<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
___________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996 Commission File No. 0-23596
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
___________________
C-CUBE MICROSYSTEMS INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0192108
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
1778 McCarthy Boulevard
Milpitas, California 95035
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code (408) 944-6300
Former name, former address and former fiscal year, if changed since last
year: N/A
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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of April 30, 1996, 33,038,821 shares of the Registrant's Common Stock
were outstanding.
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<PAGE>
C-CUBE MICROSYSTEMS INC.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995
Condensed Consolidated Statements of Operations
Quarter ended March 31, 1996 and 1995
Condensed Consolidated Statements of Cash Flows
Quarter ended March 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
C-CUBE MICROSYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
March 31, December 31,
1996 1995
--------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and equivalents $113,935 $133,414
Short-term investments 38,596 10,675
Receivables 37,893 24,421
Inventories 11,184 11,871
Deferred taxes and other current assets 5,452 5,882
-------- --------
Total current assets 207,060 186,263
Property and equipment -- net 11,522 7,222
Distribution rights -- net 1,936 1,977
Purchased technology -- net 3,003 3,095
Other assets 4,945 4,969
-------- --------
Total $228,466 $203,526
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 837 $ 1,934
Accounts payable 16,950 10,704
Accrued liabilities 10,650 13,889
Current portion of long-term obligations 1,011 1,159
-------- --------
Total current liabilities 29,448 27,686
Long-term obligations 87,903 88,010
-------- --------
Total liabilities 117,351 115,696
-------- --------
Minority interest in subsidiary 976 295
Stockholders' equity:
Common stock, $0.001 par value, 50,000 shares
authorized; shares outstanding: March 31,
1996 -- 33,004, December 31, 1995 -- 32,363 96,095 87,124
Deferred stock compensation (541) (635)
Notes receivable from stockholders (368) (459)
Accumulated translation adjustments (941) (860)
Unrealized loss on investments (66) (14)
Retained earnings 15,960 2,379
-------- --------
Total stockholders' equity 110,139 87,535
-------- --------
Total $228,466 $203,526
======== ========
See notes to condensed consolidated financial statements.
<PAGE>
C-CUBE MICROSYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Quarter Ended March 31,
-----------------------
1996 1995
---------- ----------
Net revenues:
Product $ 67,900 $ 16,461
Development contracts 200 652
-------- --------
Total 68,100 17,113
-------- --------
Costs and expenses:
Cost of product revenues 31,979 7,793
Research and development 6,850 2,746
Selling, general and administrative 7,800 3,753
-------- --------
Total 46,629 14,292
-------- --------
Income from operations 21,471 2,821
Other income (expense), net 471 477
-------- --------
Income before income taxes and
minority interest 21,942 3,298
Income tax expense 7,680 104
-------- --------
Income before minority interest 14,262 3,194
Minority interest in net income of subsidiary 681 --
-------- --------
Net income $ 13,581 $ 3,194
======== ========
Net income per share $ 0.38 $ 0.10
======== ========
Shares used in computation 36,042 33,616
======== ========
See notes to condensed consolidated financial statements.
<PAGE>
C-CUBE MICROSYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Quarter Ended March 31,
-----------------------
1996 1995
---------- ----------
Cash flows from operating activities:
Net income $ 13,581 $ 3,194
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest in subsidiary 681 --
Depreciation and amortization 1,105 544
Changes in assets and liabilities:
Receivables (13,697) (832)
Inventories 675 1,015
Deferred taxes and other assets 352 (202)
Accounts payable 6,251 2,022
Accrued liabilities 4,209 678
-------- --------
Net cash provided by operating activities 13,157 6,419
-------- --------
Cash flows from investing activities:
Maturities of short-term investments 6,700 12,000
Purchases of short-term investments (34,595) (15,602)
Capital expenditures (5,190) (1,328)
Other assets 17 109
-------- --------
Net cash used in investing activities (33,068) (4,821)
-------- --------
Cash flows from financing activities:
Bank term loan repayment -- (111)
Notes payable to banks -- net (1,044) (111)
Repayments of capital lease obligations (253) (363)
Sale of common stock, net of notes receivable 1,536 893
Collection of stockholder notes receivable 91 5
-------- --------
Net cash provided by financing activities 330 313
-------- --------
Exchange rate impact on cash and equivalents 102 (25)
-------- --------
Net increase (decrease) in cash and equivalents (19,479) 1,886
Cash and equivalents, beginning of period 133,414 13,674
-------- --------
Cash and equivalents, end of period $113,935 $ 15,560
======== ========
Supplemental schedule of noncash investing
and financing activities:
Unrealized gain (loss) on investments $ (52) $ 82
Supplemental disclosure of cash flow
information --
Cash paid during the period for:
Interest $ 147 $ 158
Income taxes 4,390 104
See notes to condensed consolidated financial statements.
