREAS, TSMC currently supplies Customer with wafers and Customer wishes to
increase the volume of wafers to be purchased from TSMC;
WHEREAS, in order to increase its output, TSMC XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX;
WHEREAS, as a condition to TSMC's acceleration of these facilities, TSMC has
asked that Customer make a capacity commitment and advance payment for the right
to buy additional capacity, and Customer is willing to do so:
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:
1. DEFINITIONS
(a) "Base Capacity" used in this Agreement shall mean the base amount of annual
wafer capacity that is used to calculate the Customer's Committed Capacity,
which amount is set forth in Exhibit B.
3
<PAGE>
(b) "Customer Committed Capacity" used in this Agreement shall mean the total
capacity that Customer agrees to purchase from TSMC pursuant to this
Agreement, and is set forth in Exhibit B.
(c) "Option Capacity" used in this Agreement shall mean the firm capacity
commitment made by Customer pursuant to this Agreement, for which Capacity
Customer agrees to pay the Option Fee as defined in this Section 1(d)
below, and is set forth in Exhibit B.
(d) "Option Fee" used in this Agreement shall mean the deposit that Customer
agrees to place with TSMC as the advance payment for the Option Capacity.
(e) "TSMC Committed Capacity" used in this Agreement shall mean the total
capacity that TSMC agrees to provide to Customer pursuant to this
Agreement, and is set forth in Exhibit B.
(f) XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXX.
2. VOLUME COMMITMENT
(a) Customer agrees to purchase from TSMC the Customer Committed Capacity, and
subject to the payment of the Option Fee by Customer under Section 5
below, TSMC agrees to provide to Customer the TSMC Committed Capacity, as
set forth in Exhibit B.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
(b) Each month, Customer agrees to provide to TSMC a six-month rolling
forecast of the number of wafers that Customer will purchase,
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. The forecast must be based on
wafers out or deliveries
4
<PAGE>
expected to be made by TSMC.
(c) TSMC will use its reasonable effort to cause its fabs to be capable of
producing wafers of more advanced specifications, as set forth in the TSMC
Technology Road Map attached as Exhibit C.
3. WAFER PRICE
(a) The wafer prices for the Customer Committed Capacity shall XXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX for the
same technology, the same fab and the same period of time. In the event
that the wafer prices for the Customer Committed Capacity do not comply
with the preceding sentence, TSMC will make proper price changes for the
unfilled orders, upon Customer's notice in writing.
(b) The parties shall negotiate in good faith each year the wafer prices for
the Customer Committed Capacity of the following year, XXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
4. OTHER PURCHASE TERMS AND CONDITIONS
The Customer/TSMC Wafer Production Agreement [to be completed within sixty
(60) days of the effective date of this Agreement] will apply to all
purchases of wafers by Customer from TSMC and delivery of all wafers from
TSMC to the Customer, except that the provisions of this Agreement will
supersede the above Agreement with respect to the subject matter hereof.
5
<PAGE>
5. OBLIGATION TO PAY OPTION FEE FOR OPTION CAPACITY
(a) Customer agrees to pay to TSMC the Option Fee in the amount of
XXXXXXXXXXXXXXXXXXXXXXXXXXX for the right to purchase the Option Capacity
pursuant to this Agreement. The Option Fee is set forth in Exhibit D and
shall be paid on the dates specified. Except that TSMC exercises its first
right of refusal and accepts the Customer's offer pursuant to Section 6
below, the Option Fee for any calendar year, once paid, shall be non-
refundable for any cause except the parties failure to mutually agree in
writing to the Wafer Production Agreement within sixty (60) days of the
effective date of this Agreement and TSMC's failure to deliver the
requisite wafers pursuant to such Option Capacity and Section 4 of this
Agreement (in such cases the applicable portion of the Option Fee which
has been paid by the Customer will be promptly refunded by TSMC), and will
be credited against the wafer prices for the Option Capacity provided by
TSMC for that particular year under this Agreement.
(b) Customer further agrees to deliver to TSMC, within seven (7) days
following the Effective Date, one (1) promissory note in an amount of the
Option Fee due in 1997 as specified in Exhibit D and payable to TSMC or
order, which promissory note is in the form of Exhibit E. The promissory
note shall be returned by TSMC to Customer within seven (7) days upon
receipt of the corresponding Option Fee by TSMC.
6. FAILURE TO PURCHASE THE OPTION CAPACITY;
FIRST RIGHT OF REFUSAL
(a) XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
6
<PAGE>
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXX.
(b) Any of Customer's right or obligation set forth in Section 6(a) shall not
affect its obligation to pay the Option Fee pursuant to Section 5 above,
except that if this Agreement is assigned to any third parties acceptable
to TSMC pursuant to this Section 6(a) above, such third parties shall pay
any unpaid portion of the Option Fee and abide by the terms and conditions
of this Agreement.
7. TERM AND TERMINATION
(a) The term of this Agreement shall commence from the Effective Date, and
continue until December 31, 2000.
(b) TERMINATION BY TSMC FOR CUSTOMER'S FAILURE TO PAY THE OPTION FEE
TSMC may terminate this Agreement if Customer fails to pay the Option Fee
pursuant to Section 5 above, and does not cure or remedy such breach
within thirty (30) days of receiving written notice of such breach.
(c) TERMINATION FOR OTHER BREACH OR FOR BANKRUPTCY
Either party may terminate this Agreement if, (i) the other party breaches
any material provisions of this Agreement (other than the breach of
Section 5 above), and does not cure or remedy such breach within ninety
(90) days of receiving written notice of such breach, or (ii) becomes the
subject of a voluntary or involuntary petition in bankruptcy or any
proceeding relating to insolvency, receivership or liquidation, if such
petition or proceeding is not dismissed with prejudice within ninety (90)
days after filing.
7
<PAGE>
(d) EFFECT OF TERMINATION
Both parties shall remain liable to the other party for any outstanding
and matured rights and obligations at the time of termination, including
all outstanding payments of the Option Fee and for the wafers already
ordered and/or shipped to Customer.
8. BOARD APPROVAL
Customer shall obtain the approval by its Board of Directors of this
Agreement, and submit to TSMC, at the time of executing this Agreement, an
authentic copy of it's board resolution authorizing the representative
designated below to execute this Agreement.
