1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
FORM 10-K
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
[FEE REQUIRED]
For the fiscal year ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
--------- ---------April 1, 2001
Commission file number 1-5560
------
Alpha Industries, Inc.ALPHA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DelawareDELAWARE 04-2302115
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 Sylvan Road, Woburn, MassachusettsSYLVAN ROAD, WOBURN, MASSACHUSETTS 01801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617)(781) 935-5150
Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on
Title of each class which registered
------------------------------- ------------------------
Common Stock, $.25 par value American Stock Exchange
Rights to purchase Common Stock American Stock ExchangeNone
Securities registered pursuant to Section 12(g) of the Act:
NoneCommon Stock, $.25 par value
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_X_ No ----------- -----------___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant'sRegistrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X][ ]
The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant at May 31, 199627, 2001 was approximately $90,109,000.$1.102
billion.
The number of shares of Common Stock outstanding at May 31, 199627, 2001 was 9,719,216.43,593,725.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement, to be filed within 120 days of the
end of the Registrant's fiscal year are incorporated by reference into Part III
of this Report.report.
The Exhibit Index is located on page 34.44.
Page 1 of 5250 pages.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
PART I
Item 1 Business
OVERVIEW
We design, develop, manufacture and market proprietary radio frequency,
microwave frequency and millimeter wave frequency integrated circuits and
discrete semiconductors for wireless voice and data and broadband
communications. The primary applications for our products include wireless
handsets, wireless infrastructure and broadband communications equipment. We
also produce integrated circuits, discrete components, electrical ceramics and
ferrites used in wireless base station equipment, cable television, cable modems
and other broadband applications, wireless local loop, wireless personal digital
assistants and wireless local area networks.
We offer a broad range of products, including integrated circuit (IC) switches
and controls, power amplifiers, discrete semiconductors and multi-chip modules
that comprise a significant part of the radio frequency devices used in wireless
telephone handsets. We use a range of technologies, processes and materials to
meet our customers' performance requirements, including gallium arsenide metal
semiconductor field effect transistor (GaAs MESFET), gallium arsenide
pseudomorphic high electron mobility transistor (GaAs PHEMT), silicon and
electrical ceramic. Through our acquisition of Network Device, Inc. (NDI) in
April 2000, we offer power amplifiers and other devices made with a gallium
arsenide heterojunction bipolar transistor (GaAs HBT) process and an indium
gallium phosphide HBT process (InGaP HBT). In May 2001, we announced the
introduction of the world's first tri-band power amplifier module employing
InGaP HBT process technology. The AP134 module is designed for use in existing
dual-mode wireless handsets and is fully General Packet Radio Service (GPRS)
compliant. We also announced the shipment of our first volume order of a new
family of broadband amplifiers utilizing our InGaP HBT technology.
During fiscal 2001, we announced the introduction of our Alpha Integration
Platform(TM) (aiIP(TM)), a breakthrough manufacturing, packaging and design
technique, combining various radio frequency (RF) components in a single
module-based platform. The aiIP satisfies the market's demand for RF solutions
that will reduce design complexity and improve the OEMs' overall time to market
for new products. Utilizing this technique, we introduced state-of-the-art
switch/filter technology for wireless handsets. These switch/filter products
combine multiple functions in a single, module-based platform.
We also announced the introduction of our Alpha-2(TM) multi-chip module
packaging technology, which will dramatically reduce the cost of manufacturing
high-speed and high-frequency data communications equipment. Alpha-2 technology
provides the first surface-mounted package specifically designed for
high-frequency and high-speed ICs. The Alpha-2 package is compatible with
standard tape-and-reel manufacturing, making it ideal for use in high-speed data
communications equipment.
We divide our operations into two segments to address the distinct dynamics of
different markets:
- ----------------------------------------------------------------------------------
SEMICONDUCTOR PRODUCTS CERAMIC PRODUCTS
- ----------------------------------------------------------------------------------
Primary Products GaAs Integrated Circuits Electrical Ceramics
Discrete Semiconductors Ferrites
Multi-Chip Modules
- ----------------------------------------------------------------------------------
Primary Markets Wireless Handsets Wireless Infrastructure
Wireless Infrastructure Broadband Communications
Broadband Communications
- ----------------------------------------------------------------------------------
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
Our Semiconductor Products The Company categorizes its product linessegment supplies GaAs integrated circuits and
core technologies as follows:
discrete semiconductors in high volume for wireless telephone handsets and
wireless data applications. These products are used in equipment incorporating
the leading digital standards, Global System for Mobile Communications, or GSM,
Code Division Multiple Access, or CDMA (IS95), and Time Division Multiple
Access, or TDMA (IS136).
Radio Frequency (RF), Microwave and Millimeter Wave Monolithic Integrated
Circuits (MMICs)
.Our Ceramic Products segment uses electrical ceramic and ferrite technologies to
supply resonators and filters, primarily for wireless base station equipment.
Financial information about segments and geographic areas can be found in Note
10 to the consolidated financial statements filed as part of this report.
We were incorporated in 1962 under the laws of the state of Delaware.
PRODUCTS AND APPLICATIONS
We offer a broad array of radio frequency, microwave frequency and millimeter
wave frequency products to the wireless and broadband markets, including GaAs IC
switches and controls, GaAs integrated circuit power amplifiers, silicon
discrete semiconductors, ceramic resonators and multi-chip modules. A typical
end product for wireless communications, such as a handset, contains radio
frequency, baseband and digital signal processing components. Radio frequency
components convert, switch, process and amplify the high frequency signals that
carry the information to be transmitted or received. Baseband components process
signals into and from their original electrical form (low frequency voice or
data). Discrete Semiconductors
. Millimeter Wave ComponentsThe digital components control the overall circuitry and Subsystemsprocess the
voice or other data to be transmitted and received.
The charttable below identifies the major product categories and markets currently served by each of the
Company's product lines. In addition, the Company's products serve other
wireless markets.we serve.
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
POWER SMALL SIGNAL & MILLIMETER
AMPLIFIER MULTIFUNCTION DISCRETE CERAMIC WAVE
MARKETS ICS ICS SWITCH ICS SEMICONDUCTORS PRODUCTS PRODUCTS
- --------------------------------------------------------------------------------
MILLIMETER WAVE
DISCRETE COMPONENTS
CERAMIC SEMI- AND SUB-
MMICS PRODUCTS CONDUCTORS SYSTEMS
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cellular
Personal Communications
Services(PCS) -------------------------------------------------
Handset * * * (1)
-------------------------------------------------
Base Station * * * *
-------------------------------------------------
Digital Radio Links * * * *
WIRELESS VOICE & DATA
Handsets - --------------------------------------------------------------------------------
Pagers * * (1)
- --------------------------------------------------------------------------------
Global Positioning Systems(GPS) * * (1)
-
--------------------------------------------------------------------------------
Cordless Telephones * * (1)PDAs - --------------------------------------------------------------------------------- -
Infrastructure - - - - - -
- ----------------------------------------------------------------------------------------------------------------------------
BROADBAND
Wireless - - - - -
Cable TV * * * *& Modems - --------------------------------------------------------------------------------
Defense-Related Systems * * * *
- --------------------------------------------------------------------------------- - - -
Fiber - - - - -
- ----------------------------------------------------------------------------------------------------------------------------
(1) These applications do3
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
SEMICONDUCTOR PRODUCTS
The diagram below illustrates the role of many of our Semiconductor Products in
a dual band and dual mode wireless telephone handset.
[DUAL BAND/DUAL MODE HANDSET DIAGRAM]
Power Amplifiers. Wireless communications systems require amplification in
receiving and transmitting signals. Relatively weak incoming signals must be
amplified without adding background noise. GaAs power amplifiers are used in
handsets because they use battery power more efficiently than silicon
amplifiers, and battery life is a critical system feature in these portable
applications. We have been a leader in innovative GaAs power amplifier ICs. We
were the first merchant semiconductor company to offer a three volt,
high-efficiency PHEMT power amplifier IC for GSM operating at three different
frequencies. This product has been in continuous production for more than a
year. We were also the first to deliver a three volt MESFET GaAs power amplifier
IC, which has now been in continuous, high-volume production for more than three
years. In addition, our acquisition of NDI has provided us with GaAs HBT process
technology, which has opened new power amplifier opportunities and complements
our strength in the GaAs PHEMT and GaAs MESFET processes.
Integrated Circuit Switches and Controls. Switching and control functions route
and adjust signal levels between the receiver and transmitter and other
processing devices. The number of switching functions increases with the
complexity of the handset design. In the dual band/dual mode handset
illustrated, the switches perform three different routing functions, including:
signal routing to transmitter or receiver; signal routing to cellular or PCS
frequency; and signal routing to digital or analog mode.
Our GaAs integrated circuit switches are used in handsets to provide lower
signal loss and better signal isolation than comparable products. Our
ultra-high-efficiency GaAs PHEMT switch ICs integrate logic elements, making
their usage even easier for our OEM customers. The GaAs HBT process has not utilize millimeter wave componentsbeen
suitable for switches.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
Discrete Semiconductors. Discrete semiconductors, especially diodes, are used
for signal tuning and subsystems.
RF, Microwave and Millimeter Wave MMICs. The Company designs and
manufactures RF,switching functions in the handset. We draw on our
microwave frequency and millimeter wave MMICsfrequency experience to produce diodes
with better circuit performance. We manufacture these products in Gallium Arsenide (GaAs)very high
volumes for several handset OEMs.
Multi-Chip Modules. Multi-chip modules combine various semiconductor processes,
such as HBT, PHEMT and RF discrete semiconductors, in a single module-based
platform. The result is an easy-to-manufacture solution that integrate numerous functions performed by discrete semiconductors. The
functions of the Company's GaAs MMICs include amplification, switchingenables broadband
and controlwireless OEMs to reduce design complexity and frequency conversion of signals in the radio transceiver portion of
wireless communications systems. In wireless voice and data applications, the
Company's GaAs MMICs are used in the handheld unit, base station transceivers
and point to point radio links between the base station and local wireline
network. The Company's millimeter wave MMICs connect transmissions between
base stations, including the local wireline PBX switching office. The Company
believes that this function is growing in importance, and that it will continue
to do so as a greater percentage of the higher frequency spectrum is allocated
to accommodate the increase in wireless communications traffic.
2
Ceramic Products. The Company'sdramatically shorten their
product development cycle.
CERAMIC PRODUCTS
Our ceramic products play a critical role in the signal selection, or filtering
process, that is essential to processing communications signals. The physical properties of ceramicCeramic
materials are
suitable forallow improved power efficiency and miniaturization. The Company is a major
supplier of miniatureminiaturization, and are being
increasingly used in wireless communications infrastructure. Additionally,
ceramic antennasproducts are essential to manufacturers of GPS receivers,
particularly for compact handheld units which are gaining popularity.the broadband market through their presence in
point-to-point radios, fiber optics and CATV HFC (cable television hybrid fiber
coax system) networks. Ceramic products are crucialalso critical in the
frequency-determining portions of directDBS/VSAT (digital broadcast satellite television (DBS TV)satellite/very
small aperture terminal) receivers, radar detectors and intrusion alarms.
They areMARKETING AND DISTRIBUTION
We sell our products through independent manufacturers' representatives and
distribution partners, and through a direct sales staff. We sell through 12
domestic and 19 international independent manufacturers' representative
organizations. We also shrinkingdistribute product through a global organization that is
franchised throughout portions of the sizeworld, and through two organizations that
focus primarily on the North American market. Our field support management staff
oversees our manufacturers' representatives and distributors and provides them
with sales direction and support. Our direct sales staff manages key customer
accounts and worldwide customer support and identifies and targets sales in
emerging wireless and broadband markets.
We maintain an internal marketing organization that is responsible for
developing sales and advertising literature, such as product announcements,
catalogs, brochures and magazine articles in trade and other publications. Our
internal marketing organization also prepares technical presentations for
industry conferences.
We believe that the technical and complex nature of cellular radio base station equipment.
Discrete Semiconductors. The Company fabricates discrete surface mount
semiconductorsour products and markets
demands an extraordinary commitment to close ongoing relationships with our
customers. We strive to maintain close contact with our customers' design,
engineering, manufacturing, purchasing and project management personnel. We
employ a team approach in both GaAs and silicon as stand alone components for
specialized applications which are not addressed efficientlydeveloping close relationships by MMICs. Silicon
technology continues to be used for discrete semiconductors when circuit
integration is not possible or for certain applications for whichcombining the
propertiessupport of silicon material provide better performance. Discrete
semiconductors are used for amplification, switching and control and frequency
conversion in base stations, transmitters and receivers of cellular handsets.
Millimeter Wave Components and Subsystems. Millimeter wave applications
operate above the microwave frequency range, primarily between 20 Ghz and 300
Ghz. The Company has been an industry leader in the design and manufactureapplications engineers, manufacturing personnel, sales and
marketing staff and senior management. We believe that maintaining close contact
with our customers improves their level of millimeter wave componentssatisfaction, assists us in
anticipating their future product needs and subsystemsenhances our opportunities for
military and defense related
applications. This experience established the Company's advanced millimeter
wave MMIC capability. It also provides the Company with technological and cost
advantages in commercial applications, such as personal communications services
and personal communications networks (PCS/PCN) and cellular telephone
infrastructure equipment. The Company manufactures MMIC based amplifiers,
transmitters and receivers, as well as single function components such as Gunn
oscillators, mixers, isolators and circulators for commercial applications,
including PCS/PCN radio equipment.
The principal customers for these products are equipment manufacturers for
commercial and defense microwave systems such as cellular telephones,
commercial telecommunications, direct broadcast satellites, and military radar,
missile, and electronic warfare.
The Company's operations are within a single segment of the electronics
industry: the development, production and sale of microwave materials, devices
and components.
Markets and Distribution
During fiscal 1996, approximately 76% of the Company's sales were to
manufacturers of commercial products, primarily in the wireless communications
markets and include components for products such as wireless telephones and
base stations in addition to motion detectors and sensors. The remaining 24%
of sales were for use in a wide variety of defense-related systems.
Export sales to non-affiliates for fiscal 1996, 1995 and 1994 were
$23,633,000, $16,855,000, and $16,471,000, respectively. This compares with
domestic sales for the same period of $66,081,000, $54,974,000, and
$47,337,000, respectively. The Company operates sales subsidiaries in the
United Kingdom and a ceramic manufacturing operation in France. During fiscal
1996, the Company closed its sales subsidiary in Germany and replaced it with
an independent sales representative and distributor. See Note 3 to the
Consolidated Financial Statements on page 22 for financial information about
the Company's foreign and domestic operations.
3
The Company's sales are made through 15 independent domestic sales
representatives and 21 independent international sales representatives, as well
as through its own sales force of 29 persons. Approximately 14% of the
Company's sales are made through its own direct sales force and 86% through
sales representatives.
Research and Development
Research and development efforts are undertaken by the Company both on a
Company or customer sponsored basis. For customer sponsored projects, the
customer may pay all or a portion of the expenses incurred. Some of the
customer sponsored contracts are reimbursed by the U.S. Government. The
Company'sdesign wins.
RESEARCH AND DEVELOPMENT
Our products and markets are subject to continued technological advances.
Recognizing this, the Company has maintainedwe maintain a high level of R&D activities to remain
competitive in certain areas and to be an industry leader in other areas. We
maintain close collaborative relationships with many of our customers to help us
identify market demands and target our development efforts to meet those
demands. We are focusing our development efforts on new products, design tools
and manufacturing processes in our Semiconductor Products segment using our core
technologies. We strive to improve existing product performance, improve design
and manufacturing processes and reduce costs. The introduction of our aiIP
technique and Alpha-2 multi-chip
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
module packaging technology during fiscal 2001 is evidence of our focus in this
area. Further evidence of our commitment to R&D is our introduction of the
world's first tri-band power amplifier module employing InGaP HBT process
technology and the introduction of breakthrough switch/filter technology for
wireless handsets. The switch/filter products combine multiple functions in a
single, module-based platform and utilize our aiIP technique.
GaAs HBT Capabilities. On April 24, 2000, we acquired NDI of Sunnyvale,
California. The acquisition provided a production-ready InGaP HBT process,
enabling the production of high efficiency HBT power amplifiers for wireless
telephone handsets. GaAs HBT process technology works at higher frequencies and
requires less power to transmit signals than traditional silicon semiconductors,
and it provides greater efficiency and linearity than GaAs MESFET devices. For
cellular telephones, this permits smaller handsets and longer talk-time between
battery charges. HBT power amplifiers are also particularly well suited for use
in the emerging wireless and broadband markets. The addition of a line of GaAs
HBT products has complemented our existing GaAs PHEMT and GaAs MESFET devices,
enabling us to offer our customers the full range of currently available GaAs
processes for use in wireless telephone handsets, wireless data applications and
broadband data applications.
During the second quarter of fiscal 2001, we shipped our first volume order of a
new family of broadband amplifiers, the first products based on our advanced
InGap HBT technology, for use in a wide range of wireless and broadband
applications.
Our R&D expenditures for the last three fiscal years are detailed below (in
thousands):
1996 1995 1994
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Company sponsored................... $ 9,148 $ 4,154 $ 3,429
Customer sponsored.................. 4,224 7,583 9,439
Other*.............................. - 695 919
------- ------- -------
Total R & D Expenditures........ $13,372 $12,432 $13,787
======= ======= =======
*Non-reimbursed costs incurred by the Company on customer sponsored contracts.
- --------------------------------------------------------------------------------
Raw Materials2001, 2000 and 1999 were $36.0 million, $25.3
million and $15.9 million, respectively.
RAW MATERIALS
Raw materials for the Company'sour products and manufacturing processes are generally
available from several sources. It is the Company'sour policy not to depend on a sole source
of supply. However, there are limited situations where the Company procureswe procure certain
components and services for itsour products from single or limited sources. The Company purchasesWe
purchase these materials and services on a purchase order basis, doesbasis. We do not carry
significant inventories and does not
have any long-term supply contracts with its sourceonly a limited
number of our vendors.
The inability of
the Company to obtain these materials in required quantities would result in
significant delays or reductions in product shipments, which would materially
and adversely affect the Company's operating results.
Working Capital
TheWORKING CAPITAL
Our business of the Company is not seasonal, and there are no special practices with respect to
working capital for the Companyus or the industry in general. The Company providesWe provide a limited warranty
on itsour products against defects in material and workmanship. Payment terms are
generally 30 days in the domestic market and generally 60 days in foreign markets.
4
ContractsCUSTOMERS
During fiscal 1996, no one customer2001, Motorola, Inc. and Ericsson accounted for 10% or moreapproximately 26%
and 11%, respectively, of the
Company'sour total sales.
All of the Company's sales to the United States
Government and prime contractors and subcontractors thereof are subject to
termination at the convenience of the Government, in which event the Company
would normally be reimbursed for costs incurred. While U.S. Government orders
are cancelled in this manner, Alpha has seldom experienced any material
terminations for convenience.
Competitive Conditions
The Company competesCOMPETITIVE CONDITIONS
We compete on the basis of price, performance, quality, reliability, size,
ability to meet delivery requirements and customer service and support. The Company experiencesHowever,
we experience intense competition worldwide from a number of multinational
companies that offer a variety of competitive products and broader product
lines, and which have substantially greater financial resources and production,
marketing, manufacturing, engineering and other capabilities than the Company. The Companywe do. We also
facesface competition from a number of smaller companies. In addition, the Company'sour customers,
particularly itsour largest customers, may have or could acquire the
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
capability to develop or manufacture products competitive with those that have
been or may be developed or manufactured by the Company.
Patent and Trademarks
Alpha owns a small number ofus.
PATENTS AND TRADEMARKS
We own certain patents and hashave other patent applications under preparation or
pending. However, the Company believeswe believe that itsour technological position depends primarily
on theour ability to develop new innovative products through the technical
competence of itsour engineering personnel.
Backlog
The Company'sBACKLOG
Our policy is to book only the next three months of commercial orders consistent
with customer short-term requirements. Many commercial orders cover
substantially more than three months of performance, but such orders can be
easily modified or cancelled by the customer and we believe it is a better
practice to limit bookings in this manner. On this basis, we believe all orders
in our backlog to be firm. However, current market conditions make predictions
about future operations particularly difficult. While we believe all orders in
our backlog to be firm, our operating results have been materially and adversely
affected in the past by deferral and cancellation of orders as a result of
changes in customer requirements.
We have backlog of undelivered orders on March 31, 1996 wasApril 1, 2001 of approximately $36,500,000$38.7
million compared with $30,200,000$55.7 million on April 2, 1995. The
Company's policy is to record commercial orders on a quarterly basis consistent
with expected customer short-term requirements. Management believes all orders
in the Company's backlog to be firm. Approximately 90% of the March 31, 1996
backlog is anticipated to be shipped in fiscal 1997.
Environmental Regulations2000.
