1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
-------------------- ---------------------
Commission file number 1-5560
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ALPHA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2302115
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 SYLVAN ROAD, WOBURN, MASSACHUSETTS 01801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 935-5150
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT OCTOBER 29, 2000
COMMON STOCK, PAR VALUE $.25 PER SHARE 42,970,970
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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PAGE
PART 1 FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets - October 1, 2000 and April 2, 2000....................... 3
Consolidated Statements of Income - Quarters and Six Month Periods Ended
October 1, 2000 and September 26, 1999................................................ 4
Consolidated Statements of Cash Flows - Six Month Periods Ended
October 1, 2000 and September 26, 1999................................................ 5
Notes to Consolidated Financial Statements............................................ 6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................. 9
Item 3 - Quantitative and Qualitative Disclosures About Market Risk....................... 13
PART 2 OTHER INFORMATION
Item 1 - Legal Proceedings................................................................ 13
Item 4- Submission of Matters to a Vote of Security Holders............................... 13
Item 6 - Exhibits and Reports on Form 8-K................................................. 14
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share amounts)
OCTOBER 1, APRIL 2,
2000 2000
(UNAUDITED) (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents................................................ $ 22,981 $ 23,219
Short-term investments (Note 3).......................................... 110,188 123,391
Accounts receivable, trade, less allowance for doubtful
accounts of $951 and $796.......................................... 50,177 33,844
Inventories (Note 4).................................................... 16,036 11,916
Prepayments and other current assets..................................... 3,256 2,583
Prepaid income taxes..................................................... 3,058 1,191
Deferred income taxes.................................................... 7,261 7,261
------------ -----------
Total current assets............................................ 212,957 203,405
------------ -----------
Property, plant and equipment, less accumulated depreciation and
amortization of $74,201 and $67,042...................................... 95,983 75,520
Other assets................................................................... 2,211 2,099
------------ -----------
$ 311,151 $ 281,024
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt..................................... $ 111 $ 3,011
Accounts payable......................................................... 20,142 20,537
Accrued liabilities:
Payroll, commissions and related expenses.............................. 11,206 8,501
Other ................................................................ 320 999
------------ -----------
Total current liabilities....................................... 31,779 33,048
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Long-term debt ................................................................ 285 345
------------ -----------
Other long-term liabilities.................................................... 2,224 2,237
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Deferred income taxes.......................................................... 3,301 3,301
------------ -----------
Commitments and contingencies (Note 7)
Stockholders' equity
Common stock par value $0.25 per share: authorized
100,000,000 shares; issued 42,976,901 and 42,576,518 shares............ 10,744 10,644
Additional paid-in capital............................................... 210,658 197,711
Retained earnings........................................................ 52,214 33,806
Treasury shares 51,989 and 64,786 at cost................................ (54) (68)
------------ -----------
Total stockholders' equity............................................. 273,562 242,093
------------ -----------
$ 311,151 $ 281,024
============ ===========
The accompanying notes are an integral part of these financial statements.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
SECOND QUARTER ENDED SIX MONTH PERIODS ENDED
----------------------- -----------------------
OCT. 1, SEPT. 26, OCT. 1, SEPT. 26,
2000 1999 2000 1999
- -------------------------------------------------------------------------------------------------------------------
Net sales............................................ $ 73,201 $ 41,921 $ 138,889 $ 80,574
Cost of sales...................................... 39,454 23,886 75,604 45,542
Research and development expenses.................. 8,814 5,780 16,709 11,195
Selling and administrative expenses................ 10,839 7,163 22,527 13,871
---------- ---------- ---------- ---------
Operating income..................................... 14,094 5,092 24,049 9,966
Interest expense..................................... (22) (17) (38) (74)
Interest income and other, net....................... 1,938 1,666 3,879 2,035
---------- ---------- ---------- ---------
Income before income taxes........................... 16,010 6,741 27,890 11,927
Provision for income taxes........................... 5,443 2,428 9,482 4,295
---------- ---------- ---------- ---------