<PAGE>
C-CUBE MICROSYSTEMS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation
In the opinion of management, these unaudited condensed
consolidated financial statements include all adjustments, consisting
only of normal recurring adjustments and accruals, C-Cube Microsystems
Inc. ("C-Cube" or the "Company") considers necessary for a fair
presentation of the Company's financial position as of March 31, 1996,
and the results of operations and cash flows for the quarters ended
March 31, 1996 and 1995. This unaudited quarterly information should be
read in conjunction with the audited consolidated financial statements
of C-Cube and the notes thereto included in the Company's Annual Report
to Stockholders for the year ended December 31, 1995.
The growth in revenues and operating income experienced by the
Company in recent quarters is not necessarily indicative of future
results. In addition, in view of the significant growth in recent years,
C-Cube believes that period-to-period comparisons of its financial
results should not be relied upon as an indication of future
performance.
2. Inventories consist of:
March 31, December 31,
1996 1995
--------- ----------
(in thousands)
Finished goods $ 6,062 $ 7,572
Work-in-process 1,255 1,667
Raw materials 3,867 2,632
------- -------
Total $11,184 $11,871
======= =======
3. Supplemental stock option plan
In the first quarter of 1996 the Board of Directors approved a
supplemental stock option plan which authorizes the issuance of up to
800,000 shares of common stock pursuant to exercises of nonstatutory
stock options granted to employees (excluding officers and directors)
and consultants under such plan.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of the risk factors
set forth in this report.
QUARTER ENDED MARCH 31, 1996
The following table sets forth certain operating data as a percentage
of net revenues for the quarters ended March 31, 1996 and 1995:
Quarter Ended March 31,
-----------------------
1996 1995
---------- ----------
Net revenues:
Product 99.7% 96.2%
Development contracts 0.3 3.8
----- -----
Total 100.0 100.0
Costs and expenses:
Cost of product revenues 47.0 45.5
Research and development 10.1 16.0
Selling, general and
administrative 11.5 21.9
----- -----
Total 68.5 83.5
----- -----
Income from operations 31.5 16.5
Interest income (expense), net 0.7 2.8
----- -----
Income before income taxes
and minority interest 32.2 19.3
Income tax expense 11.3 0.6
----- -----
Income before minority interest 20.9 18.7
Minority interest 1.0 --
----- -----
Net income 19.9% 18.7%
===== =====
The Company's quarterly and annual operating results have been, and
will continue to be, affected by a wide variety of factors that could have
a material adverse effect on revenues and profitability during any
particular period, including the level of orders which are received and can
be shipped in a quarter, the rescheduling or cancellation of orders by its
customers, competitive pressures on selling prices, changes in product or
customer mix, availability and cost of foundry capacity and raw materials,
fluctuations in yield, loss of any strategic relationships, C-Cube's
ability to introduce new products and technologies on a timely basis, new
product introductions by the Company's competitors, market acceptance of
products of both C-Cube and its customers, supply constraints for other
components incorporated into its customers' products, currency
fluctuations, and the level of expenditures in manufacturing, research and
development, and sales, general and administrative functions.
In addition, C-Cube's operating results are subject to fluctuation in
the markets for its customers' products, particularly the consumer
electronics market, which has been extremely volatile in the past, and the
satellite broadcast and wireless cable markets, which are in an early stage
creating uncertainty with respect to product volume and timing.
Furthermore, to the extent the Company is unable to fulfill its customers'
purchase orders on a timely basis, these orders may be cancelled due to
changes in demand in the markets for its customers' products. Historically,
the Company has generally recognized a substantial portion of its product
revenues in the last month of a given quarter. A significant portion of the
Company's expenses is relatively fixed, and the timing of increases in
expenses is based in large part on C-Cube's forecast of future revenues. As
a result, if revenues do not meet the Company's expectations, it may be
unable to quickly adjust expenses to levels appropriate to actual revenues,
which could have a material adverse effect on the Company's business and
results of operations.
The growth in revenues and operating income experienced by C-Cube in
recent quarters is not necessarily indicative of future results. In
addition, in view of the significant growth in recent years, the Company
believes that period-to-period comparisons of its financial results should
not be relied upon as an indication of future performance. Due to the
Company's dependence on the consumer electronics and home computer markets,
the substantial seasonality of sales in such markets could impact the
Company's revenues and net income, with the highest levels experienced in
the third and fourth calendar quarters as system manufacturers make
purchases in preparation for the holiday season, and relatively less strong
demand in the first and second calendar quarters. The Company's significant
growth in prior periods makes it impossible to assess the effect of any
such seasonal trends on the Company's operating results. There can be no
assurance, however, that the Company's operating results will not exhibit
such seasonal characteristics in the future.
As a result of the foregoing, the Company's operating results and stock
price may be subject to significant volatility, particularly on a quarterly
basis. Any shortfall in net revenues or net income from levels expected by
securities analysts could have an immediate and significant adverse effect
on the trading price of the Company's common stock.