9. LIMITATION OF LIABILITY
In no event shall either party be liable for any indirect, special,
incidental or consequential damages (including loss of profits and loss of
use) resulting from, arising out of or in connection with either party's
performance or failure to perform under this Agreement, or resulting from,
arising out of or in connection with either party's producing, supplying,
and/or sale of the wafers to the Customer, whether due to a breach of
contract, breach of warranty, tort, or negligence of either party, or
otherwise.
10. NOTICE
All notices required or permitted to be sent by either party to the other
party under this Agreement shall be sent by registered mail postage
prepaid, or by personal delivery, or by fax. Any notice given by fax shall
be followed by a confirmation copy within ten (10) days. Unless changed by
written notice given by either party to the other, the addresses and fax
numbers of the respective parties shall be as follows:
To TSMC:
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
No. 121, Park Avenue 3
Science-Based Industrial Park
Hsinchu, Taiwan
Republic of China FAX: 886-35-781545
8
<PAGE>
To Customer:
BENCHMARQ MICROELECTRONICS, INC.
17919 Waterview Parkway
Dallas, TX 75252 FAX:(214) 437-9198
11. ENTIRE AGREEMENT
This Agreement, including Exhibits A-E, constitutes the entire agreement
between the parties with respect to the subject matter hereof, and
supersedes and replaces all prior or contemporaneous understandings,
agreements, dealings and negotiations, oral or written, regarding the
subject matter hereof. No modification, alteration or amendment of this
Agreement shall be effective unless in writing and signed by both parties.
No waiver of any breach or failure by either party to enforce any
provision of this Agreement shall be deemed a waiver of any other or
subsequent breach, or a waiver of future enforcement of that or any other
provision.
12. GOVERNING LAW
This Agreement will be governed by and interpreted in accordance with the
laws of the California.
13. ARBITRATION
(a) General. Each party will make best efforts to resolve amicably any
-------
claims, controversies, or disputes under this Agreement. In the event that
a resolution is not reached among the parties within thirty (30) days
after written notice by any party of the dispute or claim, the dispute or
claim shall be finally settled by binding arbitration in accordance with
the provisions of this Section 13. The parties agree that all actions,
claims, controversies or disputes of any kind (e.g. whether in contract or
in tort, statutory or common law, legal or equitable or otherwise)
("Disputes") between them relating, directly or indirectly, to this
Agreement are to be resolved by arbitration as provided in this Agreement.
All arbitration will be
9
<PAGE>
conducted pursuant to and in accordance with the following order of
priority (i) the terms of this Agreement, (ii) the Commercial Arbitration
Rules of the American Arbitration Association, and (iii) to the extend the
foregoing are inapplicable, unenforceable or invalid, the laws of the
State of California. The arbitrator(s) used will be selected from a list
of persons familiar with disputes regarding the semiconductor
manufacturing industry to be provided by the American Arbitration
Association. Any hearing regarding arbitration will be held in the Greater
Bay Area, California, or at another location mutually acceptable to both
parties. The parties will use reasonable efforts to assure that the
arbitrator(s) will use their best efforts to conduct the arbitration
hearing as soon as practicable.
(b) Discovery. Discovery will be conducted solely through depositions and
---------
requests for documents and things but otherwise will be governed by the
Federal Rules of Civil Procedure. The arbitrator(s) will resolve any
discovery disputes by such prehearing conferences as may be needed. Both
parties agree that the arbitrator(s) will have the power of subpoena
process as provided by law. Disputes concerning the scope of depositions
or document production, its reasonableness and enforcement of discovery
requests will be subject to Agreement by the parties or will be resolved
by the arbitrator(s). All discovery requests will be subject to the
proprietary rights and rights of privilege and other protections granted
by applicable law to the parties. The arbitrator(s) will adopt procedure
to protect such rights. With respect to any Dispute, each party agrees
that all discovery activities shall be expressly limited to matters
directly relevant to the Dispute and the arbitrator(s) will be required to
fully enforce this requirement.
(c) Enforcement. The decision of the arbitrator(s) will be final and binding
-----------
on all parties. Any judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. The decision of
the arbitrator(s) will be enforceable in any court of competent
jurisdiction. Except for proceedings seeking equitable remedies, an
arbitration proceeding commenced pursuant to this Section 13 is a
condition precedent to and is a complete defense to the commencement of
any suit, action or proceeding in any federal or state court with respect
to any Dispute. Either party may bring an action in court to compel
arbitration. Any party who fails or refuses to submit to binding
arbitration following demand by the other party shall bear all costs and
expenses incurred by the opposing party in compelling arbitration.
10
<PAGE>
(d) Powers and Qualifications: Awards: Modification or Vacation of Award. The
--------------------------------------------------------------------
arbitrator(s) are empowered to resolve Disputes by summary rulings
substantially similar to summary judgments and motions to dismiss. The
arbitrator(s) will resolve all Disputes in accordance with the substantive
laws of the State of California. The arbitrator(s) may grant any remedy or
relief deemed just and equitable and within the scope of this Agreement
and may also grant such ancillary relief as is necessary to make effective
any award. The arbitrator(s) will be required to make specific, written
findings of fact and conclusions of law, and the parties will have the
right to seek vacation or modification of an award only if (I) that award
is based in whole, or in part, upon fraud or (ii) failure to follow the
procedures set forth in this Section 13. For these purposes, the award and
judgment entered by the federal or state district court shall be
considered to be the same as the award and judgment of the arbitrator(s).
To the extent permitted by applicable law, the arbitrator(s) will have the
power to award recovery of all costs and fees (including attorneys' fees,
administrative fees, and arbitrators' fees) to the prevailing party.
(e) Limitation on Award. The arbitrator(s) will be limited to interpreting
-------------------
the applicable provisions of this Agreement, and will not have the
authority or power to alter, amend, modify, revoke or suspend any
condition or provision of this Agreement, nor to create, draft or form a
new agreement between the parties, nor to render an award which, by its
terms, has the effect of altering or modifying any condition or provision
of this Agreement.