ENVIRONMENTAL REGULATIONS
In the Company'sour opinion, compliance with federal, state, and local environmental
protection regulations does not and will not have a material effect on theour
capital expenditures, earnings and competitive position of the
Company.
Executive Officersposition.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to theour executive
officers of the Company at May 31, 1996.during fiscal 2001:
Name Age PositionNAME AGE POSITION
George S. Kariotis 7378 Chairman Emeritus and Director
Thomas C. Leonard 66 Chairman of the Board of Directors
MartinDavid J. Reid 54 Director,Aldrich 44 President, and Chief Executive Officer David J. Aldrich 39and Director
Paul E. Vincent 53 Vice President, Treasurer, Secretary and Chief Financial Officer
and Treasurer
Thomas C. Leonard 61Jean-Pierre Gillard 57 Vice President
Paul E. Vincent 48 ControllerRichard Langman 54 Vice President and President of Trans-Tech, Inc.
Bruce Nonnemaker 54 Vice President
5
All officers serve until the next Board of Directors meeting following the
Annual Meeting of Stockholders scheduled for September 9, 1996,10, 2001, or until their
successors are elected and qualified. No officer was elected pursuant to any
arrangement or understanding.
George S. Kariotis was elected Chairman Emeritus in April 2000. Prior to this
election, Mr. Kariotis served as Chairman of the Board and Chief Executive
Officer from our inception in 1962 (when the Company was founded) untilto 1978, and, from 1974 to 1978, he was also
Treasurer of the Company.our Treasurer. From 1979 to 1983, Mr. Kariotis was the Secretary of Manpower
Development and Economic Affairs for the Commonwealth of Massachusetts. He was
re-elected Chairman
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
of the Board of the Company in 1983 and Chief Executive Officer in 1985. Mr. Kariotis resigned
as Chief Executive Officer in July 1986 while he campaigned for public office.
He resumed his position as Chief Executive Officer in November 1986, and served
in that capacity until 1991. Martin J. ReidMr. Kariotis served as Chairman of the Board since
his re-election in 1983 up until his election to Chairman Emeritus in April
2000. Mr. Kariotis has been a Director since 1962 and continues to serve in that
capacity.
Thomas C. Leonard was elected Chairman of the Board in April 2000. Prior to his
election, Mr. Leonard served as Chief Executive Officer since July 1996. Mr.
Leonard also served as our President from July 1996 to September 1999. In August
1996, Mr. Leonard was elected a Director. Mr. Leonard joined us in 1992 as a
division General Manager, and, in 1994, he was elected a Vice PresidentPresident. Mr.
Leonard has over 30 years experience in the microwave industry, having held a
variety of the Company from 1975 to 1981,executive and from 1981 to 1985, he was a Senior Vice President of the Company. Mr. Reidsenior level management and marketing positions at
M/A-COM, Inc., Varian Associates, Inc. and Sylvania.
David J. Aldrich was elected President, Chief OperatingExecutive Officer and became a Directormember of
the Board of Directors in 1985. He
was elected acting Chief Executive Officer in July 1986 whileApril 2000. Mr. Kariotis
campaigned for public office, and relinquished that position and resumed his
position as Chief Operating Officer in November 1986 after Mr. Kariotis'
campaign. Mr. Reid was elected to the position of Chief Executive Officer in
1991.
David J. Aldrich joined the Companyus in 1995 as Vice
President, Chief Financial Officer and Treasurer. In May 1996 Mr. Aldrich was also appointedHe served as Vice President
and General Manager of Alpha Microwave.the Semiconductor Products segment until his election in
September 1999 to President and Chief Operating Officer. From 1989 to 1995, Mr.
Aldrich held severalsenior management positions at M/A-COM, Inc., including Manager
Integrated Circuits Active Products, Corporate Vice President Strategic
Planning, Director of Finance and Administration, and Director of Strategic
Initiatives with the Microelectronics Division.
Paul E. Vincent joined us as Controller in 1979 and has been Vice President and
Chief Financial Officer since January 1997. Mr. Vincent was elected Secretary in
September 1999. Prior to joining M/A-COM, Inc.,us, Mr. Aldrich was Controller with Adams
Russell Electronics Company from 1984Vincent worked at Applicon Incorporated
and, prior to 1989 and a project leader for a NASA
satellite communications program with Space Communications Company (a Fairchild
Industries and Contel Inc. Partnership) from 1981 to 1983.that, Arthur Andersen & Co. Mr. AldrichVincent is a directorCPA.
Richard Langman joined us in January 1997 as Vice President, and as President
and General Manager of CableMaxx,our Trans-Tech, Inc., a wireless cable television service provider.
Thomas C. Leonard subsidiary. Prior to joining us, Mr.
Langman worked for Coors Ceramics Company for 23 years, holding senior executive
positions in operations and sales.
Jean-Pierre Gillard joined the Companyus in 1992 as General Manager of the
ComponentsGaAs integrated circuit
operations and Systems Division. He became the General Managerhas been Vice President of Business Development since June 1996.
Before 1992, he held a number of management positions at M/A-COM, Inc. in both
marketing and sales.
Bruce Nonnemaker joined us in 1997 as Director of Operations for the
Alpha Microwave Division effective January 1994 and was elected aSemiconductor Products segment. Mr. Nonnemaker served in this capacity until his
election to Vice President, Operations in 1994.September 1999. Prior to joining us,
Mr. Leonard has over 30 years experience in the microwave
industry, havingNonnemaker held a series of general managerial and marketingsenior operations management positions at M/A-COM, Inc., from 1972 to 1992Digital Equipment
Corporation. Before this, he held senior operations positions at Western
Digital, Commodore Computer and prior to 1972 at Varian Associates and
Sylvania.
Paul E. Vincent has held his position as Controller since he joined the
Company in 1979.
EmployeesSolid State Scientific.
EMPLOYEES
As of March 31, 1996, the Company and its subsidiariesApril 1, 2001, we employed approximately 9901,120 persons, compared with
8301,090 persons as of April 2, 1995.
6
Item2000.
ITEM 2 PropertiesPROPERTIES
The following information describes the major facilities ownedwe own and leased by
the Company. The Company believes it haslease.
We believe we have adequate production capacity to meet our current business
needs, but we are adding the capacity required to better serve the wireless and
broadband markets as demand continues to grow. In September 1999, we announced
the completion of the first phase of a major expansion program to enhance and
expand the available clean room space in our GaAs IC fabrication facility in
Woburn, Massachusetts. The new clean room space is complete and in use, and
additional manufacturing equipment has been installed and brought to full
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
operation. The second phase, which involved the installation of additional
production equipment within the existing facility, has also been completed. The
third phase of the expansion program involves the creation of a GaAs IC line
that will allow the manufacture of product on six-inch wafers. We are in the
Woburn facilityinitial stages of development of this production line and expect to meet the semiconductor and component business needs for the
next 12complete
this phase within twelve to 18fifteen months.
The Company also believes that it has adequate production
capacity in the Maryland facilities to meet the ceramic products business needs
for the next 12 to 18 months. As described in Note 5 to the Consolidated
Financial Statements on pages 23 through 25, several properties secure debt of
the Company.
a. The Company ownsa) We own a 158,000 square foot plant plus eight acres of land at
20 Sylvan Road,building in Woburn, Massachusetts. This plant is occupied byfacility
houses our primary GaAs IC fabrication facility and our corporate headquarters.
We doubled output capacity in this facility in 1999 and again in 2000. The
completion of the six-inch GaAs IC production line will enable us to double
capacity for a third time at this location.
b) We own a 125,000 square foot facility in Haverhill, Massachusetts. This
facility was purchased in September 2000 and provides additional manufacturing
and office space. Initial operations at this site commenced in January 2001 and
include design engineering as well as GaAs IC, silicon semiconductor and
component manufacturing operationsmulti-chip module assembly and corporate
headquarters.
b. The Company ownstesting.
c) We lease a 27,000 square foot building in Sunnyvale, California. This
facility houses our second GaAs IC fabrication facility and was acquired in our
purchase of Network Device, Inc. in April 2000.
d) We own a 92,000 square foot facility in Adamstown, Maryland. This plantfacility is
occupied by the Company's wholly owneda subsidiary,
Trans-Tech, Inc., and is utilized as the Company'sour primary electrical ceramic productsproduct
manufacturing facility. c. The Company leases approximatelyDuring 2000, we began expanding the capacity of this
facility to meet increased demand for its products. We are in the final stages
of this expansion project and expect to complete the project by the end of
calendar year 2001.
e) We lease a 33,000 square foot facility in Frederick, Maryland. This plantbuilding
is used by the Company's wholly owned
subsidiary, Trans-Tech, Inc., to manufacture ceramic components, including filters.
d. The Company leases a 7,200 square foot facility in Marly, France. This
plant is occupied by the Company's wholly owned subsidiary, Trans-Tech
Europe SARL and is also utilized as a ceramic products manufacturing
facility.
e. The Company leases a 3,600 square foot facility in Milpitas, California.
This facility is occupied by Western Trans-Tech, a division of Trans-Tech,
Inc., and is also utilized as a ceramic products manufacturing facility.
ItemITEM 3 Legal Proceedings
The Company doesLEGAL PROCEEDINGS
We do not have any material pending legal proceedings other than routine
litigation incidental to itsour business.
The Company hasWe have been notified by federal and state environmental agencies of itsour
potential liability with respect to the following two sites: the Spectron, Inc. Superfund site in Elkton,
Maryland, and the Seaboard Chemical Corporation
site in Jamestown, North Carolina. In each case severalMaryland. Several hundred other companies have also been notified about their
potential liability regarding these sites.
The Company continuesthis site. We continue to deny that it haswe have any
responsibility with respect to these sitesthis site other than as a de minimis party.
Management is of the opinion that -- -------
the outcome of the aforementionedthis environmental mattersmatter will
not have a material effect on the Company'sour operations.
See also Note 11 to the Consolidated Financial Statements on page 31.
ItemITEM 4 Submission Of Matters ToSUBMISSION OF MATTERS TO A Vote Of Security HoldersVOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fiscal
quarter ended March 31, 1996.April 1, 2001.
9
10
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
PART II
ItemITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
In April 2000, we issued an aggregate 2.67 million shares of common stock to all
shareholders of NDI in exchange for all outstanding shares of NDI, pursuant to
an exemption from registration under Section 3(a)(10) of the Securities Act of
1933, as amended.
Our common stock is traded on the NASDAQ National Market forunder the Registrant's Common Stock and
Related Stockholder Matters
See the section entitled "Quarterly Financial Data" appearing on page 19 for
information regarding Common Stock market prices. Dividendssymbol AHAA.
The number of stockholders of record as of May 31, 2001 was approximately 950.
We have not been paid cash dividends on our common stock since fiscal 1986, and we do
not anticipate paying cash dividends in eitherthe foreseeable future. Our current
practice is to retain all of our earnings to finance future growth. We are
subject to financial and operating covenants, including restrictions on the
past two fiscal years.payment of cash dividends, under our bank financing agreement. See Note 5Notes 4 and 6
to the Consolidated Financial Statements appearingbeginning on pages 23 through 2530 and 34,
respectively, for information regarding dividend restrictions.restrictions and the stock
split.
The following table sets forth high and low market prices for our common stock
for the periods indicated.
HIGH LOW
-------------------------------------------------------------------------------
FISCAL YEAR ENDED APRIL 1, 2001:
First quarter.................................... $63.875 $35.000
Second quarter................................ 50.438 32.000
Third quarter................................... 54.000 24.750
Fourth quarter................................. 35.938 13.938
FISCAL YEAR ENDED APRIL 2, 2000:
First quarter.................................... $23.125 $ 8.938
Second quarter.................................. 28.906 21.500
Third quarter................................... 33.125 23.875
Fourth quarter.................................. 74.734 27.016
-------------------------------------------------------------------------------
10
11
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
ITEM 6 SELECTED FINANCIAL DATA
You should read the data set forth below in conjunction with Item 7,
Item 6 Selected"Management's Discussion and Analysis of Financial Data
Five Year Financial SummaryCondition and Results of
Operations" and our consolidated financial statements and related notes
appearing elsewhere in this Annual Report on Form 10-K. The selected
consolidated financial data set forth below as of April 1, 2001 and April 2,
2000 and for the fiscal years ended April 1, 2001, April 2, 2000 and March 28,
1999 has been derived from our audited consolidated financial statements and are
included elsewhere in this Annual Report on Form 10-K. The selected consolidated
financial data set forth below as of March 28, 1999, March 29, 1998 and March
30, 1997 and for the years ended March 29, 1998 and March 30, 1997 has been
derived from our consolidated financial statements that are not included in this
Annual Report on Form 10-K.
On April 24, 2000, we completed our acquisition of privately-held NDI. The
acquisition has been accounted for as a pooling-of-interests and accordingly,
all prior period consolidated financial data set forth below has been restated
to include the combined results of operations, financial position and cash flows
of NDI.
FISCAL YEAR
2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts
and financial ratios)
Fiscal Year
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------
Results of Operations
Sales...............................RESULTS OF OPERATIONS
Sales ....................................... $271,568 $186,402 $126,413 $116,881 $ 96,894 $78,254 $ 70,147 $69,543 $71,032
Income (loss) before
extraordinary item................. 3,794 2,847 (11,466) (2,987) 113
Extraordinary item-utilization of
net operating loss carryforward.... - - - - 985,253
Net income (loss)................... 3,794 2,847 (11,466) (2,987) 122 ........................... 33,373 17,982 19,263 10,161 (15,572)
Per share data
Net income (loss) basic ................... $ 0.78 $ 0.44 $ 0.56 $ 0.31 $ (0.48)
Net income (loss) diluted ................. $ .430.75 $ .360.42 $ (1.53)0.54 $ (.40)0.30 $ .02(0.48)
Weighted average common shares........................... 8,755 7,882 7,502 7,464 7,429
Financial Ratiosshares basic ...... 43,029 40,659 34,314 33,268 32,208
Weighted average common shares diluted .... 44,752 42,822 35,406 34,088 32,208
FINANCIAL RATIOS
Return (based on net income-net loss)income (loss))
On sales.......................... 3.9% 3.6% (16.3%) (4.3%) 0.2%sales .................................. 12.3% 9.6% 15.2% 8.7% (18.3)%
On average assets................. 6.0% 6.0% (23.4%) (5.6%) 0.2%assets ......................... 10.8% 9.0% 18.1% 12.4% (21.1)%
On average equity................. 8.9% 11.0% (38.3%) (8.1%) 0.3%equity ......................... 12.3% 10.7% 23.3% 16.7% (28.9)%
Current Ratio.......................ratio ............................... 6.94 6.15 3.45 3.24 3.35
1.68 1.64 2.26 2.90
DebtLong-term debt to Equity...................... 4.5% 17.1% 19.9% 11.8% 13.1%
Financial Positionequity .................... 0.1% 0.1% 0.8% 2.3% 7.2%
FINANCIAL POSITION
Working Capital.....................capital ............................. $188,288 $170,357 $ 32,647 $10,98351,154 $ 8,981 $15,767 $17,80038,620 $ 32,647
Additions to property, plant and equipment...................... 12,297 5,248 2,939 4,112 1,274equipment... 54,748 39,660 20,793 13,037 7,963
Total assets........................ 75,423 50,167 44,430 53,777 53,211assets ................................ 337,019 281,024 120,683 92,524 71,979
Long-term debt...................... 2,565 4,744 4,826 4,191 5,030debt .............................. 235 345 713 1,625 3,606
Long-term capital lease obligations........................ 565 754 892 1,032 -obligations ......... -- -- -- -- 8
Stockholders' equity................ 57,533 27,674 24,261 35,565 38,456
Other Statisticsequity ........................ 299,178 242,093 94,252 71,287 50,108
OTHER STATISTICS
New orders (net of cancellations)... 103,200 84,900 66,700 70,500 66,500 ........... 254,600 203,500 126,500 121,100 81,300
Backlog at year end.................end ......................... $ 36,500 $30,20038,700 $ 23,500 $26,900 $25,90055,700 $ 36,900 $ 36,800 $ 32,500
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
811
Item12
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
ITEM 7 Management's Discussion And Analysis Of Financial
Condition And Results Of OperationsMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
We design, develop, manufacture and market proprietary radio frequency,
microwave frequency and millimeter wave frequency integrated circuits and
discrete semiconductors for the wireless and broadband communications markets.
During our second quarter ended October 1, 2000, we reorganized into two
reportable segments based on management's methods of evaluating operations and
performance. Our reportable segments are: Semiconductor Products and Ceramic
Products.The Semiconductor Products segment is comprised of two of the Company's
former segments: Wireless Semiconductor Products and Application Specific
Products. A description of the reportable segments follows:
The Company set record levelsSemiconductor Products segment designs and manufactures gallium arsenide
integrated circuits, other discrete semiconductors and multi-chip modules
primarily for salesthe global wireless communications and orders for fiscal 1996, and
earnings increased 33%broadband markets. This
segment represented 82.7% of our total sales in fiscal 1996 as compared with2001.
The Ceramic Products segment designs and manufactures technical ceramic and
magnetic products primarily for the prior year. Inglobal wireless infrastructure and broadband
markets. This segment represented 17.3% of our total sales in fiscal 1996,2001.
On April 24, 2000, we completed our acquisition of privately-held Network
Device, Inc. (NDI) of Sunnyvale, California. Approximately 2.67 million shares
of common stock of the Company doubled its investments in product development mainlywere exchanged for all outstanding shares of NDI.
Approximately 185,000 shares of Company stock were reserved for the Gallium Arsenide Monolithic Integrated Circuits (GaAs MMICs)conversion
of NDI stock options into Company options. The acquisition has been accounted
for as a pooling-of-interests and ceramic products aimed ataccordingly, all prior period consolidated
financial statements and related notes to the consolidated financial statements
have been restated to include the combined results of operations, financial
position and cash flows of NDI.
Our customers include leading OEMs in the wireless communication markets. Atand broadband communications
industry and their principal suppliers. During fiscal 2001, sales to our 15
largest customers accounted for 69.1% of our total sales. During that period,
sales to Motorola and Ericsson accounted for 26.0% and 11.3%, respectively, of
total sales.
RESULTS OF OPERATIONS
The following table shows our statement of operations data expressed as a
percentage of sales for the same
time,periods indicated:
YEARS ENDED
---------------------------------------------------
APRIL 1, 2001 APRIL 2, 2000 MARCH 28, 1999
------------- ------------- --------------
Sales............................................................ 100.0% 100.0% 100.0%
Cost of sales.................................................... 55.8 56.6 56.4
----- ----- -----
Gross margin..................................................... 44.2 43.4 43.6
Research and development expenses................................ 13.3 13.6 12.6
Selling and administrative expenses.............................. 15.9 18.3 18.8
----- ----- -----
Operating income................................................. 15.0 11.5 12.2
Other income, net................................................ 3.2 3.1 1.0
----- ----- -----
Income before income taxes....................................... 18.1 14.6 13.2
Provision (benefit) for income taxes............................. 5.9 5.0 (2.0)
----- ----- -----
Net income....................................................... 12.3% 9.6% 15.2%
===== ===== =====
12
13
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
FISCAL YEARS ENDED APRIL 1, 2001, APRIL 2, 2000 AND MARCH 28, 1999
Sales. Sales increased 45.7% to $271.6 million in fiscal 2001 from $186.4
million in fiscal 2000. The increase is principally the Company increased unit outputresult of high growth
experienced by 64% due to improved manufacturing
efficienciesour Semiconductor and added capacity for both semiconductor and ceramic products.
These actions have positionedCeramic Products segments during the Company to support higher demands
particularlyfirst
nine months of fiscal 2001 as demand for wireless communication products. Unfortunately, an overall
softness inand broadband products
increased during this period. During the North American cellular market and the delayed roll-out of the
Personal Communications System (PCS) is expected to result in lower demand
throughout the summer of 1996. With lower volumes, higher fixed costs
associated with the Company maintaining its readiness to serve the wireless
market and a decision to exit certain non-strategic business areas, the Company
expects to report a net loss for the firstfourth quarter of fiscal 1997. As demand
returns2001, a
downturn in the wireless and increases,broadband markets resulted in lower quarterly
sales, reducing the Company anticipates improved results for the
remainder ofoverall increase in sales during fiscal 1997.
