SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Check One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 3, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File No. 0-12695
INTEGRATED DEVICE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2669985
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2975 Stender Way,
Santa Clara, California 95054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 727-6116
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
___ ___
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'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. ( )
The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant was approximately $1,008,443,000 as of
April 29, 1994, based upon the closing sale price on the NASDAQ
National Market System for that date. Shares of Common Stock held
by each executive officer and director and by each person who owns 5%
or more of the outstanding Common Stock have been excluded in that such
persons may be deemed affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.
There were 33,475,296 shares of the Registrant's Common Stock issued
and outstanding as of April 29, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12, and 13 of Part III incorporate information by reference
from the 1994 Proxy Statement for the Annual Meeting of Shareholders to
be held on August 25, 1994.
ITEM 1. BUSINESS
General
Integrated Device Technology, Inc. was incorporated in California in 1980
and reincorporated in Delaware in 1987. The terms the "Company" and "IDT"
refer to Integrated Device Technology, Inc. and its consolidated
subsidiaries, unless the context indicates otherwise. IDT designs,
develops, manufactures and markets high-performance integrated circuits
and subsystems using advanced CMOS (Complimentary Metal Oxide Silicon) and
BiCMOS (a combination of bipolar and CMOS) process technologies. The
Company's strategy is to offer proprietary and enhanced industry-standard
products that improve the performance of systems incorporating
high-performance microprocessors.
IDT markets its products for use in workstation/server, personal computer,
telecommunications, office automation, and military applications. The
Company offers products in four areas: SRAM (Static Random Access
Memory) components and modules, specialty memory products, logic circuits
and RISC (Reduced Instruction Set Computers) microprocessors and subsystems.
IDT's products are essentially all catalog items as opposed to custom
circuits designed for a single customer application.
The Company attempts to differentiate itself from competitors through
unique architecture, enhanced system cost/performance, and packaging options.
Products and Markets
IDT offers over 3,000 product configurations in four families: SRAM
components and modules, specialty memory products, logic circuits, and
RISC microprocessors and subsystems. During fiscal 1994, these product
families accounted for 33%, 29%, 21% and 17%, respectively, of total
revenues. The Company markets its products primarily to OEMs in the
workstation/server, personal computer, telecommunications, office
automation and military markets. IDT's product design efforts are focused
on developing proprietary components and integrating its components into
single devices, modules or subsystems to meet the needs of customers.
SRAMs
SRAMs are memory circuits used for storage and retrieval of data
during a computer system's operation. SRAMs do not require electrical
refreshment of the memory contents to ensure data integrity, allowing them
to operate at high speeds. SRAMs are delineated by density (number of
bits of data stored) and organization (number of bits of data available in
one access, i.e. width). SRAMs incorporate substantially more circuitry
than DRAMs, resulting in higher production costs for a given amount of
memory, and generally command higher selling prices than the equivalent
sized DRAM. The SRAM market is fragmented by differing speed, power,
density, organization and packaging demands. As a result, there exist a
number of niche markets for SRAMs.
In order to meet varying customer needs, the Company uses both CMOS and
BiCMOS process technologies and markets 16K (Kilobyte), 64K, 256K, and
1 Meg (Megabyte) SRAMs in a number of speed, power, organization and
packaging configurations. IDT's SRAMs are used in products in all
markets served by the Company.
IDT is a leader in cache SRAM memories, which increase microprocessor
efficiency by temporarily storing the most frequently used instructions
and data. IDT cache SRAMs are optimized to enhance the performance of
Intel 486-based systems, as well as the Intel Pentium and the PowerPC
microprocessors.
IDT markets a family of cache-memory modules to several large personal
computer OEMs, incorporating IDT's 71589 (32K X 9) and 71B74 (8K X 8)
static memories in particular.
Specialty Memory Products
The Company's proprietary specialty memory products include FIFOs and
multi-port memory products that offer high-performance features which
allow communications and computer systems to operate more efficiently.
FIFOs are used as rate buffers to transfer large amounts of data at high
speeds between separate devices or pieces of equipment operating at different
speeds within a system. IDT's FIFOs are manufactured using primarily
CMOS process technology. FIFOs are used in all markets served by the
Company.
Synchronous memories use clock edges to trigger read and write signals. By
transferring data on clock edges, a system's timing can be more easily
designed.
The Company is a leading supplier of both synchronous and asynchronous
high-performance FIFOs and has increasingly focused its resources on the
design of synchronous FIFOs which are faster and provide an easier user
interface.
Multi-port memory products are used to speed data transfers and act as the
link between multiple processors or between microprocessors and peripherals
when the order of data to be transferred needs to be controlled. IDT's
multi-port memory products are available with arbitration logic functions
built in which resolve conflicts between devices seeking to access the same
data. IDT's multi-port memory products are used in peripheral interface,
communications and networking products, including hubs, routers and bridges.
IDT's family of multi-port memory products is comprised of synchronous and
asynchronous dual-port, and asynchronous four-port devices. The Company
also offers a new device, known as a SARAM, which combines the flexibility
of a multi-port product with the ease of a FIFO.
Logic Circuits
Logic circuits control data communications between various elements of
electronic systems, such as between a microprocessor and a memory circuit.
IDT offers high-speed byte-wide and double density CMOS logic circuits
which support bus and backplane interfaces, memory interfaces and other
logic support applications where high-speed, low power and high-output
drive are critical.
IDT's 16-bit family of logic products has gained market acceptance and is
available in small packages which enable board area to be significantly
reduced. IDT also supplies a series of 8-bit and 16-bit 3.3 volt logic
products and a 3.3 volt to 5 volt translator circuit directed at the
growing notebook and laptop computer markets. The Company also markets
a family of clock drivers and clock generators. These devices, placed at
critical positions in a circuit, correct the degradation of timing that
occurs the further the impulse travels from the main system clock. IDT's
logic circuits are used in all markets served by the Company.
RISC Microprocessor Components and Subsystems
Microprocessors act as the CPU (central processing unit) of computer systems.
In January 1988, IDT became a licensed manufacturer of MIPS RISC
microprocessors. RISC processors utilize a smaller instruction set,
containing only the most frequently used instructions, than traditional
CISC (Complex Instruction Set Computers) processors. This simplified
instruction set executes an instruction in a single cycle and is therefore
much faster than CISC processors which require multiple cycles. The
Company's RISC microprocessor components are used in the office automation,
telecommunications, server/workstation and personal computer markets.
IDT manufactures MIPS 32-bit and 64-bit standard microprocessors. The
Company also sells several proprietary 32-bit derivative products for the
embedded controller market, including its R3051 with on-circuit memory
and its R3081 with floating point functions and on-circuit memory. IDT has
licensed Siemens to manufacture and market R3051 products worldwide. The
Company has also entered into a license agreement with Toshiba, pursuant to
which Toshiba can manufacture and market R3081 products and, in the future,
R3051 products, and an OEM private labeling agreement with respect to the
Company's R3051 and R3081 products. In addition, IDT entered into an
agreement with Adobe Systems to define, develop and manufacture a variety
of products that allow OEMs to evaluate laser printer feature/price/
performance combinations using Adobe software and IDT's embedded controllers.
The Company recently announced and is shipping its newest RISC microprocessor
based on the MIPS architecture, the R4600 Orion*. The R4600 is a full 64-bit
MIPS instruction set architecture microprocessor targeted at the desktop PC
and high-end embedded control markets. The R4600 is the first microprocessor
designed for IDT by Quantum Effect Design (QED), a consolidated subsidiary,
initially to address applications arising from Microsoft's porting of its
WindowsNT operating system to the MIPS RISC architecture platform. The
Orion has also proved attractive to customers in embedded control
applications.
RISC subsystems are board level products that contain MIPS RISC
microprocessors, cache SRAMs, logic circuits and supporting software.
These products are used in development systems for the evaluation and
design of hardware and software or are integrated into customers' end-user
systems, thereby reducing design cycle time. IDT also markets RISC
subsystems used by several OEMs that provide performance enhancements to
standard products. IDT believes that there are significant opportunities
in the development of custom solutions for computer and peripherals
companies based upon IDT's MIPS architecture expertise, its expertise in
laser printer controls and its several alliances with software developers.
There can be no assurance that MIPS RISC technology will continue to be
successful or that other technologies will not become more accepted.
* R4600 and Orion are trademarks of Integrated Device Technology, Inc.
Manufacturing
Wafer fabrication involves a highly sophisticated, complex process that is
extremely sensitive to contamination. Integrated circuit manufacturing
costs are primarily determined by circuit size because the "yield" of good
circuits per wafer generally increases as a function of smaller die. Other
factors affecting costs include wafer size, number of process steps, costs
and sophistication of manufacturing equipment, packaging type, process
complexity and cleanliness. IDT's manufacturing process is complex,
involving a number of steps including wafer fabrication, plastic or ceramic
packaging, burn-in and final test. From time to time the Company has
experienced manufacturing problems which have caused delays in shipments or
increased costs. There can be no assurance that IDT will not experience
manufacturing problems in the future.
The Company utilizes proprietary CMOS and BiCMOS process technologies. The
Company's current CMOS and BiCMOS technologies permit sub-micron geometries.
BiCMOS, a more costly process, is used for applications requiring higher
speeds. The Company anticipates that it will use its BiCMOS technologies
for those applications requiring highest speed. Because BiCMOS is a more
costly manufacturing process, these devices must sell for substantial
premiums to compensate for their higher costs.
The Company currently operates two submicron wafer fabrication facilities
in San Jose and Salinas, California. The Salinas facility, first placed in
production in 1985, has a 20,000 square foot class 3 five-inch wafer
fabrication line. The Company plans to expand production capacity by
converting this facility to six-inch wafer manufacturing. The San Jose
facility has a 25,000 square foot class 1 (less than one particle 0.5 micron
or greater in size per cubic foot) six-inch wafer fabrication line which was
first placed in production in March 1991. The San Jose facility currently
operates at approximately 70% of its ultimate capacity, whereas the Salinas
facility runs at approximately 95% of capacity. IDT has attempted to
procure some of its older designed die through outside foundries. However,
the Company has experienced difficulty in procuring the state-of-the-art
wafers required by its products. IDT is actively investigating increasing
its wafer fabrication capacity through increasing equipped production
capacity at its San Jose and Salinas facilities, acquiring existing
facilities or construction of a new factory, which might involve one or
more strategic partners.