(f) Provisional Remedies and Multiple Parties. No provision of, nor the
-----------------------------------------
exercise of any rights under, this Agreement will limit the right of any
party, during any Dispute, to resort to a court of applicable jurisdiction
to seek such equitable remedies as may be available to such party, and any
such action will not be deemed an election of remedies. Such rights will
include, without limitation, rights and remedies relating to injunctive
relief. Such rights may be exercised at any time except to the extent such
action is contrary to an award or decision of the arbitrator(s). The
institution and maintenance of an action for equitable relief will not
constitute a waiver of the right of any party, to submit a Dispute to
arbitration, nor render inapplicable the compulsory arbitration provisions
of this Agreement.
(g) Choice of Arbitrator(s). The arbitrator(s) will be chosen by mutual
-----------------------
agreement of the parties. If they cannot agree within thirty (30) days
upon a single arbitrator, each will, within fifteen (15) days
11
<PAGE>
thereafter, appoint an arbitrator and such arbitrators will appoint a
third impartial arbitrator. If more than one arbitrator is appointed, the
decision of a majority of such arbitrators will be binding. Subject to the
provisions of Subsection 13(d), (i) each party will be responsible for the
expenses and fees of the arbitrator appointed by it and one-half of the
fees and expenses of the third arbitrator, (ii) if there is only one
arbitrator appointed, each party will be responsible for one-half of the
fees and expenses of such arbitrator and (iii) each party will bear its
own attorney's and expert's fees. If either party fails to timely appoint
an arbitrator, the decision of the arbitrator who is timely appointed will
be binding.
14. ASSIGNMENT
This Agreement shall be binding on and inure to the benefit of each party
and its successors, and except that Customer may assign this Agreement under
Section 6 above, neither party shall assign any of its rights hereunder, nor
delegate its obligations hereunder, to any third party, without the prior
written consent of the other.
15. CONFIDENTIALITY
Neither party shall disclose the existence or contents of this Agreement
except as required by Customer's assignment of this Agreement to any third
parties pursuant to Section 6 above, in confidence to its advisers, as
required by Securities and Exchange Commission regulations and related laws,
as required by applicable law, or otherwise without the prior written
consent of the other party and to enforce this Agreement.
16. FORCE MAJEURE
Neither party shall be responsible for delays or failure in performance
resulting from acts beyond the reasonable control of such party. Such acts
shall include but not limited to acts of God, war, riot, labor stoppages,
governmental actions, fires, floods, and earthquakes.
12
<PAGE>
IN WITNESS WHEREOF, the parties, have executed this Agreement as of the date
first stated above.
TAIWAN SEMICONDUCTOR BENCHMARQ
MANUFACTURING CO., LTD. MICROELECTRONICS, INC.
BY:/s/ Don Brooks BY:/s/ Derrell Coker
----------------------------------- ----------------------------
Donald Brooks Derrell Coker
President President
13
<PAGE>
EXHIBIT A
EQUIVALENCY FACTOR TABLE
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
XXXXXXX XXXXXX XXXXXXXXXX XXXXXXXXXX
XXXXXXXXXXXXXXXXXX XXXXXXXXX XXXXXXXXX XXXXXXXX XXXXXXXXX
XXXXXXXX
XXXXXXXX
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
XXXXXXXXXXXXXXXXXXXXXX XX XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXX XX XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXX XX XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXX XX XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXX XX XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXX XX XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXX XX XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXX XX XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX XX XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXX XX X XX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXX XX X XXXX XXXX
- - --------------------------------------------------------------------------------
</TABLE>
REMARKS:XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
DATE OF ISSUE: XXXXXXXX
14
<PAGE>
EXHIBIT B
BENCHMARQ/TSMC
COMMITTED CAPACITY
<TABLE>
<CAPTION>
UNIT: XXXXXXXXXXXXXXXXXXXXXX
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
- - ----------------------------------------------------------------------
- - ----------------------------------------------------------------------
- - ----------------------------------------------------------------------
XXXXXXXXXXXXX X X X X X
- - ----------------------------------------------------------------------
XXXXXXXXXXXXX
- - ----------------------------------------------------------------------
- - ----------------------------------------------------------------------
XXXXXXXXXXXXX XXX XXX XXX XXX
- - ----------------------------------------------------------------------
- - ----------------------------------------------------------------------
XXXXXXXXXXXXXXXXX XXXX XXXX XXXX XXXX
- - ----------------------------------------------------------------------
- - ----------------------------------------------------------------------
XXXXXXXXXXXXXXX X X X X
- - ----------------------------------------------------------------------
- - ----------------------------------------------------------------------
XXXXXXXXXXXX X X X X
- - ----------------------------------------------------------------------
XXXXXXXX
- - ----------------------------------------------------------------------
- - ----------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXX X XX XX XX XX
- - ----------------------------------------------------------------------
XXXXXXXXXXXXXXXX
- - ----------------------------------------------------------------------
XXXXXXXXXXXXXXXX
- - ----------------------------------------------------------------------
- - ----------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX XXXXXXXXX XXXX XXXX XXXX XXXX
- - ----------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- - ----------------------------------------------------------------------
XXXXXXXXXXXXXXXX
- - ----------------------------------------------------------------------
</TABLE>
*
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
Deposits Required: $ 5.88M - XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Payment Schedule: $ 2.5M - May 31, 1996
$ 3.38M - March 31, 1997
15
<PAGE>
EXHIBIT C
TSMC CMOS TECHNOLOGY ROADMAP
16
<PAGE>
EXHIBIT D
OPTION FEE
Years Total Option Option Fee Due Date
Capacity (Unit: (Unit: US$)
Wafer Equivalent)
- - -------------------------------------------------------------------
1996- XXX $ 2.5M May 31, 1996
2000
$ 3.38M March 31, 1997
17
<PAGE>
EXHIBIT E
STANDARD FORM OF PROMISSORY NOTE
Amount: US$________________ Due Date:__________________
The Undersigned, _____________________ (the "Maker"), unconditionally promise
to pay to Taiwan Semiconductor Manufacturing Co., Ltd. or its order the sum of
US Dollars _________________ ($___________), XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXX per annum on any unpaid portion of the principal amount stated herein,
and said payment will be made at ________________ (Place of Payment).