Results Of Operations
Sales for fiscal 1996 increased 23.8% to $96.9 million as2001 when compared
to sales
of $78.3fiscal 2000. Sales increased 47.5% to $186.4 million in fiscal 1995 and $70.12000 from
$126.4 million for fiscal 1994. The
increases in fiscal 1996 and 1995 sales were1999. The increase was primarily attributable to
increased unit
volumedemand for wireless products, as well as demand for products in
emerging broadband data applications. Sales of products for the Company's GaAs MMIC, ceramicdefense market
decreased to 6.5% of total sales in fiscal 2001 from 7.7% in fiscal 2000 and
discrete semiconductor product
lines primarily into the commercial wireless markets. These unit volume
increases were partially offset by a decline17.2% in average selling prices because
of the Company's shift to high volume business in the commercial sector. As
the Company continues to gain strength in the commercial wireless markets,
direct sales to the United States Defense Department1999, as we continue to decline, with
24%exit the defense market by offering last time
buys to our customers and concluding existing contracts. Deliveries to Motorola
represented 26.0% of fiscal 1996our total sales related to military subcontracts for ultimate sale to
the Defense Department or foreign governments, compared with 29% in fiscal 1995, and 40%2001 compared to 34.1% in fiscal
1994. The decrease2000 and 28.1% in defense related business for
fiscal 19961999. Deliveries to Ericsson represented 11.3% of our
total sales in fiscal 2001 and 1995 was attributable to the declinerepresented less than 10% of our total sales in
traditional military
productsfiscal 2000 and reduced funding for certain weapons systems.fiscal 1999.
Gross Profit. Gross profit increased 29.4%48.4% to $119.9 million in fiscal 1996 to $30.92001 from
$80.8 million or 31.9% of
sales, as compared to $23.9 million, or 30.5% of sales in fiscal 1995 and $14.8
million or 21.0% of sales2000. Gross margin increased to 44.2% in fiscal 1994. The improvement in gross profit for
fiscal 1996 and 1995 was the result of (a) increased sales volumes (b) higher
capacity utilization at the Company's Woburn, Massachusetts manufacturing
facility and (c) greater efficiencies due to the consolidation of facilities
that took place2001
from 43.4% in fiscal 1994 when2000. These increases were primarily attributable to our
continued ability to leverage capacity and improve operating efficiencies in
both our Semiconductor and Ceramic Products segments during the Company moved several product lines to
its Woburn, Massachusetts plant. The Company recordedfirst nine
months of fiscal 2001, offset by the effect of high fixed costs on lower marginssales
experienced in the fourth quarter of fiscal 1996 as2001. Gross profit increased 46.6%
to $80.8 million in fiscal 2000 from $55.1 million in fiscal 1999. The increase
in gross profit was primarily a result of flatteningincreased sales, as well as improved
operating efficiencies in our Semiconductor and rising costs
dueCeramic Products segments, as
both continued to added manufacturing capacity. In anticipationleverage capacity and improve yields. Gross margin decreased
slightly to 43.4% in fiscal 2000 from 43.6% in fiscal 1999. The slight decrease
in gross margin was attributable to our acquisition of NDI on April 24, 2000.
NDI experienced a negative gross margin during fiscal 2000 as it initiated a
ramp in production during this period without the demand for
wireless communication products increasing over the second half of fiscal 1997,
the Company has decided to maintain its current levels of manufacturing
capacity for MMICs, discrete semiconductorsoffsetting sales volume.
Research and ceramic products which will
result in lower gross margins in the first quarter of fiscal 1997, but with
steady improvement expected as the volumes increase with higher demand.Development Expenses. Research and development expenses increased
120.2% in fiscal 199642.2% to $9.1$36.0 million or 9.4% of sales, from $4.2 million, or 5.3%13.3% of sales in fiscal 1995.2001 from $25.3 million or
13.6% of sales in fiscal 2000. The increase in research and development expenses
is primarily attributable to our ongoing development of processes and
applications within our Semiconductor Products segment in order to address our
targeted markets: wireless and broadband. More than 90% of our total research
and development spending in fiscal 2001 was within the Semiconductor Products
segment. Research and development expenses increased 21.1% in fiscal 1995 from $3.458.9% to $25.3 million or
4.9%13.6% of sales in fiscal 1994. These increases2000 from $15.9 million or 12.6% of sales in fiscal
1999. The increase in research and development reflectexpenses was primarily
attributable to the continued investment by the Companydevelopment of processes and applications in the
GaAs MMICSemiconductor Products segment.
Selling and ceramic product lines. The Company will continue to invest in product and
process development in order to address the demands of its targeted wireless
markets. Customer sponsored R&D decreased $3.4 million in fiscal 1996, $1.9
million in fiscal 1995 and $1.5 million in fiscal 1994. As customer sponsored
R&D continues to decrease, the Company sponsored R&D will continue to increase
since the Company is strongly committed to developing new wireless
communications products. However, whenever possible the Company will try to
fund its R&D through collaborative developmental contracts.
9
Administrative Expenses. Selling and administrative expenses
increased 26.8% to $17.2$43.3 million or 17.8%15.9% of sales in fiscal 1996. Whereas2001 from $34.1
million or 18.3% of sales in fiscal 2000. Included in the $43.3 million is
approximately $1.8 million in one-time transaction costs associated with the
acquisition of NDI on April 24, 2000. Excluding these one-time costs, selling
and administrative expenses decreased to
$15.7for fiscal 2001 would have totaled $41.5 million or
20.1%15.3% of sales, inan increase of 21.6% compared to fiscal 1995 from $16.3 million, or 23.2%
of sales in fiscal 1994.2000. The increase in
selling and administrative expenses for fiscal 1996 iswas primarily a result of training and otherattributable to increased
direct selling costs related to
the early phases of implementation of a new manufacturing and management
information system,resulting from higher sales volumes, as well as increased
commissionscosts related to highertraining and recruiting employees. Due to our continued ability
to support our sales volume.growth without incurring substantial additional costs,
selling and administrative expenses as a percentage of sales declined in fiscal
2001 when compared to fiscal 2000.
13
14
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
Selling and administrative expenses increased 43.7% to $34.1 million or 18.3% of
sales in fiscal 2000 from $23.7 million or 18.8% of sales in fiscal 1999. The
decreaseincrease in selling and administrative expenses forwas attributable to increased
sales commissions and direct selling costs resulting from higher sales volumes,
as well as increased expenses related to training, recruiting and an increased
sales force. As a result of our ability to support our sales growth without
incurring substantial additional costs, selling and administrative expenses as a
percentage of sales declined in fiscal 19952000 over fiscal 1999.
Other Income, Net. Other income, net, increased 47.1% to $8.6 million or 3.2% of
sales in fiscal 2001 from $5.9 million or 3.1% of sales in fiscal 2000. The
increase in other income, net, was primarily attributable to an increase in
interest income as a result of higher average levels of cash, cash equivalents
and short-term investments. Other income, net, more than quadrupled to $5.9
million or 3.1% of sales in fiscal 2000 from $1.2 million or 1.0% of sales in
fiscal 1999. The increase was also primarily the result of considerably higher
levels of cash, cash equivalents and short-term investments.
Provision (Benefit) for Income Taxes. The provision for income taxes in fiscal
2001 was $15.9 million compared to $9.3 million in fiscal 2000. The fiscal 2001
provision reflects a tax rate of approximately 32% compared to a tax rate of 34%
in fiscal 2000. The decrease in the fiscal 2001 tax rate is primarily the result
of research and development tax credits utilized in fiscal 2001. The $2.6
million benefit reflected in fiscal 1999 reflects a 10% tax rate offset by a
$3.3 million tax benefit. The tax benefit of $3.3 million resulted from a
reduction in administrative personnel completedthe valuation allowance against deferred tax assets because of the
expected use of net operating loss carryforwards in future periods.
BUSINESS SEGMENTS
The table below displays sales and operating income by business segment for
fiscal 2001, 2000 and 1999. See Note 10 to the consolidated financial
statements.
YEARS ENDED
APRIL 1, APRIL 2, MARCH 28,
2001 2000 1999
-------- -------- ---------
(in thousands)
SALES
Semiconductor Products..... $224,560 $150,348 $100,873
Ceramic Products .......... 47,008 36,054 25,540
-------- -------- --------
$271,568 $186,402 $126,413
======== ======== ========
OPERATING INCOME
Semiconductor Products..... $ 33,496 $ 16,761 $ 13,580
Ceramic Products .......... 7,164 4,632 1,879
-------- -------- --------
$ 40,660 $ 21,393 $ 15,459
======== ======== ========
Semiconductor Products. Sales for the Semiconductor Products segment increased
49.4% to $224.6 million in fiscal 2001 from $150.3 million in fiscal 2000. The
increase was primarily attributable to increased demand and penetration into our
two targeted markets, wireless communications and broadband during the first
nine months of fiscal 2001. During the fourth quarter of fiscal 1994, as2001, a result ofdownturn
in the consolidation ofwireless and broadband markets resulted in lower quarterly sales,
reducing the Company's operationsoverall increase in Methuen, Massachusetts into its operationssales during fiscal 2001. Sales for the
Semiconductor Products segment increased 49.0% to $150.3 million in Woburn, Massachusetts.
Interest expense remained relatively constantfiscal 2000
from $100.9 million in fiscal 1999. The increase reflects a growing wireless
market to include data, increased market penetration and gains in market share.
Operating income for the Semiconductor Products segment increased 99.8% to $33.5
million in fiscal 1996 and 1995. In2001 from $16.8 million in fiscal 1995 interest expense decreased $40 thousand from fiscal 1994 since
certain financing2000. Included in the $33.5
million is approximately $1.8 million in one-time transaction costs associated
with the Methuen facility were chargedacquisition of NDI. Excluding these one-time costs, operating income
14
15
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
for fiscal 2001 would have totaled $35.3 million, an increase of 110.5% when
compared to fiscal 2000. The increase was primarily attributable to increased
sales and improved operating efficiencies as this segment continued to leverage
capacity, improve yields and control selling and administrative costs. Operating
income for the repositioning costSemiconductor Products segment increased 23.4% to $16.8 million
in fiscal 2000 from $13.6 million in fiscal 1999. The increase was primarily
attributable to increased sales and improved operating efficiencies as this
segment continued to leverage capacity and control material costs. Additionally,
as this segment continued its development of processes and applications for the
wireless and broadband markets, it was able to control administrative costs.
Ceramic Products. Sales for the Ceramic Products segment increased 30.4% to
$47.0 million in fiscal 2001 from $36.1 million in fiscal 2000. The increase was
primarily due to growth in demand and increased penetration in the wireless
infrastructure and broadband markets for the first nine months of fiscal 2001.
During the fourth quarter of fiscal 1994.
Interest2001, a downturn in the wireless and
broadband markets resulted in lower quarterly sales, reducing the overall
increase in sales during fiscal 2001. Sales for the Ceramic Products segment
increased 41.2% to $36.1 million in fiscal 2000 from $25.5 million in fiscal
1999. The increase in sales was primarily attributable to growth in wireless
infrastructure combined with added customer penetration, as well as an
increasing demand from emerging broadband customers.
Operating income for the Ceramic Products segment increased $315 thousand largely due54.7% to interest earned on
funds received$7.2
million in fiscal 2001 from a stock offering that$4.6 million in fiscal 2000. The increase in
operating income was completed duringprimarily the third
quarterresult of increased sales and improved
operating efficiencies, including the leveraging of existing capacity and the
investment in more cost-effective equipment. Operating income for the Ceramic
Products segment more than doubled to $4.6 million in fiscal 1996.2000 from $1.9
million in fiscal 1999. The Company successfully completed a secondary public
offering which raised $25.3 million, netincrease in operating income was primarily
attributable to an increase in sales and improved operating efficiencies,
including the leveraging of expenses, on the salecapacity and increased manufacturing automation.
LIQUIDITY AND CAPITAL RESOURCES
As of 1,840,000
shares of common stock. The proceeds are being used to fund further capital
expansion, to retire certain bank debt, forApril 1, 2001, we had working capital potential
acquisitions and general corporate purposes. Interest income remained constant
for fiscal 1995 and 1994. Other expense and income increased by $43 thousand in
fiscal 1996 compared with fiscal 1995 and decreased $82 thousand in fiscal 1995
in relation to fiscal 1994. These fluctuations are due to currency gains and
losses.
The Company's effective tax rate for fiscal 1996 was 15% compared to the
current combined federal, state and foreign rate of approximately 40%. This
rate differed from statutory rates primarily as a result of the utilization of
net operating loss carryforwards. At March 31, 1996, the Company had available
net operating loss carryforwards of approximately $25$188.3 million, which will expire
commencing in 2004.
Net income for fiscal 1996 was $3.8 million or $0.43 per share versus $2.8
million or $0.36 per share for fiscal 1995 and a net loss of $11.5 million or
$1.53 per share for fiscal 1994. The first quarter of fiscal 1996 included a
repositioning credit of $320 thousand or $0.03 per share which resulted from
the reversal of certain accruals for estimated carrying costs as a result of an
earlier than expected disposition of the Methuen, Massachusetts facility. Per
share data reflects the stock offering completed in the third quarter of fiscal
1996.
The Company expects a loss of approximately $0.24 to $0.27 per share for the
first quarter of fiscal 1997, as a result of: (i) lower shipments in the
quarter, (ii) the decision to maintain production capacity, (iii) the decision
to continue product development work, and (iv) the exiting of certain
non-strategic areas. The Company has previously announced that it anticipates
break-even to positive results in the second quarter of fiscal 1997, and if an
anticipated resurgence of demand for the Company's products sold into the
wireless communications industry leads to increased orders beginning in the
second quarter of fiscal 1997, the Company expects to report improved operating
results and a return to profitability in the second half of fiscal 1997.
Financial Position
At March 31, 1996, working capital totaled $32.6 million and included $15.5including $153.8
million in cash, cash equivalents and short-term investments, compared with
$11.0investments. In fiscal 2001,
operations generated $57.6 million of cash primarily attributable to net income
of $33.4 million. In addition, we effectively managed working capital at the end ofas
evidenced by an increase in average annual inventory turns to 11.0 in fiscal
1995. Cash increased
$7.8 million2001 compared to 10.2 in fiscal 2000, and by a decrease in average annual days
sales outstanding to 48 days in fiscal 2001 compared to 56 days in fiscal 2000.
Capital expenditures during fiscal 1996 mainly2001 totaled $54.7 million. Of the $54.7
million, approximately $48.4 million was related to the Semiconductor Products
segment as a result of proceeds received fromwe continued our investment in the secondary public offering. During fiscal 1996,semiconductor GaAs wafer
fabrication operation and the Company hadintegrated circuit and discrete semiconductor
assembly and test areas. Of the $48.4 million, $12.3 million relates to the
purchase of capital expenditures primarilya 125,000 square foot facility in Haverhill, Massachusetts. This
facility was purchased in September 2000 and provides additional manufacturing
and office space. Initial operations at this site commenced in January 2001 and
include design engineering as well as GaAs IC, silicon semiconductor and
multi-chip module assembly and testing. The relocation of these operations to
the Haverhill facility has provided additional space for the expansion of
its ceramicfabrication operations at our facility in Woburn, Massachusetts.
In September 1999, we announced the completion of the first phase of a major
expansion program to enhance and expand the available clean room space in our
GaAs IC facility in Woburn, Massachusetts. The new clean room space is complete
and in use, and additional manufacturing equipment has been installed and
brought to full operation. The second phase, which involved the installation of
additional production equipment within the existing facility, has been
completed. The third phase of the expansion program involves the creation of a
GaAs IC line that will allow the manufacture of product on six-inch wafers. We
are in the initial stages of development of this six-inch wafer production line,
which we estimate will cost approximately $30 million dollars. We expect to
complete this phase within twelve to fifteen months. Once
15
16
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
this new six-inch wafer production line is in operation, we plan to convert our
existing four-inch wafer production areas to six-inch, as future demand
requires. Improvements in manufacturing capabilities at our ceramics facilities
further automationaccounted for approximately $6.3 million of its semiconductor wafer fab
operations, and various information technology equipment. The Company remains
strongly committed to adding the required capacity needed to service the
wireless markets as the demand begins to return.capital expenditures.
In addition to the proceeds
received from the offering, the Company also has two lines of credit available
for a total of $12.5 million. The Company entered into a $7.5November 2000, we extended our $10 million working
capital line ofrevolving credit agreement which expires on Augustthrough
November 15, 2002. The revolving credit agreement had an initial expiration date
of October 31, 2000. There were no borrowings under this agreement at April 1,
1997,
10
and2001. We expect to continue to maintain a $5 million equipment linedebt facility upon expiration of the
existing credit which expires on July 31, 1996. At
expiration both lines are expected to be renewed. At March 31, 1996 there was
$1 million outstanding under the equipment lineagreement.
In June 1999, we completed a public offering of credit.
In July 1995, the Company sold its Methuen, Massachusetts plant and receivedour common stock that raised net
proceeds of $2.5$109.4 million. In connectionSubstantially all of the proceeds were invested in
commercial paper and securities issued by various federal agencies and
corporations. The net proceeds may be used for the purchase of equipment, the
expansion of facilities and the acquisition of businesses, technologies or
products that complement our business.
On April 24, 2000, we announced the completion of our acquisition of
privately-held Network Device, Inc. based in Sunnyvale, California.
Approximately 2.67 million shares of common stock of the Company were exchanged
for all outstanding shares of NDI. Approximately 185,000 shares of Company stock
were reserved for the conversion of NDI stock options into Company options. The
acquisition has been accounted for as a pooling-of-interests.
We believe that anticipated cash from operations, available funds and borrowings
under our revolving credit agreement, together with the sale, using the net proceeds from our
fiscal 1999 stock offering, will be adequate to fund our currently planned
working capital and $1 million borrowed under its line of credit, the Company retired
$3.5 million of related debt.
With the funds raised from the secondary offering and the lines of credit
available, the Company believes it has adequate funds to support its current
operating needs. The Company will continue to evaluate other available
financing such as low interest financing for the capital expansion of its
ceramic manufacturing business and any other sources that may become available.
Other Matters
During the third quarter, the Company successfully completed a surveillance
audit to renew its ISO 9001 certification of its Woburn, Massachusetts facility.expenditure requirements at least through fiscal
2002.
OTHER MATTERS
Inflation did not have a significant impact upon theour results of operations
ofduring the three-year period ended April 1, 2001.
On April 1, 2001, the Company during the three year period ended March 31, 1996.
In March 1995, theadopted Statement of Financial Accounting
Standards Board issued Statement(SFAS) No. 121,133, "Accounting for the Impairment of Long-Lived AssetsDerivative Instruments and Hedging
Instruments" and SFAS No. 138, "Accounting for Long-Lived
AssetsCertain Derivative Instruments
and Certain Hedging Activities," an amendment to be Disposed Of" (FAS 121), which becomes effective for fiscal years
beginning after December 15, 1995. This standard establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used for
long-lived assets and certain identifiable intangibles to be disposed of.SFAS No. 133. The
Company will adopt FAS 121 for fiscal 1997 and believes that adoption of
this
standard willthese statements had no material effect on our consolidated financial position,
results of operations or cash flows.
FORWARD-LOOKING STATEMENTS
This report and other documents we have filed with the Securities and Exchange
Commission contain forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements represent our judgment regarding future events.
Although we would not make forward-looking statements unless we believe we have
a material impact on the financial condition or
operating results of the Company.
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accountingreasonable basis for Stock-Based Compensation" (FAS 123), which becomes
effective for fiscal years beginning after December 15, 1995. Under FAS 123,
companies can elect to adopt the new accounting method, which accounts for
stock- based compensation based on the fair value at the date of grant.
Companies that choose not to adopt FAS 123 would continue to follow the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees". In addition, those companies who choose not to adopt the
new accounting method prescribed by FAS 123 would be required to provide
proforma disclosures of net incomedoing so, we cannot guarantee their accuracy and earnings per share, assuming FAS 123 had
been adopted. The Company currently does not expect to adopt the new
accounting method prescribed by FAS 123.
Forward-Looking Statements
Except for the historical information contained herein, the discussion in
this Report contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Report
should be read as being applicable to all forward-looking statements wherever
they appear in this Report. The Company's actual
results couldmay differ materially from those discussed herein. Factors that could cause or contribute
to such differences are discussed below.
Current Market Softness
As the Company has previously announced, overall softness in the North
American cellular market and the delayed roll-out of the Personal
Communications System (PCS), have significantly impacted the Company's orders
and shipments. Although the Company believes that the market softness will
abate, especially as orders for new PCS equipment increase, there can be no
assurance as to when, if at all, these events will occur, how significant they
will be to the industry and the Company in particular, and whether or not the
Company will
11
receive new orders in any such demand run-up that will be consistent with its
past market share. Substantial delay in the new demand, or failure of the
Company to receive thewe anticipated share of such new orders would have a
material and adverse effect on the Company's business, financial condition and
operating results.
Repositioning of Company's Business
The Company has in recent years worked to reposition its business, away from
military sales and into commercial sales. Military sales have been declining,
and the Company anticipates that revenues from military sales will continue to
decline. There can be no assurance that the Company's effort to reposition
itself as a supplier of advanced products to wireless communications markets
will be successful. If revenues from commercial wireless customers do not grow,
or grow less rapidly than expected, or if in the near term revenues from
military sales decline more rapidly than expected, the Company's operating
results could be materially and adversely affected.