Net income........................................... $ 10,567 $ 4,313 $ 18,408 $ 7,632
========== ========== ========== =========
Net income per share basic........................... $ 0.25 $ 0.10 $ 0.43 $ 0.20
========== ========== ========== =========
Net income per share diluted......................... $ 0.24 $ 0.10 $ 0.41 $ 0.19
========== ========== ========== =========
Weighted average common shares basic................. 42,867 41,511 42,765 39,020
========== ========== ========== =========
Weighted average common shares diluted............... 44,737 43,958 44,761 41,212
========== ========== ========== =========
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The accompanying notes are an integral part of these financial statements.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
SIX MONTH PERIODS ENDED
-----------------------
OCT. 1, SEPT. 26,
2000 1999
- ----------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY OPERATIONS:
Net income..................................................................... $ 18,408 $ 7,632
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization of property, plant and equipment............... 7,159 5,077
Loss on disposal of assets................................................... --- 303
Deferred income taxes........................................................ --- 2,976
Issuance of treasury stock to 401(k) plan.................................... 733 561
Amortization of unearned compensation - restricted stock..................... --- 4
(Decrease) increase in other liabilities and long-term benefits.............. (13) 162
Increase in other assets..................................................... (113) (199)
Changes in operating assets and liabilities:
Accounts receivable ........................................................ (16,333) (5,177)
Inventories................................................................. (4,120) (396)
Prepayments and other current assets........................................ (2,540) (1,681)
Accounts payable............................................................ (395) (125)
Other accrued liabilities and expenses...................................... 11,447 (1,796)
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Net cash provided by operations........................................... 14,233 7,341
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CASH USED IN INVESTING:
Additions to property, plant and equipment.................................. (27,622) (15,479)
Proceeds from sale of equipment............................................. --- 60
Purchases of short-term investments......................................... (65,486) (127,956)
Maturities of short-term investments........................................ 78,689 29,300
--------- ---------
Net cash used in investing................................................ (14,419) (114,075)
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CASH (USED IN) PROVIDED BY FINANCING:
Payments on long-term debt.................................................... (2,960) (1,081)
Proceeds from long-term debt.................................................. --- 1,500
Deferred charges related to long-term debt.................................... 1 24
Proceeds from sale of stock................................................... 238 112,479
Exercise of stock options and warrants........................................ 2,669 667
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Net cash (used in) provided by financing activities....................... (52) 113,589
--------- ---------
Net (decrease) increase in cash and cash equivalents............................. (238) 6,855
Cash and cash equivalents, beginning of period................................... 23,219 15,162
--------- ---------
Cash and cash equivalents, end of period......................................... $ 22,981 $ 22,017
========= =========
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Supplemental cash flow disclosures:
Cash paid for income taxes............................................. $ 1,616 $ 2,968
========= =========
Cash paid for interest................................................. $ 34 $ 76
========= =========
Supplemental disclosure of non-cash operating activities:
Tax benefit associated with the exercise of stock options............... $ 9,331 $ ---
========= =========
Compensation expense related to stock options........................... $ 90 $ ---
========= =========
The accompanying notes are an integral part of these financial statements.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
The interim financial information included herein is unaudited. In addition, the
financial information does not include all disclosures required under generally
accepted accounting principles because certain note information included in the
Company's annual report to shareholders has been omitted. Such information
should be read in conjunction with the prior year's annual report. However, the
financial information reflects all adjustments (consisting solely of normal
recurring adjustments), which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods. The Company considers the
disclosures adequate to make the information presented not misleading.
NOTE 2 ACQUISITION OF NETWORK DEVICE, INC.
On April 24, 2000, the Company completed its acquisition of privately-held
Network Device, Inc. ("NDI") of Sunnyvale, California. Approximately 2.67
million shares of common stock were exchanged for all outstanding shares of NDI.
Approximately 185,000 shares of Company stock were issued for the conversion of
NDI stock options into Company options.