This Note shall be governed in all respects by the laws of the State of
California.
The Maker of this Note agrees to waive protests and notice of whatever kind.
Issue Date: ___________________
Issue Place:___________________
Maker's Signature: _______________________
Maker's Address: _______________________
_______________________
18
<PAGE>
EXHIBIT 10.2
WAFER PRODUCTION AGREEMENT
(FOR OPTIONEES ONLY)
BETWEEN
TAIWAN SEMICONDUCTOR MANUFACTURING
COMPANY, LTD.
AND
BENCHMARQ MICROELECTRONICS, INC.
JULY 30, 1996
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS....................................... 3
2. PRODUCT DEVELOPMENT............................... 4
3. SUPPLY............................................ 5
4. ON-SITE INSPECTION AND VENDOR INFORMTION.......... 6
5. DELIVERY.......................................... 7
6. ACCEPTANCE........................................ 7
7. PRICE............................................. 7
8. PROPRIETARY INFORMATION........................... 8
9. WARRANTY.......................................... 9
10. INTELLECTUAL PROPERTY INDEMNITY................... 10
11. LIMITATION OF LIABILITY........................... 11
12. EXPORT CONTROL.................................... 11
13. TERM AND TERMINATION.............................. 12
14. FORCE MAJEURE..................................... 12
15. NON-PUBLICITY..................................... 12
16. ASSIGNMENT........................................ 12
17. GOVERNING LAW AND ARBITRATION..................... 13
18. NOTICE............................................ 13
19. ENTIRE AGREEMENT.................................. 14
20. LIST OF EXHIBITS.................................. 16
2
<PAGE>
WAFER PRODUCTION AGREEMENT
THIS AGREEMENT is entered into, effective July 30, 1996 (the "Effective
Date"), by and between Taiwan Semiconductor Manufacturing Co., Ltd., a company
duly incorporated under the laws of the Republic of China, having its principal
place of business at No. 121, Park Avenue III, Science Based Industrial Park,
Hsin-Chu, Taiwan, R.O.C. ("TSMC"), and Benchmarq Microelectronics, Inc. a
company duly incorporated under the laws of Delaware having its principal place
of business at 17919 Waterview Parkway, Dallas, Texas 75252 ("Customer").
RECITALS
Customer has designed and/or manufactures integrated circuits, and wishes to
have a manufacturing source for certain of such integrated circuits.
TSMC is in the business of manufacturing such integrated circuits, and wishes to
manufacture such integrated circuits for Customer.
Customer and TSMC have in place an Option Agreement dated May 31, 1996,
outlining quantity commitments for both parties.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:
1. DEFINITIONS
(a) "PROCESS" shall mean the process available at TSMC as set forth in Exhibit
A, or such process or successor process as may be mutually acceptable.
The Process shall be used to manufacture the Products defined below.
(b) "PRODUCTS" used in this Agreement shall mean those products designed by
Customer and manufactured for Customer by TSMC under this Agreement,
including wafers, devices and packaged devices, but does not include test
wafers or risk start wafers as described in Section 2. The Products shall
meet the Parametric and Electrical Specifications set forth in Exhibit B,
and the Products in device form, upon Customer's request, may be packaged
and marked in accordance with the requirements set forth in Exhibit B-1.
3
<PAGE>
(c) "PROPRIETARY INFORMATION" shall mean mask data base data and also
shall mean any other information that is controlled by a party and
is identified as proprietary and confidential and that is disclosed by
either party to the other under this Agreement. Written Proprietary
Information shall be clearly marked or labeled "PROPRIETARY" or
"CONFIDENTIAL" or other words of similar meaning. All oral disclosures of
Proprietary Information shall be identified as such prior to disclosure
except data disclosed orally prior to the date of this Agreement and
confirmed, in writing, by the disclosing party within thirty (30) days of
the later of (i) oral disclosure or (ii) the
date hereof. In case of disagreement, the receiving party must make
an objection thereto, in writing, within thirty (30) days of receipt.
2. PRODUCT DEVELOPMENT
(a) The parties shall agree upon the Process for the manufacture of the
Products, and upon the specifications according to which Customer shall
conduct acceptance of the Products (the "Quality and Reliability
Specifications"). The Quality and Reliability Specifications are
attached hereto as Exhibit C. TSMC shall furnish the design rule and
parametric information for the agreed upon Process, which information
shall be described in Exhibit A.
(b) TSMC will make, or designate a mask vendor to make, the mask sets for the
Products in accordance with the device database tapes provided by
Customer, and in case that a mask vendor is used, TSMC will provide mask
alignment and test structure databases to the mask vendor. TSMC shall be
responsible for ensuring that the mask sets are manufactured in accordance
with device database tapes provided by Customer and the mask alignment and
test structure databases provided by TSMC. Customer shall bear all the
costs and expenses of producing the mask sets necessary for the production
of the Products under this Agreement. The mask sets, if not used for a
specified period of time, will be handled as proprietary data and
in accordance with TSMC idle mask policy then in effect.
(c) TSMC will provide Customer with such amount of test wafers as Customer may
require for qualification, at the purchase prices specified in Section 7.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXX, following receipt of the test wafers, Customer shall
inform TSMC in writing of whether or not such test wafers meet the Quality
and Reliability Specifications, and if affirmative, full qualification
will be deemed completed and TSMC will proceed to produce the Products
pursuant to the purchase order or orders issued by Customer, if any, and
accepted by TSMC under Section 3 below. If no notification is received by
TSMC during the time period specified in the preceding sentence, full
qualification shall be deemed accomplished. In the event that the test
wafers do not meet the Quality and Reliability Specifications, the parties
will work together in good faith to achieve full qualification.
4
<PAGE>
(d) Upon Customer's request, TSMC will provide additional test wafers
or "risk starts" at the purchase prices specified in Section 7.
(e) Prior to the completion of full qualification, Customer may, by giving at
least seven (7) days notice to TSMC, terminate the production of any test
wafers or risk starts specified in Subsections 2(c) and 2(d), and TSMC
will do so following the completion of the process steps at which such
test wafers or risk starts reside at the time of receiving such notice.