The Company has recently experienced a period of significant growth,
which has placed, and could continue to place, a significant strain on
C-Cube's limited personnel and other resources. The Company's ability to
manage any further growth, should it occur, would require significant
expansion of its research and development and marketing and sales
capabilities and personnel. In particular, the Company is in the process of
expanding its sales and marketing organization to increase coverage of the
United States and the Asia-Pacific region. There can be no assurance that
the Company will be able to find qualified personnel to fill such sales and
marketing positions or be able to successfully manage a broader sales and
marketing organization. In addition, the sale and distribution of products
to numerous large system manufacturers in diverse markets and the
requirements of such manufacturers for design support would also place
substantial demands on C-Cube's research and development and sales
functions. The Company's ability to manage any further growth, should it
occur, would depend upon its ability to manage and potentially expand its
foundry relationships. The failure of C-Cube's management to effectively
expand or manage these functions consistent with any growth which may occur
could have a material adverse effect on the Company's business and results
of operations.
NET REVENUES
Product revenues in the first quarter of 1996 were $67.9 million, an
increase of 312% from the corresponding quarter a year ago. The increase in
product revenues was primarily due to significantly increased volume of
shipments for the CL480 MPEG 1 system decoder product, the CL9100 MPEG 2
video decoder product, the CL9110 MPEG 2 transport demultiplexer product,
and the MPEG 2 encoder family of products. In addition, the CL484VCD
advanced MPEG 1 system decoder was introduced and began significant volume
shipments in the first quarter of 1996.
The Company's revenues from development contracts decreased to $0.2
million in the first quarter of 1996 from $0.7 million in the first quarter
of 1995.
During the first quarter of 1996, three divisions of Samsung
collectively accounted for 22% of net revenues and sales to Kanematsu
Semiconductor Corporation, a distributor selling to seventeen customers,
accounted for 12% of the Company's net revenues. During the same period
last year, Scientific Atlanta Inc. accounted for 10% of net revenues. There
can be no assurance that such customers will continue to account for a
significant percentage of the Company's revenues in the future. The loss of
any of such customers could have a material adverse effect on the Company's
business and results of operations.
International revenues accounted for 76% of net revenues for the first
quarter, compared to 39% for the same period last year. The significant
increase in international sales is primarily due to volume shipments of the
CL480 and CL484 MPEG 1 system decoders in Asia for video CD players in the
consumer market, the CL9100 MPEG 2 video decoder product and the CL9110
MPEG 2 transport demultiplexer product primarily for international
deployments of direct broadcast satellite. The Company expects that
international revenues will continue to represent a significant portion of
net revenues. C-Cube's international sales and manufacturing are subject to
changes in foreign political and economic conditions and to other risks
including fluctuations in foreign exchange rates, export/import controls
and changes in tax laws, tariffs and freight rates. For example, China and
Taiwan comprise substantial markets for consumer electronics products
utilizing the Company's MPEG 1 system decoders, such as Video CD players.
As a consequence, any political or economic instability in such countries
could significantly reduce demand for products from certain of the
Company's major customers.
PRODUCT GROSS MARGIN
The following table sets forth the components of product gross margin
for the quarters ended March 31, 1996 and 1995:
Quarter Ended March 31,
-----------------------
1996 1995
---------- ----------
Product gross margin:
Net product revenues $67,900 $16,461
Cost of product revenues 31,979 7,793
------- -------
Product gross margin $35,921 $ 8,668
======= =======
Product gross margin percentage 52.9% 52.7%
======= =======
C-Cube's product gross margin percentage increased to 52.9% in the
first quarter of 1996 from 52.7% in the prior year quarter primarily due to
improved manufacturing yields over the same period, partially offset by a
shift in product mix to the lower margin decoder products.
The Company anticipates that its product gross margin percentage may
decrease due to competitive pricing pressure and the increasing demand for
volume shipments of the CL480 product, a relatively lower margin product.
The markets into which C-Cube sells its products are characterized by
extreme price competition, and the Company expects the average selling
prices of its products and the gross margin for such products will decrease
over the life of each product. In order to partially offset declines in the
selling price of its products, C-Cube will need to reduce the cost of its
products by implementing cost reduction design changes, obtaining costs
reductions as and if volumes increase and successfully managing
manufacturing and subcontracting relationships. Since the Company does not
operate its own manufacturing facilities and must make long-term binding
commitments to purchase products, it may not be able to reduce its costs as
rapidly as companies that operate their own manufacturing facilities. The
failure of the Company to design and introduce lower cost versions of the
Company's products in a timely manner or to successfully manage its
manufacturing relationships would have a material adverse effect on
C-Cube's business and results of operations.