The acquisition has been accounted for as a pooling-of-interests and
accordingly, the prior period consolidated financial statements and related
notes included herein have been restated to include the combined results of
operations, financial position and cash flows of NDI. In recording the business
combination, NDI's prior period financial statements have been restated to
conform with the Company's year end.
NOTE 3 SHORT-TERM INVESTMENTS
The Company's short-term investments are classified as held-to-maturity. These
investments consist primarily of commercial paper and securities issued by
various federal agencies and corporations with original maturities of more than
90 days. Such short-term investments are carried at amortized cost, which
approximates fair value, due to the short period of time to maturity. Gains and
losses are included in investment income in the period they are realized.
NOTE 4 INVENTORIES
OCT. 1, APRIL 2,
Inventories consist of the following: 2000 2000
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(in thousands)
Raw materials......................................................$ 5,302 $ 3,473
Work-in-process.................................................... 8,635 7,397
Finished goods..................................................... 2,099 1,046
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$ 16,036 $ 11,916
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
NOTE 5 SEGMENT INFORMATION
During the quarter ended October 1, 2000, the Company reorganized into two
reportable segments based on management's methods of evaluating operations and
performance. The new reportable segments are: Semiconductor Products and Ceramic
Products. The Semiconductor segment is comprised of two of the Company's former
segments: Wireless Semiconductor Products and Application Specific Products. A
description of the reportable segments follows:
SEMICONDUCTOR PRODUCTS:
The Semiconductor segment designs and manufactures gallium arsenide integrated
circuits and other discrete semiconductors primarily for the global broadband,
infrastructure and wireless communications markets.
CERAMIC PRODUCTS:
The Ceramics segment designs and manufactures technical ceramic and magnetic
products primarily for the wireless infrastructure and broadband markets.
The table below presents selected financial data by business segment for the
periods indicated. The prior periods presented have been restated to reflect the
reorganization into two reportable segments during the quarter ended October 1,
2000.
QUARTERS ENDED SIX MONTHS ENDED
------------------------------ ------------------------------
OCT. 1, SEPT. 26, OCT. 1, SEPT. 26,
2000 1999 2000 1999
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(in thousands)
SALES
Semiconductor Products............................ $ 60,970 $ 33,520 $ 113,930 $ 64,151
Ceramic Products.................................. 12,231 8,401 24,959 16,423
------------ ------------ ----------- -----------
$ 73,201 $ 41,921 $ 138,889 $ 80,574
============ ============ =========== ===========
OPERATING INCOME
Semiconductor Products............................ $ 11,956 $ 4,049 $ 19,834 $ 8,025
Ceramic Products.................................. 2,138 1,043 4,215 1,941
------------ ------------ ----------- ------------
$ 14,094 $ 5,092 $ 24,049 $ 9,966
============ ============ =========== ============
OCT. 1, APRIL 2,
2000 2000
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(in thousands)
NET LONG-LIVED ASSETS
Semiconductor Products.......................................................... $ 81,527 $ 62,459
Ceramic Products................................................................ 14,456 13,061
------------ -----------
$ 95,983 $ 75,520
============ ===========
TOTAL ASSETS
Semiconductor Products.......................................................... $ 134,192 $ 95,755
Ceramic Products................................................................ 29,542 25,892
Corporate .................................................................... 147,417 159,377
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$ 311,151 $ 281,024
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
SIGNIFICANT CUSTOMERS
During the three months ended October 1, 2000, two customers accounted for
approximately 25% and 14%, respectively, of the Company's total sales. During
the three months ended September 26, 1999, one customer accounted for
approximately 34% of the Company's sales. For the six months ended October 1,
2000, two customers accounted for approximately 29% and 14%, respectively, of
the Company's total sales. For the six months ended September 26, 1999, one
customer accounted for approximately 33% of the Company's total sales.