In addition, IDT operates a 100,000 square foot component assembly and test
facility in Penang, Malaysia. The Company has announced plans to construct
an additional 40,000 square foot building on its vacant land in Penang to
further expand its test and assembly operations there. More than 85% of
IDT's products are tested in its Malaysian facility. IDT also uses
subcontractors, principally in Korea and the Philippines, to perform some
assembly operations. If IDT were unable to assemble or test products
offshore, or if air transportation to these locations were curtailed, the
Company's operations could be materially adversely affected. Additionally,
foreign manufacture exposes IDT to political and economic risks, including
expropriation, foreign government regulations, currency controls, exchange
rate fluctuations and changes in tax and freight rates and exemptions for
taxes and tariffs. IDT is insured for certain of these risks. In addition
to this offshore assembly and test capability, the Company has capacity for
low-volume, quick turn assembly in Santa Clara as well as limited test
capability in Santa Clara, San Jose and Salinas. Assembly and test of
memory modules and RISC subsystems takes place at subcontractors and in
the Company's facilities in both San Jose and Santa Clara.
Raw Material Availability
Generally the Company has been able to arrange for multiple sources of
supply, but the number of vendors capable of delivering certain raw
materials, such as silicon wafers, ultra-pure metals, chemicals and gases
is very limited. Some of the Company's packages, while not unique, have
very long lead times and are available from only a few suppliers. While
IDT has not experienced any difficulties recently, from time to time vendors
have extended lead times or limited supply to the Company due to capacity
constraints. These circumstances could reoccur and could adversely affect
IDT.
Environmental Compliance
IDT's manufacturing sites are subject to numerous environmental laws and
regulations, particularly with respect to industrial waste and emissions.
Compliance with these laws and regulations has not had a material impact on
the Company's capital expenditures, earnings or competitive position. There
can be no assurance that changes in such laws and regulations or problems at
the Company's facilities would not have adverse effects in the future.
Marketing and Customers
IDT markets and sells its products primarily to original equipment
manufacturers (OEMs) through a variety of channels, including a direct
sales force, distributors and independent sales representatives.
The Company's direct sales personnel are located at the Company's
headquarters and in 17 sales offices in key domestic geographic areas and are
primarily responsible for marketing and sales in those areas. Distributors
typically maintain an inventory of IDT products and often handle small or
rush orders. Pursuant to distribution agreements, the Company grants
distributors the right to return slow moving products for credit against
other products and offers protection to the distributors against inventory
obsolescence or price reductions. IDT utilizes two national and four
regional distributors in the United States. Subsequent to the close of
fiscal 1994, the Company announced that it had franchised a third national
distributor for IDT's products. These distributors generally carry a wide
variety of products, including products offered by IDT's competitors.
Independent sales representatives generally take orders on an agency basis
and the Company ships directly to the customer. The representatives receive
commissions on all products shipped to customers in their geographic area.
International sales are controlled by IDT's subsidiaries located in France,
Germany, Hong Kong, Italy, Japan, Sweden and the United Kingdom. The
majority of export sales is through international distributors, which tend
not to carry inventory or carry significantly smaller levels compared to
domestic distributors. During fiscal 1994, 1993 and 1992, export sales
accounted for 32%, 36% and 30% of total revenues, respectively. See
Note 12 "Industry Segment, Foreign Operations" of Notes to the Consolidated
Financial Statements. Sales outside the United States are typically
denominated in local currencies, except for those made through IDT's Hong
Kong subsidiary which are denominated in U.S. dollars. Export sales are
subject to certain risks, including currency controls and fluctuations,
changes in local economic conditions, import and export controls, and
changes in tax laws, tariffs and freight rates.
No single customer or distributor accounted for more than 10% of net revenues
in fiscal 1993 and 1992. During fiscal 1994, two of the Company's national
distributors became one entity and accounted for 15% of net revenues. If
these two distributors had been a single entity during fiscal 1993 and 1992,
it would have accounted for 16% and 17%, respectively, of IDT's total
revenues.
Backlog
IDT manufactures and markets primarily standard parts. Sales are made
pursuant to standard purchase orders, which are frequently revised during
the agreement term to reflect changes in the customer's requirements. The
Company has also entered into master purchase agreements with several of
its OEM customers. These agreements do not require the OEMs to purchase
minimum quantities of the Company's products. Product deliveries are
scheduled upon the Company's receipt of purchase orders under the related
OEM agreements. Generally, these purchase orders and OEM agreements also
allow customers to reschedule delivery dates and cancel purchase orders
without significant penalties. Orders are frequently rescheduled, revised
or canceled. In addition, distributor orders are subject to price
adjustments both prior to, and occasionally after, shipment. For these
reasons, IDT believes that its backlog, while useful for scheduling
production, is not necessarily a reliable indicator of future revenues.
Research and Development
The markets serviced by IDT are characterized by rapid technological changes
and advances. IDT's competitive position has been established, to a large
extent, through its emphasis on the development of proprietary products as
well as enhanced performance industry standard products. In addition, the
Company continues to refine its CMOS and BiCMOS process technologies to
increase the speed and density of circuits in order to provide its customers
with advanced products that will enhance their competitive positions. IDT's
current activities are focused on the design of new circuits with higher
performance capabilities utilizing consistently reproducible low-cost
manufacturing technologies.
In fiscal 1992, the Company purchased approximately 48% of the common stock
and a majority of the preferred stock of Quantum Effect Design, Inc. (QED),
a newly formed corporation. Pursuant to a development agreement between the
Company and QED, QED is developing derivative products based on MIPS new
64-bit microprocessor, initially to address applications arising from the
porting of Microsoft's Windows NT operating system to the MIPS RISC
platform. IDT will own such derivative products, subject to the payment of
royalties and other fees to QED. In an effort to increase market acceptance
of these products as they are developed, IDT has licensed Toshiba and NKK
to manufacture and market these products. The first of these products, the
R4600 Orion processor, was successfully introduced in fiscal 1994. There
can be no assurance that QED will successfully develop other such products
or that any such products will be accepted in the market.
The Company believes that a continued high level of research and development
expenditure is necessary to retain its competitive position. The Company
spent 19%, 23% and 26% of net sales on research and development in fiscal
1994, 1993, and 1992, respectively.
Employees
At April 3, 1994, IDT and its subsidiaries employed approximately 2,615
people worldwide. IDT's success depends in part on its ability to attract
and retain qualified personnel. Since its founding, the Company has
implemented policies enabling its employees to share in IDT's success.
Examples are available stock option, stock purchase, profit sharing and
special bonus plans for key contributors. IDT has never had a work stoppage,
no employees are represented by a collective bargaining agreement, and the
Company considers its employee relations to be good.
Competition
The semiconductor industry is highly competitive and is characterized by
rapid technological advances, cyclical market patterns, price erosion,
evolving industry standards, occasional shortages of materials and high
capital equipment costs. Many of the Company's competitors have
substantially greater technical, marketing, manufacturing and financial
resources than IDT. In addition, there are several foreign competitors,
some of whom receive assistance from their host governments in the form of
research and development loans and grants and reduced capital costs. The
Company competes in different product areas, to varying degrees, on the
basis of price, performance, availability and quality.
IDT's competitive strategy is to focus on markets which characteristically
have less foreign competition and to differentiate its products through high
performance, unique configurations and proprietary features or to offer
industry standard products with higher speeds and/or lower power consumption.
There can be no assurance that price competition, introductions of new
products by IDT's competitors, delays in product introductions by IDT or
other competitive factors will not have a material adverse effect on the
Company in the future.
Intellectual Property and Licensing
IDT has obtained 37 patents in the United States, 9 patents abroad and has
approximately 100 inventions in various stages of the patent application
process. The Company intends to continue to increase the scope of its
patents. There can be no assurance that any patents issued to the Company
will not be challenged, invalidated or circumvented, or that the rights
granted thereunder will provide competitive advantages to the Company. The
Company also relies on trade secret, copyright, and trademark laws to
protect its products, and a number of the Company's circuit designs are
registered pursuant to the Semiconductor Chip Protection Act of 1984.
This Act gives protection similar to copyright protection for the patterns
which appear on integrated circuits and prohibits competitors from making
photographic copies of such circuits.
IDT has been notified that it may be infringing patents issued to others
and in the past has been involved in patent litigation, which adversely
affected its operating results. There can be no assurance that additional
intellectual property claims will not be made against the Company in the
future. The Company believes that licenses, to the extent required,
will be available in connection with these claims. No assurance can be
given, however, that the terms of any offered license will be favorable.
Should licenses from any such claimant be unavailable, the Company may be
required to discontinue its use of certain processes or the manufacture,
use and sale of certain of its products or to develop noninfringing
technology. If IDT is unable to obtain any necessary licenses, pass any
increased cost of patent licenses on to its customers, or develop
noninfringing technology, the Company could be materially adversely affected.
In 1988, IDT entered into a manufacturing, marketing and purchase agreement
with MIPS Computer Systems which allows IDT to manufacture and market the
complete MIPS family of RISC microprocessors and related software and to
modify the MIPS microprocessors to create subsets and supersets.
The Company, consistent with normal industry practices, entered into two
five-year patent cross-license agreements during fiscal 1993, in settlement
of patent litigation with AT&T and Texas Instruments (TI). Under the
agreement with AT&T, IDT made a lump-sum payment and issued shares of its
Common Stock to AT&T, granted a discount on future purchases, and gave
credit for future purchases of technology on a non-exclusive basis. Under
the agreement with TI, IDT granted to TI a license to certain IDT technology
and products, guaranteed TI that it will realize certain revenues from the
technology and products, and is required to develop certain products which
will be manufactured and sold by both IDT and TI.