RESEARCH AND DEVELOPMENT EXPENSES
In the first quarter of 1996, research and development expenses, which
include development costs associated with customer development contracts,
were $6.9 million, or 10% of net revenues, as compared to $2.7 million, or
16% of net revenues, in the comparable prior-year period. The decrease in
research and development expenses as a percent of net revenues is primarily
due to the significant increase in net revenues over the same period. The
increase in research and development spending from the prior-year quarter
reflects an increase in employee-related costs as well as the Company's
continuing efforts to develop and bring to market innovative and cost-
effective digital video solutions. The Company expects that absolute levels
of research and development expenses will continue to increase in future
periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased to $7.8 million,
or 11% of net revenues, in the first quarter of 1996, as compared to $3.8
million, or 22% of net revenues, for the same quarter last year. The
decrease in selling, general and administrative expenses as a percent of
net revenues is primarily due to the significant increase in net revenues
over the same period. The increase in spending was primarily due to
increased headcount and related expenses and increased commissions on
higher sales levels. The Company expects that absolute levels of selling,
general and administrative expenses will continue to increase in future
periods.
INTEREST INCOME (EXPENSE)
Interest income, net of interest expense decreased to $471,000 for the
first quarter of 1996 from $477,000 for the first quarter of 1995 primarily
due to interest accrued for the Company's convertible subordinated notes
which were issued in the fourth quarter of 1995. The decline was partially
offset by the increased interest income from the proceeds of a sale of
convertible subordinated notes in November 1995. See "Liquidity and Capital
Resources."
INCOME TAX EXPENSE
The Company's effective tax rate for the first quarter of 1996 was 35%
before consideration of minority interest. The Company's effective tax rate
increased from that of 1995 as the benefits from operating loss
carryforwards were fully utilized.
LIQUIDITY AND CAPITAL RESOURCES
In November 1995, the Company completed a public debt offering of
$86,250,000 aggregate principal amount of convertible subordinated notes
due 2005.
Cash, cash equivalents and short-term investments were $152.5 million
at March 31, 1996 as compared to $144.1 million at the end of 1995. Working
capital increased to $177.6 million at March 31, 1996 from $158.6 million
at the end of 1995.
The Company's operating activities provided cash of $13.2 million in
the first quarter of 1996 primarily from net income and higher accounts
payable and accrued liabilities, partially offset by an increase in
accounts receivable. The increase in receivables from December 31, 1995
reflects an increase in the volume of sales of the Company's key products.
The increase in accounts payable is primarily due to a significant increase
in production activities near the end of the first quarter.
C-Cube's investing activities, exclusive of the maturities and
purchases of short-term investments of $6.7 million and $34.6 million,
respectively, used cash of $5.2 million, primarily for capital
expenditures.
Cash provided by financing activities was $0.3 million, consisting of
proceeds from sales of stock pursuant to employee stock plans partially
offset by payments of debt.
C-Cube had an aggregate outstanding balance of $1.3 million under
capital lease lines at March 31, 1996. The Company's 65%-owned subsidiary,
KCC, has yen denominated credit lines with a group of Japanese banks, the
outstanding balance of which was $0.8 million at March 31, 1996.
In January 1996, the Company increased its available bank line of
credit from $8.5 million to $20 million. The line of credit expires August
1, 1996. The line is collateralized by the Company's receivables, inventory
and fixed assets. The line of credit agreement requires the Company, among
other things, to maintain a tangible net worth of $162,720,000, 80% of its
tangible consolidated assets within the U.S. parent company, quarterly net
income (no more than one quarterly loss per fiscal year), a quick ratio of
1.75 to 1, and a maximum debt to tangible net worth (as defined) ratio of
0.75 to 1. In addition, this agreement prohibits the payment of cash
dividends. Borrowings bear interest at the bank's prime rate. At
March 31, 1996, the Company was in compliance with these covenants, and
there were no borrowings under this line.
Based on current plans and business conditions, C-Cube expects that its
cash equivalents and short-term investments together with any amounts
generated from operations and available borrowings, if any, will be
sufficient to meet the Company's cash requirements for at least the next 12
months. However, there can be no assurance that the Company will not be
required to seek other financing sooner or that such financing, if
required, will be available on terms satisfactory to the Company. In
addition, the Company has considered and will continue to consider various
possible transactions to secure additional foundry capacity, which could
include, without limitation, equity investments in, prepayments to,
deposits with or loans to foundries in exchange for guaranteed capacity,
"take or pay" contracts that commit the Company to purchase specified
quantities of wafers over extended periods or joint ventures or other
partnership relationships with foundries.
<PAGE>
C-CUBE MICROSYSTEMS INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time the Company is party to certain litigation or
legal claims. Management has reviewed all pending legal matters and
believes that the resolution of such will not have a significant
adverse effect on the Company's financial position or results of
operations.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------- -------------
10.30 Supplemental Stock Option Plan.
10.31 Amendment to Revolving Credit Loan Agreement dated
January 3, 1996.
11.1 Statement regarding computation of net income per share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None.
<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.
C-Cube Microsystems Inc.
(Registrant)
Dated: May 10, 1996 By: /s/ James G. Burke
-------------- ---------------------
James G. Burke
Vice President of Finance and
Administration, Chief Financial Officer
and Secretary
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- -------------
10.30 Supplemental Stock Option Plan.
10.31 Amendment to Revolving Credit Loan Agreement dated
January 3, 1996.