Variability of Operating Results
The Company's quarterly and annual results have varied in the past and may
vary significantly in the future due to a number of
factors, including:
cancellation or delay of customer orders; market acceptance ofuncertainties. We urge you to consider the Company's or
its customers' products; variationsrisks and uncertainties discussed
below and elsewhere in manufacturing yields; timing of
announcementthis report and introduction of new products by the Company and its
competitors; changes in revenue and product mix; competition; changes in
manufacturing capacity and variations in the utilizationother documents filed with the SEC
in evaluating our forward-looking statements. We have no plans to update our
forward-looking statements to reflect events or circumstances after the date of
this capacity;
variations in average selling prices; variations in operating expenses; the
long sales cycles associatedreport. We generally identify forward-looking statements with the Company's customer specific products; the
timingwords
"plans," "expects," "anticipates," "estimates," "will," "should" and level of product and process development costs; cyclicality of the
semiconductor and ceramic industries; the timing and level of nonrecurring
engineering revenues and expenses relating to customer specific products; and
changes in inventory levels. Any unfavorable changes in these or other factors
could have a material adverse effect on the Company's operating results. The
Company's expense levels are based, in part, on its expectations as to future
revenue, and certain of these expenses, particularly those relating to the
Company's capital equipment and manufacturing overhead, are relatively fixed in
nature. For example, the Company is investing in GaAs, silicon and ceramic
process development technology in anticipation of increased revenues from
related markets. As a result of the relatively fixed nature of certain of the
Company's expenses,similar
expressions.
16
17
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CURRENT MARKET CONDITIONS MAKE IT ESPECIALLY DIFFICULT TO PREDICT OPERATING
RESULTS. Our operating results would be disproportionatelyhave been materially and adversely affected by a reduction in revenue. The Company expects that its operating
results will continue to fluctuate in
the futurepast by the failure of anticipated orders to be realized and by deferrals
and cancellations of orders as a result of thesechanges in customer requirements.
Current market conditions make predictions of future operations particularly
difficult. These factors include, but are not limited to, the following:
- significant variations in and other
factors.
Customer Concentration
Historically, aunpredictability of customer orders;
- more frequent customer requests for order cancellations and deferrals
- customers' inability to make accurate forecasts or predictions of
their future requirements; and
- customers' increased efforts to minimize their inventories and attain
just-in-time delivery.
OUR RELIANCE ON A SMALL NUMBER OF CUSTOMERS FOR A LARGE PORTION OF OUR SALES
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS. A significant
portion of the Company'sour sales in each fiscal period has been concentrated among a limited
number of customers. This trend is
accelerating, and in recent periods sales to the Company's major customers as a
percentage of total sales have increased. The Company does not generally enter
into long-term contracts with its customers, and when it does, the contract is
generally terminable for the convenience of the customer. If the Company were
to losewe lost one or more of these major customers, or if one
or more major customers significantly decreases its orders, by a major customer
otherwise were to decrease, or if major orders were to be cancelled or
deferred, the Company'sour business financial condition and operating results would
be materially and adversely affected. Product And Process Development And Technological Change
The wireless communications industryIn fiscal 2001, sales to our five largest
customers accounted for 52.9% of our sales, with Motorola and Ericsson
accounting for 26.0% and 11.3% of sales, respectively. Our future operating
results depend on the success of these customers and our success in selling
products to them.
OUR SALES VOLUME IS AFFECTED BY OUR OEM CUSTOMERS' SALES VOLUME. A substantial
portion of our sales is characterizedderived from sales of products to OEMs. These OEMs
demand highly reliable products and often require up to several months to
evaluate and test our integrated circuits and devices before deciding to design
them into their products. If our products are designed into an OEM's product,
our sales volume will depend upon the commercial success and the length and
timing of the product cycle of the OEM's product. We are also subject to sales
variations arising from our OEM customers' inventory management. Our operating
results have been materially affected and will probably be affected in the
future by frequent new
product introductions, evolving industry standards and rapidunexpected changes in our OEM customers' order patterns.
DIFFICULTIES IN PRODUCTION WOULD ADVERSELY AFFECT OUR OPERATING RESULTS. Our
products are very complex, have sophisticated designs and are manufactured using
complex process technologies. Difficulties in production can occur which would
limit our ability to ship product and process technologies. The Company believesadversely affect our operating results. In
most cases, our products are customized for our customers who insist that itsour
products meet their exact specifications for quality, performance and
reliability. If we are unable to manufacture to our customers' specifications,
our operating results will suffer.
OUR OPERATING RESULTS ARE DEPENDENT ON THE DEVELOPMENT OF NEW PRODUCTS AND ON
OUR ABILITY TO INCREASE PRODUCT REVENUE PER PLATFORM. Our future success will
depend upon itson our ability to continuedevelop new products in a timely and cost-effective
manner and on our continued ability to improve itsincrease product revenue per platform.
The development of our new products is highly complex. We have sometimes
experienced delays in completing the development and introduction of new
products. The successful development and introduction of new products depends on
a number of factors, including our timely completion of product designs and
development, our ability to develop manufacturing processes for new products,
and commercial acceptance of our new products and enhancements.
OUR FAILURE TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGES IN THE WIRELESS AND
BROADBAND COMMUNICATIONS INDUSTRY WOULD IMPAIR OUR GROWTH. The wireless and
broadband communications markets are characterized by frequent introductions of
new products, services and protocols. New products, services and protocols
respond to evolving product and process technologies and develop new technologies. The success of the Company's newconsumer demand for
greater functionality, lower costs, smaller products is dependent upon many factors, including factors that are outside the
Company's control. These factors include: the Company's ability to anticipate
market requirements in its product development efforts; market acceptance and continued commercial success of OEM products for which the Company's productsbetter performance. As
a result, we have been designed; the ability to adapt to technological changesexperienced, and to
support established and emerging industry standards; successful and timely
completion of product development and commercialization; achievement of
acceptable wafer fabrication and ceramic process yields and manufacturing
yields generally; and the ability to offer new products at competitive prices.
No assurance can be given that the Company's product and process development
efforts will be successful or that the Company's new products or those of its
customers will achieve or sustain market acceptance. In addition, the wireless
communications industry is characterized by end-user demands for increased
functionality at ever lower prices.
12
To remain competitive, the Company must obtain yield and productivity
improvements and cost reductions and must introduce new products which
incorporate advanced features and which therefore can be sold at higher average
selling prices. To the extent that such cost reductions and new product
introductions do not occur in a timely manner or the Company's or its
customers' products do not achieve market acceptance, the Company's operating
results could be materially and adversely affected.
Manufacturing Risks
The manufacturing processes for the Company's products, in particular its
GaAs MMICs, are highly complex and precise, requiring advanced and costly
equipment, and are being modified continually in an effort to improve yields
and product performance. The Company expects that its customers will continue to establish demanding specificationsexperience, product design
obsolescence. We must continue to improve our product designs and develop new
products with new technologies to meet our customers' demands.
WE OPERATE IN VERY COMPETITIVE INDUSTRIES AND WE MAY BE UNABLE TO COMPETE
SUCCESSFULLY. Competition in the markets for quality, performanceour products is intense. We compete
with several companies primarily
17
18
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
engaged in the business of designing, manufacturing and reliability
that must be met by the Company's products. The Company has limited experience
in high volume manufacturing of certain GaAs MMICsselling integrated
circuits, discrete semiconductors and ceramic products, for the
high volume commercial applications on which its current product development,
sales and marketing efforts are focused. The Company has encountered and may in
the future encounter development and manufacturing delays, has from time to
time failed and may in the future fail to meet its customers' contractual
specifications, and one or more of its products have contained and may in the
future contain undetected defects or failures when first introduced or after
commencement of commercial shipments. If such delays, defects or failures
occur, the Company could experience lost revenue, resulting from delays in or
cancellations or rescheduling of orders or shipments, product returns or
discounts, or could experience increased costs, including product or process
redesign, warranty expense or costs associated with customer support, any of
which could have a material adverse effect on the Company's operating results.
There can be no assurance that the Company will not in the future experience
significant product quality, performance or reliability problems.
Cyclicality of the Company's Markets
While the semiconductor and ceramic markets have in the past experienced
overall growth, they have historically been characterized by wide fluctuations
in product supply and demand. From time to time, these industries have also
experienced significant downturns, often in connection with, or in anticipation
of, maturing product cycles and declines in general economic conditions. These
downturns have been characterized by diminished product demand, production
overcapacity and subsequent accelerated price erosion, and in some cases have
lasted for extended periods of time. The Company's business is currently, and
may in the future be, materially and adversely affected by industry-wide
fluctuations. The Company's continued success will depend in large part on the
continued growth of the wireless communications industry. No assurance can be
given that the Company will not be adversely affected in the future by cyclical
conditions in the wireless communications industry.
Competition
Wireless communications markets are intensely competitive and are
characterized by rapid technological change, rapid product obsolescence and
price erosion. Currently, the Company competes primarily with manufacturers of
high performance GaAs MMICs, discrete silicon semiconductors, ceramic filters
and other ceramic products and microwave and millimeter wave components and
subsystems. The Company expects increased competition both from existing
competitors and others which may enter these markets, as well as potential
future competition from companies whichsuppliers of
other discrete products. For example, we compete with our largest customer in
the production of power amplifiers. Our competitors could develop new process
technologies that may offer new or emerging technologies,
such as surface acoustic wave filters, silicon germanium and other silicon
technologies.be superior to ours. In addition, many of the Company'sour existing and
potential customers particularly its
largestmanufacture or assemble wireless communications devices and
have substantial in-house technological capabilities. If one of our large
customers have or could acquire the capabilitydecided to develop or
manufacture products competitive with those that have been or maybe developed
or manufactured by the Company. The Company's future operating results may
depend in part upon the extent to which these customers elect to purchase from
outside sources rather than developdesign and manufacture their own systems. Aintegrated circuits internally, it
could have an adverse effect on our operating results.
Many of our existing and potential competitors have strong market positions,
considerable internal manufacturing capacity, established intellectual property
rights and substantial technological capabilities. Moreover, a number of the Company'sour
existing and potential competitors have significantly greater financial, technical,
manufacturing and marketing resources than the Company. The ability of the
Company to compete successfully depends in part upon the ability of the Company
to develop price competitive, high quality solutions for OEMs and the extent to
which customers select the Company's products over competitors' products for
their systems. There can be no assurancewe do. We cannot guarantee that the Companywe
will be able to compete successfully with our competitors.
We expect competition to increase. This could mean lower prices for our products
or reduced demand for our products. Any of these developments would have an
adverse effect on our operating results.
AVERAGE SELLING PRICES FOR OUR PRODUCTS TYPICALLY DECLINE OVER TIME. Average
selling prices for our products decline over time. Many of our manufacturing
costs are fixed. For a given level of sales, when our manufacturing costs
decline, our gross margins improve, and when our manufacturing costs increase,
our gross margins decline. Our operating results suffer when gross margins
decline. We may experience these problems in the future and we cannot predict
when they may occur or their severity.
OUR OPERATING RESULTS WOULD SUFFER IF ONE OF OUR KEY SUPPLIERS FAILS TO DELIVER
MATERIALS OR SERVICES FOR THE FABRICATION OF OUR PRODUCTS. We obtain certain
materials and services for our products from one or a limited number of
suppliers. For example, we procure GaAs substrates, a critical raw material,
from a small number of suppliers. In addition, we obtain some GaAs wafers from a
single external foundry, and we buy silicon substrates for semiconductors and
certain chemical powders for ceramic manufacturing from single sources. We
purchase these materials and services on a purchase order basis. We do not carry
significant inventories and have long-term supply contracts with only a limited
number of our vendors. Our inability to obtain critical materials or services in
required quantities or in acceptable quality would result in significant delays
or reductions in product shipments. This would materially and adversely affect
our operating results.
OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY. Our quarterly and annual
sales, earnings and other operating results have fluctuated significantly in the
past and may fluctuate significantly in the future primarily as a result of
variations in our customers' orders and the potential for delay or deferral of
customer implementation of our technology into their products.
THE BENEFITS OF OUR GaAs PRODUCTS COMPARED TO SILICON ALTERNATIVES MAY NOT
CONTINUE. The production of GaAs integrated circuits is more costly than the
production of silicon circuits. As a result, we must offer GaAs products that
provide superior performance to that of silicon for specific applications to be
competitive with silicon products. If we do not continue to offer products that
provide sufficiently superior performance to offset the cost differential, our
operating results may be materially and adversely affected. We believe our costs
of producing GaAs integrated circuits will continue to exceed the costs
associated with the production of silicon circuits. The costs differ because of
higher costs of raw materials for GaAs, lower production yields in GaAs
technology and higher unit costs associated with lower production volumes.
Silicon semiconductor technologies are widely used process technologies for
certain integrated circuits and these technologies continue to improve in
performance. We cannot assure you that we will continue to identify products and
markets that require performance superior to that offered by silicon solutions.
WE FACE SIGNIFICANT CHALLENGES MANAGING OUR GROWTH. We have experienced periods
of significant growth, and expect to do so in the future. 13To manage our growth
effectively, we must continue to:
18
Item19
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
- improve operational systems;
- maintain adequate physical plant, manufacturing facilities and
equipment to meet customer demand;
- add experienced senior level managers; and
- attract and retain qualified people with experience in engineering,
design and manufacturing.
We will spend substantial amounts of money in connection with our growth and may
have additional unexpected costs. Our manufacturing equipment may not be
adequate to support rapid increases in orders for our products, and we may not
be able to expand quickly enough to exploit potential market opportunities. If
we cannot attract qualified people or manage growth effectively, our business,
operating results and financial condition could be adversely affected.
THERE MAY BE UNANTICIPATED COSTS ASSOCIATED WITH INCREASING OUR CAPACITY. We
anticipate that any future growth of our business will require increased
manufacturing capacity. In response to this need, we have begun the
implementation of a conversion of our Woburn, Massachusetts GaAs IC fabrication
facility that will allow the manufacture of product on six-inch wafers. We also
purchased a 125,000 square foot facility in Haverhill, Massachusetts, which
provides additional manufacturing and office space for our Massachusetts
operations. We may be required to purchase significant additional equipment or
further expand our facilities in the future. Expansion activities such as these
are subject to a number of risks, including:
- unavailability or late delivery of the advanced, and often customized,
equipment used in the production of our products;
- delays in bringing new production equipment on-line;
- work stoppages and delays in supplying products for our existing
customers during expansion activities; and
- unforeseen environmental or engineering problems relating to existing
or new facilities.
These and other risks may affect the ultimate cost and timing of our present
expansion or any future expansion of our capacity.
OUR INTERNATIONAL SALES COULD DECLINE AS A RESULT OF CURRENCY EXCHANGE
FLUCTUATIONS AND OTHER FACTORS. Our sales outside of the United States were
approximately $133.7 million in fiscal 2001, $84.8 million in fiscal 2000, and
$45.8 million in fiscal 1999. Because most of our foreign sales are denominated
in United States dollars, our products, particularly our ceramic products,
become less price competitive with products manufactured by competitors based in
countries whose currencies decline in value against the dollar. International
sales involve a number of additional risks, including:
- imposition of government controls;
- potential insolvency of international distributors and
representatives;
- fluctuation of economies outside the United States;
- political instability outside the United States;
- generally longer receivables collection periods for foreign customers;
and
- tariffs and other trade barriers.
In addition, due to the technological advantage provided by GaAs in many
military applications, a portion of our sales outside of North America are
subject to export controls. Although we have not experienced any difficulty in
obtaining necessary export licenses, failure to obtain such licenses in the
future could have a material adverse effect on our operating results.
OUR COMPLIANCE WITH ENVIRONMENTAL REGULATIONS MAY BE COSTLY. We are subject to a
variety of federal, state and local requirements governing the protection of the
environment. These requirements relate to the use, storage, handling, discharge
and disposal of toxic or otherwise hazardous materials used in our manufacturing
processes. We may incur significant expense in complying with these
requirements, and these requirements may become more stringent in the future. In
the past, compliance with environmental
19
20
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
regulations and our response to environmental claims and litigation has been
costly. Failure to comply with environmental regulations could subject us to
substantial liability or force us to change our manufacturing operations. In
addition, under some of these regulations, we could be held financially
responsible for remedial measures if our properties are contaminated, even if we
did not cause the contamination.
WE MAY HAVE DIFFICULTY IN PROTECTING OUR INTELLECTUAL PROPERTY. Our ability to
compete is affected by our ability to protect our intellectual property. A
significant aspect of our intellectual property is our product and process
technology. We rely primarily on trade secret laws, confidentiality procedures
and licensing arrangements to protect our trade secrets and intellectual
property. The laws of certain foreign countries in which our products are or may
be developed, manufactured or sold may not protect our trade secrets or
intellectual property rights to the same extent as do the laws of the United
States. This may make the possibility of misappropriation of our technology and
trade secrets more likely. We cannot assure you that the steps taken by us to
protect our trade secrets and intellectual property will be adequate to prevent
misappropriation of our technology.
OUR OPERATIONS COULD INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
Aspects of our technology could be found to infringe on the intellectual
property rights or patents of others. Other companies may hold or obtain patents
on inventions or may otherwise claim proprietary rights to technology necessary
to our business. We cannot predict the extent to which we may be required to
seek licenses. We cannot guarantee that the terms of any licenses we may be
required to seek will be reasonable.
WE MAY HAVE DIFFICULTY IN MANAGING AND INTEGRATING ACQUISITIONS. From time to
time, we explore opportunities to acquire businesses to expand our production
capacity and our product offerings, such as our acquisition of NDI. Acquisitions
involve numerous risks, including:
- difficulties in integrating operations, products and corporate
cultures;
- difficulties in completing the development of acquired technologies;
- difficulties in managing different geographic units;
- entering markets or businesses in which we have limited experience;
and
- the loss of key employees of the acquired businesses.
Moreover, any delay or failure to integrate an acquired company, technology or
product line could result in the additional expenditure of money and in
increased demands on our management's time. These expenditures and demands could
have a material adverse effect on our business, financial condition and results
of operations. Acquisitions may involve expending significant funds and the
issuance of additional securities, which may be dilutive to stockholders.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in the value of short-term
investments and financial instruments caused by fluctuations in investment
prices and interest rates.
INVESTMENT PRICE RISK
The fair value of the Company's short-term investment portfolio at April 1,
2001, approximated carrying value due to its short-term duration. Market risk,
estimated as the potential decrease in fair value resulting from a hypothetical
10% decrease in interest rates for the issues contained in the investment
portfolio, is not considered to be material because of the short-term nature of
the investments.
INTEREST RATE RISK
The carrying value of the Company's long-term debt, including current
maturities, was $235,000 at April 1, 2001. Due to the nature of the debt
instruments, management has determined that the fair value was not materially
different from the year-end carrying value.