During fiscal 1993, the Company entered into a five-year patent cross-license
agreement with Motorola which obligated the Company to pay royalties
dependent upon the level of the Company's profitability. The agreement
specifies minimum annual royalties and maximum royalties over the term of
the agreement. See Note 13 "Cross License Agreement" of Notes to the
Consolidated Financial Statements.
ITEM 2. PROPERTIES
The Company presently occupies six major facilities in California and
Malaysia as follows:
Facility Square Feet Location
Wafer fabrication, SRAM and multi-port
memory operations 95,000 Salinas
Logic and RISC microprocessor operations 62,000 Santa Clara
Administration and sales 43,700 Santa Clara
Administration and RISC SubSystems 50,000 Santa Clara
Assembly and test 100,000 Penang, Malaysia
Wafer fabrication, process technology
development, FIFO, memory subsystems
operations and research and development 136,000 San Jose
IDT leases its Salinas and Santa Clara facilities under leases expiring
through 2000. IDT is currently negotiating the renewal of its
Salinas lease. Each of IDT's other leases has a renewal option for a term of
five years. The Company owns its Malaysian and San Jose facilities,
although the Malaysian facility is subject to long-term ground leases and
the San Jose facility is subject to a mortgage. IDT leases
offices for its sales force in 17 domestic locations as well as London,
Milan, Munich, Paris, Stockholm, Hong Kong and Tokyo. See Note 7 -
"Commitments" of Notes to Consolidated Financial Statements for
information concerning IDT's obligations under operating and capital
leases. The Company believes its existing facilities and equipment, coupled
with its announced capacity expansion in Malaysia and the planned conversion
of its Salinas wafer fabrication line to six-inch wafer manufacturing
capability along with continued capacity increases in test equipment,
are adequate to meet its current requirements. IDT is also investigating
either acquiring wafer fabrication capacity from existing facilities or
contemplating constructing a new factory, which might involve one or more
strategic partners.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Registrant or
any of its subsidiaries is a party, or of which any of their property is
the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
No matters were submitted to a vote of the Company's securityholders during
the last quarter of the fiscal year ended April 3, 1994.
Executive Officers of the Registrant
The following information as of May 3, 1994 is provided with respect
to each executive officer of the Company.
Name Age Position
D. John Carey 58 Chairman of the Board
Leonard C. Perham 51 Chief Executive Officer, President
William Cortelyou 38 Vice President, Wafer Operations
Robin H. Hodge 54 Vice President, Assembly and Test
Alan H. Huggins 41 Vice President, Memory Division
Larry T. Jordan 49 Vice President, Marketing
Daniel L. Lewis 45 Vice President, Sales
Chuen-Der Lien 38 Vice President, Technology Development
Jack Menache 51 Vice President, General Counsel and
Secretary
Richard R. Picard 46 Vice President, Logic and Microprocessor
Products
William D. Snyder 49 Vice President, Finance and
Chief Financial Officer
Background of Executive Officers
Mr. Carey served as Chief Executive Officer from 1982 until his resignation
in April 1991 and was President from 1982 until 1986. He was elected to the
Board of Directors in 1980 and has been Chairman of the Board since 1982.
Mr. Perham joined IDT in October 1983 as Vice President and General Manager,
SRAM Division. In October 1986, Mr. Perham was appointed President and
Chief Operating Officer of the Company. In April 1991, Mr. Perham was
elected Chief Executive Officer.
Mr. Cortelyou joined the Company in 1982. In January 1990, he was elected
Vice President, Wafer Operations, Salinas. Mr. Cortelyou currently serves as
Vice President, Wafer Operations.
Mr. Hodge joined IDT as Director of Assembly Operations in 1989. In January
1990, Mr. Hodge was elected Vice President, Assembly Operations. Mr. Hodge
currently serves as Vice President, Assembly and Test. From 1983 until
joining IDT, Mr. Hodge was director of Assembly Operations for
Maxim Integrated Products.
Mr. Huggins joined IDT in 1983 and was elected as Vice President in 1987.
Mr. Huggins currently serves as Vice President, Memory Division.
Mr. Jordan joined IDT in July 1987 as Vice President of Marketing.
Mr. Lewis joined IDT in 1984 as Eastern Area Sales Manager. In 1991, he
was elected as Vice President, Sales.
Dr. Lien joined IDT in 1987. He was elected Vice President, Technology
Development in 1992.
Mr. Menache joined IDT as vice President, General counsel and Secretary in
September 1989. From April 1989 until joining IDT, he was General
Counsel of Berg & Berg Developers. From 1986 until April 1989, he was
Vice President, General Counsel and Secretary of The Wollongong Group Inc.
Mr. Picard joined IDT in 1985. In 1989 he was elected Vice President, Static
RAM Product Line. Mr. Picard currently serves as Vice President, Logic and
Microprocessor Products.
Mr. Snyder joined the Company as Treasurer in 1985. In May 1990, he was
elected Vice President, Corporate Controller, and in September 1990
Mr. Snyder was elected Vice President, Finance and Chief Financial Officer.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Quarterly Market and Dividend Information
Year Ended April 3, 1994
First Second Third Fourth
Quarter Quarter Quarter Quarter
Bid Quotations
Low $ 6 1/4 $ 10 3/8 $ 11 1/2 $ 13 1/2
High 11 3/8 19 1/2 19 3/4 34 3/8
Year Ended March 28, 1993
Bid Quotations
Low $ 3 3/4 $ 3 1/2 $ 4 $ 6 1/4
High 6 5 6 3/4 8 3/8
The Company's Common Stock is traded in the over-the-counter market
under the symbol "IDTI". The table sets forth the range of high and
low bid quotations per share of Common Stock for each quarter, as
reported by the National Association of Securities Dealers Automatic
Quotation (NASDAQ) System.
As of April 3, 1994 there were 868 shareholders of record.
The Company has not regularly paid cash dividends. It is the present
policy of the Company to reinvest earnings in the Company to finance
expansion of the Company's operations, and the Company does not expect
to pay dividends for the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
(in thousands, except per share and employee data)
Fiscal Year Ended
April 3 March 28 March 29 March 31 April 1
1994 1993 1992 1991 1990
Revenues $330,462 $236,263 $202,734 $198,559 $209,475
Net income (loss) $ 40,165 $ 5,336 $(32,808) $ 1,226 $ 17,007
Net income (loss)
per share $ 1.21 $ .18 $ (1.25) $ .05 $ .66
Shares used in
computing net
income (loss)
per share 33,116 29,701 26,255 26,070 25,668
Total assets $349,571 $239,994 $229,730 $258,626 $261,538
Long-term obligations,
excluding current
portion $ 37,462 $ 48,987 $ 53,050 $ 62,664 $ 68,083
Shareholders' equity $224,367 $117,760 $104,602 $134,524 $130,704
Research and
development expenses $ 64,237 $ 53,461 $ 52,044 $ 50,848 $ 41,644
Number of employees 2,615 2,414 2,159 2,052 2,090
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following table contains certain amounts, and the amounts as a
percentage of revenues, reflected in the Company's consolidated financial
statements of operations for the 1994, 1993, and 1992 fiscal years.
(dollars in millions) 1994 % 1993 % 1992 %
Net revenues $330.4 100.0 $236.3 100.0 $202.7 100.0
Cost of revenues 159.6 48.3 132.3 56.0 126.8 62.6
Operating expenses:
Research and development 64.2 19.4 53.5 22.6 52.0 25.7
Selling, general and
administrative 54.3 16.5 39.5 16.7 48.7 24.0
Restructuring charge 4.5 2.2
Operating income (loss) 52.3 15.8 11.0 4.7 (29.3) (14.5)
Net interest expense 2.1 0.6 4.7 2.0 5.5 2.7
Provision (benefit) for
income taxes 10.0 3.0 1.0 0.4 (2.0) (1.0)
Net income (loss) $40.2 12.2 $5.3 2.3 $(32.8) (16.2)
Overview
Fiscal 1994 was an outstanding year in virtually every respect. IDT
recorded record revenue, pretax income as a percentage of revenue, earnings
per share, revenue per employee and new orders. As a result of a secondary
stock offering and an improvement in operating cash flow, IDT's cash,
cash equivalents and short-term investments improved by approximately
$97 million over the prior year, while total liabilities increased less
than $3 million. Demand was strong in the U.S. across all products.
For the second consecutive year, European sales increased, driven in part
by strong demand from the telecommunications sector. Late in the year
Japanese orders showed signs of recovery. As IDT utilized more of its
installed manufacturing capacity, significantly improved gross margins
were realized. Finally the Company released several significant new products
including the R4600, or Orion microprocessor.
Results of Operations
Net revenue in fiscal 1994 was $330.4 million, a 40% increase over
1993 revenue of $236.3 million and a 63% increase over fiscal 1992
revenue of $202.7 million. Growth in fiscal 1994 was across all
product segments, with the microprocessor segment most pronounced on
a percentage basis. In mid-year, prices on certain products rose
dramatically due to concerns about availability of plastic packaged
products, but by year end prices returned to normal levels. Demand
outstripped supply on some products and IDT responded by ordering
incremental wafer fabrication equipment, some of which will be received
in fiscal 1995. Fiscal 1993 revenue growth was attributed to increases
in demand for products across all market segments.
As a percentage of net revenues, gross margin was 51.7% in fiscal 1994
compared to 44.0% in fiscal 1993 and 37.4% for fiscal 1992. The
improvement in fiscal 1994 can be attributed to greater capacity
utilization, which in turn lowered average wafer manufacturing costs,
significant increases in die per wafer due to wafer fabrication process
improvements, and a mix shift to products with higher average selling
prices, particularly microprocessors. In fiscal 1992, gross margin was
negatively influenced by $14.9 million of charges associated with
writeoffs of inventory and underutilized capital equipment. Were it
not for those charges, fiscal 1992 gross margin would have been similar
to fiscal 1993.