NOTE 6 EARNINGS PER SHARE
A reconciliation of the weighted average number of shares outstanding used in
the computation of the basic and diluted earnings per share for the quarters and
six months ended October 1, 2000 and September 26, 1999 is as follows:
QUARTERS ENDED SIX MONTHS ENDED
------------------------------- -------------------------------
OCT. 1, SEPT. 26, OCT. 1, SEPT. 26,
2000 1999 2000 1999
------------- ------------- ------------- -------------
(in thousands)
Weighted average shares (basic)..................... 42,867 41,511 42,765 39,020
Effect of dilutive stock options.................... 1,870 2,447 1,996 2,192
------- ------- ------- -------
Weighted average shares (diluted)................... 44,737 43,958 44,761 41,212
======= ======= ======= =======
For the periods ended October 1, 2000 and September 26, 1999, options to
purchase approximately 1.2 million and 72,000 shares, respectively, were
outstanding but not included in the computation of diluted earnings per share
because the exercise prices of the options were greater than the average market
prices of the Company's common stock during those periods.
NOTE 7 COMMITMENTS AND CONTINGENCIES
The Company is party to suits and claims arising in the normal course of
business. Management believes these are adequately provided for or will result
in no significant additional liability to the Company.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table shows our statement of operations data as a percentage of
sales for the periods indicated. All data represented in the table has been
restated to reflect the Company's April 24, 2000 acquisition of Network Device,
Inc., which was accounted for as a pooling-of-interests:
Quarters Ended Six Months Ended
--------------------------- ---------------------------
Oct. 1, Sept. 26, Oct. 1, Sept. 26,
2000 1999 2000 1999
----------- ----------- ------------ -----------
Sales................................................ 100.0% 100.0% 100.0% 100.0%
Cost of sales ....................................... 53.9 57.0 54.4 56.5
------ ------- ------ ------
Gross margin......................................... 46.1 43.0 45.6 43.5
Research and development expenses.................... 12.0 13.8 12.0 13.9
Selling and administrative expenses.................. 14.8 17.1 16.2 17.2
------ ------- ------ ------
Operating income..................................... 19.3 12.1 17.3 12.4
Other income, net.................................... 2.6 3.9 2.8 2.4
------ ------- ------ ------
Income before income taxes........................... 21.9 16.1 20.1 14.8
Provision for income taxes........................... 7.4 5.8 6.8 5.3
------ ------- ------ ------
Net income.......................................... 14.4% 10.3% 13.3% 9.5%
====== ======= ====== ======
SALES. Sales increased 74.6% to $73.2 million for the second quarter of fiscal
2001 from $41.9 million for the second quarter of fiscal 2000. For the first six
months of fiscal 2001, sales increased 72.4% to $138.9 million from $80.6
million for the first six months of fiscal 2000. Orders increased 75.0% to $77.3
million for the second quarter of fiscal 2001, compared with $44.2 million for
the same period last year. The increase in sales and orders continues to be the
result of high growth experienced by our Semiconductor and Ceramic Products
Groups as a result of increased demand for wireless products and our ability to
penetrate the growing broadband market. Deliveries to two customers represented
approximately 25% and 14%, respectively, of our total sales for the second
quarter of fiscal 2001 compared with one customer, which represented 34% of our
sales for the same period last year. Deliveries to two customers represented
approximately 29% and 14% of our total sales for the first six months of fiscal
2001 compared with one customer, which represented 33% for the comparable period
last year.