11.1 Statement regarding computation of net income per share.
27.1 Financial Data Schedule.
<PAGE>
C-CUBE MICROSYSTEMS INC.
SUPPLEMENTAL STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are:
* to attract and retain the best available personnel for
positions of substantial responsibility,
* to provide additional incentive to eligible Employees and
Consultants, and
* to promote the success of the Company's business.
Nonstatutory Stock Options may be granted under the Plan.
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option plans under U. S. state corporate laws,
U.S. federal and state securities laws, the Code and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted
under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means C-Cube Microsystems Inc., a Delaware
corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged
by the Company to render services and who is compensated for such services,
provided that the term "Consultant" shall not include any person who is
also an officer or Director of the Company.
(i) "DIRECTOR" means a member of the Board.
(j) "DISABILITY" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person employed by the Company other
than any person who is an officer or Director of the Company.
(l) "FAIR MARKET VALUE" means, as of any date, the closing sales
price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system for the last market trading day prior to
the time of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable.
(m) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of
the Code and the regulations promulgated thereunder.
(n) "NOTICE OF GRANT" means a written notice evidencing certain
terms and conditions of an individual Option grant. The Notice of Grant is
part of the Option Agreement.
(o) "OPTION" means a stock option granted pursuant to the Plan.
(p) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(q) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(r) "OPTIONEE" means an Employee or Consultant who holds an
outstanding Option.
(s) "PLAN" means this Supplemental Stock Option Plan.
(t) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(u) "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 800,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan
has terminated).
4. ADMINISTRATION OF THE PLAN
(a) ADMINISTRATION. The Plan shall be administered by (i) the Board
or (ii) a Committee designated by the Board, which Committee shall be
constituted to satisfy Applicable Laws. Once appointed, such Committee
shall serve in its designated capacity until otherwise directed by the
Board. The Board may increase the size of the Committee and appoint
additional members, remove members (with or without cause) and substitute
new members, fill vacancies (however caused), and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(l) of the Plan;
(ii) to select the Consultants and Employees to whom Options
may be granted hereunder;
(iii) to determine whether and to what extent Options
are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions,
and any restriction or limitation regarding any Option or the shares of
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vii) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating
to sub-plans established for the purpose of qualifying for preferred tax
treatment under foreign tax laws;
(ix) to modify or amend each Option (subject to Section
15(b) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options;
(x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xi) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on
all Optionees and any other holders of Options.
5. ELIGIBILITY. Nonstatutory Stock Options may be granted to
Employees and Consultants. If otherwise eligible, an Employee or
Consultant who has been granted an Option may be granted additional
Options. Notwithstanding anything to the contrary contained in the Plan,
Options may not be granted to officers or Directors under this Plan.
6. LIMITATIONS. Neither the Plan nor any Option shall confer upon
an Optionee any right with respect to continuing the Optionee's employment
or consulting relationship with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
employment or consulting relationship at any time, with or without cause.
7. TERM OF PLAN. The Plan shall become effective upon its adoption
by the Board. It shall continue in effect until terminated under Section
15 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the
Notice of Grant.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied
before the Option may be exercised.
(c) FORM OF CONSIDERATION. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including
the method of payment. Such consideration may consist entirely of:
(i) cash or cash equivalent;
(ii) check;
(iii) recourse promissory note;
(iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than
six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares
as to which said Option shall be exercised;
(v) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker,
if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price;
(vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws; or
(vii) any combination of the foregoing methods of
payment.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized
by the Administrator and permitted by the Option Agreement and the Plan.
Shares issued upon exercise of an Option shall be issued in the name of the
Optionee or, if requested by the Optionee, in the name of the Optionee and
his or her spouse. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the Option is
exercised.
(b) TERMINATION OF EMPLOYMENT. Upon termination of an
Optionee's status as an Employee or Consultant (other than as a result of
the Optionee's death or Disability), the Optionee may exercise his or her
Option, but only within three (3) months or such other period of time as
the Administrator shall specify from the date of such termination and,
unless determined otherwise by the Administrator, only to the extent that
the Optionee was entitled to exercise it at the date of such termination
(and in no event later than the expiration of the term of such Option as
set forth in the Option Agreement). To the extent that Optionee was not
entitled to exercise an Option at the date of such termination, and to the
extent that the Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
For purposes of this Section 10(b), an Employee's change of status from
Employee to Consultant or from Consultant to Employee shall not, unless
specified otherwise by the Administrator, be considered a termination of
status as an Employee or Consultant.