Research and development (R & D) expense increased 20% in fiscal 1994
compared to fiscal 1993, but decreased as a percentage of net revenue
from 22.6% of 1993 revenue to 19.4% of fiscal 1994 revenue. 1992 R & D
spending was 25.7% of revenue. The Company continues to invest in
process technology and introduced CEMOS 7, a .6 micron technology used
in a substantial portion of its manufacturing process. As previously
mentioned, a number of new products, highlighted by the R4600 Orion
microprocessor, were introduced in fiscal 1994. During fiscal 1995,
IDT expects R & D spending to decrease slightly as a percentage of revenue
while increasing in dollars. The Company believes that continued high
levels of investment in R & D, both internally and with technology partners,
leads to new processes and products, both of which are critical elements
in offering proprietary products, resulting in enhanced gross margins.
Selling, general and administrative (SG&A) expenses increased 37%
compared to fiscal 1993. This was due in part to increases in bonuses
for management, employee profit sharing and the variable selling expenses
associated with a 40% revenue increase. SG&A spending declined slightly
from 16.7% of fiscal 1993 revenue to 16.5% of fiscal 1994 revenue. Fiscal
1992 SG&A costs, which were significantly impacted by patent litigation
expenses and an increase in the provision for bad debts, were 24.0% of
revenue. Patent litigation expenses accrued in fiscal 1992 were resolved
in fiscal 1993 and, as a consequence, the reversal of a portion of the 1992
accruals benefited fiscal 1993 results.
IDT incurred approximately $4.5 million of restructuring charges in fiscal
1992 associated with the closing of its oldest wafer fabrication line and
a reduction in workforce. No such expense was incurred in either fiscal
1993 and 1994.
Fiscal 1994 interest expense declined to $5.2 million compared to $5.9
million and $7.0 million in fiscal years 1993 and 1992, respectively.
Interest expense has decreased as IDT's asset secured debt has declined.
IDT continues to incur interest on a long-term obligation associated
with a patent cross-license which did not exist in fiscal 1992 and
insignificant in fiscal 1993. The Company expects a small decline in
interest expense in fiscal 1995 as reduced debt balances will more than
offset accretion of the long-term obligation.
Interest income and other, net increased to $3.1 million in fiscal 1994
compared to $1.1 million and $1.6 million in fiscal years 1993 and
1992, respectively. Fiscal 1994 was favorably impacted by higher cash
balances available for investment, gains on the disposition of assets,
and royalty income. IDT expects interest income and other, net to increase
in fiscal 1995 due to significantly higher cash balances available for
investment.
The effective tax rate in fiscal 1994 was 20%. Because of tax benefits
available from the Company's Malaysian operation, valuation allowances which
could be reversed and other tax credits available at both the federal and
state level the Company does not expect to record the full statutory (35%)
tax rate in fiscal 1995.
Liquidity and Capital Resources
The Company's financial position improved considerably during fiscal
1994. Cash and cash equivalents and short-term investments rose by
$97.4 million to $121.8 million. Working capital increased from $51.4
million to $143.2 million. The current ratio improved from 1.84 to
2.81. This growth was due to improved profitability, a secondary stock
offering yielding net proceeds of approximately $46.8 million and a
dramatic improvement in accounts receivable turnover, which ended below
45 days outstanding on a trailing twelve month basis.
During fiscal 1994 IDT made cash payments of $38.1 million for
additional capital equipment principally for its wafer fabrication
operations. The Company paid down $23.3 million of equipment secured
debt. A significant source of funds was IDT's several employee stock plans
which generated an additional $8.9 million cash.
IDT's operating plan for fiscal 1995 provides for capital equipment
expenditures of approximately $65 million, principally for additional
equipment for the San Jose wafer fabrication plant and the conversion of
the Salinas wafer fabrication line to six-inch capability. The Company
expects to fund this expansion through existing cash balances, cash flow
from operations and equipment secured or other debt financings.
Factors Affecting Future Results
During fiscal 1994, IDT experienced consistently improved quarterly
financial results and stronger bookings. Nonetheless the Company and
semiconductor industry in general are subject to a number of
uncertainties. IDT is impacted by shortening product life cycles,
continuous evolution of process technology, the ability to secure
intellectual property rights, high fixed costs and the need for large
additions of wafer fabrication capacity as well as general world
economic conditions. In the semiconductor industry generally, revenues
are generated after a considerable amount of time and financial resources
are invested in product and process development. There can be no
assurance that IDT's efforts will result in successful new products.
In addition, a significant number of the Company's growth opportunities
are dependent on successful penetration of new, high volume desk top
computer, workstation, telecommunications and office automation segments
of the electronics market where the Company will face substantial
competition from many well-funded competitors.
No assurance can be given that market demand or customer acceptance will
be realized; that such demand will be sustainable; that competitors
will not force prices to fall to unacceptable levels or take market share
from the Company; or that IDT can achieve or maintain profits in these
markets. Also, some of the Company's customers in these markets are less
well established, which could subject IDT to increased credit risk.
IDT intends to convert its Salinas wafer fabrication line from a five inch
to six inch facility in fiscal 1995. Problems with the installation of new
equipment or conversion of old equipment could cause disruptions in
the manufacturing flow, thus adversely impacting revenues.
IDT's stock price has been subject to considerable volatility. If revenues
or earnings fail to meet expectations of the investment community, there
could be an immediate and significant impact on the price for IDT's stock.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
COVERED BY REPORT OF INDEPENDENT ACCOUNTANTS
Consolidated Financial Statements included in Item 8:
Report of Independent Accountants
Consolidated Balance Sheets at April 3, 1994 and March 28, 1993
Consolidated Statements of Operations for each of the three fiscal years
in the period ended April 3, 1994
Consolidated Statements of Cash Flows for each of the three fiscal years
in the period ended April 3, 1994
Consolidated Statements of Shareholder's Equity for each of the three
fiscal years in the period ended April 3, 1994
Notes to consolidated financial statements
Schedules for each of the three years in the period ended April 3, 1994
included in Item 14(d):
I Short-term investments
V Property, plant and equipment
VI Accumulated depreciation and amortization of property, plant
and equipment
VIII Valuation and qualifying accounts
IX Short-term borrowings
X Supplementary income statement information
All other schedules have been omitted since the required information is
not present or is not present in amounts sufficient to require submission
of the schedules, or because the information required is included in the
consolidated financial statements or notes thereto.
Report of Price Waterhouse, Independent Accountants
To the Shareholders and Board of Directors of Integrated Device Technology,
Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Integrated Device Technology, Inc. and its subsidiaries at
April 3, 1994 and March 28, 1993, and the results of their operations and
their cash flows for each of the three years in the period ended April 3,
1994, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
San Jose, California
April 27, 1994
CONSOLIDATED BALANCE SHEETS
April 3, 1994 March 28, 1993
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents $88,490 $22,529
Short-term investments 33,351 1,877
Accounts receivable, net of allowance
for returns and doubtful accounts of
$4,129 and $2,994 40,643 43,190
Inventory 29,855 27,237
Deferred tax assets 26,276 15,270
Prepayments and other current assets 3,858 2,825
Total current assets 222,473 112,928
Property, plant and equipment , net 120,838 118,837
Other assets 6,260 8,229
TOTAL ASSETS $349,571 $239,994
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $15,925 $15,819
Accrued compensation and related expense 16,528 7,399
Deferred income on shipments to
distributors 17,592 10,450
Income taxes payable 1,964 878
Other accrued liabilities 13,032 7,524
Current portion of long-term obligations 14,184 19,467
Total current liabilities 79,225 61,537
Long-term obligations 37,462 48,987
Deferred tax liabilities 8,517 11,710
Commitments and contingencies
Shareholders' equity :
Preferred stock; $.001 par value:
5,000,000 shares authorized;
no shares issued
Common stock; $.001 par value: 65,000,000
shares authorized; 33,405,552 and
28,377,721 shares issued and outstanding 33 28
Additional paid-in capital 160,221 93,731
Retained earnings 64,517 24,352
Cumulative translation adjustment (404) (351)
Total shareholders' equity 224,367 117,760
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $349,571 $239,994
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEAR ENDED
April 3, 1994 March 28, 1993 March 29, 1992
(In thousands, except per share data)
Revenues $330,462 $236,263 $202,734
Cost of revenues 159,627 132,285 126,819
Gross profit 170,835 103,978 75,915
Operating expenses:
Research and development 64,237 53,461 52,044
Selling, general and
administrative 54,329 39,511 48,721
Restructuring charge 4,466
Total operating expenses 118,566 92,972 105,231
Operating income (loss) 52,269 11,006 (29,316)
Interest expense (5,165) (5,855) (7,045)
Interest income and other, net 3,102 1,127 1,593
Income (loss) before provision
(benefit) for income taxes 50,206 6,278 (34,768)
Provision (benefit) for
income taxes 10,041 942 (1,960)
Net income (loss) $40,165 $5,336 ($32,808)
Net income (loss) per share $ 1.21 $ .18 $ (1.25)
Shares used in computing
net income (loss) per share 33,116 29,701 26,255
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEAR ENDED
(In thousands) April 3, March 28, March 29,
1994 1993 1992
Operating activities:
Net income (loss) $40,165 $5,336 ($32,808)
Adjustments:
Depreciation and amortization 37,594 37,140 40,787
Provision for losses on
accounts receivable 476 (742) 1,222
Restructuring charges 4,466
Changes in assets and liabilities:
Accounts receivable 2,071 (6,167) (1,926)
Inventory (2,618) (3,843) 8,670
Deferred tax assets (10,897) 2,616 2,324
Other assets (1,247) (391) 2,180
Accounts payable 106 (804) 5
Accrued compensation and
related expense 9,799 3,158 (157)
Deferred income to distributors 7,142 1,093 610
Income taxes payable 11,574 477 722
Other accrued liabilities 5,885 (679) 5,816
Net cash provided by operating activities 100,050 37,194 31,911
Investing activities:
Additions to property, plant
and equipment (38,083) (28,188) (25,706)
Proceeds from sale of equipment 671 178 416
Purchases of short-term investments (40,221) (4,927) (18,458)
Proceeds from sales of short-term
investments 8,747 4,110 27,624
Net cash used for investing activities (68,886) (28,827) (16,124)
Financing activities:
Issuance of common stock, net 55,337 2,981 2,358
Proceeds from borrowings 2,731 32,161 11,665
Payment on capital leases and
other debt (23,271) (41,006) (21,423)
Net cash provided (used) for financing
activities 34,797 (5,864) (7,400)
Net increase in cash and cash equivalents 65,961 2,503 8,387
Cash and cash equivalents at
beginning of period 22,529 20,026 11,639
Cash and cash equivalents at
end of period $88,490 $22,529 $20,026
Supplemental disclosure of cash flow information:
Interest paid 4,713 5,893 6,876
Income taxes paid (refunded) 9,163 (2,050) (5,638)
Issue of Common Stock for
acquisition of technology 7,738
Tax benefits from exercise of
Stock Options 10,488 582 477
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Additional Cumulative Total
Common Stock Paid-In Retained Translation Shareholders'
Shares Amount Capital Earnings Adjustment Equity
(In thousands, except share data)
Balance,
March 31, 1991 25,889,601 $26 $82,834 $51,824 ($160) $134,524
Issuance of
common stock 664,130 1 2,358 2,359
Tax benefits of
stock option
transactions 477 477
Translation
adjustment 50 50
Net loss (32,808) (32,808)
Balance,
March 29, 1992 26,553,731 27 85,669 19,016 (110) 104,602
Issuance of
common stock 1,823,990 1 7,480 7,481
Tax benefits of
stock option
transactions 582 582
Translation adjustment (241) (241)
Net income 5,336 5,336
Balance,
March 28, 1993 28,377,721 28 93,731 24,352 (351) 117,760
Issuance of
common stock 2,027,831 2 9,241 9,243
Issuance of
common stock at
$15.71 per share,
pursuant to
public offering,
net of expenses
of $366 3,000,000 3 46,761 46,764
Tax benefits of
stock option
transactions 10,488 10,488
Translation adjustment (53) (53)
Net income 40,165 40,165
Balance,
April 3, 1994 33,405,552 $33 $160,221 $64,517 ($404) $224,367
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 Summary of Significant Accounting Policies
Basis of Presentation The consolidated financial statements include
the accounts of Integrated Device Technology, Inc. (IDT or "the Company")
and all of its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Fiscal year The Company's fiscal year ends on the Sunday nearest
March 31. Fiscal years 1993 and 1992 each included 52 weeks. The fiscal
year ended on April 3, 1994 was a 53-week year. The fiscal year end
of certain of the Company's foreign subsidiaries are March 31, and the
results of their operations as of their fiscal year end have been
combined with the Company's results of operations as of April 3, 1994.