GROSS PROFIT. Gross profit increased 87.1% to $33.7 million or 46.1% of sales
for the second quarter of fiscal 2001 from $18.0 million or 43.0% of sales for
the comparable period last year. For the first six months of fiscal 2001, gross
profit increased 80.6% to $63.3 million or 45.6% of sales compared with $35.0
million or 43.5% of sales for the same period last year. The increase in gross
margin for the quarter and year to date was primarily the result of our
continued ability to leverage fixed costs and improve efficiencies, combined
with a more favorable product mix with higher value-added products.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses increased
52.5% to $8.8 million or 12.0% of sales for the second quarter of fiscal 2001
from $5.8 million or 13.8% of sales for the comparable period last year. For the
first six months of fiscal 2001, research and development expenses increased
49.3% to $16.7 million or 12.0% of sales from $11.2 million or 13.9% of sales
for the comparable period last year. The increase in research and development
expenses is due to our ongoing development of processes and applications within
our Semiconductor Products Group. For the second quarter and first six months of
fiscal 2001, over 90% of our total research and development expenses were
focused on the Semiconductor Products Group.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses
totaled $10.8 million or 14.8% of sales for the second quarter of fiscal 2001
compared with $7.2 million or 17.1% of sales for the same period last year. For
the first six months of fiscal 2001, selling and administrative expenses totaled
$22.5 million or 16.2% of sales. Included in the $22.5 million was approximately
$1.8 million in one-time closing costs associated with the acquisition of
Network Device, Inc., which was completed on April 24, 2000. Excluding these one
time costs, selling and administrative expenses for the six months ended October
1, 2000 totaled $20.7 million or 14.9% of sales compared with $13.9 million or
17.2% of sales for the comparable period last year. The increase in selling and
administrative expenses was primarily attributable to increased sales
commissions resulting from higher sales volumes as well as increased costs
incurred in training and recruiting employees. Due to our continued ability to
support our sales growth without incurring substantial additional costs, selling
and administrative expenses as a percentage of sales declined for the quarter
and six months ended October 1, 2000 when compared to the same periods last
year.
OTHER INCOME, NET. Other income, net, for the second quarter and first six
months of fiscal 2001 increased $267 thousand and $1.9 million, respectively,
over the comparable periods last year. These increases were primarily
attributable to an increase in interest income as a result of higher average
levels of cash, cash equivalents and short-term investments.
PROVISION FOR INCOME TAXES. Our effective tax rates for the first six months
of fiscal 2001 and 2000 were 34% and 36%, respectively.
BUSINESS SEGMENTS
The table below displays sales and operating income by business segment for the
periods indicated. All data represented in the table has been restated to
reflect the Company's acquisition of Network Device, Inc. on April 24, 2000.
Additionally, the data represented in the table has been restated to reflect the
reorganization from three to two reportable operating segments during the
quarter ended October 1, 2000:
Quarter Ended Six Months Ended
------------------------- ---------------------------
Oct. 1, Sept. 26, Oct. 1, Sept. 26,
2000 1999 2000 1999
---------- ----------- ---------- -----------
(in thousands)
Sales
Semiconductor Products........................... $ 60,970 $ 33,520 $113,930 $64,151
Ceramic Products................................. 12,231 8,401 24,959 16,423
-------- -------- -------- -------
$ 73,201 $ 41,921 $138,889 $80,574
======== ======== ======== =======
Operating Income
Semiconductor Products........................... $ 11,956 $ 4,049 $ 19,834 $ 8,025
Ceramic Products................................. 2,138 1,043 4,215 1,941
-------- -------- -------- -------
$ 14,094 $ 5,092 $ 24,049 $ 9,966
======== ======== ======== =======
SEMICONDUCTOR PRODUCTS. Sales for the Semiconductor Products Group increased
81.9% to $61.0 million for the second quarter of fiscal 2001 from $33.5 million
for the same quarter last year. For the first six months of fiscal 2001, sales
for the Semiconductor Products Group increased 77.6% to $113.9 million from
$64.2 million for the same period last year. The increase continues to be
attributable to increased demand and penetration into our two targeted markets -
wireless and broadband.
Operating income for the Semiconductor Products Group almost tripled to $12.0
million for the second quarter of fiscal 2001 from $4.0 million for the
comparable quarter last year. For the six months ended October 1, 2000,
operating income increased 147.2% to $19.8 million from $8.0 million for the
comparable period last year. The increase was primarily attributable to
increased sales and improved operating efficiencies as this group continued to
leverage capacity and improve yields. In addition, this group continued its
focus on the development of processes and products for the wireless and
broadband markets, while continuing to control administrative costs.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
CERAMIC PRODUCTS. Sales for the Ceramics Group for the second quarter increased
45.6% to $12.2 million from $8.4 million for the same quarter last year. For the
first six months of fiscal 2001, sales for the Ceramics Group increased 52.0% to
$25.0 million from $16.4 million for the same period last year. The increase was
primarily attributable to growth in demand and increased penetration in the
wireless infrastructure and broadband markets.