(c) DISABILITY OF OPTIONEE. Upon termination of an Optionee's
status as an Employee or Consultant as a result of the Optionee's
Disability, the Optionee may exercise his or her Option, but only within
six (6) months or such other time period as the Administrator shall specify
from the date of such termination, and, unless determined otherwise by the
Administrator, only to the extent that the Optionee was entitled to
exercise it at the date of such termination (and in no event later than the
expiration of the term of such Option as set forth in the Option
Agreement). To the extent that Optionee was not entitled to exercise an
Option at the date of such termination, and to the extent that the Optionee
does not exercise such Option (to the extent otherwise so entitled) within
the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. In the event of an Optionee's death
within three (3) months of the termination of employment, the Optionee's
estate or a person who acquired the right to exercise the deceased
Optionee's Option by bequest or inheritance may exercise the Option, but
only within six (6) months or such other time period as the Administrator
shall specify following the date of death, and, unless determined otherwise
by the Administrator, only to the extent that the Optionee was entitled to
exercise it at the date of death (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). To the
extent that Optionee was not entitled to exercise an Option at the date of
death, and to the extent that the Optionee's estate or a person who
acquired the right to exercise such Option does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.
11. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, OR
TRANSFER IN CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option, and the number of shares of Common
Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the
Plan upon cancellation or expiration of an Option, as well as the price per
share of Common Stock covered by each such outstanding Option shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify
each Optionee as soon as practicable prior to the effective date of such
proposed transaction. To the extent it has not been previously exercised,
an Option will terminate immediately prior to the consummation of such
proposed action.
(c) TRANSFER OF CONTROL.
(i) A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the
Company:
(a) a merger or consolidation in which the Company is
not the surviving corporation;
(b) a merger or consolidation in which the Company is
the surviving corporation where the shareholders of the Company before such
merger or consolidation do not retain, directly or indirectly, at least a
majority of the beneficial interest in the voting stock of the Company
after such merger or consolidation;
(c) the sale, exchange, or transfer of all or
substantially all of the assets of the Company (other than a sale, exchange
or transfer to one (1) or more Subsidiaries);
(d) the direct or indirect sale or exchange by the
shareholders of the Company of all or substantially all of the stock of the
Company where the shareholders of the Company before such sale or exchange
do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company after such sale or
exchange.
(ii) In the event of a Transfer of Control of the Company,
each outstanding Option will be assumed or an equivalent option
substituted by the successor corporation or a parent or Subsidiary of the
successor corporation (the "Successor Corporation"). In the event that an
Option is not assumed or substituted for, such Option shall terminate as of
the date of the Transfer of Control. For the purposes of this paragraph,
the Option shall be considered assumed if, following the Transfer of
Control, the option confers the right to purchase or receive, for each
Share of Optioned Stock subject to the Option immediately prior to the
Transfer of Control the consideration (whether stock, cash, or other
securities or property) received in the Transfer of Control by holders of
Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the
Transfer of Control was not solely common stock of the Successor
Corporation, the Administrator may, with the consent of the Successor
Corporation, provide for the consideration to be received upon the exercise
of the Option for each Share of Optioned Stock subject to the Option to be
solely common stock of the Successor Corporation equal in fair market value
to the per share consideration received by holders of Common Stock in the
Transfer of Control.
13. DATE OF GRANT. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination
granting such Option, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each
Optionee within a reasonable time after the date of such grant.
14. WITHHOLDING TAXES. In accordance with any applicable
administrative guidelines it establishes, the Administrator may allow a
purchaser to pay the amount of taxes required by law to be withheld as a
result of a purchase of Shares, by withholding from any payment of Common
Stock due as a result of such purchase, or by permitting the purchaser to
deliver to the Company, Shares having a Fair Market Value, as determined by
the Administrator, equal to the amount of such required withholding taxes.
15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights
of any Optionee, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the
Optionee and the Company.
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, Applicable Laws, and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or quoted, and
shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise
of an Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required.
17. LIABILITY OF COMPANY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such
requisite authority shall not have been obtained.
18. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
<PAGE>
FOURTH AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT
---------------------------------------------------
THIS AMENDMENT TO "REVOLVING CREDIT LOAN AGREEMENT" ("Credit
Agreement") is entered into between C-CUBE MICROSYSTEMS, INC. (the
"Borrower"), and COMERICA BANK-CALIFORNIA (the "Bank"), as of this 3rd day
of January, 1996, at San Jose, California.
RECITALS
A. Bank has loaned monies to the Borrower pursuant to that certain
promissory note in the original principal amount of Six Million and No/100
Dollars ($6,000,000), executed by C-Cube Microsystems, and that certain
Revolving Credit Loan Agreement (Secured), dated August 18, 1994 and
subsequently amended to be unsecured and increased to Eight Million Five
Hundred Thousand and No/l00 Dollars ($8,500,000) and is hereby amended and
increased to Twenty Million and No/l00 Dollars ($20,000,000).
B. All of the loan documents referred to above, and any other loan
documents executed in connection therewith, are hereinafter sometimes
collectively referred to as the "Loan Documents," and the Revolving Credit
Loan Agreement, is sometimes hereinafter referred to as the "Credit
Agreement."
C. The Borrower has requested, and the Bank has agreed, to modify
certain conditions and financial covenants contained in the Revolving
Credit Loan Agreement as set forth more completely below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and the terms
and conditions hereof for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Borrower and the
Bank hereby agree as follows:
1. DEFINITIONS, INTERPRETATION. All capitalized terms defined above
and elsewhere in this Fourth Amendment shall be used herein as so defined.