Transactions during the intervening period were not significant.
Cash, Cash Equivalents and Short-term Investments Cash equivalents are
highly liquid investments with original maturities of three months or
less at the time of acquisition or with guaranteed on-demand buy-back
provisions. Short-term investments are valued at amortized cost, which
approximates market and consist primarily of time deposits, corporate notes,
and treasuries. Short-term investments have maturities greater than three
months and less than one year. Cash equivalents and short-term investments
included certificates of deposit totaling $10,603,000 and $9,349,000
at April 3, 1994 and March 28, 1993, respectively.
The Company will adopt Statement of Financial Accounting Standards (FAS)
115, "Accounting for Certain Investments in Debt and Equity Securities"
effective April 4, 1994 as required by that pronouncement. The Statement
requires reporting of investments as either held to maturity,
trading or available for sale. The Company's investments will be classified
as available for sale. The effect of adoption was not material
as of April 3, 1994.
Inventory Inventory is stated at the lower of standard cost (which
approximates actual cost on a first-in, first-out basis) or market.
Market is based upon estimated realizable value reduced by normal
gross margin. Inventory at April 3, 1994 and March 28, 1993 was:
(in thousands) April 3, 1994 March 28, 1993
Inventory:
Raw materials $ 2,834 $ 3,117
Work-in-process 10,201 13,494
Finished goods 16,820 10,626
$ 29,855 $ 27,237
Property, Plant and Equipment Property, plant and equipment are
stated at cost. Depreciation is computed for property, plant and
equipment using the straight-line method over estimated useful lives
of the assets. Leasehold improvements and leasehold interests are
amortized over the shorter of the estimated useful lives of the
assets or the remaining term of the lease. Accelerated methods of
depreciation are used for tax computations. Property, plant and
equipment at April 3, 1994 and March 28, 1993 were:
(in thousands) April 3, 1994 March 28, 1993
Property, plant and equipment:
Land $ 4,382 $ 4,382
Machinery and equipment 248,095 217,167
Building and leasehold improvements 40,063 39,896
Construction-in-progress 76 10
292,616 261,455
Accumulated depreciation and
amortization (171,778) (142,618)
$ 120,838 $ 118,837
Income Taxes The Company adopted Statement of Financial Accounting
Standards (FAS) 109, "Accounting for Income Taxes" in the year
ended March 28, 1993. The Company elected to apply the provisions of
FAS 109 retroactively to the beginning of its year ended March 29, 1992.
The adoption of FAS 109 changed the Company's method of accounting for
income taxes from the deferred method to an asset and liability approach.
The asset and liability approach requires that the expected future tax
consequences of temporary differences between book and tax bases of assets
and liabilities be recognized as deferred tax assets and liabilities.
Net Income (Loss) Per Share Net income (loss) per share is computed
using the weighted average number of shares of common stock outstanding
during the year, plus incremental common equivalent shares, if dilutive.
Common stock equivalents consist of stock options (using the treasury
stock method).
Revenue Recognition Revenue from product sales is generally recognized
upon shipment and a reserve is provided for estimated returns and
discounts. A portion of the Company's sales are made to distributors
under agreements which allow certain rights of return and price protection
on products unsold by the distributors; such sales and profits thereon
are deferred until the products are resold by the distributors.
Reclassifications Certain amounts in prior fiscal years' consolidated
financial statements and notes have been reclassified to conform with
fiscal 1994 presentation.
Translation of Foreign Currencies Amounts denominated in foreign
currencies have been translated in accordance with Statement of Financial
Accounting Standards (FAS) 52. The functional currency for the Company's
sales operations is the applicable local currency with the exception
of the Hong Kong sales subsidiary whose functional currency and
reporting currency is the U.S. dollar. For subsidiaries whose functional
currency is the local currency, gains and losses resulting from translation
of these foreign currencies into U.S. dollars are accumulated in a separate
component of shareholders' equity. For the Malaysian manufacturing and
the Hong Kong sales subsidiaries, where the functional currency is the
U.S. dollar, gains and losses resulting from the process of remeasuring
foreign currency financial statements into U.S. dollars are included
in income. Aggregate net foreign currency transaction gains (losses)
totaled $(232,000), $(93,000) and $(141,000) in fiscal 1994, 1993 and
1992, respectively. The effect of foreign currency exchange rate
fluctuations on cash balances held in foreign currencies have not been
material.
Foreign Exchange Contracts The Company enters into forward exchange
contracts to hedge against the short-term impact of foreign currency
fluctuations on certain assets denominated in foreign currencies. The
total amount of these contracts is offset by the underlying assets
denominated in foreign currencies. The gains or losses on these
contracts are included in income as the exchange rates change and are
offset by gains and losses on the underlying assets being hedged. At
April 3, 1994, the Company had $12 million of forward exchange contracts
outstanding, with maturity dates through July 1994.
The Company does not anticipate non-performance by the counterparties
to these contracts.
Concentration of Credit Risk and Off-Balance-Sheet Risk The Company
markets high-speed integrated circuits to OEMs and distributors
primarily in the United States, Europe, and the Far East. The Company
performs on-going credit evaluations of its customers' financial
conditions and limits the amount of credit extended when deemed
necessary but generally does not require collateral. Management believes
that any risk of loss is significantly reduced due to the diversity of
its products, customers and geographic sales areas. The Company maintains
a provision for potential credit losses.
The Company sells a significant portion of its products through third-
party distributors. As a result of the merger of two of the
Company's national distributors, the receivable balance from the merged
company is significant in aggregate for fiscal 1994. If the financial
condition and operations of this distributor deteriorate below critical
levels, the Company's operating results could be adversely affected. This
distributor receivable balance represented 11% and 9% of total accounts
receivable at April 3, 1994 and March 28, 1993, respectively.
The Company invests its cash and cash equivalents in time deposits,
money market funds and commercial paper. Securities comprising cash
equivalents and short-term investments are maintained with high quality
institutions, the composition and maturities of which are regularly
monitored by management. Generally, these securities maintain a highly
liquid market and may be redeemed upon demand and, therefore, bear
minimal risk. The Company has not experienced any material losses on its
investments.
NOTE 2 Restructuring and Significant Other Events
In fiscal year 1992, the Company recorded $4.5 million of charges to net
income relating to the abandonment of IDT's original wafer processing
facility and product line reorganizations. The Company has substantially
completed this restructuring.
Also in fiscal 1992, due to changes in the market, the Company revised
its estimated useful lives and the future realizable values of several
items. These charges included a $7.2 million writeoff of excess
inventory and $5.4 million of writeoffs and changes in useful lives of
underutilized capital assets. Also, due to specific events during the
second fiscal quarter, the Company provided a $1.3 million reserve for
doubtful accounts and recorded $6.4 million of accrued legal expenses.
Subsequent developments and resolution of one of these legal matters led
the Company to recognize a $1 million benefit during fiscal 1993.
NOTE 3 Other Assets - Intangibles
During fiscal 1993, IDT entered into various royalty-free patent cross-
license agreements. The patents licenses granted to IDT under these
agreements have been recorded at their cost of approximately $8,200,000
and are being amortized on a straight-line basis over five years. The
amortization relating to patents licenses was $1,647,000 and $780,000
at April 3, 1994 and March 28, 1993, respectively.