20
21
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
ITEM 8 Financial Statements And Supplementary Data
Index To Financial StatementsFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Page
- ----------------------------------------------------------------------------------------
Consolidated Balance Sheets - March 31, 1996April 1, 2001 and April 2, 1995................. 152000........................................... 22
Consolidated Statements of Operations - Years ended March 31, 1996,April 1, 2001,
April 2, 1995,2000 and April 3, 1994............................................... 16March 28, 1999........................................................................ 23
Consolidated Statements of Cash Flows - Years ended March 31, 1996,April 1, 2001,
April 2, 1995,2000 and April 3, 1994............................................... 17March 28, 1999........................................................................ 24
Consolidated Statements of Stockholders' Equity - Years ended March 31, 1996,April 1, 2001,
April 2, 1995,2000 and April 3, 1994.............................................. 18
Quarterly Financial Data (unaudited) - Fiscal 1996 and Fiscal 1995............. 19March 28, 1999........................................................................ 25
Notes to Consolidated Financial Statements..................................... 20Statements.............................................................. 26
Independent Auditors' Report................................................... 32
- ----------------------------------------------------------------------------------------Report............................................................................ 43
14- --------------------------------------------------------------------------------
21
22
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
MARCH 31,APRIL 1, 2001 APRIL 2, 1996 19952000
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
AssetsASSETS
Current assets
Cash and cash equivalents (Note 5)................................... $11,326 $ 3,51068,802 $ 21,620
Short-term investments (Note 5)...................................... 4,143 -84,982 124,990
Accounts receivable, trade, less allowance
for doubtful accounts of $634$921 and $783$796 .................. 36,984 33,844
Inventories (Note 5)..................... 17,688 13,548
Inventories (Notes 4 and 5).......................................... 12,015 9,3703) ........................................ 15,661 11,916
Prepayments and other current assets................................. 1,379 756
------- -------assets ........................ 3,169 2,583
Prepaid income taxes ........................................ 735 1,191
Deferred income taxes ....................................... 9,668 7,261
-------- --------
Total current assets............................................. 46,551 27,184
------- -------assets ............................... 220,001 203,405
-------- --------
Property, plant and equipment
(Note 5)
Land................................................................. 462 462
BuildingLand, building and improvements............................................ 22,788 22,148improvements ............................. 50,328 32,456
Machinery and equipment.............................................. 54,794 51,162
------- -------
78,044 73,772equipment ..................................... 142,115 110,106
-------- --------
192,443 142,562
Less-accumulated depreciation and amortization....................... 49,908 53,283
------- -------
28,136 20,489
------- -------amortization .............. 78,247 67,042
-------- --------
114,196 75,520
-------- --------
Other assets........................................................... 736 594
Property held for resale (Note 6)...................................... - 1,900
------- -------
$75,423 $50,167
======= =======
Liabilities And Stockholders' Equityassets ................................................... 2,822 2,099
-------- --------
Total assets ....................................... $337,019 $281,024
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable, bank (Note 5)......................................... $ - $ 3,000
Current maturities of long-term debt (Note 5)........................ 332 339
Current maturities of capital lease obligations (Note 5)............. 443 3704) ............... $ 129 $ 3,011
Accounts payable..................................................... 7,075 5,206
Repositioning reserve (Note 6)....................................... - 991payable ............................................ 20,820 20,537
Accrued liabilities
Payroll commissions and related expenses.......................... 4,898 4,777expenses ............................ 7,283 6,975
Other (Note 7)..................................................... 1,156 1,518
------- -------................................................... 3,481 2,525
-------- --------
Total current liabilities........................................ 13,904 16,201
------- -------liabilities .......................... 31,713 33,048
-------- --------
Long-term debt (Note 5)................................................ 2,565 4,744
Long-term capital lease obligations (Note 5)........................... 565 7544) ........................................ 235 345
Other long-term liabilities............................................ 856 794
------- -------liabilities .................................... 2,081 2,237
Deferred income taxes .......................................... 3,812 3,301
-------- --------
Total liabilities .................................. 37,841 38,931
-------- --------
Commitments and contingencies (Note 11)8)
Stockholders' equity (Notes 4 and 6)
Common stock par value $.25$0.25 per share:share; authorized
30,000,000100,000,000 shares; issued 9,938,58743,520,880 and 7,994,495 shares (Note 9)... 2,484 1,99942,576,518..... 10,880 10,644
Additional paid-in capital (Note 9).................................. 53,468 27,921221,147 197,711
Retained earnings (accumulated deficit) (Note 5)..................... 2,056 (1,738)
------- -------
58,008 28,182........................................... 67,179 33,806
-------- --------
299,206 242,161
Less - Treasury shares 249,05226,539 and 262,88664,786 at cost................... 321 330
Unearned compensation-restricted stock (Note 9).................... 154 178
------- -------cost ............ 28 68
-------- --------
Total stockholders' equity......................................... 57,533 27,674
------- -------
$75,423 $50,167
======= =======equity ......................... 299,178 242,093
-------- --------
Total liabilities and stockholders' equity ......... $337,019 $281,024
======== ========
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
1522
23
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
YEARYEARS ENDED
MARCH 31,APRIL 1, APRIL 2, APRIL 3,
1996 1995 1994MARCH 28,
2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sales....................................................Sales ............................................ $ 96,894271,568 $ 78,254186,402 $ 70,147
----------126,413
--------- --------- ---------
Cost of sales............................................ 65,986 54,376 55,395sales .................................... 151,632 105,566 71,280
Research and development expenses (Note 2)............... 9,148 4,154 3,429................ 36,026 25,336 15,947
Selling and administrative expenses...................... 17,226 15,727 16,281
Repositioning (credit) expenses (Note 6)................. (320) - 5,639
----------.............. 43,250 34,107 23,727
--------- --------- 92,040 74,257 80,744---------
Total operating expenses ............. 230,908 165,009 110,954
--------- --------- ---------
Operating income (loss).................................. 4,854 3,997 (10,597)
---------- --------- ---------................................. 40,660 21,393 15,459
Other income (expense)
Interest expense........................................ (743) (728) (768)expense ............................. (56) (223) (267)
Interest income......................................... 372 57 64income .............................. 8,733 6,685 1,552
Other (expense) income, net............................. (20) 23 105
----------expense, net ........................... (67) (608) (42)
--------- --------- (391) (648) (599)
-------------------
Total other income, net .............. 8,610 5,854 1,243
--------- --------- ---------
Income (loss) before income taxes........................ 4,463 3,349 (11,196)taxes ....................... 49,270 27,247 16,702
Provision (benefit) for income taxes (Note 8)...................... 669 502 270
----------5)..... 15,897 9,265 (2,561)
--------- --------- ---------
Net income (loss)............................................................................... $ 3,79433,373 $ 2,84717,982 $ (11,466)
==========19,263
========= ========= Net income (loss)=========
Basic earnings per share..............................share ......................... $ .430.78 $ .360.44 $ (1.53)
==========0.56
========= ========= Weighted average common shares and
common=========
Diluted earnings per share equivalents................................ 8,755 7,882 7,502
==========....................... $ 0.75 $ 0.42 $ 0.54
========= ========= =========
Shares used in computing:
Basic earnings per share ......................... 43,029 40,659 34,314
========= ========= =========
Diluted earnings per share ....................... 44,752 42,822 35,406
========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
1623
24
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
YEARYEARS ENDED
MARCH 31,APRIL 1, APRIL 2, APRIL 3,
1996 1995 1994MARCH 28,
2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY OPERATIONS:
Net income (loss)............................................................................................................... $ 3,79433,373 $ 2,84717,982 $ (11,466)19,263
Adjustments to reconcile net income (loss) to net cash provided
by operations:
Depreciation and amortization of property, plant and equipment...................................................... 4,628 4,106 4,521equipment:... 16,010 10,681 8,257
Deferred income taxes ............................................ (1,896) 658 (4,618)
Amortization of unearned compensation - restricted stock............ 61 64 44
Unearned compensation............................................... - - (11)
(Gain) lossstock ......... -- 14 90
Gain on sales of property, plant and equipment ................... (61) -- --
Loss on sales and retirements of property, plant and equipment.............................................. (9) 26 -
(Gain) loss on property, plant and equipment due
to repositioning.................................................. (320) - 2,479
Increase... 3 544 12
(Increase) decrease in other assets............................................ (395) (536) (69)assets .............................. (723) (605) 469
Increase (decrease) in other long-term liabilities and long-term benefits..... 62 399 (70)............... (156) 573 (706)
Issuance of treasury stock to ESOP.................................. 220 12 -
Change401(k) plan ........................ 1,512 1,120 960
Changes in operating assets and liabilitiesliabilities:
Accounts receivable............................................... (4,140) (305) 706
Inventories....................................................... (2,645) (1,757) 2,331receivable .......................................... (3,140) (10,791) (4,553)
Inventories .................................................. (3,745) (3,117) (858)
Prepayments and other current assets.............................. (623) (266) 482assets ......................... (130) (2,853) (6)
Accounts payable.................................................. 1,869 141 912payable ............................................. 283 9,321 5,491
Accrued liabilities............................................... (241) 1,237 (349)
Repositioning reserve............................................. (991) (967) 1,958liabilities .......................................... 16,263 9,902 (196)
--------- --------- -------------------
Net cash provided by operations..................................... 1,270 5,001 1,468operations .................................. 57,593 33,429 23,605
--------- --------- -------------------
CASH USED IN INVESTMENTS:INVESTING:
Additions to property, plant and equipment excluding capital leases............................................. (11,972) (4,971) (2,630)leases . (54,748) (39,660) (20,793)
Purchases of short-term investments................................... (12,113) - -investments ................................. (134,813) (226,242) (24,167)
Maturities of short-term investments.................................. 7,970 - -investments ................................ 174,821 117,523 18,195
Proceeds from sale of property, plant and equipment................... 31 68 33
Proceeds from sale of property held for resale........................ 2,465 - -equipment ................. 120 60 34
--------- --------- -------------------
Net cash used in investments........................................ (13,619) (4,903) (2,597)investing ....................................... (14,620) (148,319) (26,731)
--------- --------- -------------------
CASH PROVIDED BY (USED IN) FINANCING:
Proceeds from notes payable........................................... 621 1,983 131
Payments on notes payable............................................. (5,807) (330) (623)payable ........................................... (92) (1,169) (1,876)
(Payments on) proceeds from line of credit .......................... (2,900) 2,900 --
Payments on capital lease obligations................................. (441) (416) (311)obligations ............................... -- -- (8)
Deferred charges related to long-term debt............................ 8 (6) 68debt .......................... -- 28 16
Exercise of stock options............................................. 392 391 45options ........................................... 6,579 3,393 1,724
Proceeds from sale of stock........................................... 25,392 99 84stock ......................................... 622 116,196 225
--------- --------- -------------------
Net cash provided by (used in) financing............................ 20,165 1,721 (606)financing ................................... 4,209 121,348 81
--------- --------- -------------------
Net increase (decrease) in cash and cash equivalents.................. 7,816 1,819 (1,735)equivalents ................ 47,182 6,458 (3,045)
Cash and cash equivalents, beginning of year.......................... 3,510 1,691 3,426year ........................ 21,620 15,162 18,207
--------- --------- -------------------
Cash and cash equivalents, end of year................................year .............................. $ 11,32668,802 $ 3,51021,620 $ 1,69115,162
========= ========= ===================
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Supplemental disclosure of non-cash operating activities:
Tax benefit from the exercise of stock options ...................... $ 14,840 $ 7,027 $ 703
========= ========= =========
Compensation expense ................................................ $ 159 $ 2,109 $ --
========= ========= =========
Supplemental cash flow disclosures:
Cash paid for income taxes .......................................... $ 2,380 $ 3,300 $ 915
========= ========= =========
Cash paid for interest .............................................. $ 119 $ 191 $ 265
========= ========= =========
Supplemental disclosures:
Capital lease obligations of $325 thousand, $277 thousand, and $309 thousand
were incurred during the years ended March 31, 1996, April 2, 1995, and April
3, 1994, respectively, when the Company entered into leases for new equipment.
The accompanying notes are an integral part of these financial statements.
1724
25
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
RETAINED UNEARNED
ADDITIONAL EARNINGS COMPENSATION
COMMON STOCK PAID-IN (ACCUMULATED)(ACCUMULATED TREASURY RESTRICTED
SHARES PAR VALUE CAPITAL (DEFICIT)DEFICIT) STOCK STOCK
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Balance, March 28, 1993 .......... 7,73629, 1998 as previously
reported ................................ 31,635 $ 1,934 $27,1937,908 $ 6,88151,486 $ (310)(3,214) $ (133)(315) $ (43)
Adjustment for pooling of interests ... 2,665 666 21,614 (225) -- --
--------- --------- --------- --------- --------- ---------
Balance, March 29, 1998 as restated ..... 34,300 8,574 73,100 (3,439) (315) (43)
Net loss ........................ - - - (11,466) - -income .............................. -- -- -- 19,263 -- --
Employee Stock Purchase Plan .... 29 7 77 - - -............ 52 13 212 -- -- --
Issuance of restricted shares ... 5 1 15 - - (16)stock ............ 12 3 58 -- -- (61)
Amortization of unearned compensation
restricted stock .. - - - - - 44
Repurchase 8,333...................... -- -- -- -- -- 90
Issuance of 175,828 treasury shares
of
restricted stock ............... - - - - (21) 10to 401(k) plan ........................ -- -- 778 -- 182 --
Exercise of stock options ....... 17 5 40 - - -
-------- ------- --------............... 404 102 1,622 -- -- --
Tax benefit from the exercise of
stock options ......................... -- -- 703 -- -- --
--------- -------- ---------------- --------- --------- --------- ---------
Balance April 3, 1994 ........... 7,787 1,947 27,325 (4,585) (331) (95)at March 28, 1999 ............... 34,768 8,692 76,473 15,824 (133) (14)
Net income ...................... - - - 2,847 - -.............................. -- -- -- 17,982 -- --
Employee Stock Purchase Plan .... 29 7 92 - - -
Issuance of restricted stock .... 31 8 139 - - (147)............ 21 5 283 -- -- --
Amortization of unearned compensation
restricted stock .. - - - - - 64...................... -- -- -- -- -- 14
Issuance 1,110of 59,972 treasury shares to
ESOP ........................ - - 11 - 1 -401(k) plan ........................... -- -- 1,055 -- 65 --
Exercise of stock options ....... 147 37 354 - - -
-------- -------- -------- -------- -------- --------............... 1,159 290 3,103 -- -- --
Tax benefit from the exercise of
stock options ......................... -- -- 7,027 -- -- --
Compensation expense .................... -- -- 2,109 -- -- --
Proceeds from stock offering ............ 6,629 1,657 107,661 -- -- --
--------- --------- --------- --------- --------- ---------
Balance at April 2, 1995 ........... 7,994 1,999 27,921 (1,738) (330) (178)2000 ................ 42,577 10,644 197,711 33,806 (68) --
Net income ...................... - - - 3,794 - -
Stock offering net
of expenses .................... 1,840 460 24,802 - - -.............................. -- -- -- 33,373 -- --
Employee Stock Purchase Plan ........................... 17 4 126 - - -............ 21 5 617 -- -- --
Issuance of restricted stock .... 9 2 49 - - (51)
Amortization of unearned
compensation restricted
stock .......................... - - - - - 61
Issuance 18,33438,247 treasury shares to
ESOP ........................ - - 197 - 23 -
Repurchase 4,500 shares of
restricted stock ............... - - - - (14) 14401(k) plan ........................... -- -- 1,472 -- 40 --
Exercise of stock options ....... 79 19 373............... 923 231 6,348 -- -- --
Tax benefit from the exercise of stock
options ............................... -- -- 14,840 -- -- --
Compensation expense .................... -- -- 159 -- -- --
--------- --------- --------- --------- --------- ---------
Balance at April 1, 2001 ................ 43,521 $ 10,880 $ 221,147 $ 67,179 $ (28) $ --
========= ========= ========= ========= ========= =========
- - -
-------- -------- ------- ------- ------- -------
Balance March 31, 1996 .......... 9,939 $ 2,484 $53,468 $ 2,056 $ (321) $ (154)
======== ======== ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
1825
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL DATA
(unaudited)
(In thousands except per share data)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
- -----------------------------------------------------------------------------------------------------------
FISCAL 1996
Sales.................................. $ 22,434 $ 23,733 $ 25,237 $ 25,490 $ 96,894
Gross profit........................... 7,382 7,897 8,553 7,076 30,908
Net income............................. 1,114 1,081 1,437 162 3,794
Per share data
Net income(1)......................... .14 .13 .16 .02 .43
Market price range:
High................................. 15-1/4 19-5/8 17-7/8 13-7/8 19-5/8
Low.................................. 10-5/8 14-1/8 10-1/2 7 7
FISCAL 1995
Sales.................................. $ 18,675 $ 18,253 $ 19,359 $ 21,967 $ 78,254
Gross profit........................... 5,618 5,397 5,865 6,998 23,878
Net income............................. 603 659 774 811 2,847
Per share data
Net income............................ .08 .08 .10 .10 .36
Market price range:
High................................. 4-1/2 6-7/8 7-3/8 11-5/8 11-5/8
Low.................................. 3 3-7/8 5-1/4 6-3/8 3
- -----------------------------------------------------------------------------------------------------------
The Company's common stock is traded on the American Stock Exchange, symbol
AHA. The number of stockholders of record as of May 31, 1996 was approximately
1,100.
(1) Earnings per share calculations for each of the quarters are based on
the weighted average number of shares outstanding and included common
stock equivalents in each period. Therefore, the sum of the quarters
do not necessarily equal the full year earnings per share.
19
26
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Fiscal Year:
The Company's fiscal year ends on the Sunday closest to March 31, there31. There
were 52 weeks in fiscal 19962001 and 1995,
and1999. There were 53 weeks in fiscal 1994.2000.
Use of Estimates:
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses. Actual results could differ from those estimates.
Revenue Recognition:
Revenue from product sales is recognizedrecorded when athe product is shipped, and services are performed.
Contract revenue is recognized onwhen
persuasive evidence of an arrangement exists, when the percentage-of-completion method,
which is primarily measured on the ratio of units shippedprice to the total
contract numberbuyer
is fixed or determinable, and collectibility of units.the sales price is
reasonably assured. Provisions for estimated losses, if any, on
uncompleted contractsproduct returns and allowances are
maderecorded in the same period in which such losses are
determined.as the related revenue.
Foreign Currency Translation:
The accounts of foreign subsidiaries are translated in accordance with
theStatement of Financial Accounting Standards Board Statement("SFAS") No. 52. Foreign
operations are remeasured as if the functional currency were the U.S.
dollar. Monetary assets and liabilities are translated at the year end
rates of exchange. Revenues and expenses (except cost of sales and
depreciation) are translated at the average rate for the period.
Non-monetary assets, equity, cost of sales and depreciation are remeasured
at historical rates. Remeasurement gains and losses are reflected currently
in operations and are not material.
Research and Development Expenditures:
Research and development expenditures are charged to income as incurred
unless they are reimbursed under specific contracts. Losses incurred on the
equity basis in the Company's two joint ventures are included in research
and development.incurred.
Cash, Cash Equivalents and Short-term Investments:Short-Term Investments
Cash and cash equivalents include cash deposited in demand deposits at
banks and highly liquid investments with original maturities of 90 days or
less.
During fiscal year 1996, the Company adopted Statement of Financial
Accounting Standard No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." Accordingly, theThe Company's short-term investments are classified as held-to-maturity.
These investments consist primarily of commercial paper and bondssecurities
issued by various federal agencies and corporations with original
maturities of more than 90 days. Such short-term investments are carried at
amortized cost, which approximates fair value, due to the short period of
time to maturity. Gains and losses are included in investment income in the
period they are realized.
Inventories:
Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market.
26
27
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property, Plant and Equipment:
Property, plant and equipment are carried at cost. Depreciation is
provided
oncalculated using the straight-line method for financial reporting and
accelerated methods for tax purposes.
Estimated useful lives used for depreciation purposes are 5 to 30 years for
buildings and improvements and 3 to 10 years for machinery and equipment.
During fiscal 1996,2001 and 2000, the Company removed $7.7$4.4 million and $6.0
million, respectively, of fully depreciated fixed assets from the related
property, plant and equipment and accumulated depreciation accounts.
20
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments:
Financial instruments of the Company consist of cash, cash equivalents,
accounts receivable, accounts payable and accrued liabilities. The carrying
value of these financial instruments approximates their fair value because
of the short maturity of these instruments. Based upon borrowing rates
currently available to the Company for issuance of similar debt with
similar terms and remaining maturities, the estimated fair value of
long-
termlong-term debt approximates theirits carrying amounts.amount. The Company does not
currently use derivative instruments.
Income Taxes:
The Company uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
This method also requires the recognition of future tax benefits such as
net operating loss carryforwards, to the extent that realization of such
benefits is more likely than not. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date.
Net IncomeEarnings Per Share:
In fiscal 1996, 1995, and 1994, the computation of both primary and fully
dilutedBasic earnings per share was based onis calculated by dividing net income by the
weighted average number of outstanding common shares however, fiscal 1996 and 1995 included common
stock equivalents. Fiscal 1994 common stock equivalents did not
significantly affect theoutstanding. Diluted earnings per
share amount and, accordingly, were not
included inincludes the computation. The inclusion of additional shares assuming
the exercisedilutive effect of stock options, would have been insignificant or
antidilutive. In fiscal 1996 and 1995 the computation was based on the
weighted average shares of common stock outstanding plus common equivalent
shares arising from theif their effect ofis
dilutive, stock options and warrants, using the treasury stock method.
TheA reconciliation of the weighted average number of shares outstanding used
in the computation of common stockthe basic and common equivalent shares outstanding, if applicable, for
the calculation of primarydiluted earnings per share was 8,755,000 in fiscal 1996,
7,882,000 in fiscal 1995, and 7,502,000 in fiscal 1994.
NOTE 2 JOINT VENTURES
In fiscal 1984, the Company and Aerojet ElectroSystems Company formed a
joint venture, and in fiscal 1987 the Company entered into a similar
arrangement with Martin Marietta Corporation. These ventures were formed for the purpose of developing and producing certain millimeter wave monolithic
integrated circuits. Each joint venture may be terminated by either party at
any time.
The Company's joint ventures with Aerojet ElectroSystems Company and Martin
Marietta Corporation were created to share research and development expenses in
order to develop technology for millimeter wave monolithic integrated circuits.
In the caseeach of
the Aerojet/Alpha venture, this partnership has been dormant
since 1987. The partnership has no remaining assets or liabilities. As for the
Martin/Alpha venture, the only assets or liabilities that exist are the
original capitalization of $5,000 and the amounts due to/due from the partners.
The technical goals established by this partnership were completed and this
partnership ceased activity during fiscal 1996. The Company's share of the
joint venture's research and development expenses are recorded in the Company's
consolidated statements of operations. The Company has no investment recorded
on its consolidated balance sheets for either joint venture.