Unless otherwise defined herein, all other capitalized terms used herein
shall have the respective meanings given to those terms in the Loan
Documents. The rules of construction set forth in the Loan Documents shall,
to the extent not inconsistent with the terms of this Fourth Amendment,
apply to this Fourth Amendment and are hereby incorporated by reference.
2. CREDIT AGREEMENT AMENDMENTS. The parties agree to the following
amendments:
a. The first paragraph after WITNESSETH on page one of the
Agreement is hereby amended to read as follows:
WHEREAS, the Borrower desires to borrow up to Twenty Million and
No/100 Dollars ($20,000,000) from the Bank from time to time; and
b. In Section 1. DEFINITIONS, "Commitment Amount" is hereby
amended to read as follows:
"Commitment Amount" shall mean, as of any applicable date of
determination, Twenty Million and No/100 Dollars ($20,000,000).
c. Section 2.6.1 is amended to read as follows:
Commitment Fee. The Borrower shall pay to the Bank a fee for the
increased commitment amount for the period from the date of this Agreement
to and including the Termination Date equal to one quarter of one percent
(.25 %) per annum on the increased commitment amount or Sixteen Thousand
Seven Hundred Seventy and No/l00 Dollars ($16,770). Such commitment fee
shall be payable upon signing this Agreement.
3. EFFECTIVE DATE OF THIS AMENDMENT. This Amendment shall be effective as
of January 3, 1996 (the "Effective Date").
4. EFFECT OF THIS FOURTH AMENDMENT. On and after the Effective Date,
each reference in the Loan Documents to the Credit Agreement shall mean the
Credit Agreement as amended hereby. Except as specifically amended above,
the Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed. The execution, delivery and effectiveness of this
Fourth Amendment shall not operate as a waiver of any right, power, or
remedy of the Bank, nor constitute a waiver of any provision of the Loan
Documents.
5. COUNTERPARTS. This Fourth Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for all
purposes.
6. WAIVER. Except as agreed to herein, no failure or delay by the
Bank in exercising any of its rights hereunder shall operate as a waiver
thereof; nor shall the Bank be estopped to exercise any such rights at any
future time because of any such failure or delay; nor shall any single or
partial exercise of such rights preclude any other or further exercise
thereof; or the exercise of any other rights hereunder.
7. INTEGRATION. This Fourth Amendment contains the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings, offers and negotiations,
oral or written, with respect thereto.
8. AMENDMENTS. No supplement, modification or amendment to this
Fourth Amendment shall be binding unless executed in writing by the parties
hereto.
9. BINDING EFFECT. This Fourth Amendment shall bind and inure to the
benefit of the parties hereto and their respective representatives, heirs,
successors and assigns.
10. TIME OF ESSENCE. Time is of the essence as to the performance of
all obligations under this Fourth Amendment.
11. GOVERNING LAW. This Fourth Amendment shall be governed by and
construed in accordance with the laws of the State of California.
12. CAPTIONS. The captions in this Fourth Amendment are for
convenience of reference and shall not modify or alter the operative
provisions hereof.
13. ADDITIONAL DOCUMENTS: FURTHER ASSURANCES. Assuming Party and the
Original Borrower agree to execute such other documents and/or take such
other actions as the Bank deems may be appropriate to carry out the intent
of this Fourth Amendment.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Fourth
Amendment to be executed as of the day and year first above written.
COMERICA BANK-CALIFORNIA
(the "Bank")
By: /s/ Alan Jepsen
--------------------
Alan Jepsen
Its: Vice President and Assistant Manager
C-CUBE MICROSYSTEMS, INC.
(the "Borrower")
By: /s/ James Burke
--------------------
James Burke
Its: Chief Financial Officer
COMERICA
BORROWER'S AUTHORIZATION
DATE: JANUARY 3, 1996
-------------------
I (we) hereby authorize and direct COMERICA BANK-CALIFORNIA ("Bank") to
pay
to RENEW AND INCREASE LOAN #1154422507/67 $
----------------------------------------- --------------------------
to $
----------------------------------------- --------------------------
to $
----------------------------------------- --------------------------
to $
----------------------------------------- --------------------------
of the proceeds of my (our) loan from the Bank evidenced by a note in the
original principal amount of $20,000,000.00, dated JANUARY 3, 1996.
-------------- ---------------
Borrower(s): C-CUBE MICROSYSTEMS INC.
------------------------
By: /s/ James Burke Its: CFO
--------------------------- ------------------------
Signature of Title (if applicable)
By: Its:
--------------------------- ------------------------
Signature of Title (if applicable)
By: Its:
--------------------------- ------------------------
Signature of Title (if applicable)
By: Its:
--------------------------- ------------------------
Signature of Title (if applicable)
BORROWER
LOAN
COMERICA BANK-CALIFORNIA C-CUBE MICROSYSTEMS INC. REVISION/EXTENSION
AGREEMENT
(Herein called "Bank") 1778 MCCARTHY BLVD.