NOTE 4 Long-Term Obligations
The Company leases certain equipment under long-term leases or finances
purchases of equipment under bank financing agreements. Leased assets
and assets pledged under financing agreements which are included under
property, plant and equipment are as follows:
(in thousands) April 3, 1994 March 28, 1993
Building improvements $ 6,907 $ 6,907
Machinery and equipment 65,403 86,091
Accumulated depreciation and
amortization (43,949) (49,001)
28,361 43,997
The capital lease agreements and equipment financings are collateralized
by the related leased equipment and contain certain restrictive covenants.
Future minimum payments under capital leases and equipment financing
agreements, at varying interest rates (4.9% - 11%), are as follows:
(Fiscal Year) (in thousands)
1995 $ 14,339
1996 5,898
1997 3,075
1998 1,486
1999 3
Total minimum payments 24,801
Less interest 2,420
Present value of net minimum payments 22,381
Less current portion 12,878
$ 9,503
During fiscal 1993, IDT recorded a long-term obligation in connection
with the dismissal of certain litigation and entering into a patent
cross-license agreement. The present values of the amount due at the
end of the license term were $7,471,000 and $7,041,000 at April 3, 1994
and March 28, 1993, respectively. During the year, this amount payable
has been reduced by an amount of royalty income pursuant to certain
guaranteed revenues realized on sales of IDT's products. The Company
is accreting $3.3 million in future interest charges from the recorded
amount at April 3, 1994 to the amount due at the end of the term using
the effective interest method.
NOTE 5 Long-Term Debt
Long-term debt consists of the following:
(in thousands) April 3, 1994 March 28, 1993
Mortgage payable bearing interest
at 9.625% due in monthly
installments of $142,000 including
interest through April 1, 2005.
The note is secured by property
and improvements in San Jose,
California. $ 11,543 $ 12,152
Term loan payable to a Malaysian
bank at 8% due in monthly
installments of $54,000
791 1,448
12,334 13,600
Less current portion 1,306 1,188
11,028 12,412
Principal payments required in the next five years and beyond are as
follows (in thousands): $1306 (1995), $790 (1996), $752 (1997), $828 (1998),
$8,658 (Beyond 1998).
NOTE 6 Lines of Credit
The Company's Malaysian subsidiary has unsecured revolving lines of credit
that allow borrowings up to $2,500,000 with three local banks. These lines
have no expiration date. At April 3, 1994, there were no outstanding
borrowings against these lines. The borrowing rate for these lines would
be incurred at the local bank's cost of funds plus 0.75% to 1% (8.80-9.25%
on April 3, 1994).
In fiscal 1994, the Company's Japanese subsidiary had an unsecured revolving
line of credit that allowed borrowings up to approximately $1,940,000. The
line of credit automatically extends until the Company requests termination.
As of April 3, 1994, no amounts were outstanding under this line of credit.
The borrowing rate for this line of credit is the local bank's short-term
prime rate existing at the borrowing date plus 0.2%. At April 3, 1994,
this short-term borrowing rate was 3.2%.
The Company also has foreign exchange contract facilities with several
banks that allow the Company to enter into foreign exchange contracts of
up to $30,000,000, of which $18,026,000 was available at April 3, 1994.
NOTE 7 Commitments
Lease Commitments The Company leases most of its administrative and
several manufacturing facilities under operating lease agreements which
expire through 1996. Two facilities were leased from a principal
shareholder. The annual rent paid to this shareholder totaled
approximately $1,396,000, $1,396,000 and $1,995,000 in fiscal 1994,
1993 and 1992, respectively. One shareholder lease expired during
fiscal 1992 and the other will expire in June 1995.
The aggregate minimum rent commitments under all operating leases are
as follows:
(Fiscal Year) (in thousands)
1995 $ 4,122
1996 2,902
1997 2,217
1998 1,924
1999 1,933
2000 and thereafter 1,980
$ 15,078
Rent expense for the years ended April 3, 1994, March 28, 1993,
and March 29, 1992 totaled approximately $3,488,000, $3,303,000 and
$3,839,000, respectively.
As of April 3, 1994, four secured standby letters of credit were
outstanding totaling $1,937,000. Three letters of credit are held in
connection with the Company's workers compensation insurance and mature
on June 30, 1994, June 30, 1995 and June 30, 1996. The fourth letter of
credit secures the credit facility for the Company's Japanese subsidiary
and matured on April 4, 1994.
NOTE 8 Fair Value Disclosures of Financial Instruments
The estimated fair value of financial instruments has been determined
by the Company, using available market information and valuation
methodologies. However, considerable judgment is required in interpreting
market data to develop the estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies could have a
material effect on the estimated fair value amounts.
The amounts reported for cash and cash equivalents, short-term investments,
foreign exchange contracts, and the Malaysian term loan were considered
to be a reasonable estimate of their fair value.
The fair values of short-term and long-term debt were based upon estimated
interest rates available to the Company for issuance of debt with similar
terms and remaining maturities for existing asset-secured equipment loans
and capital leases. The estimated fair value of the Company's short-term
and long-term debt at April 3, 1994 was $20,784,000. The fair value for
the mortgage loan is $10,748,000 estimated using discounted cash flow
analysis based on an estimated interest rate of 7.5% percent for similar
types of borrowing arrangements.
The fair value estimates presented herein were based upon information
available to management as of April 4, 1994. Although management is
not aware of any factors that would materially affect the estimated
fair value amounts, such amounts have not been comprehensively revalued
for purposes of the consolidated financial statements since that date,
and current estimates of fair value may differ significantly from the
amounts presented herein.
NOTE 9 Shareholders' Equity
Stock Option Plans The Company has stock option plans under which
key employees, officers, directors and consultants may be granted options
to purchase shares of the Company's common stock at prices which are not
less than fair market value at the date of grant. Options granted are
generally exercisable in 25% increments each year beginning one year
after the grant date.
At April 3, 1994, options for 1,172,000 shares were exercisable at an
aggregate exercise price of $4,856,000. At March 28, 1993, options for
2,093,853 shares were exercisable at an aggregate exercise price
$7,692,000.
Activity under the plans is summarized as follows:
Options Outstanding
Options
Available for Number Price per Share Aggregate
Issuance Price
Balance,
March 31, 1991 1,463,734 4,391,764 $ 3.25 - $14.25 16,832,000
Additional
Authorization 1,500,000
Granted (2,697,815) 2,697,815 $ 3.75 - $ 9.50 14,459,000
Surrendered,
canceled
or expired 1,807,581 (1,809,971) $ 3.25 - $14.25 (11,321,000)
Exercised ( 464,036) $ 3.25 - $ 5.13 ( 1,683,000)
Balance,
March 29, 1992 2,073,500 4,815,572 $ 3.25 - $13.25 18,287,000
Additional
Authorization
Granted (1,358,323) 1,358,323 $ 3.625- $ 8.25 6,701,000
Surrendered,
canceled
or expired 254,930 ( 447,625) $ 3.25 - $13.25 (1,810,000)
Exercised ( 529,371) $ 3.25 - $ 7.50 (1,933,000)
Balance,
March 28, 1993 970,107 5,196,899 $ 3.25 - $12.125 21,245,000
Additional
Authorization 975,000
Granted (1,850,234) 1,850,234 $ 7.00 - $25.375 26,599,000
Surrendered,
canceled
or expired 284,010 (287,423) $ 3.25 - $22.125 (1,738,000)
Exercised (1,780,613) $ 3.25 - $17.625 (6,695,000)
Balance,
April 3, 1994 378,883 4,979,097 $ 3.25 - $25.375 39,411,000
Stock Purchase Plan The Company has a stock purchase plan under which
employees and officers may purchase shares of the Company's Common Stock.
The purchase price at which shares may be purchased under this plan is 85%
of the lower of the fair market value on the first or last day of each
quarterly plan period. As of April 3, 1994 and March 28, 1993, 1,457,771 and
1,277,328 shares,respectively, had been purchased by employees, net of
repurchases by the Company, under the terms of the plan agreements. At
April 3, 1994, 567,229 shares were reserved and available for issuance under
this plan.
Stockholder Rights Plan In February 1992, the Board approved certain
amendments to the Company's Stockholder Rights Plan. Under the plan, the
Company declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of common stock. Each Right entitles the holder,
under certain circumstances, to purchase common stock of the Company with
a value of twice the exercise price of the Right. In addition, the Board of
Directors may, under certain circumstances, cause each Right to be exchanged
for one share of common stock or substitute consideration. The Rights are
redeemable by the Company and expire in 1998.
NOTE 10 Employee Benefits Profit Sharing Plan
Prior to September 24, 1993, under the profit sharing plan, the Board of
Directors could authorize semiannual contributions of up to 10% of pre-tax
earnings, before profit sharing, in connection with the Company's Profit
Sharing Plan. Half of the annual contribution, net of expenses, was in the
form of cash payments directly to all domestic and Malaysian employees
meeting certain service criteria, and the residual half was contributed
directly to the Company's Long-Term Incentive Plan.
The Company received approval from the IRS to terminate the Long-term
Incentive Plan effective September 24, 1993. Effective this date, all
shares were 100% vested and no additional shares of IDT stock will be
added to this account. Beginning September 27, 1993, all IDT employees will
receive an increase in their cash profit sharing from 5% to 7% and
an additional 1% of pre-tax profits will be divided equally among all
domestic employees and placed in their accounts under the Company 401(k)
plan.
Administrative expenses are netted against the profit sharing plan
contribution. Contributions for the years ended April 3, 1994 and
March 28, 1993 were $5,128,000 and $477,000 respectively. There were
no contributions for the year ended March 29, 1992.