The Company's share of losses incurred by the joint venturesfollowing years is recorded on
the equity basis and included in research and development expenses. The losses
were approximately $167,000, $895,000, and $856,000 in fiscal 1996, 1995, and
1994, respectively.
21as follows:
YEARS ENDED
-----------------------------------------
APRIL 1, APRIL 2, MARCH 28,
2001 2000 1999
-------- -------- ---------
(in thousands)
Weighted average shares (basic) ...... 43,029 40,659 34,314
Effect of dilutive stock options ..... 1,723 2,163 1,092
------ ------ ------
Weighted average shares (diluted)..... 44,752 42,822 35,406
====== ====== ======
27
28
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 COMPANY OPERATIONS
The Company operates1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At April 1, 2001, April 2, 2000 and March 28, 1999, options to purchase
approximately 2.5 million, 7,000 and 3,000 shares, respectively, were
outstanding but not included in one industry segment: the development, production
and salecomputation of microwave materials, devices and components. Sales include export
sales primarily to Europe and Southeast Asiadiluted earnings per
share because the exercise prices of $23,633,000, $16,855,000, and
$16,471,000, in fiscal 1996, 1995, and 1994, respectively.
During fiscal year 1996 and 1995 no one customer accounted for 10% or morethe options were greater than the
average market prices of the Company's total sales, whereascommon stock during those periods.
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of:
The Company accounts for impairment of long-lived assets in accordance with
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." This statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying
amount of an asset to undiscounted future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value
less costs to sell. This Statement has not had a material impact on the
Company's financial position, results of operations, or liquidity.
Stock Option Plans:
The Company accounts for its stock-based compensation under the provisions
of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" and related interpretations and provides disclosure related
to its stock-based compensation under the provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation."
Comprehensive Income:
During fiscal 1994, one customer1999, the Company adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income." SFAS No. 130 is a financial statement
presentation standard, which requires the Company to disclose non-owner
changes included in equity but not included in net income or loss. There
were no differences between net income and comprehensive income for fiscal
2001, 2000 and 1999.
Recent Accounting Pronouncements:
On April 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Instruments" and SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging
Activities," an amendment to SFAS No. 133. The adoption of these standards
had no material effect on our consolidated financial position, results of
operations or cash flow.
28
29
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 ACQUISITION OF NETWORK DEVICE, INC.
On April 24, 2000, the Company completed its acquisition of privately-held
Network Device, Inc. ("NDI") based in Sunnyvale, California. Approximately 2.67
million shares of common stock of the Company were exchanged for all outstanding
shares of NDI. Approximately 185,000 shares of Company stock were reserved for
the conversion of NDI stock options into Company options.
The acquisition has been accounted for 15%as a pooling-of-interests and
accordingly, all prior period consolidated financial statements and related
notes to the consolidated financial statements have been restated to include the
combined results of operations, financial position and cash flows of NDI.
Prior to the merger, NDI's fiscal year ended on September 30. In recording the
business combination, NDI's prior period financial statements have been restated
to conform with the Company's year end.
The following information presents certain income statement data of the Company's total sales. The Company is focused on four
major OEMs and six other customers thatseparate
companies for the Company believes are principal
suppliers to these OEMs in the wireless communications market. For fiscal 1996
sales to the four major OEMs and their suppliers represented approximately 29%
of the Company's sales. In fiscal 1995 and 1994 sales to these OEMs and their
suppliers represented approximately 17% and 10% of the Company's sales,
respectively. While the Company believes that these emerging wireless markets
afford great opportunities, such customer concentration could have an adverse
affect on the business.
During fiscal 1996, the Company operated sales subsidiaries in the United
Kingdom and Germany, and a ceramic manufacturing operation in France. The
Company closed its sales subsidiary in Germany during fiscal 1996 and replaced
it with an independent sales representative and distributor. The following
table shows certain financial information relating to the Company's operations
in various geographic areas (in thousands):prior periods reflected:
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------YEARS ENDED
-----------------------------
APRIL 2, MARCH 28,
2000 1999
-------- ---------
(in thousands)
Sales
United States
Customers....................................................Net sales:
Alpha Industries, Inc. ...... $ 83,078184,705 $ 67,495126,339
Network Device, Inc. ........ 2,642 74
Adjustments/ Eliminations.... (945) --
--------- ---------
$ 61,963
Intercompany................................................. 8,526 6,665 5,753
Europe
Customers.................................................... 13,816 10,759 8,184
Eliminations.................................................. (8,526) (6,665) (5,753)186,402 $ 126,413
========= =========
Net income (loss):
Alpha Industries, Inc. ...... $ 24,380 $ 21,490
Network Device, Inc. ........ (9,299) (3,515)
Adjustments/Eliminations .... 2,901 1,288
--------- ---------
$ 17,982 $ 19,263
========= =========
The effects of conforming NDI's accounting policies to those of the Company were
not material.
NOTE 3 INVENTORIES
APRIL 1, APRIL 2,
Inventories consisted of the following: 2001 2000
-------- --------
--------
Net Sales....................................................... 96,894 78,254 70,147
-------- -------- --------
Income (loss) before taxes
United States................................................. 3,553 2,723 (11,767)
Europe........................................................ 910 626 571
-------- -------- --------
Income (loss) before taxes...................................... 4,463 3,349 (11,196)
-------- -------- --------
Assets
United States................................................. 69,201 44,896 40,454
Europe........................................................ 6,222 5,271 3,976
-------- -------- --------
Total Assets....................................................(in thousands)
Raw materials ..................... $ 75,4235,187 $ 50,167 $ 44,430
======== ======== ========
- ------------------------------------------------------------------------------------------------------------3,473
Work-in-process.................... 7,868 7,397
Finished goods..................... 2,606 1,046
------- -------
$15,661 $11,916
======= =======
Transfers between geographic areas are made at terms that allow for a
reasonable profit to the seller.
2229
30
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 INVENTORIES
MARCH 31, APRIL 2,
Inventories consisted of the following (in thousands): 1996 1995
- -----------------------------------------------------------------------------------------------------
Raw materials........................................ $ 4,878 $ 3,186
Work-in-process...................................... 5,830 4,950
Finished goods....................................... 1,307 1,234
-------- --------
$ 12,015 $ 9,370
======== ========
- ------------------------------------------------------------------------------------------------------
Work-in-process inventory has been reduced by allowances for estimated losses to
be sustained on completion of certain contracts. These allowances totaled
$24,000 and $117,000 in fiscal 1996 and 1995, respectively.
NOTE 5 BORROWING ARRANGEMENTS AND COMMITMENTS
LINELINES OF CREDIT
In September 1995,November 1999, the Company entered into a $7.5$10.0 million Working Capital
Line ofunsecured Revolving
Credit Agreement which expiresthat was scheduled to expire on August 1, 1997 and a $5.0 million
Equipment Line of Credit Agreement which expires on JulyOctober 31, 1996. These lines
of credit are collateralized by the assets of2000. In November
2000, the Company excluding real
property, not otherwise collateralized. Interest payments are due monthlyextended the agreement through November 15, 2002. The
agreement includes various covenants that require maintenance of certain
financial ratios and balances and restrict creation of funded debt and payment
of dividends. There were no borrowings under this Agreement at prime or LIBOR plus 2%. Commitment fees on these lines of credit agreements are
$25,000 for the Equipment Line of Credit and 1/2% per year on the Working
Capital Line of Credit which are to be paid quarterly. At March 31, 1996 there
was $1.0 million outstanding under the equipment line of credit. At April 2,
1995 there was $3.0 million borrowed under a previous line of credit which
expired in September 1995.1, 2001.
LONG-TERM DEBT
MARCH 31,APRIL 1, APRIL 2,
Long-term debt consisted of the followingfollowing: 2001 2000
-------- --------
(in thousands): 1996 1995
- ------------------------------------------------------------------------------------------------------
Equipment Line of Creditcredit (a)........................ ................... $ 1,011 $ -
9-1/2% Mortgage Note Payable (b).................... 40 80
Industrial Revenue Bonds (c)........................ 667 3,878
UDAG Loan (d) - 438
French Government Sponsored and Start-up Loans (e).. 251 323-- $2,900
CDBG Grant (f)...................................... 928(b) ....................... 364 -------- --------
2,897 5,083456
------ ------
364 3,356
Less - current maturities........................... 332 339
-------- --------maturities......... 129 3,011
------ ------
$ 2,565235 $ 4,744
======== ========
- ------------------------------------------------------------------------------------------------------345
====== ======
a. The equipmenta) Network Device, Inc. had a $3.0 million line of credit is at LIBOR (5.4375%April 2,
2000 with a maturity date of May 31, 2000. Borrowings under this
agreement totaled $2.9 million at March 31, 1996) plus
2% and is due in full on August 1, 1999. ThisApril 2, 2000. The line of credit
is
collateralized bywas paid in full during the assetsfirst quarter of the Company, excluding real property, not
otherwise collateralized.
b. The mortgage note payable is collateralized by land and buildings having a
net book value of $5,319,000 at March 31, 1996. Principal installments of
$3,333, plus interest, are due monthly until March 1997.
c. In July 1995, the Company sold its Methuen, Massachusetts plant and retired
a $3.1 million industrial revenue bond.
Another industrial revenue bond is held by the Farmers and Mechanics
National Bank. The interest rate on this bond is prime and quarterly
principal payments of $27,777 are due until March 2002. The bond is secured
by various property, plant and equipment with a net book value of
$2,652,000 at March 31, 1996.
23
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 BORROWING ARRANGEMENTS AND COMMITMENTS (CONTINUED)
d. The City of Lawrence, Massachusetts loaned the Company $989,000 in proceeds
it acquired from an Urban Development Action Grant (UDAG). Monthly payments
of $10,491 representing principal and interest at 5% on the unamortized
balance were required until January 1999. This debt was repaid when the
Methuen, Massachusetts plant was sold in July 1995.
e. The Company has three unsecured government sponsored and start-up business
loans. The first loan has an interest rate of 8.75% and requires annual
payments of $36,000 beginning December 1994 through December 1998. The
second loan has an interest rate of 5% and from February 1995 through
February 2000 quarterly principal and interest payments of $8,300 are due.
The third loan has an interest rate of 9.0% and requires principal and
interest payments of $3,500 through January 1998.
f.fiscal 2001.
b) The Company obtained a ten yearten-year $960,000 loan from the State of
Maryland under the Community Development Block Grant program.
Quarterly payments are due through December 2003 and represent
principal plus interest at 5% of the unamortized balance.
Aggregate annual maturities of long-term debt are as follows (in thousands):follows:
FISCAL YEAR
- --------------------------------------------------------------------------------(in thousands)
1998.................................... $ 290
1999.................................... 288
2000.................................... 1,271
2001.................................... 234
Thereafter.............................. 482
--------
$ 2,565
========2002..................... $129
2003..................... 136
2004..................... 99
----
$364
====
CAPITAL LEASE OBLIGATIONS
At March30
31 1996 included in property, plant and equipment are the following
capitalized leases (in thousands):
Property, plant and equipment....................... $ 2,154
Accumulated depreciation and amortization.......... 1,127
--------
$ 1,027
========
Future minimum lease payments under the capitalized lease obligations at March
31, 1996 were as follows (in thousands):
FISCAL YEAR
- --------------------------------------------------------------------------------
1997.................................. $ 483
1998.................................. 261
1999.................................. 53
2000.................................. 44
2001.................................. 44
Thereafter............................ 366
--------
Total minimum lease payments................ 1,251
Less: Amount representing interest......... 243
--------
Present value of net minimum lease payments. 1,008
Less: Current maturities................... 443
--------
Long-term maturities........................ $ 565
========
- --------------------------------------------------------------------------------
24
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 BORROWING ARRANGEMENTS AND COMMITMENTS (CONTINUED)
Cash payments for interest were $906,000, $635,000, and $740,000 in fiscal 1996,
1995, and 1994, respectively.INCOME TAXES
Income before income taxes consisted of:
YEARS ENDED
------------------------------------------
APRIL 1, APRIL 2, MARCH 28,
2001 2000 1999
-------- -------- ---------
(in thousands)
Domestic.......... $49,270 $26,929 $15,920
Foreign .......... -- 318 782
------- ------- -------
Total ............ $49,270 $27,247 $16,702
======= ======= =======
The bonds and line of credit include various covenants that require maintenance
of certain financial ratios and balances and restrict creation of funded debt
and payment of dividends. Under the most restrictive covenants the Company may
not pay dividends except restricted payments in an amount not to exceed $100,000
in connection with the redemption of certain common stock repurchase rights.
NOTE 6 REPOSITIONING CHARGES
On January 25, 1994, the Company announced the transfer of certain component
product lines manufacturing from a facility in Methuen, Massachusetts to the
Company's headquarters facility in Woburn, Massachusetts. These component
product lines were used principally by military customers. Faced with a
continued decline in defense business, the Company determined the need for
further consolidations to reduce operating costs and enhance its competitive
position in commercial electronics markets, principally wireless communications.
In the fourth quarter of fiscal year 1994, the Company recorded a repositioning
charge of $5.6 million which included charges for employee severance costs of
$2.2 million, the write-down of $2.6 million to reduce the carrying value of the
Methuen, Massachusetts plant to its estimated net realizable value and costs
related to the consolidation of the facilities of $800 thousand. During fiscal
1996, 1995 and 1994 the Company paid severance costs of $531 thousand, $600
thousand and $500 thousand, and consolidation costs of $324 thousand, $300
thousand and $600 thousand, respectively. The $2.6 million write-down of the
Methuen plant included $1.2 million for carrying and selling costs through the
expected date of disposal. The Methuen plant was carried at $1.9 million at
April 2, 1995. During fiscal 1996 and 1995, the Company paid $193 thousand and
$500 thousand, respectively, in carrying costs related to the Methuen plant.
In July 1995, the Company sold its Methuen, Massachusetts plant. The Company
received the proceeds of $2.5 million and retired $3.5 million of related debt.
In order to repay the balance of the debt, the Company borrowed approximately
$1.0 million under its line of credit agreement. During the first quarter of
fiscal 1996, the Company recorded a $320 thousand repositioning credit,
attributable to the reversal of certain accruals for estimated carrying costs,
as a result of an earlier than expected disposition of this property. As of
March 31, 1996 the remaining $136 thousand of repositioning reserve (reclassed
to other accruals) is sufficient to cover the remaining severance payments.
NOTE 7 OTHER CURRENT LIABILITIES
Other current liabilitiesincome tax provision (benefit) consisted of the followingfollowing:
FISCAL 2001 CURRENT DEFERRED TOTAL
----------- ------- -------- -----
(in thousands):
MARCH 31, APRIL 2,
1996 1995
- --------------------------------------------------------------------------------
Income taxes................................. $ 489 $ 411
Professional services........................ 201 172
Interest..................................... 18 171
Miscellaneous................................ 448 764
Federal.......... $16,921 $(1,757) $15,164
State ........... 872 (139) 733
------- ------- $ 1,156 $ 1,518-------
Total ........... $17,793 $(1,896) $15,897
======= ======= - --------------------------------------------------------------------------------=======
25
FISCAL 2000 CURRENT DEFERRED TOTAL
----------- ------- -------- -----
(in thousands)
Federal.......... $8,202 $ 760 $8,962
State ........... 305 (101) 204
Foreign.......... 99 -- 99
------ ------ ------
Total ........... $8,606 $ 659 $9,265
====== ====== ======
FISCAL 1999 CURRENT DEFERRED TOTAL
----------- ------- -------- -----
(in thousands)
Federal.......... $ 447 $(3,826) $(3,379)
State ........... 670 (97) 573
Foreign.......... 245 -- 245
------- ------- -------
Total ........... $ 1,362 $(3,923) $(2,561)
======= ======= =======
31
32
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 85 INCOME TAXES (CONTINUED)
Income (loss) before income taxes consisted of (in thousands):
1996 1995 1994
- --------------------------------------------------------------------------------
Domestic...................................... $ 3,553 $ 2,723 $(11,767)
Foreign....................................... 910 626 571
-------- -------- --------
$ 4,463 $ 3,349 $(11,196)
======== ======== ========
The provision for income taxes consisted of (in thousands):
1996 1995 1994
- --------------------------------------------------------------------------------
Current income taxes
Federal..................................... $ 69 $ 75 $ -
State....................................... 108 217 126
Foreign..................................... 492 210 144
-------- -------- --------
$ 669 $ 502 $ 270
======== ======== ========
- --------------------------------------------------------------------------------
The provisiontax expense (benefit) for income taxes is different from that which would
be obtained by applying the statutory Federalfederal income tax rate of 35% to pretax
income (loss) before income
taxes. The items causing this difference are as followsa result of the following:
YEARS ENDED
-----------------------------------------------
APRIL 1, APRIL 2, MARCH 28,
2001 2000 1999
-------- -------- ---------
(in thousands):
1996 1995 1994
- --------------------------------------------------------------------------------
Tax expense (benefit) at U.S. statutory rate..rate ....................... $ 1,51717,245 $ 1,1399,536 $ (3,807)5,846
Loss on foreign investment ............................... (560) -- --
Foreign sales corporation ................................ (600) (416) --
Foreign tax rate difference .............................. -- (12) (29)
Nondeductible transaction expenses ....................... 625 -- --
Utilization of research and development credit ........... (1,883) -- --
State income taxes, net of Federal benefit.... 71 143 83
Operating loss not currently benefited........ - - 4,044federal benefit ............... 477 133 372
Change in valuation allowance................. (882) (763) -allowance ............................ 1,011 40 (9,298)
Net U.S. tax on distribution of foreign earnings.......... -- 216 --
Other, net..................................... (37) (17) (50)net ............................................... (418) (232) 548
-------- -------- --------
Total .................................................... $ 66915,897 $ 5029,265 $ 270
========(2,561)
======== ======== - --------------------------------------------------------------------------------========
26Total income tax expense (benefit) was allocated as follows:
YEAR ENDED
-------------------------------
APRIL 1, APRIL 2, MARCH 28,
2001 2000 1999
-------- -------- ---------
(in thousands)
Income from continuing operations ............. $ 15,897 $ 9,265 $2,561
Stockholders equity, for compensation expense
for tax purposes in excess of amounts
recognized for financial reporting
purposes .................................... (14,840) (7,027) (703)
-------- ------- ------
Total ......................................... $ 1,057 $ 2,238 $3,264
======== ======= ======
32
33
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 85 INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at March 31, 1996 and
April 2, 1995 are as followsfollows:
APRIL 1, APRIL 2,
2001 2000
-------- --------
(in thousands):
1996 1995
- -----------------------------------------------------------------------------------------------------------------------
Deferred tax assets:
Accounts receivable due to bad debts.............................................debts ................................................... $ 234340 $ 293234
Inventories due to reserves and inventory capitalization......................... 729 407capitalization ............................... 2,786 981
Accrued liabilities.............................................................. 575 1,475liabilities .................................................................... 2,101 965
Deferred compensation............................................................ 177 243
Other............................................................................ 6 4
Netcompensation .................................................................. 889 777
Federal net operating loss carryforward.................................................. 9,275 9,374
Charitable contribution carryforward............................................. 32 33
Short-term capital loss carryforward............................................. - 160carryforwards ............................................... 2,883 4,463
Minimum tax creditscredit, state tax credit and state tax credit carryforwards........................... 415 203
--------- ---------net operating loss carryforwards..... 4,825 1,819
-------- --------
Total gross deferred tax assets............................................... 11,443 12,192assets ...................................................... 13,824 9,239
Less valuation allowance...................................................... (8,314) (9,196)
--------- ---------allowance ............................................................. (1,881) (870)
-------- --------
Net deferred tax assets....................................................... 3,129 2,996
--------- ---------assets .............................................................. 11,943 8,369
-------- --------
Deferred tax liabilities:
Property, plant and equipment due to depreciation................................ (3,129) (2,989)
Other............................................................................ - (7)
--------- ---------depreciation ...................................... (5,871) (4,193)
Net U.S. tax on distribution of foreign earnings ....................................... (216) (216)
-------- --------
Total gross deferred tax liability............................................ (3,129) (2,996)
--------- ---------liability ................................................... (6,087) (4,409)
-------- --------
Net deferred tax..............................................................tax assets .................................................................. $ -5,856 $ -
========= =========
- -----------------------------------------------------------------------------------------------------------------------3,960
======== ========
Deferred income taxes are presented in the accompanying consolidated balance
sheets as follows:
APRIL 1, APRIL 2,
2001 2000
-------- --------
(in thousands)
Current deferred tax assets ............. $9,668 $7,261
Non-current deferred tax liabilities..... 3,812 3,301
------ ------
Net deferred tax assets ............. $5,856 $3,960
====== ======
The valuation allowance for deferred tax assets as of March 31, 1996April 1, 2001 and April 2,
19952000 was $8,314,000$1.9 million and $9,196,000,$870,000, respectively. The net change in the total
valuation allowance for the years ended March 31, 1996April 1, 2001 and April 2, 19952000 was a
decreasean
increase of $882,000$1.0 million and $763,000,$40,000, respectively. Cash payments for income taxes were $241,000, $157,000, and $111,000The increase in the
valuation allowance during fiscal 1996, 1995, and 1994, respectively.2001 reflects the estimated amount of deferred
tax asset which may not be realized due to the expiration of state net operating
loss carryforwards. As of March 31, 1996,April 1, 2001, the Company has available for income
tax purposes approximately $25,000,000$8.2 million in federal net operating loss
carryforwards (NOLs). The NOLs relate to operating losses of NDI, which may be usedwas
acquired on April 24, 2000. These losses are subject to offset future taxable income.