MILPITAS, CA 9035
(Herein called "Borrower")
ORIGINAL NOTE INFORMATION
INTEREST RATE AMOUNT NOTE DATE MATURITY DATE OBLIGATION # NOTE #
B+0.00% $6,000,000.00 08/18/94 08/01/95 1154422507 67
This Agreement is effective as of: JANUARY 3, 1996
ORIGINAL OBLIGATION:
This Loan Revision Agreement refers to the loan evidenced by the above
Note dated AUGUST 18, 1994 in favor of Bank executed by C-CUBE MICROSYSTEMS
INC. in the amount of $6,000,000.00 payable in full on AUGUST 1, 1995. Said
Note is secured by a Deed of Trust dated _________________________
(hereinafter referred to as the "Encumbrance"), recorded on
__________________________ as Instrument No. N/A in the Office of
County Recorder of N/A County California.
CURRENT OBLIGATION:
The unpaid principal balance of said Note as of JANUARY 3, 1996 is $0.00
on which interest is paid to SEPTEMBER 21, 1994, with a maturity of AUGUST
1, 1996. /x/ As modified by previous LOAN REVISION/EXTENSION AGREEMENT
dated JULY 27, 1995.
REVISION:
The undersigned Borrower hereby requests Bank to revise the terms of said
Note, and said Bank to accept payment thereof at the time, or times, in the
following manner:
1) THE CREDIT LIMIT IS HEREBY INCREASED BY $11,500,000.00 FROM
$8,500,000.00 TO $20,000,000.00; 2) THIS NOTE IS SUBJECT TO THE TERMS OF
A REVOLVING CREDIT LOAN AGREEMENT DATED AUGUST 18, 1994 AND ANY AND ALL
SUBSEQUENT AMENDMENT(S) THEREOF.
In consideration of Bank's acceptance of the revision of said Note,
including the time for payment thereof, all as set forth above, the
Borrower does hereby acknowledge and admit to such indebtedness, and
further does unconditionally agree to pay such indebtedness together with
interest thereon within the time and in the manner as revised in
accordance with the foregoing, together with any and all attorney's fees,
cost of collection, and any other sums secured by the Encumbrance.
Any and all security for said Note including but not limited to the
Encumbrance, if any, may be enforced by Bank concurrently or independently
of each other and in such order as Bank may determine; and with reference
to any such security in addition to the Encumbrance Bank may, without
consent of or notice to Borrower, exchange, substitute or release such
security without affecting the liability of the Borrower, and Bank may
release any one or more parties hereto or to the above obligation or
permit the liability of said party or parties to terminate without
affecting the liability of any other party or parties liable thereon.
This Agreement is a revision only, and not a novation; and except as
herein provided, all of the terms and conditions of said Note, said
Encumbrance and all related documents shall remain unchanged and in full
force and effect.
When one or more Borrowers signs this Agreement, all agree:
a. That where in this Agreement the word "Borrower" appears, it
shall read "each Borrower";
b. That breach of any covenant by any Borrower may at the Bank's
option be treated as breach by all Borrowers;
c. That the liability and obligations of each Borrower are joint and
several.
C-CUBE MICROSYSTEMS INC.
Dated this 3RD day of JANUARY 96. /S/ James Burke
------------------------
------------------------
The foregoing agreement is accepted this
this 3RD day of JANUARY 96. ------------------------
------------------------
By: /s/ Alan Jepsen
------------------------
<PAGE>
Exhibit 11.1
C-CUBE MICROSYSTEMS INC.
COMPUTATION OF EARNINGS PER SHARE
Quarter Ended March 31, 1996
(in thousands, except per share amounts)
Quarter Ended March 31,
---------------------
1996 1995
------- ------
Net income $13,581 $3,194
======= ======
Weighted average common shares outstanding 32,742 31,276
Common share equivalents related to stock options 3,300 2,340
------- ------
Weighted average common and equivalent shares 36,042 33,616
======= ======
Net income per share $0.38 $0.10
======= ======
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 113,935
<SECURITIES> 38,596
<RECEIVABLES> 37,893
<ALLOWANCES> 0
<INVENTORY> 11,184
<CURRENT-ASSETS> 207,060
<PP&E> 22,697
<DEPRECIATION> 11,175
<TOTAL-ASSETS> 228,466
<CURRENT-LIABILITIES> 29,448
<BONDS> 0
0
0
<COMMON> 96,095
<OTHER-SE> 14,044
<TOTAL-LIABILITY-AND-EQUITY> 228,466
<SALES> 67,900
<TOTAL-REVENUES> 68,100
<CGS> 31,979
<TOTAL-COSTS> 31,979
<OTHER-EXPENSES> 14,650
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,942
<INCOME-TAX> 7,680
<INCOME-CONTINUING> 13,581
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,581
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