NOTE 11 Income Taxes
The components of income before provision (benefit) for income taxes are
as follows:
April 3, March 28, March 29,
(in thousands) 1994 1993 1992
United States $ 44,808 $ 2,240 $(37,858)
Foreign 5,398 4,038 3,090
$ 50,206 $ 6,278 $(34,768)
The provisions (benefits) for income taxes consist of the following:
April 3, March 28, March 29,
1994 1993 1992
Current income taxes
(benefits):
United States $ 14,699 ( 2,467) 242
State 4,039 0 0
Foreign 798 102 161
$ 19,536 $( 2,365) $ 403
Deferred (prepaid)
income taxes:
United States $ (5,379) $ 3,307 $( 2,363)
State (4,116) 0 0
$( 9,495) $ 3,307 $( 2,363)
Provision (benefit)
for income taxes $ 10,041 $ 942 $( 1,960)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
significant components of deferred assets and liabilities are as follows:
April 3, 1994 March 28, 1993
(in thousands)
Deferred tax assets:
Deferred income on shipment
to distributors $ 7,466 $ 4,330
Non-deductible accruals and reserves 13,527 8,313
Capitalized inventory and
other expenses 4,071 6,014
Capitalized research & development 825 752
Other 273 746
Refund receivables 2,451 3,560
Total deferred tax asset $ 28,613 $ 23,715
Valuation allowance (2,337) ( 8,445)
Net deferred tax asset $ 26,276 $ 15,270
Deferred tax liabilities:
Depreciation (8,517) (11,710)
Total deferred tax liability $ (8,517) $(11,710)
Net deferred tax asset $ 17,759 $ 3,560
The provision (benefit) for income taxes differs from the amount computed
by applying the U.S. statutory income tax rate of 35% for the year ended
April 3, 1994 (34% for the years ended March 28, 1993 and March 29, 1992)
to income before the provision (benefit) for income taxes as follows:
April 3, March 28, March 29,
(in thousands) 1994 1993 1992
Provision at U.S. Statutory rate $ 17,572 $ 2,134 $(11,821)
Earnings of foreign subsidiaries
considered permanently
reinvested, less foreign taxes (951) (1,701) ( 232)
General business credits (2,710) 0 ( 660)
Tax rate differential (1,167) 574 3,220
State Tax 3,558 0 0
Valuation allowance (6,108) 414 8,031
Other (153) ( 479) ( 498)
Provision (benefit) for
income taxes $10,041 $ 942 $( 1,960)
The Company's Malaysian subsidiary operated under a tax holiday which
extended through July, 1993. Management believes it is likely that
carryovers of depreciation from the tax holiday period along with expected
additional depreciation grants will defer the time when the Malaysian
subsidiary will first begin to pay local taxes beyond its year ended
April 3, 1994.
The Company's intention is to permanently reinvest its earnings in all of its
foreign subsidiaries. Accordingly, U.S. taxes have not been provided on
approximately $19,700,000 of unremitted earnings, of which approximately
$17,100,000 were earned by the Company's Malaysian subsidiary. Upon
distribution of those earnings in the form of dividends or otherwise, the
Company would be subject to both U.S. income taxes and various foreign
country withholding taxes.
NOTE 12 Industry Segment, Foreign Operations and Significant Customers
IDT operates predominantly in one industry segment and is engaged in the
design, development, manufacture and marketing of high-performance integrated
circuits. No single customer or distributor accounted for more than 10%
of net revenues in fiscal 1993 and 1992. During fiscal 1994, two of the
Company's national distributors became one entity and accounted for 15% of
net revenues. If these two distributors had been a single entity during
fiscal 1993 and 1992, it would have accounted for 16% and 17%, respectively,
of IDT's total revenues.
Major operations outside the United States include manufacturing facilities
in Malaysia and sales subsidiaries in Japan, the Pacific Rim and throughout
Europe.
At April 3, 1994 and March 28, 1993, total liabilities for operations
outside of the United States were $20,704,000 and $20,152,000,respectively.
The following is a summary of IDT's operations by the geographic area
for fiscal 1994, 1993 and 1992:
Transfers
Sales to Between Operating
Unaffiliated Geographic Net Income Identifiable
(in thousands) Customers Areas Revenue ( Loss) Assets
Fiscal year
ended April 3,
1994
United States 223,600 42,500 266,100 70,788 197,385
Japan 29,959 29,959 ( 257) 8,033
Europe 60,064 3,274 63,338 677 8,182
Asia-Pacific 16,839 24,869 41,708 5,146 27,202
Eliminations (70,643) (70,643) ( 408) (24,470)
Corporate (23,677) 133,239
Consolidated $330,462 $ 0 $330,462 $52,269 $349,571
Fiscal year
ended March 28,
1993
United States 152,303 23,585 175,888 22,159 198,993
Japan 23,022 23,022 ( 419) 5,651
Europe 33,907 2,847 36,754 374 8,028
Asia-Pacific 27,031 20,566 47,597 4,715 24,155
Eliminations (46,998) (46,998) ( 94) (24,081)
Corporate (15,729) 27,248
Consolidated $236,263 $ 0 $236,263 $11,006 $239,994
Fiscal year
ended March 29,
1992
United States 140,999 21,616 162,615 ( 4,800) 190,801
Japan 23,018 23,018 41 6,192
Europe 26,861 2,838 29,699 303 5,703
Asia-Pacific 11,856 15,230 27,086 3,234 18,838
Eliminations (39,684) (39,684) ( 71) (26,172)
Corporate (28,023) 34,368
Consolidated $202,734 $ 0 $202,734 $(29,316) $229,730
Transfers between geographic areas are accounted for at amounts which are
generally above cost and consistent with the rules and regulations of
governing tax authorities. Such transfers are eliminated in the consolidated
financial statements. Operating income by geographic areas reflects foreign
earnings reported by the foreign entities and does not include an allocation
of general corporate expenses. Identifiable assets are those assets that
can be directly associated with a particular foreign entity and thus do not
include assets used for general corporate purposes: cash and cash
equivalents, short-term investments and prepaid income taxes.
NOTE 13 Cross-license Agreement
During fiscal 1993, the Company entered into a patent cross-license agreement
which obligated the payment of an amount of royalties dependent upon the
level of the Company's profitability. The amount of royalties accrued
during fiscal 1994 was approximately $4.4 million and has been included in
other accrued liabilities. The Company will not be negatively impacted by
any further royalty payment from this agreement beginning fiscal 1995.
SUPPLEMENTARY FINANCIAL INFORMATION
(Unaudited)
Quarterly Results of Operations
(in thousands, except per share data)
Year Ended April 3, 1994
First Second Third Fourth
Quarter Quarter Quarter Quarter *
Revenues $72,766 $80,295 $85,330 $92,071
Gross profit 33,948 39,967 45,419 51,501
Net income 4,628 7,733 11,625 16,179
Net income
per share $ .15 $ .24 $ .35 $ .45
Year Ended March 28, 1993
Revenues $53,758 $57,479 $60,590 $64,436
Gross profit 23,366 24,734 27,234 28,645
Net income 475 838 1,493 2,530
Net income
per share $ .02 $ .03 $ .05 $ .08
* represents a 14-week quarter in fiscal 1994.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is incorporated herein by reference the information required by this
Item included in the Company's Proxy Statement for the 1994 Annual Meeting
of Stockholders which will be filed with the Securities and Exchange
Commission no later than 120 days after the close of the fiscal year ended
April 3, 1994, and the information from the section entitled
"Executive Officers of the Registrant" in Part I, Item 4 of this Report.
ITEM 11. EXECUTIVE COMPENSATION
There is incorporated herein by reference the information required by this
Item included in the Company's Proxy Statement for the 1994 Annual Meeting
of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is incorporated herein by reference the information required by this
Item included in the Company's Proxy statement for the 1994 Annual Meeting
of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated herein by reference the information required by this
Item included in the Company's Proxy Statement for the 1994 Annual Meeting
of Stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) 1. Financial Statements
The following consolidated financial statements are included in
Item 8:
- Consolidated Balance Sheets at April 3, 1994 and March 28, 1993
- Consolidated Statements of Operations for each of the three
fiscal years in the period ended April 3, 1994
- Consolidated Statements of Shareholder's Equity for each of the
three fiscal years in the period ended April 3, 1994
- Consolidated Statements of Cash Flows for each of the three
fiscal years in the period ended April 3, 1994
(a) 2. Financial Statements Schedules
The following consolidated financial statement schedules are
included in Item 14(d):
Schedule I - Short-term Investments
Schedule V - Property, plant and equipment
Schedule VI - Accumulated depreciation and amortization of
property, plant and equipment
Schedule VIII - Valuation and qualifying accounts
Schedule IX - Short-term borrowings
Schedule X - Supplementary income statement information
Schedules other than those listed above have been omitted since
the required information is not present or not present in
amounts sufficient to require submission of the schedule, or
because the information required is included in the consolidated
financial statements or the notes thereto.
(a) 3. Listing of Exhibits
Exhibit No. Description Page
3.1* Restated Certificate of Incorporation (previously filed
as Exhibit 3A to Registration Statement on Form 8-B
[File No. 0-12695] dated September 23, 1987).
3.2* Certificate of Amendment of Restated Certificate of
Incorporation (previously filed as Exhibit 3.2 to Annual Report
on From 10-K [File No. 0-12695] for the Fiscal Year Ended
April 2, 1989).
3.3* Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock (previously filed
as Exhibit 3.3 to Annual Report on Form 10-K [File No. 0-12695]
for the Fiscal Year Ended April 2, 1989).
3.4* Bylaws dated January 25, 1993 (previously filed as Exhibit 3.4
to Annual Report on Form 10-K [File No. 0-12695] for the Fiscal
Year Ended March 28, 1993).
4.1* Amended and Restated Rights Agreement dated as of
February 27, 1992, between the Company and The First
National Bank of Boston (previously filed as Exhibit
4.1 to Current Report on Form 8-K [File No. 0-12695]
dated February 27, 1992).