In such event, Customer shall pay TSMC for all the test wafers and/or risk
starts so affected, and the prices for such test wafers and/or risk starts
shall be the respective purchase prices specified in Section 7, equitably
prorated based on the completed stage of production.
(f) The parties may agree to add processes from which the Customer may
purchase wafers. Whereas, the procedures included herein in Section 2 and
Subsections (a), (b), (c), (d) and (e) will be followed.
3. SUPPLY
(a) Subject to the terms and conditions of this Agreement and the Option
Agreement, TSMC agrees to manufacture and supply to Customer the test
wafers and Products during the term of this Agreement. TSMC shall use
its best efforts to deliver Products in quantities and timing consistent
with the Customers purchase orders.
(b) TSMC agrees to use reasonable efforts to meet all the quantity
requirements of Customer for the Products in excess of the binding
quantity commitments of TSMC to Customer as described in the Option
Agreement dated May 31, 1996.
(c) Customer shall place purchase orders or other release documents ("Purchase
Orders") for such quantities of the Products as and when it requires.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. Such Purchase Orders constitute
firm purchase obligations on the part of Customer and shall only be final
subject to acceptance by TSMC. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. The terms
of Purchase Orders must be consistent with and limited to the terms and
conditions of this Agreement.
5
<PAGE>
(d) XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXX.
(e) It is anticipated that from time to time there may be instances where an
accelerated lead and cycle time is required to serve the needs of
Customer, and in such instances, TSMC shall, upon mutually agreed upon
terms and conditions, use reasonable efforts to accelerate the schedule of
production for the Products and/or increase the volume of the Products
manufactured for Customer in order to meet such needs.
(f) If Customer notifies TSMC in writing that modifications to the Quality and
Reliability Specifications are required, including modifications to mask
tooling, process or testing, TSMC shall use its best effort to make such
modifications within a reasonable period of time after Customer
notification, provided that any adjustments in price, production, delivery
schedule, and any other terms and conditions of this Agreement shall meet
with TSMC's approval prior to the making of such modifications. It is
understood that all costs to be incurred as a result of making such
modifications (including retooling cost) shall be agreed upon in advance
of the modifcations and shall be borne by Customer.
(g) Customer may, at any time, add or substitute similar Product types using
the Processes agreed upon by the parties under Section 2, and TSMC shall
use reasonable efforts to produce such similar Product types as requested.
All the costs incurred as a result of such adding or substituting similar
Product types shall be borne by Customer. The prices for such similar
Product types shall be negotiated by the parties.
4. ON-SITE INSPECTION AND VENDOR INFORMATION
(a) At a frequency of no more than once a year, Customer may send its
representatives to inspect TSMC's production facilities involved in the
manufacture of the Products during normal working hours, by giving a
reasonable prior written notice to TSMC.
(b) Upon Customer's written request, TSMC will provide Customer with process
control information as set forth in Exhibit A-1,
XXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
6
<PAGE>
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
5. DELIVERY
(a) Unless otherwise agreed to between the parties, TSMC shall deliver the
Products to Customer in accordance with the terms and conditions of the
INCOTERMS 1990 - EXW (Ex Works TSMC's Hsin-Chu Factory) the outline of
which is set forth in Exhibit E. Title to the Products and risk of loss
shall pass to Customer upon delivery. TSMC shall package the Products for
secure shipment according to good manufacturing practices with
consideration of the method of shipment chosen. The receipt issued by the
carrier shall be conclusive proof of the date and fact of shipment of
Products.
(b) Partial shipments are allowed, so long as full shipment of the appropriate
quantities are made by the delivery dates specified in the respective
Purchase Orders. Such partial shipments may be invoiced individually or
in combination with all the other partial shipments made under the same
Purchase Order.
(c) Any delivery or shipment made within fifteen (15) days before or after the
delivery date(s) specified in the Purchase Orders shall constitute timely
delivery or shipment.
6. ACCEPTANCE
(a) Customer shall accept all conforming tenders of the Products delivered
under this Agreement, and shall notify TSMC in writing,
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, as to
either acceptance or rejection thereof. If no notification indicating
rejection is received by TSMC within the above time period, then such
Products shall be deemed accepted.
(b) Customer may inspect the Products and carry out testing, prior to
acceptance thereof, at its own facilities. The inspection and testing
shall be performed pursuant to the methods set forth in Exhibit D.
7. PRICE
(a) XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXX. The Product Prices are in U.S. currency and net of
7
<PAGE>
any and all taxes and duties, including but not limited to customs duties,
sales tax, value added tax, use tax, and excise tax. Customer shall pay
all applicable U.S. taxes (including one or more of the above taxes, but
excluding all taxes based on TSMC's income) in addition to the Product
Prices quoted in Exhibit F.
(b) Unless otherwise agreed upon by the parties, payment terms shall be net
due thirty (30) days after the date of TSMC's invoice. Any payment made
under this Agreement shall be in U.S. dollars subject, to the
extent applicable, to the conditions of Subsection 5(a) of
the Option Agreement dated May 31,1996.
(c) The Product Prices quoted are based upon the New Taiwan Dollar/U.S. Dollar
exchange rate in effect at the time of execution of this Agreement, and
will be subject to, at the time of shipment, an adjustment due to changes
in the exchange rate between New Taiwan Dollars and U.S. Dollars
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
8. PROPRIETARY INFORMATION
(a) Both parties agree to maintain Proprietary Information of the other party
in strict confidence, not to make use thereof other than for the
performance of this Agreement, to release it only to employees who have a
reasonable need to know the same and who have agreed to comparable
restrictions on use and disclosure, and not to release or disclose it to
any third parties without the prior written consent of the disclosing
party. The obligations set forth in this Subsection shall not apply to
any information that: (i) is now or hereafter in the public domain or
otherwise becomes available to the public other than by breach of this
Agreement by the receiving party; (ii) is rightfully in the receiving
party's possession prior to receipt from the disclosing party; (iii) is
rightfully received by the receiving party from a third party; (iv) is
independently developed by the receiving party; and (v) is authorized by
the disclosing party to be released or disclosed. The obligations of non-
disclosure set forth in this Subsection shall not apply to information
that is required to be disclosed in accordance with applicable law.