Operating income for the Ceramics Group more than doubled to $2.1 million from
$1.0 million for the second quarter and increased 117.2% to $4.2 million from
$1.9 million for the first six months of fiscal 2001 compared with the same
periods last year. The increase in operating income was primarily the result of
increased sales and improved operating efficiencies, including the leveraging of
capacity and increased manufacturing automation.
FINANCIAL CONDITION
At October 1, 2000 working capital totaled $181.2 million and included $133.2
million in cash, cash equivalents and short-term investments. Annualized
inventory turns for the six months ended October 1, 2000 increased to 10.8 from
10.1 for the comparable period last year. Additionally, average days sales
outstanding for the six months ended October 1, 2000 decreased to 55 from 58 for
the same period last year.
Capital expenditures for the six months ended October 1, 2000 totaled $27.6
million. Of the $27.6 million, approximately $8.8 million related to the
purchase of a 125,000 square foot manufacturing and office facility on a
forty-one acre site in Haverhill, Massachusetts. Initial operations at this site
will commence in January 2001 and include design engineering as well as
automated GaAs IC, silicon semiconductor and multi-chip module assembly and
testing. Expansion into Haverhill will provide space in our existing facility in
Woburn, Massachusetts for the expansion of our fabrication operations.
In September 1999, we announced the completion of the first phase of a major
expansion program to enhance and expand the available clean room space in our
GaAs IC facility in Massachusetts. The new clean room space is complete and in
use, and additional manufacturing equipment has been installed and brought to
full productivity. The second phase, which involved the installation of
additional production equipment within the existing facility, has been
completed. The third phase of this project involves the creation of a GaAs IC
line that would allow us to manufacture product on six-inch wafers. We are in
the initial phases of development of this six-inch wafer production line, which
is estimated to cost approximately $30 million dollars. We expect to complete
this phase within twelve to fifteen months. Once this new six-inch wafer
production line is in operation, we plan to convert our existing four-inch wafer
production areas to six-inch, as future demand requires.
We believe that anticipated cash from operations, available funds and borrowings
under our revolving credit agreement will be adequate to fund our currently
planned working capital and capital expenditure requirements, at least through
fiscal 2001.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" establishes accounting and
reporting standards for derivatives and hedging activities. In June 2000, the
Financial Accounting Standards Board issued SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities," an amendment to
SFAS No. 133. These statements require that an entity recognize all derivatives
as either assets or liabilities in the balance sheet and measure those
instruments at fair value. These statements will be effective for our fiscal
2002. We are currently evaluating SFAS No.133 and SFAS No. 138. We do not expect
these new statements to have a material effect on our consolidated financial
position, results of operations or cash flow.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
OTHER MATTERS
Safe Harbor Statement - Except for the historical information contained herein,
this report contains forward-looking statements that constitute the Company's
current intentions, hopes, beliefs and expectations or predictions of future
results and accomplishments, which are inherently subject to risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in the Company's forward-looking statements based on various
factors, including without limitation: cancellation or deferral of customer
orders; dependence on a small number of large customers; difficulties in the
timely development and market acceptance of new products; market developments
that vary from the current public expectations concerning the growth of
wireless, broadband and fiber-optic communications; difficulties in
manufacturing new or existing products in sufficient quantity or quality;
difficulties in completing the Company's planned capital improvements, including
its expansion to the facility in Haverhill, Massachusetts; increased competitive
pressures; decreasing selling prices for the Company's products; or changes in
economic conditions. Further information on factors that could affect the
Company's performance is included in the Company's periodic reports filed with
the Securities and Exchange Commission, including but not limited to the
Company's Form 10-K for the year ended April 2, 2000, and subsequent Forms 10-Q.