10.1* Lease for 1566 Moffet Street, Salinas, California, dated
June 28, 1985 between the Company and Carl E. Berg and
Clyde J. Berg, dba Berg & Berg Developers (previously
filed as Exhibit 10.7 to Form S-1 Registration Statement
No. 33-3189).
10.2* Assignment of Lease dated October 30, 1985 between the
Company and Synertek Inc. relating to 2975 Stender Way,
Santa Clara, California (previously filed as Exhibit 10.4
to Annual Report on Form 10-K [File No. 0-12695] for the
Fiscal Year Ended April 1, 1990).
10.3* Assignment of Lease dated October 30, 1985 between the
Company and Synertek Inc. relating to 3001 Stender Way,
Santa Clara, California (previously filed as Exhibit 10.5
to Annual Report on Form 10-K [File No. 0-12695] for Fiscal
Year Ended April 1, 1990).
10.4* Lease dated October 23, 1989 between Integrated Device
Technology International Inc. and RREEF USA FUND - III
relating to 2972 Stender Way, Santa Clara, California
(previously filed as Exhibit 10.6 to Annual Report on
Form 10-K [File No. 0-12695] for the Fiscal Year Ended
April 1, 1990).
10.5* First Deed of Trust and Assignment of Rents, Security Agreement
and Fixture Filing dated March 28, 1990 between the Company and
Santa Clara Land Title Company for the benefit of The Variable
Annuity Life Insurance Company relating to 2670 Seeley Avenue,
San Jose, California (previously filed as Exhibit 10.7 to Annual
Report on Form 10-K [File No. 0-12695] for the Fiscal Year Ended
April 1, 1990).
10.6 Amended and Restated 1984 Employee Stock Purchase Plan.**
10.7 Amended and Restated 1985 Incentive and Non-Qualified Stock
Option Plan, together with related form of Stock Option
Agreement.**
10.8* 1989 Nonemployee Director Stock Option Plan with related form of
Stock Option Agreement (previously filed as Exhibit 10.45 to
Annual Report on Form 10-K [File No. 0-12695] for the Fiscal
Year Ended April 1, 1990).**
10.9* Property Acquisition and Construction Management Agreement dated
February 1, 1989 between the Company and Baccarat Development
Partnership (previously filed as Exhibit 10.52 to Annual
Report on Form 10-K [File No. 0-12695] for the Fiscal Year
Ended April 1, 1990).
10.10* Form of Indemnification Agreement between the Company and its
directors and officers(previously filed as Exhibit 10.68 to
Annual Report on Form 10-K [File No. 0-12695] for the Fiscal
Year Ended April 2, 1989).**
10.11* Manufacturing, Marketing and Purchase Agreement between the
Company and MIPS computer Systems, Inc. dated January 16, 1988
(previously filed as Exhibit 10.12 to Annual Report on Form
10-K [File No. 0-12695] for the Fiscal Year Ended March 29, 1992)
(Confidential Treatment).
10.12* Preferred Stock Purchase Agreement dated January 14, 1992 among
the Company, Berg & Berg Enterprises, Inc. and Quantum Effect
Design, Inc. (previously filed as Exhibit 10.13 to Annual Report
on Form 10-K [File No. 0-12695] for the Fiscal Year Ended
March 29, 1992).
10.13* Patent License Agreement between the Company and American
Telephone and Telegraph Company dated May 1, 1992 (previously
filed as Exhibit 19.1 to Quarterly Report on Form 10-Q [File
No. 0-12695] for the Quarter Ended June 28, 1992)
(Confidential Treatment).
10.14* Patent License Agreement dated September 22, 1992 between the
Company and Motorola, Inc. (previously filed as Exhibit 19.1
to Quarterly Report on Form 10-Q [File No. 0-12695] for the
Quarter Ended September 27, 1992) (Confidential Treatment).
10.15* Agreement between the Company and Texas Instruments Incorporated
effective December 10, 1992, including all related exhibits,
among others, the Patent Cross-License Agreement and the OEM
Purchase Agreement (previously filed as Exhibit 19.1 to Quarterly
Report on Form 10-Q [File No. 0-12695] for the Quarter Ended
December 27, 1992) (Confidential Treatment).
22.1* Subsidiaries of the Company (previously filed as Exhibit 22.1 to
Annual Report on Form 10-K [File No. 0-12695] for the Fiscal
Year Ended March 28, 1993).
24.1 Consent of Price Waterhouse.
* These exhibits were previously filed with the Commission as indicated
and are incorporated herein by reference.
** These exhibits are management contracts or compensatory plans or
arrangements required to be filed pursuant to Item 14 (c) of Form 10-K.
(b) Reports on Form 8-K
Not applicable.
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.
INTEGRATED DEVICE TECHNOLOGY, INC.
Registrant
May 20, 1994 By: /s/ Leonard C. Perham
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ D. John Carey Chairman of the Board May 20, 1994
(D. John Carey)
/s/ Leonard C. Perham Chief Executive Officer May 20, 1994
(Leonard C. Perham) and Director (Principal
Executive Officer)
/s/ William D. Snyder Vice President, Chief May 20, 1994
(William D. Snyder) Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Carl E. Berg Director May 20, 1994
(Carl E. Berg)
/s/ John C. Bolger Director May 20, 1994
(John C. Bolger)
/s/ Federico Faggin Director May 20, 1994
(Federico Faggin)
ITEM 14 (d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
SCHEDULE I
INTEGRATED DEVICE TECHNOLOGY, INC.
SHORT-TERM INVESTMENTS
(in thousands)
Amount at which
Each Security
Name of Issuer and Issue Carried in
Title of Each Issue the Balance Sheet (1)
April 3, 1994:
Certificates of Deposits $ 2,440
Corporate Notes 20,784
Corporate Paper 1,995
Treasuries 5,591
Agencies 2,541
TOTAL $ 33,351
(1) The cost of issue and carrying and market value of each issue at the
balance sheet date are the same amounts as listed. No individual
security issue exceeds 2% of total assets.
F-1
SCHEDULE V
INTEGRATED DEVICE TECHNOLOGY, INC.
PROPERTY, PLANT AND EQUIPMENT
Balance at Balance
Beginning of Additions Retirements at End
(in thousands) Period at Cost and Sales of Period
Year Ended March 29, 1992:
Land $ 4,382 $ $ $ 4,382
Machinery and Equipment 200,193 25,226 (30,772) 194,647
Building and Leasehold
Improvements 44,062 372 ( 4,942) 39,492
Construction in Progress 11 108 119
248,648 25,706 (35,714) 238,640
Year Ended March 28, 1993:
Land 4,382 4,382
Machinery and Equipment 194,647 27,850 ( 5,330) 217,167
Building and Leasehold
Improvements 39,492 447 ( 43) 39,896
Construction in Progress 119 (109) 10
238,640 28,188 ( 5,373) 261,455
Year Ended April 3, 1994:
Land 4,382 4,382
Machinery and Equipment 217,167 37,850 ( 6,922) 248,095
Building and Leasehold
Improvements 39,896 167 40,063
Construction in Progress 10 66 76
$261,455 $38,083 ($6,922) $292,616
F-2
SCHEDULE VI
INTEGRATED DEVICE TECHNOLOGY, INC.
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
Balance at Additions Balance
Beginning Charged to Cost Retirements at End
(in thousands) of Period and Expenses (1) and Sales of Period
Year Ended March 29, 1992:
Machinery and Equipment $94,782 $36,098 ($29,192) $101,688
Building and Leasehold
Improvements 10,753 4,306 ( 4,907) 10,152
105,535 40,404 (34,099) 111,840
Year Ended March 28, 1993:
Machinery and Equipment 101,688 32,361 ( 5,153) 128,896
Building and Leasehold
Improvements 10,152 3,613 ( 43) 13,722
111,840 35,974 ( 5,196) 142,618
Year Ended April 3, 1994:
Machinery and Equipment 128,896 31,783 ( 6,249) 154,430
Building and Leasehold
Improvements 13,722 3,626 17,348
$142,618 $35,409 ($6,249) $171,778
F-3
SCHEDULE VIII
INTEGRATED DEVICE TECHNOLOGY, INC.
VALUATION AND QUALIFYING ACCOUNTS
Balance at Additions Recoveries Balance
Beginning of Charged to Cost and at End
(in thousands) Period and Expenses Write-offs of Period
Allowance for returns and
doubtful accounts
Year ended March 29, 1992 $2,514 $2,172 ($ 950) $3,736
Year ended March 28, 1993 $3,736 $258 ($1,000) $2,994
Year ended April 3, 1994 $2,994 $1,144 ($ 9) $4,129
Inventory Valuation
Reserve
Year ended March 29, 1992 $6,042 $7,267 ($2,840) $10,469
Year ended March 28, 1993 $10,469 $3,647 ($2,286) $11,830
Year ended April 3, 1994 $11,830 $2,453 ($1,745) $12,538
F-4
SCHEDULE IX
INTEGRATED DEVICE TECHNOLOGY, INC.
SHORT-TERM BORROWINGS
Balance Weighted Maximum Average Weighted
at Average Amount Amount Average
End Interest Outstanding Outstanding Interest Rate
of Period Rate During the During the During the
(in thousands, Period Period (1) Period (2)
except percentages)
Notes Payable to Bank:
Year ended
March 29, 1992 $1,551 10.5% $1,551 $257 9.6%
Year ended
March 28, 1993 $545 10.2% $1,908 $1,223 9.9%
Year ended
April 3, 1994 $0 9.8% $1,448 $494 10.0%
(1) Computed by dividing the sum of the daily outstanding
balances by the number of days such balances were outstanding.
(2) Represents the effective annual interest rate on short-term borrowings
for the period.
F-5
SCHEDULE X
INTEGRATED DEVICE TECHNOLOGY, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Year Ended Year Ended Year Ended
(in thousands) April 3, 1994 March 28, 1993 March 29, 1992
Maintenance and Repairs $6,702 $5,970 $7,328
Items omitted if less than 1% of revenues or separately reported in financial
statements in Registrant's Annual Report to Shareholders.
F-6