(b) All Proprietary Information of the disclosing party and any copies thereof
shall remain the property of the disclosing party, and no license or other
right is granted or implied hereby. The receiving party shall, upon the
disclosing party's request, return the original and all copies of tangible
Proprietary Information of the disclosing party. Any mask sets generated
by TSMC from Customer's database tapes shall be the property of Customer,
and will be returned to Customer upon request. TSMC shall have any and
all the rights to and interests in any modifications or improvements of
the Process during the course of performance of this Agreement.
8
<PAGE>
(c) The obligation under this Section shall survive the termination or
expiration of this Agreement, and shall be effective for a period of five
(5) years from the date of disclosure.
9. WARRANTY
(a) TSMC warrants that the Products delivered hereunder shall meet the Quality
and Reliability Specifications as set forth in Exhibit C-1 and shall be
free from defects in material and workmanship under normal use for a
period of one (1) year from the date of shipment. If, during the one (1)
year period: (i) TSMC is notified promptly in writing upon discovery of
any defect in the Products, including a detailed description of the
alleged defect; (ii) such Products are returned to TSMC, F.O.B. TSMC
Hsin-Chu (INCOTERMS 1990) as set forth in Exhibit E; and (iii) TSMC's
examination of such Products reveals that such Products are indeed
defective and not caused by accident, abuse, misuse, neglect, improper
installation, device packaging or shipping package,
repair or alteration by someone other than TSMC, or improper testing or
use contrary to any instructions given by TSMC, then TSMC shall, at its
option, either repair, if applicable, replace, or credit
Customer for such defective Products XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXX. TSMC shall return any Products repaired or replaced under
this warranty to Customer transportation prepaid, and shall reimburse
Customer for the transportation charges paid by Customer for returning
such defective Products to TSMC. The performance of this warranty shall
not act to extend the one (1) year warranty period for any Products
repaired or replaced beyond that period applicable to such Products as
originally delivered.
(b) The foregoing constitutes TSMC's exclusive liability, and Customer
exclusive remedy for any breach of warranty under this Agreement,
including any non-conformity of the Products with the Quality and
Reliability Specifications, and any defects in material or workmanship of
the Products. The warranty set forth in this Section 9 is the only
warranty that applies to the Products manufactured by TSMC hereunder. No
warranty claims may be made to TSMC for the Products, except by Customer
in accordance with the terms of this Agreement.
THE FOREGOING WARRANTY SHALL BE EXCLUSIVE AND IN LIEU OF ANY AND ALL OTHER
WARRANTIES: EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO,
THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
ALL OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED.
(c) Notwithstanding the provisions of Subsection 9(a) above, prior to any
return of allegedly defective Products by Customer pursuant to Subsection
9(a) Customer shall first afford TSMC the opportunity upon TSMC's request,
to inspect the allegedly defective Products at Customer's facilities,
XXXXXXXXXXXXXXXXXXXXXXXXX
9
<PAGE>
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXX. If TSMC thereby determines that the allegedly defective Products
are defective or non-conforming with the Quality and Reliability
Specifications, or that such alleged defects are caused by defects in
material or workmanship of TSMC, then Customer shall be entitled to
repair, replacement or credit under this Subsection.
10. INTELLECTUAL PROPERTY INDEMNITY
(a) Subject to Subsection 10(b) below, TSMC shall, at its expense and at
Customer request, defend any claim or suit brought against Customer,
solely to the extent that it is based on a Process provided by TSMC
pursuant to this Agreement that infringes any patent, copyright, trade
secret or other proprietary rights of a third party, and TSMC shall
indemnify and hold Customer harmless from and against any costs, damages
and fees reasonably incurred by Customer, including but not limited to,
attorney's fees that are attributable to such claim or suit related to
that Process, provided that: (i) Customer gives TSMC reasonably prompt
notice in writing of any such claim or suit, and permits TSMC, through
counsel of its choice and reasonably acceptable to Customer, to
answer the charge of infringement and defend such claim or suit; (ii)
Customer provides TSMC information, assistance and authority, at TSMC's
expense, to enable TSMC to defend such suit or claim; and (iii) TSMC
shall not be responsible for any settlement made by Customer without TSMC
written permission.
(b) TSMC shall have no liability under this Agreement for any claim or suit
where infringement arises solely out of TSMC's compliance with or
implementation of any of Customer's instructions, specifications, designs
or requirements (including those relating to the Process) hereunder, and
Customer shall defend such claim or suit and indemnify and hold TSMC
harmless from and against any costs, damages and fees reasonably incurred
by TSMC in connection with such claim or suit, including but not limited
to, attorneys' fees that are attributable to such claims or suit, provided
that: (i) TSMC gives Customer reasonably prompt notice in writing of any
such claim or suit, and permits Customer, through counsel of its choice
and reasonably acceptable to TSMC, to answer the charge of infringement
and defend such claims or suit; (ii) TSMC provides Customer information,
assistance and authority at Customer's expense, to enable Customer to
defend such claim or suit; and (iii) Customer shall not be responsible
for any settlement made by TSMC without Customer's written permission.
10
<PAGE>
(c) If the court or a settlement enjoins the use of the Process by TSMC or,
if, in TSMC's opinion, the Process or Products are likely to become the
subject of a claim of infringement, TSMC shall, at its option, modify
such Process so that it becomes non-infringing, substitute a
substantially equivalent non-infringing process, obtain the right to
continue using the Process under this Agreement, or subject to Subsection
5(a) of the Option Agreement dated May 31, 1996, decline to furnish or to
continue to furnish the Products under this Agreement. XXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
(d) The foregoing states the entire liability and exclusive remedies of TSMC
and Customer for infringement by the Products, the Process and the
production of the Products furnished hereunder.
11. LIMITATION OF LIABILITY
In no event shall either party be liable for any punitive, exemplary,
indirect, special, incidental or consequential damages (including loss of
profits and loss of use) resulting from, arising out of or in connection
with such party's performance or failure to perform under this Agreement,
or resulting, from, arising out of or in connection with TSMC producing,
supplying, and/or sale of the Products or any part thereof, whether due
to a breach of contract, breach of warranty, tort, or negligence of
either party, or otherwise. The foregoing limitation on liability will
not be applicable to claims asserted by third parties which fall within
the scope of Section 10 of this Agreement.