The Company cautions readers not to place undue reliance upon any such
forward-looking statements, which speak only as of the date made. The Company
expressly disclaims any obligations or undertaking to release publicly any
updates or revisions to any such statements to reflect any change in the
Company's expectations or any change in events, conditions or circumstances on
which any such statement is based.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
PART I
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in the value of a short-term
investment and a financial instrument caused by fluctuations in investment
prices and interest rates.
The Company handles market risks in accordance with established policies. The
Company's risk-management activities include "forward-looking statements" that
involve risk and uncertainties. Actual results could differ materially from
those projected in the forward-looking statements.
INVESTMENT PRICE RISK
The fair value of the Company's short-term investment portfolio at October 1,
2000 approximated carrying value due to its short-term duration. Market risk,
estimated as the potential decrease in fair value resulting from a hypothetical
10% decrease in interest rates for the issues contained in the investment
portfolio, is considered not to be material because of the short-term nature of
the investments.
INTEREST RATE RISK
The carrying value of the Company's long-term debt, including current
maturities, was approximately $396 thousand at October 1, 2000. Due to the
nature of the debt instruments, management has determined that the fair value
was not materially different from the quarter-end carrying value.
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The Company does not have any material pending legal proceedings other than
routine litigation incidental to its business.
The Company has been notified by federal and state environmental agencies of its
potential liability with respect to the Spectron, Inc. Superfund site in Elkton,
Maryland. Several hundred other companies have also been notified about their
potential liability regarding this site. The Company continues to deny that it
has any responsibility with respect to this site other than as a de minimis
party. Management is of the opinion that the outcome of the aforementioned
environmental matter will not have a material effect on the Company's operations
or financial position.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) On September 11, 2000, Alpha Industries, Inc. held its Annual
Meeting of Stockholders.
b) Omitted pursuant to Instruction 3 to Item 4 of Form 10-Q.
c) A proposal to elect Thomas C. Leonard, David J. Aldrich and Arthur
Pappas as Class 2 Directors to hold office for a three-year term
until the 2003 Annual Meeting of Stockholders and until their
successors have been duly elected and qualified was approved with
the following vote: Mr. Leonard 36,529,181 for and 89,276
withheld, Mr. Aldrich 36,410,965 for and 207,492 withheld and Mr.
Pappas 36,410,885 for and 207,572 withheld.
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ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(3) Certificate of Incorporation and By-laws.
(a) Restated Certificate of Incorporation (Filed as Exhibit 3(a)
to Registration Statement on Form S-3 (Registration No.
33-63857))*.
(b) Amended and restated By-laws of the Corporation dated April 30,
1992 (Filed as Exhibit 3(b) to the Annual Report on Form 10-K
for the year ended March 29, 1992)*.
(4) Instruments defining rights of security holders, including
indentures.
(a) Specimen Certificate of Common Stock (Filed as Exhibit 4(a) to
Registration Statement on Form S-3 (Registration
No. 33-63857))*.
(b) Loan and Security Agreement dated December 15, 1993 between
Trans-Tech, Inc., and County Commissioners of Frederick County
(Filed as Exhibit 4(h) to the Quarterly Report on Form 10-Q for
the quarter ended July 3, 1994)*.
(c) Revolving credit agreement dated November 1, 1999 between Alpha
Industries, Inc., and Trans-Tech Inc. and Fleet Bank of
Massachusetts and Silicon Valley Bank (Filed as Exhibit 4(c) to
the Quarterly Report on Form 10-Q for the quarter ended December
26, 1999)*.
(10) Material Contracts.
Purchase and Sale Agreement dated July 27, 2000 between the
Registrant and C.R. Bard, Inc.
(11) Statement regarding computation of per share earnings.**
(27) Financial Data Schedules.
(b) Reports on Form 8-K
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the fiscal quarter ended October 1, 2000.
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** Reference is made to Note 6 of the notes to Consolidated Financial
Statements on Page 8 of this Quarterly Report on Form 10-Q, which Note 6 is
hereby incorporated by reference herein.
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