These loss carryforwardsan annual limitation and
begin to expire in fiscal year 2004. The2019. In addition, the Company also
has minimum
federal and state tax credit carryforwards of approximately $15,000 which$699,000 and
$870,000 respectively, that are available to reduce future federal regular income taxes, if any, over an
indefinite period. In addition, the Company hasand state
tax credit carryforwards
of $400,000 of which $195,000 is available to reduce stateregular income taxes over an indefinite period. The Company also has not recognized a deferred tax liabilityresearch
and development credits of approximately $930,000 for the undistributed earnings of its 100 percent owned foreign
subsidiaries$1.9 million that arosewill begin to expire
in 1996 and prior years because the Company currently
does not expect those unremitted earnings to reverse and become taxable to the
Company in the foreseeable future. A deferred tax liability will be recognized
when the Company expects that it will recover those undistributed earnings in a
taxable manner, such as through receipt of dividends or sale of the investments.
As of March 31, 1996, the undistributed earnings of these subsidiaries were
approximately $2.7 million.
27fiscal year 2012.
33
34
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 96 COMMON STOCK
COMMON STOCK SPLIT
On January 27, 2000, the Board of Directors approved a two-for-one split of the
Company's common stock, subject to stockholder approval of an increase in the
Company's authorized shares from 30 million to 100 million. On March 28, 2000,
the increase in authorized shares was approved at a Special Meeting of
Stockholders. The two-for-one split was effected in the form of a stock dividend
paid on April 19, 2000 to shareholders of record as of March 29, 2000. All
agreements concerning stock options and other commitments payable in shares of
the Company's common stock provide for the issuance of additional shares due to
the declaration of the stock split. An amount equal to the par value of the
common shares issued was transferred from additional paid-in capital to the
common stock account. All share and per share data in these consolidated
financial statements and related footnotes has been restated to reflect the
stock split on a retroactive basis for all periods presented.
LONG-TERM INCENTIVE PLANPLANS
The Company hasadopted a Long-Term Incentive Planlong-term incentive plan in 1999 pursuant to which
non-qualified stock options may be granted. The Company also adopted a long-term
incentive plan in 19861996 pursuant to which stock options, with or without stock
appreciation rights, may be granted and restricted stock awards and book value
awards may be made.
Common Stock Options
These options may be granted in the form of incentive stock options or
non-qualified stock options. The option price may vary at the
discretion of the Compensation Committee but shall not be
less than the greater of fair market value or par value. The option term
may not exceed ten years. The options may be exercised in cumulative annual
increments commencing one year after the date of grant. A total of
13,314,250 shares are authorized for grant under the Company's long-term
incentive plans. The number of common shares reserved for granting of
future awards was 3,076,551 at April 1, 2001.
Restricted Stock Awards
ForNo restricted shares of the Company's common stock were issued during
fiscal 1996, 1995,2001 and 1994, respectively,2000. During fiscal 1999, a total of 8,500,
31,000, and 5,00012,132 restricted
shares of the Company's common stock were granted to certain employees. The
market value of these shares awarded were $51,000, $147,000,was $61,000 and $16,000
for fiscal 1996, 1995, and 1994, respectively. These amounts werethe vesting period was one
year. This amount was recorded as unearned compensation - restricted stock
and areis shown as a separate component of stockholders' equity. Unearned
compensation is
beingwas amortized to expense over the five year vesting period and
amounted to $61,000, $64,000 and $44,000 in fiscal 1996, 1995, and
1994, respectively.
LONG-TERM COMPENSATION PLAN
On October 1, 1990, the Company adopted a Supplemental Executive Retirement Plan
(SERP) for certain key executives. Benefits payable under this plan are based
upon the participant's base pay at retirement reduced by proceeds from the
exercise of certainperiod. Unearned
compensation - restricted stock options. Options vest over a five year period.
Benefits earned under the SERP arewas fully vested at age 55, however, the full
amount of accrued benefit will not usually begin until age 65. Compensation
expense related to the plan was $62,000, $68,000, and $130,000 in fiscal 1996,
1995, and 1994, respectively. Total benefits accrued under these plans were
$515,000 at March 31, 1996 and $453,000amortized at April 2, 1995.
282000.
Unearned compensation expense amounted to $14,000 and $90,000 in fiscal
2000 and 1999, respectively.
34
35
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 96 COMMON STOCK (CONTINUED)
A summary of stock option and restricted stock award transactions follows:
NUMBERWEIGHTED AVERAGE
EXERCISE PRICE OF
SHARES OPTIONSHARES UNDER OPTIONS AND PRICES
RESTRICTED STOCK AWARDS PER SHARE
- -----------------------------------------------------------------------------------------------PLAN
------ -----------------
Balance outstanding at March 29, 1998..... 2,786,332 $ 2.83
---------
Granted .............................. 1,047,184 4.03
Exercised ............................ (358,910) 2.53
Restricted ........................... (32,008) --
Cancelled ............................ (85,500) 3.26
---------
Balance outstanding at March 28, 1993................... 984,744 $ 2.375-$8.75
------------ --------------
FISCAL YEAR 1994 TRANSACTIONS
Granted................................. 49,500 3.25-3.625
Exercised/vested........................ (33,554) 2.50-3.75
Cancelled............................... (30,126) 2.50-8.75
------------ --------------1999..... 3,357,098 3.20
---------
Granted .............................. 1,441,400 17.37
Exercised ............................ (1,075,106) 2.79
Restricted ........................... (32,134) --
Cancelled ............................ (168,620) 6.57
---------
Balance April 3, 1994.................... 970,564 2.375-8.75
------------ ---------------
FISCAL YEAR 1995 TRANSACTIONS
Granted................................. 87,000 3.875-10.25
Exercised............................... (166,590) 2.50-4.625
Cancelled............................... (21,749) 2.50-10.25
------------ --------------
Balance,outstanding at April 2, 1995................... 869,225 2.375-10.25
------------ --------------
FISCAL YEAR 1996 TRANSACTIONS
Granted................................. 115,500 10.00-12.75
Exercised............................... (101,096) 2.50-4.625
Cancelled............................... (44,242) 2.50-12.75
------------ --------------2000 3,522,638 8.99
---------
Granted .............................. 2,403,497 37.57
Exercised ............................ (884,458) 6.88
Cancelled ............................ (274,604) 27.20
---------
Balance March 31, 1996................... 839,387 $ 2.375-$12.75
============ ==============
- -----------------------------------------------------------------------------------------------outstanding at April 1, 2001..... 4,767,073 $22.75
=========
Options exercisable at the end of each fiscal year:
NUMBER OF NUMBER OFWEIGHTED AVERAGE
SHARES SHARES RESERVED FOR
EXERCISABLE FUTURE GRANTS
- -----------------------------------------------------------------------------------------------EXERCISE PRICE
------ ----------------
March 31, 1996............................ 469,259 214,373
- -----------------------------------------------------------------------------------------------2001................................................................... 794,275 $ 6.86
2000................................................................... 858,346 $ 5.81
1999................................................................... 830,638 $ 2.40
STOCK PURCHASE WARRANTS
In April 1994, the Company amended its line of credit agreement and issued
50,000 stock purchase warrants to Silicon Valley Bank. The warrants are
exercisable at $3.75 per share and expire on April 1, 1999.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
On September 12, 1994, the shareholders approved a Non-Qualified Stock
Option Plan for Non-Employee Directors. A total of 50,000 options may be
granted under this plan. The option price is the greater of the fair market
value of the shares of common stock at the time the option is granted or four
dollars ($4.00). Options are exercisable 20% per year. During fiscal 1996, a
new director was elected to the Board of Directors and 5,000 non-qualified
stock options were issued at $17.875 per share. In fiscal 1995, each of the
three directors received 5,000 non-qualified stock options issued at $5.875 per
share.
2935
36
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 96 COMMON STOCK (CONTINUED)
The following table summarizes information concerning currently outstanding and
exercisable options as of April 1, 2001:
WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE WEIGHTED
RANGE OF NUMBER CONTRACTUAL OUTSTANDING OPTIONS AVERAGE
EXERCISE PRICES OUTSTANDING LIFE (YEARS) OPTION PRICE EXERCISABLE EXERCISE PRICE
- --------------- ----------- ------------ ------------ ----------- --------------
$ 0.92 - $10.00 1,649,052 6.72 $ 3.80 646,725 $ 3.54
$10.01 - $20.00 672,090 8.21 $16.68 96,210 $16.77
$20.01 - $30.00 468,215 9.18 $27.86 37,800 $26.41
$30.01 - $40.00 834,466 9.40 $31.99 7,500 $30.53
$40.01 - $50.00 1,112,750 9.07 $44.47 3,400 $44.44
$50.01 - $60.00 21,400 9.05 $54.92 1,040 $55.68
$60.01 - $67.00 9,100 8.96 $65.40 1,600 $66.06
--------- -------
4,767,073 794,275
========= =======
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations in accounting for its
stock option and employee stock purchase plans. Had compensation cost for the
Company's stock option plans been determined based upon the fair value at the
grant date for awards under these plans consistent with the methodology
prescribed under SFAS No. 123, "Accounting for Stock-based Compensation," the
Company's net income would have been as follows:
YEARS ENDED
-----------------------------------------------
APRIL 1, APRIL 2, MARCH 28,
2001 2000 1999
-------- -------- ---------
(in thousands)
Net income ................................ As reported $33,373 $17,982 $ 19,263
======= ======= ========
Pro forma $25,958 $15,088 $ 18,181
======= ======= ========
Net income per share diluted .............. As reported $ 0.75 $ 0.42 $ 0.54
======= ======= ========
Pro forma $ 0.58 $ 0.35 $ 0.51
======= ======= ========
36
37
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 COMMON STOCK (CONTINUED)
The effect of applying SFAS No. 123 as shown in the above pro forma disclosure
is not representative of the pro forma effect on net income in future years
because it does not take into consideration pro forma compensation expense
related to grants made prior to fiscal year 1996.
The fair value of each option grant was estimated on the grant date using the
Black Scholes Option Pricing Model with the following weighted average
assumptions:
2001 2000 1999
---- ---- ----
Expected volatility ............. 125% 69% 85%
Risk free interest rate ......... 5% 6% 5%
Dividend yield .................. -- -- --
Expected option life (years)..... 3 3 4
Weighted average fair value of options granted during the year:
2001............................. $ 7.46
2000............................. $ 5.02
1999............................. $ 1.89
STOCK OPTION PLANS FOR NON-EMPLOYEE DIRECTORS
The Company has two stock option plans for non-employee directors -- the 1994
Non-Qualified Stock Option Plan and the 1997 Non-Qualified Stock Option Plan.
Under the two plans, a total of 450,000 shares have been authorized for option
grants. The two plans have substantially similar terms and conditions and are
structured to provide options to non-employee directors as follows: a new
Director receives a total of 45,000 options upon becoming a member of the Board;
and continuing Directors receive 15,000 options after each Annual Meeting of
Shareholders. Under both of these plans the option price is the fair market
value at the time the option is granted. Options granted during fiscal 2001
become exercisable 25% per year beginning one year from the date of grant.
Options granted prior to fiscal 2001 become exercisable at a rate of 20% per
year beginning one year from the date of grant. During fiscal 2001, 45,000
options were granted under these plans at a price of $36.50. During fiscal 2000,
105,000 options were granted with 45,000 granted at a price of $16.36 and 60,000
granted at a price of $27.28. During fiscal 1999, 60,000 shares were granted at
a price $6.59. At April 1, 2001, a total of 441,000 options, net of
cancellations, have been granted under these two plans. During fiscal 2001,
39,000 options were exercised at a weighted average exercise price of $4.60. At
April 1, 2001, 54,000 shares were exercisable.
37
38
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 COMMON STOCK (CONTINUED)
STOCK PURCHASE PLAN
In December 1989, theThe Company adoptedmaintains an employee stock purchase plan. The
plan was amended in October 1992 to provide for six month offering periods. Under the plan, eligible
employees may purchase common stock through payroll deductions of up to 10% of
compensation. The price per share is the lower of 85% of the market price at the
beginning or end of theeach six-month offering period. The plan originally providedprovides for
purchases by employees of up to an aggregate of 300,000900,000 shares through December
31, 1995. During fiscal 1996, the employee
stock purchase plan was amended through December 31, 1998.2001. Shares of 16,836,
28,875,20,904, 21,086 and 29,31351,506 were purchased under this plan in
fiscal 1996, 1995,2001, 2000 and 1994,1999, respectively.
SHAREHOLDER RIGHTS PLAN
In November 1986, the Board of Directors of the Company declared a dividend
distribution of one right for each outstanding share of common stock. Each
right entitles the registered holder to purchase from the Company one common
share at an exercise price of $30 per share. A right will also be issued with
each common share that is issued prior to the time the rights become
exercisable or expire.
The rights are not exercisable until after a person or group acquires 10% or
more of the Company's common stock or announces a tender offer for 10% or more
of the common stock except with respect to persons who already hold 10% in
which case the threshold is any additional shares. In such events, each holder
shall be entitled to purchase that number of shares of the Company's common
stock having a market value equal to two times the $30 per share exercise
price. In lieu of such right, the Board of Directors may issue one share of
common stock for each right held by everyone except the acquiring person or
group. In the event that the Company is acquired in a merger or other business
combination transaction or more than 50% of its assets or earning power are
sold, each holder shall thereafter have the right to receive, upon exercise of
each right, that number of shares of common stock of the acquiring company
which at the time of such transaction would have a market value of two times
the $30 per share exercise price.
The Company is entitled to redeem the rights at five cents per right at any
time before the rights are exercisable. The rights will expire on December 5,
1996 unless earlier redeemed by the Company.
NOTE 107 EMPLOYMENT BENEFIT PLAN
On March 31, 1995, theThe Company mergedmaintains a 401(k) plan covering substantially all of its Employee Stock Ownership Plan into
the Alpha Industries, Inc. Saving and Retirement Plan also known as the 401(k)
plan.employees.
All of the Company's employees who are at least 21 years old and have
completed six months of service (1,000 hours in a 12 month period) with the
Company are eligible to
receive a Company contribution. Discretionary Company contributions are
determined by the CompanyBoard of Directors and may be in the form of cash or the
Company's stock. Beginning January 1, 1996, theThe Company will contributecontributes a match of 100% of the first 1% and a
50% match on the next 4% of an employee's salary for employees with 5 years or
less of service. For employees with more than 5 years of service, the Company
will contributecontributes a 100% match on the first 1% and a 75% match on the next 5% of an
employee's salary. DuringFor fiscal 1996,2001, 2000 and 1999, the Company contributed
$101,000 for the first three quarters55,500, 39,374 and accrued a contribution of
$208,000 for the fourth quarter of fiscal 1996 that is expected to be
distributed in fiscal 1997 in the form of the Company's stock.
Under the previous 401(k) plan all of the Company's employees who were at
least 21 years old and had completed one year of service (1,000 hours in a 12
month period) with the Company were eligible to receive a Company matching
contribution. The Company contributed $.50 for each $1.00 contributed by
employees, up to a maximum Company matching contribution of $500 per employee
for fiscal 1995 and 1994. For fiscal years 1995 and 1994, the Company
contributed $232,000 and $281,000, respectively.
30
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 EMPLOYMENT BENEFIT PLAN (CONTINUED)
Under the previous Employee Stock Ownership Plan contributions were
determined by the Board of Directors and contributed to a trust created to
acquire161,336 shares, respectively, of the Company's common stock
valued at $1.5 million, $1.2 million and other assets for$995,000, to fund the exclusive
benefit ofCompany's
obligation under the participants. The Company accrued a contribution of $226,000 for
fiscal 1995 that was distributed during fiscal 1996. No contribution was made
for fiscal 1994.401(k) plan.
NOTE 118 COMMITMENTS AND CONTINGENCIES
The Company has various operating leases primarily for manufacturing and engineeringcomputer equipment and
buildings. Rent expense amounted to $1,626,000, $1,255,000, and
$1,418,000$1.4 million in fiscal 1996, 1995,2001 and 1994,$1.7 million
in fiscal 2000 and fiscal 1999, respectively. Purchase options may be exercised
at various times for some of these leases. Future minimum payments under these
leases isare as follows (in thousands):follows:
FISCAL YEAR - --------------------------------------------------------------------------------(IN THOUSANDS)
----------- --------------
1997..............................2002 ................................................................... $ 1,265
1998.............................. 1,009
1999.............................. 332
2000.............................. 60
2001.............................. 58
Thereafter........................ 4071,788
2003 ................................................................... 1,437
2004 ................................................................... 926
2005 ................................................................... 843
2006 ................................................................... 758
Thereafter............................................................... 1,255
--------
$ 3,1317,007
========
- --------------------------------------------------------------------------------
The Company has been notified by federal and state environmental agencies of its
potential liability with respect to the following two sites: the Spectron, Inc. Superfund site in Elkton,
Maryland and the Seaboard Chemical Corporation
site in Jamestown, North Carolina. In each case severalMaryland. Several hundred other companies have also been notified about their
potential liability regarding these sites.this site. The Company continues to deny that it
has any responsibility with respect to these sitesthis site other than as a de minimis
party. Management is of the -- -------
opinion that the outcome of the aforementionedthis environmental
mattersmatter will not have a material effect on the Company's operations or financial
position.
The Company is party to suits and claims arising in the normal course of
business. Management believes these are adequately provided for or will result
in no significant additional liability to the Company.
38
39
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 129 RELATED PARTY TRANSACTIONS
The Company has had transactions in the normal course of business with various
other corporations, that are either major stockholders or whose
director is also a director of the Company.related parties. Scientific Components Corporation,
currently a beneficial owner of the
Company's Common Stockcommon stock during fiscal 2000 and fiscal 1999, purchased
approximately $4.3$7.4 million $1.9 million and $447 thousand of products during fiscal 1996, 19952000 and 1994,1999,
respectively. In addition,Scientific Components Corporation was not a directorbeneficial owner of
the Company's common stock during fiscal 2001.
NOTE 10 SEGMENT INFORMATION
The Company is alsoengaged in the design and manufacture of discrete semiconductors,
integrated circuits and electrical ceramic components for a directorwide range of
Scientific Atlanta, Inc.applications in the wireless and broadband communications markets.
The Company has adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for the
way public business enterprises report information about operating segments in
annual financial statements and in interim reports to shareholders. The method
for determining what information to report is based on the way that management
organizes the segments within the Company for making operating decisions and
assessing financial performance. In evaluating financial performance, management
uses sales and operating profit as the measure of the segments' profit or loss.
During the Company's second quarter ended October 1, 2000, the Company
reorganized into two reportable segments based on management's methods of
evaluating operations and performance. The new reportable segments are:
Semiconductor Products and Ceramic Products. The Semiconductor Products segment
is comprised of two of the Company's former segments: Wireless Semiconductor
Products and Application Specific Products. A description of the reportable
segments follows:
Semiconductor Products:
The Semiconductor Products segment designs and manufactures gallium arsenide
integrated circuits, other discrete semiconductors and multi-chip modules
primarily for the global wireless communications and broadband markets.
Ceramic Products:
The Ceramic Products segment designs and manufactures technical ceramic and
magnetic products for the global wireless infrastructure and broadband markets.
39
40
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 SEGMENT INFORMATION (CONTINUED)
The table below presents selected financial data by business segment for fiscal
2001, 2000 and 1999. The accounting policies of the segments are the same as
those described in the "Summary of Significant Accounting Policies."
YEARS ENDED
---------------------------------------------
APRIL 1, APRIL 2, MARCH 28,
2001 2000 1999
-------- -------- ---------
(in thousands)
Sales
-----
Semiconductor Products..... $224,560 $150,348 $100,873
Ceramic Products .......... 47,008 36,054 25,540
-------- -------- --------
$271,568 $186,402 $126,413
======== ======== ========
Operating Income
----------------
Semiconductor Products..... $ 33,496 $ 16,761 $ 13,580
Ceramic Products .......... 7,164 4,632 1,879
-------- -------- --------
$ 40,660 $ 21,393 $ 15,459
======== ======== ========
APRIL 1, APRIL 2,
2001 2000
-------- --------
(in thousands)
Net Long-lived Assets
---------------------
Semiconductor Products..... $ 97,568 $ 62,459
Ceramic Products .......... 16,628 13,061
-------- --------
$114,196 $ 75,520
======== ========
Total Assets
------------
Semiconductor Products..... $138,614 $108,443
Ceramic Products .......... 29,217 25,892
Corporate ................. 169,188 146,689
-------- --------
$337,019 $281,024
======== ========
Customer Concentration:
During fiscal 1996, 1995year 2001, two customers accounted for 26% and 1994, Scientific Atlanta, Inc. purchased11%, respectively
of the Company's total sales. In fiscal 2000 and 1999, one customer accounted
for 34% and 28%, respectively, of the Company's total sales. In fiscal 2001,
sales to the Company's 15 largest customers accounted for 69% of total sales. In
fiscal 2000 and 1999, sales to these customers accounted for 65% and 64%,
respectively.