12. EXPORT CONTROL
TSMC and Customer are subject to national export control regulations of
the Republic of China and the Export Administration Regulations of the
United States of America. TSMC and Customer will take all appropriate
measures not to violate these regulations and will indemnify the other
party against and hold the other party harmless from all damages arising
out of or in connection with any violation. Within reason and upon TSMC's
request, Customer shall execute any and all documents provided by TSMC to
facilitate the shipment of the Products in compliance with the export
control regulations.
11
<PAGE>
13. TERM AND TERMINATION
(a) The term of this Agreement shall commence from the Effective Date, and
continue until December 31, 2000.
(b) This Agreement may be terminated by either party if the other party: (i)
breaches any material provision of this Agreement and does not cure or
remedy such breach within sixty (60) days of notice of breach; (ii)
becomes the subject of a voluntary or involuntary petition in bankruptcy
or any proceeding relating to insolvency, receivership, liquidation, or
composition for the benefit of creditors if such petition or proceeding
is not dismissed with prejudice within ninety (90) days after filing. If
Customer is the breaching party under this provision, then TSMC shall be
entitled to stop or suspend the production of the Products upon giving
notice to Customer, and to the payment of the Product Prices for all
finished Products and work-in-process (partially finished Products) which
are identifiable to this Agreement, without prejudice to damages that may
be claimed by TSMC under applicable law.
(c) In addition to Section 8 above, the provisions under Sections 9, 10, 12
and 15 shall survive the termination or expiration of this Agreement.
14. FORCE MAJEURE
Neither party shall be held liable for any delay or failure to perform
under this Agreement if such delay or failure is due to causes beyond its
control, including, but not limited to: acts of God, war, riot,
embargoes, labor stoppages, acts of civil and military authorities, fire,
floods, earthquakes or accidents.
15. NON-PUBLICITY
Except to the extent required by applicable law, neither publicity nor
information regarding the existence or contents of this Agreement shall
be given or released by either party without the prior written consent of
the other party.
12
<PAGE>
16. ASSIGNMENT
Neither party shall delegate any obligations under this Agreement nor
assign this Agreement or any interest or rights hereunder without the
prior written consent of the other, except that TSMC shall be free to
choose the mask vendor to make mask sets, and/or to subcontract the
packaging of the Products.
17. GOVERNING LAW AND ARBITRATION
(a) This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California.
(b) Each party will make best efforts to resolve amicably any disputes or
claims under this Agreement among the parties. In the event that a
resolution is not reached among the parties within thirty (30) days after
written notice by any party of the dispute or claim, the dispute or claim
shall be finally settled pursuant to the arbitration procedure in Section
13 of the Option Agreement between the two parties.
18. NOTICE
All notices required or permitted to be sent by either party to the other
party under this Agreement shall be sent by registered mail postage
prepaid, or by personal delivery, or by fax. Any notice given by fax
shall be followed by a confirmation copy within ten (10) days. Unless
changed by written notice given by either party to the other, the
addresses and fax numbers of the respective parties shall be as follows:
To TSMC:
Taiwan Semiconductor Manufacturing Company, Ltd.
No. 121, Park Avenue 3
Science Based Industrial Park
Hsin-Chu, Taiwan
Republic of China FAX: 886-35-781545
To Customer:
Benchmarq Micrelectronics, Inc.
17919 Waterview Parkway
Dallas, TX 75252 FAX: (214) 437-9198
13
<PAGE>
19. ENTIRE AGREEMENT
In case of any conflict between this Agreement and the Option Agreement
dated May 31, 1996, the Option Agreement shall govern. This Agreement and
attached Exhibits and the Option Agreement dated May 31, 1996,
constitute the entire agreement between the parties with respect to the
subject matter hereof and supersedes and replaces all prior or
contemporaneous understandings, agreements, dealings, and negotiations,
oral or written, regarding the subject matter. Any terms and conditions
listed in the Purchase Orders placed by Customer under this Agreement,
except quantities ordered, shipment dates and delivery dates shall not
constitute part of this Agreement, nor affect or revise the terms and
conditions of this Agreement, even in cases such Purchase Orders are signed
and returned by TSMC, unless both parties expressly agree in writing to
include any such terms or conditions in the Agreement. No modification,
alteration or amendment of this Agreement shall be effective unless in
writing and signed by both parties. No waiver of any breach or failure by
either party to enforce any provision of this Agreement shall be deemed a
waiver of any other or subsequent breach or a waiver of future enforcement
of that or any other provision.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed in duplicate on their behalf by their duly authorized
officers and representatives on the date given above.
Taiwan Semiconductor
Manufacturing Company, Ltd.
/s/ Don Brooks
____________________________
Signature
_____________________________
Don Brooks
_____________________________
President
14
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed in duplicate on their behalf by their duly authorized officers and
representatives on the date given above.
Benchmarq Microelectronics, Inc.
/s/ Derrell Coker
_____________________________
Signature
_____________________________
Derrell Coker
_____________________________
President
15
<PAGE>
20. LIST OF EXHIBITS
EXHIBIT A PROCESS DESIGN RULE & PARAMETRIC
INFORMATION
A-1 PROCESS CONTROL INFORMATION
B PARAMETRIC AND ELECTRICAL SPECIFICATIONS
B-1 PACKAGE SPECIFICATION
C QUALIFICATION PLAN
C-1 QUALITY AND RELIABILITY SPECIFICATIONS
D INSPECTION AND ACCEPTANCE TESTING
METHODS
E INCOTERMS
F PRICE QUOTE
16
<PAGE>
EXHIBIT A-1
PROCESS CONTROL INFORMATION
1. XXXXXXXXXXXXXXXXX
2. XXXXXXXX
3. XXXXXXXXXXXX
4. XXXXXXXXXXXXXXXXXXXXXXXXXX
5. XXXXXXXXXXXXXXXXXXXXXXXXXXXX
6. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
7. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
8. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
9. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
17
<PAGE>
EXHIBIT B
PARAMETRIC & ELECTRICAL SPECIFICATIONS
18
<PAGE>
EXHIBIT B-1
PACKAGE SPECIFICATION
19
<PAGE>
EXHIBIT C
QUALIFICATION PLAN
1. Wafers/process must pass all TSMC's documented electrical test parameters and
physical dimension specifications.