40
41
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 SEGMENT INFORMATION (CONTINUED)
Geographic Information
Sales include export sales primarily to Europe and Asia of $133.7 million, $84.8
million and $45.8 million, in fiscal 2001, 2000 and 1999, respectively. During
fiscal 2001, the Company closed its sales subsidiary in the United Kingdom. This
sales subsidiary was in operation during fiscal 2000 and 1999. The following
table shows certain financial information relating to the Company's operations
in various geographic areas:
YEARS ENDED
------------------------------------------------
APRIL 1, APRIL 2, MARCH 28,
2001 2000 1999
-------- -------- ---------
(in thousands)
Sales
United States
Customers ......... $ 271,510 $ 180,576 $ 118,534
Intercompany ...... 18 4,698 6,497
Europe
Customers ......... 58 5,826 7,879
Eliminations ......... (18) (4,698) (6,497)
--------- --------- ---------
Net sales .............. $ 271,568 $ 186,402 $ 126,413
========= ========= =========
Income before taxes
United States......... $ 49,260 $ 26,929 $ 15,920
Europe ............... 10 318 782
--------- --------- ---------
Income before taxes .... $ 49,270 $ 27,247 $ 16,702
========= ========= =========
Assets
United States ........ $ 333,626 $ 276,540 $ 115,214
Europe ............... 3,393 4,484 5,469
--------- --------- ---------
Total assets ........... $ 337,019 $ 281,024 $ 120,683
========= ========= =========
Substantially all of the Company's long-lived assets were located in the United
States as of April 1, 2001.
41
42
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
- ---------------------------------------------------------------------------------------------------------
FISCAL 2001
Sales ..................... $65,688 $73,201 $78,684 $53,995 $271,568
Gross profit .............. 29,538 33,747 36,358 20,293 119,936
Net income ................ 7,841 10,567 11,580 3,385 33,373
Per share data (1)
Net income basic ...... .18 .25 .27 .08 .78
Net income diluted..... .18 .24 .26 .08 .75
Market price range
High ................... 63.875 50.438 54.000 35.938 63.875
Low .................... 35.000 32.000 24.750 13.938 13.938
FISCAL 2000
Sales ..................... $38,653 $41,921 $48,043 $57,785 $186,402
Gross profit .............. 16,997 18,035 20,955 24,849 80,836
Net income ................ 3,319 4,313 5,451 4,899 17,982
Per share data
Net income basic ...... .09 .10 .13 .12 .44
Net income diluted..... .09 .10 .12 .11 .42
Market price range
High ................... 23.125 28.906 33.125 74.734 74.734
Low .................... 8.938 21.500 23.875 27.016 8.938
- ---------------------------------------------------------------------------------------------------------
The Company's common stock is traded on the NASDAQ National Market under the
symbol AHAA. The number of stockholders of record as of May 31, 2001 was
approximately $1.2 million, $766
thousand, $326 thousand950.
(1) Earnings per share calculations for each of product, respectively.
31the quarters are based on
the weighted average number of shares outstanding and included common
stock equivalents in each period. Therefore, the sums of the quarters
do not necessarily equal the full year earnings per share.
42
43
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Alpha Industries, Inc.:
We have audited the consolidated financial statements of Alpha Industries, Inc.
and subsidiaries as listed in the accompanying index under Item 8. In connection
with our audits of the consolidated financial statements, we have also audited
the financial statement schedule as listed in the accompanying index under Item
14. These consolidated financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
auditing
standards.in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Alpha Industries,
Inc. and subsidiaries at March 31, 1996April 1, 2001 and April 2, 1995,2000, and the results of
their operations and their cash flows for each of the years in the three-year
period ended March 31, 1996April 1, 2001 in conformity with accounting principles generally
accepted accounting principles.in the United States of America. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
KPMG Peat Marwick LLP
Boston, Massachusetts
May 10, 1996
321, 2001
44
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
NoneNone.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See the section entitled "Election of Directors" appearing in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held on September
9, 1996,10, 2001, to be filed within 120 days of the end of the Company's fiscal year,
which section is incorporated herein by reference, and the section entitled
"Executive Officers" under Item 1 of this Annual Report on Form 10-K.
ITEM 11 EXECUTIVE COMPENSATION
See the section entitled "Executive Compensation" appearing in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held on September
9, 1996,10, 2001, which section is incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See the section entitled "Securities Beneficially Owned by Certain Persons"
appearing in the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held on September 9, 1996,10, 2001, which section is incorporated
herein by reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See the section entitled "Certain Relationships and Related Transactions"
appearing in the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held on September 9, 1996,10, 2001, which section is incorporated
herein by reference.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Index to Financial Statements
The financial statements filed as part of this report are listed on the
index appearing on page 14.21.
2. Index to Financial Statement Schedules
The following financial statement schedule is filed as part of this
report (page references arereference is to this report):
Schedule II Valuation and Qualifying Accounts (page 38)48)
Other schedules arehave been omitted because of the absence of conditions
under which they are required or because the required information is
presented in the financial statements or notes thereto.
3344
45
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
3. Exhibits
(3) Certificate of Incorporation and By-laws.
(a) Restated Certificate of Incorporation (Filed as Exhibit 3
(a)
NO. DESCRIPTION
--- -----------
2.a Agreement and Plan of Merger, dated as of February 10, 2000, by and among Alpha
Industries, Inc., Aries Acquisition Corporation and Network Device, Inc. (1)
3.a Restated Certificate of Incorporation (2)
3.b Amended and restated By-laws of the Corporation dated April 30, 1992 (3)
3.c Certificate of Amendment of Restated Certificate of Incorporation of Alpha Industries, Inc.,
dated March 30, 2000 (17)
4.a Specimen Certificate of Common Stock (2)
4.b Loan and Security Agreement dated December 15, 1993 between Trans-Tech, Inc., and
County Commissioners of Frederick County (4)
4.c Revolving Credit Agreement dated November 1, 1999 between Alpha Industries, Inc.,
Trans-Tech, Inc., Fleet Bank of Massachusetts and Silicon Valley Bank (5); as amended by
that Agreement and Amendment No 1. dated November 16, 2000 between Alpha Industries,
Inc., Trans-Tech, Inc., Fleet Bank of Massachusetts and Silicon Valley Bank (6)
10.a Alpha Industries, Inc., 1986 Long-Term Incentive Plan as amended (7)*
10.b Alpha Industries, Inc., Long-Term Compensation Plan dated September 24, 1990 (8);
amended March 28, 1991 (9); and as further amended October 27, 1994 (10)*
10.c Severance Agreement dated May 20, 1997 between the Registrant and David J. Aldrich
(11)*
10.d Severance Agreement dated January 14, 1997 between the Registrant and Richard Langman
(11)*
10.e Consulting Agreement dated August 13, 1992 between the Registrant and Sidney Topol
(12)*
10.f Alpha Industries, Inc., 1994 Non-Qualified Stock Option Plan for Non-Employee Directors
(7)*
10.g Alpha Industries Executive Compensation Plan dated January 1, 1995 and Trust for the
Alpha Industries Executive Compensation Plan dated January 3, 1995 (10)*
10.h Severance Agreement dated September 4, 1998 between the Registrant and Paul E. Vincent
(13)*
10.i Alpha Industries, Inc., 1997 Non-Qualified Stock Option Plan for Non-Employee Directors
(14)*
10.j Severance Agreement dated September 13, 1999 between the Registrant and Thomas C.
Leonard (15)*
10.k Purchase and Sale Agreement dated July 27, 2000 between the Registrant and C.R. Bard,
Inc. (16)
10.l Severance Agreement dated May 30, 2000 between the Registrant and Jean-Pierre Gillard*
10.m Alpha Industries, Inc. 1996 Long-Term Incentive Plan*
11 Statement regarding computation of per share earnings. See Note 1 to the Consolidated
Financial Statements
21 Subsidiaries of the Registrant
23 Consent of Independent Auditors
------------------------------------
*Management contract or compensatory plan
45
46
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
(1) Incorporated by reference to the exhibit filed with our Form 8-K dated
May 8, 2000.
(2) Incorporated by reference to the exhibit filed with our Registration
Statement on Form S-3 (Registration No. 33-63857))*.
(b) Amended and restated By-laws of the Corporation dated April
30, 1992 (Filed as Exhibit 3(b)(3) Incorporated by reference to the Annual Report on Form
10-K for the year ended March 29, 1992)*.
(4) Instruments defining rights of security holders, including
indentures.
(a) Specimen Certificate of Common Stock (Filed as Exhibit 4(a)
to Registration Statement on Form S-3 (Registration No. 33-
63857))*.
(b) Frederick County Industrial Development Revenue Bond, Deed
of Trust, Loan Agreement and Guaranty and Indemnification
Agreement dated June 17, 1982 (Filed as Exhibit 4(g) to the
Registration Statement on Form S-8exhibit filed July 29, 1982)*.
Bond and Loan Document Modification Agreement dated December
9, 1993 (Filed as Exhibit 4(c) to the Quarterly Report on
Form 10-Q for the quarter ended December 26, 1993)*.
(c) Amended and Restated Rights Agreement dated as of November
24, 1986, as amended and restated July 3, 1990 and as
further amended September 9, 1990 and September 24, 1990,
between Registrant and The First National Bank of Boston, as
Rights Agent (The July 3, 1990 restatement and the September
9, 1990 and September 24, 1990 amendments were filed as
Exhibit 4 to the Current Report on Form 8-K dated July 3,
1990 and Exhibits 4(a) and 4(b) to the Current Report on
Form 8-K dated September 18, 1990, respectively)*.
(d) Loan and Security Agreement dated December 15, 1993 between
Trans-Tech, Inc., and County Commissioners of Frederick
County (Filed as Exhibit 4(h) to the Quarterly Report on
Form 10-Q for the quarter ended July 3, 1994)*.
(e) Stock Purchase Warrant for 50,000 shares of the Registrant's
Common Stock issued to Silicon Valley Bank as of April 1,
1994 (Filed as Exhibit 4(i) to the Quarterly Report on Form
10-Q for the quarter ended July 3, 1994)*.
(f) Credit Agreement dated September 29, 1995 between Alpha
Industries, Inc., and Trans-Tech Inc. and Fleet Bank of
Massachusetts, N.A. and Silicon Valley Bank. (Filed as
Exhibit 4(j) to the Quarterly Report on Form 10-Q for the
quarter ended October 1, 1995)* and amended and restated
promissory notes dated as of October 31, 1995 (Filed as
Exhibit 4(f) to the Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995)*.
34
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
(10) Material Contracts.
(a) Alpha Industries, Inc., 1986 Long-Term Incentive Plan as
amended (Filed as Exhibit 10(a) to the Quarterly Report on
Form 10-Q for the quarter ended October 2, 1994)*. (1)
(b) Alpha Industries, Inc., Employee Stock Purchase Plan as
amended October 22, 1992 (Filed as Exhibit 10(b) to the
Annual Report on Form 10-K for the fiscal year ended March
28, 1993)* and amended August 22, 1995. (1)
(c) SERP Trust Agreement between the Registrant and the First
National Bank of Boston as Trustee dated April 8, 1991
(Filed as Exhibit 10(c) to the Annual Report on Form 10-K
for the fiscal year ended March 31, 1991)*. (1)
(d) Digital Business Agreement between Digital Equipment
Corporation and Registrant dated April 2, 1990. Master Lease
Addendum (Ref. No. 6260) to Digital Business Agreement No.
3511900 between Digital Equipment Corporation and Registrant
dated April 2, 1990 (Filed as Exhibit 10(g) to thewith our Annual Report
on Form 10-K for the fiscal year ended March 29, 1992)*.
(e) Alpha Industries, Inc., Long-Term Compensation Plan dated
September 24, 1990 (Filed as Exhibit 10(i)1992.
(4) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended July 3,1994.
(5) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended December 26, 1999.
(6) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended December 31, 2000.
(7) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended October 2, 1994.
(8) Incorporated by reference to the exhibit filed with our Annual Report
on Form 10-K for the fiscal year ended March 29, 1992)*; amended March 28, 1991 (Filed as Exhibit 10 (a)1992.
(9) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended June 27, 1993)* and as further amended October 27, 1994 (Filed as
Exhibit 10(f)1993.
(10) Incorporated by reference to the exhibit filed with our Annual Report
on Form 10-K for the fiscal year ended April 2, 1995)*. (1)
(f) Master Equipment Lease Agreement between AT&T Commercial
Finance Corporation and1995.
(11) Incorporated by reference to the Registrant dated June 19, 1992
(Filed as Exhibit 10(j) to theexhibit filed with our Annual Report
on Form 10-K for the fiscal year ended March 28, 1993)*.
(g) Employment Agreement dated October 1, 1990 between the
Registrant and Martin J. Reid, as amended March 26, 1992 and
amended January 19, 1993 (Filed as Exhibit 10(k)30, 1997.
(12) Incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended March
28, 1993)* and amended August 10, 1993 (Filed as Exhibit
10(j) to the Quarterly Report on Form 10-Q for the quarter
ended July 3, 1994)*. (1)
(h) Employment Agreement dated October 1, 1990 between the
Registrant and George S. Kariotis, as amended May 15, 1991
and amended January 22, 1993 (Filed as Exhibit 10(l) to the
Annual Report on Form 10-K for the fiscal year ended March
28, 1993)* and amended August 10, 1993 (Filed as Exhibit
10(k) to the Quarterly Report on Form 10-Q for the quarter
ended July 3, 1994)*. (1)
(i) Employment Agreement dated October 1, 1990 between the
Registrant and Patrick Daniel Gallagher, as amended March
24, 1992 and amended by Second Amendment dated September 29,
1992 and Third Amendment dated January 20, 1993 (Filed as
Exhibit 10(m) to the Annual Report on Form 10-K for the
fiscal year ended March 28, 1993)* and Fourth Amendment
dated August 3, 1994 (Filed as Exhibit 10(l) to the
Quarterly Report on Form 10-Q for the quarter ended October
2, 1994)*. (1)
35
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
(j) Employment Agreement dated April 28, 1994 between the
Registrant and Joseph J. Alberici. (Filed as Exhibit 10(o)
to theexhibit filed with our Annual Report
on Form 10-K for the fiscal year ended April 3, 1994)*; and further amended August 3, 1994 (Filed
as Exhibit 10(n)1994.
(13) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended October 2, 1994)*. (1)
(k) Consulting Agreement dated August 13, 1992 betweenSeptember 27, 1998.
(14) Incorporated by reference to the Registrant and Sidney Topol. (Filed as Exhibit 10(p) to theexhibit filed with our Annual Report
on Form 10-K for the fiscal year ended April
3, 1994)*. (1)
(l) Employment Agreement dated August 3, 1994 betweenMarch 29, 1998.
(15) Incorporated by reference to the Registrant and Thomas C. Leonard (Filed as Exhibit 10(p) to
theexhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended October 2, 1994)*. (1)
(m) Master Lease Agreement between Comdisco, Inc. andSeptember 26, 1999.
(16) Incorporated by reference to the Registrant dated September 16, 1994 (Filed as Exhibit 10(q)
to theexhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended October 2, 1994)*.
(n) Alpha Industries, Inc., 1994 Non-Qualified Stock Option Plan
for Non-Employee Directors (Filed as Exhibit 10(r)1, 2000.
(17) Incorporated by reference to the Quarterly Reportexhibit filed with our Registration
Statement on Form 10-Q for the quarter ended October
2, 1994)*S-8 (Registration No. 33-63818). (1)
(o) Alpha Industries Executive Compensation Plan dated January
1, 1995 and Trust for the Alpha Industries Executive
Compensation Plan dated January 3, 1995 (Filed as Exhibit
10(p) to the Annual Report on Form 10-K for the fiscal year
ended April 2, 1995)*. (1)
(p) Letter of Employment dated January 24, 1995 between the
Registrant and David J. Aldrich (Filed as Exhibit 10(q) to
the Annual Report on Form 10-K for the fiscal year ended
April 2, 1995)*. (1)
(q) Alpha Industries, Inc. Savings and Retirement Plan dated
March 31, 1995 (Filed as Exhibit 10(r) to the Annual Report
on Form 10-K for the fiscal year ended April 2, 1995)*. (1)
(11) Statement re computation of per share earnings.
(21) Subsidiaries of the Registrant
(23) Consent of Independent Auditors.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the fiscal quarter ended March
31, 1996.
_______________
*Not filed herewith. In accordance with Rule 12b-32 promulgated pursuantApril 1, 2001.
(c) Exhibits
The exhibits required by Item 601 of Regulation S-K are FILED HEREWITH
and INCORPORATED BY REFERENCE herein. The response to the
Securities Exchange Actthis portion of
1934, as amended, referenceItem 14 is hereby made to
documents previously filed with the Commission, which are incorporated by
reference herein.
(1) Management Contracts.
36submitted under Item 14(a)(3).
46
47
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ALPHA INDUSTRIES, INC.
(REGISTRANT)
By:BY: /s/ MARTINDAVID J. REID
------------------------------
MartinALDRICH
--------------------
DAVID J. Reid, PresidentALDRICH, PRESIDENT
Date: June 21, 199627, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on June 21, 1996.
SIGNATURE AND TITLE SIGNATURE AND TITLE
- ------------------- -------------------
/s/ GEORGE S. KARIOTIS /s/ ARTHUR PAPPAS
- ------------------------------ ----------------------------
George S. Kariotis Arthur Pappas27, 2001.
SIGNATURE AND TITLE SIGNATURE AND TITLE
/s/ THOMAS C. LEONARD /s/ TIMOTHY R. FUREY
- ------------------------------------------ ----------------------------------------------
Thomas C. Leonard Timothy R. Furey
Chairman of the Board Director
/s/ DAVID J. ALDRICH /s/ JAMES W. HENDERSON
- ------------------------------------------ ----------------------------------------------
David J. Aldrich James W. Henderson
Chief Executive Officer Director
President and Director
/s/ PAUL E. VINCENT /s/ GEORGE S. KARIOTIS
- ------------------------------------------ ----------------------------------------------
Paul E. Vincent George S. Kariotis
Chief Financial Officer Director
Principal Financial Officer
Principal Accounting Officer
Secretary /s/ DAVID MCLACHLAN
----------------------------------------------
David McLachlan
Director
/s/ ARTHUR PAPPAS
----------------------------------------------
Arthur Pappas
Director
/s/ SIDNEY TOPOL
----------------------------------------------
Sidney Topol
Director
/s/ MARTIN J. REID /s/ RAYMOND SHAMIE
- ------------------------------ ----------------------------
Martin J. Reid Raymond Shamie
Chief Executive Officer Director
President and Director
/s/ DAVID J. ALDRICH /s/ SIDNEY TOPOL
- ------------------------------ ----------------------------
David J. Aldrich Sidney Topol
Chief Financial Officer Director
Principal Financial Officer
/s/ PAUL E. VINCENT /s/ CHARLES A. ZRAKET
- ------------------------------ ----------------------------
Paul E. Vincent Charles A. Zraket
Controller Director
Chief Accounting Officer
37
47
48
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
CHARGED
BALANCE AT TO COSTS BALANCE AT
BEGINNING AND END OF
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS YEAR
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED MARCH 31, 1996Year Ended April 1, 2001
Allowance for doubtful accounts.............. $ 783 $ 60 $ 209 $ 634accounts ................ $796 $434 $309 $921
Year Ended April 2, 2000
Allowance for doubtful accounts ................ $741 $418 $363 $796
Year Ended March 28, 1999
Allowance for doubtful accounts ................ $634 $295 $188 $741
Allowance for estimated losses on contracts..contracts..... $ 11736 $ --- $ 9336 $ 24
YEAR ENDED APRIL 2, 1995
Allowance for doubtful accounts.............. $ 945 $ 60 $ 222 $ 783
Allowance for estimated losses on contracts.. $ 593 $ - $ 476 $ 117
YEAR ENDED APRIL 3, 1994
Allowance for doubtful accounts.............. $ 293 $ 663 $ 11 $ 945
Allowance for estimated losses on contracts.. $ 448 $ 145 $ - $ 593
- -----------------------------------------------------------------------------------------------------------------
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