2. Wafers/process must pass TSMC electromigration, oxide pinhole, hot electron,
VT stability, metal integrity and metal step coverage tests.
3. Wafers/process must meet TSMC's documented design rule and device modeling
specifications.
4. Wafers and packaged unties will be submitted by Benchmarq for industry
standard environmental and reliability testing (such as High-Temperature
Operating Life, Temperature Cycling, THB, Autoclave, etc.). TSMC will be
notified of any wafer level problems that are detected and will implement any
necessary corrective action.
5. TSMC must provide periodic reliability and Statistical Process Control data
to Benchmarq on a regular basis.
6. Notices of any major changes to process or materials must be submitted to
Benchmarq in writing for their approval prior to the change being
implemented.
20
<PAGE>
EXHIBIT C-1
QUALITY AND RELIABILITY SPECIFICATIONS
SPECIFICATION NAME SPECIFICATION NUMBER
- - ------------------ --------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXX XXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXX XXXXXXXXXXXX
21
<PAGE>
EXHIBIT D
INSPECTION AND ACCEPTANCE TESTING METHODS
The following specifications describe the requirements and the minimum
conformance standard for TSMC manufactured products. The specifications listed
below apply to all products manufactured by TSMC.
1. TSMC Document XXXXXXXXXXXX Outgoing QA Procedure
2. TSMC PCM data
3. TSMC functional test data (if applicable)
The above specifications identify the electrical criteria, minimum yield
criteria, visual criteria, and structural and mechanical standards that all TSMC
manufactured Products are required to meet.
22
<PAGE>
EXHIBIT E
INCOTERMS
Outline of Incoterms 1990
Chapter Contents
- - ------- --------
EXW............................................ Ex Works
FCA............................................ Free Carrier
FAS............................................ Free Alongside Ship
FOB............................................ Free On Board
CAR............................................ Cost and Freight
CIF............................................ Cost, Insurance and Freight
CPT............................................ Carriage Paid To
CIP............................................ Carriage and Insurance Paid To
DAF............................................ Delivered at Frontier
DES............................................ Delivered Es Ship
DEQ............................................ Delivered Ex Quay (Duty Paid)
DDU............................................ Delivered Duty Unpaid
DDP............................................ Delivered Duty Paid
23
<PAGE>
July 25, 1996
EXHIBIT F
QUOTE
XXXXXXXXXXXXXXXXX
Benchmarq Microelectronics
Fax No. 214/437-9198
XXXXXXXXXXXXXXXX,
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
XXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
<TABLE>
<CAPTION>
1. Price Quotation:
<S> <C> <C>
XXXXXXXXXX XXXXXXXXXXXXX
- - -------------------------------------------------------------------------------
XXXXXXXXXXXXXX XXXXXXXXXXXXXXXXX
XXXX XXXX XXXX XXXX
- - -------------------------------------------------------------------------------
XXXXXXXX $XXX $XXX $XXX $XXX
- - -------------------------------------------------------------------------------
XXXXXXXX $XXX $XXX $XXX $XXX
- - -------------------------------------------------------------------------------
XXXXXXXX $XXX $XXX $XXX $XXX
- - -------------------------------------------------------------------------------
XXXXXXXX $XXX $XXX $XXX $XXX
- - -------------------------------------------------------------------------------
XXXXXXXX $XXX $XXX $XXX $XXX
- - -------------------------------------------------------------------------------
</TABLE>
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
If you have any questions, please feel free to contact XXXXXXXXXXXXXXXXXXXXXXXX
Sincerely,
XXXXXXXXXX
XXXXXXXXXXXXXX,
North American Business
TSMC, USA
XXXXXXXXX
CC: XXXXXXXXXXXXXXX XXXXXXXXXXXXXXXX XXXXXXXXXXXXXX
XXXXXXXXXXXX XXXXXXXXXXXXXX XXXXXXXXXXXXXXXX
24
<PAGE>
EXHIBIT 11
BENCHMARQ MICROELECTRONICS, INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Earnings:
Net income................................................. $ 1,259 $ 1,042 $ 2,316 $ 2,021
Add: Interest expense, net of tax effect, on
subordinated promissory notes assumed retired........... - 14 - 26
------- ------- ------- -------
Adjusted net income........................................ $ 1,259 $ 1,056 $ 2,316 $ 2,047
======= ======= ======= =======
Shares:
Weighted average common shares outstanding................. 6,606 255 6,581 247
Weighted average common equivalent shares:
Add: Common shares issued upon assumed
conversion of preferred stock.................... - 5,106 - 5,106
Common shares issued on assumed
exercise of stock options and warrants........... 1,065 1,111 958 1,118
Less: Shares assumed repurchased....................... 312 122 247 122
------- ------- ------- -------
Weighted average common and common equivalent
shares..................................................... 7,359 6,350 7,292 6,349
======= ======= ======= =======
Earnings per common and common equivalent share............... $ 0.17 $ 0.17 $ 0.32 $ 0.32
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1996 BALANCE SHEET AND THE STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,199,931
<SECURITIES> 9,703,654
<RECEIVABLES> 4,041,155
<ALLOWANCES> 107,891
<INVENTORY> 4,455,355
<CURRENT-ASSETS> 20,441,266
<PP&E> 8,244,133
<DEPRECIATION> 2,971,936
<TOTAL-ASSETS> 31,614,219
<CURRENT-LIABILITIES> 8,960,336
<BONDS> 0
0
0
<COMMON> 6,711
<OTHER-SE> 21,193,290
<TOTAL-LIABILITY-AND-EQUITY> 31,614,219
<SALES> 17,542,763
<TOTAL-REVENUES> 17,542,763
<CGS> 10,133,730
<TOTAL-COSTS> 15,269,909
<OTHER-EXPENSES> 37,999
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94,135
<INCOME-PRETAX> 2,482,774
<INCOME-TAX> 166,300
<INCOME-CONTINUING> 2,316,474
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,316,474
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
