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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-K
(Mark 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 MARCH 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period
from _______to______ .
Commission file number 0-15895
DIGITAL MICROWAVE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0016028
(State incorporation) (I.R.S. Employer Identification No)
170 ROSE ORCHARD WAY, SAN JOSE, CALIFORNIA 95134
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 943-0777
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act:
COMMON STOCK-PAR VALUE $0.01 PER SHARE
(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 a 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 the Form 10-K or any
amendment to this Form 10-K. / /
State the aggregate market value of voting stock held by non-affiliates
of Registrant (based on the last reported sale price of $12.00 per share on the
Nasdaq National Market) as of June 1, 1995: Approximately $149,050,944.
As of June 1, 1995, there were 13,509,985 shares of Common Stock, par
value $0.01 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Form 10-K Reference
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Definitive Proxy Statement Part III, Items 10-13
Annual Report to Stockholders Part I, Item 1 and 3
for fiscal year ended Part II, Items 5-8
March 31, 1995 Part IV, Item 14
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TABLE OF CONTENTS
DIGITAL MICROWAVE CORPORATION
1995 FORM 10-K ANNUAL REPORT
PART I
Item 1 Business......................................................... 3
Item 2 Properties ...................................................... 13
Item 3 Legal Proceedings................................................ 13
Item 4 Submission of Matters to a Vote of Security Holders ............. 13
PART II
Item 5 Market for Registrant's Common Equity
and Related Stockholder Matters......................... 14
Item 6 Selected Financial Data ......................................... 14
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 14
Item 8 Financial Statements and Supplementary Data ..................... 14
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................ 14
PART III
Item 10 Directors and Executive Officers of the Registrant .............. 15
Item 11 Executive Compensation .......................................... 16
Item 12 Security Ownership of Certain Beneficial
Owners and Management .................................. 16
Item 13 Certain Relationships and Related Transactions .................. 16
PART IV
Item 14 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K..................................... 17
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PART I
ITEM 1. BUSINESS
Digital Microwave Corporation (the "Company" or "DMC") designs,
manufactures and markets advanced and high-performance digital microwave
equipment for a wide variety of short- and medium-haul communication
applications worldwide. The Company's comprehensive portfolio of technologically
advanced products is designed for use by telecommunication operators providing
Personal Communication Services ("PCS")/Personal Communication Networks ("PCN"),
mobile telephone services, and local access, as well as for use in private
networks worldwide. The Company offers its products to wireless service
providers such as Panafon in Greece, Piltel in the Philippines, Airtouch
Cellular, E-Plus in Germany and U.S. West New Vector; telephone companies and
common carriers such as British Telecom and Mercury Communications Ltd.; and
private networks such as the State of California and the United States Forestry
Service. In addition, the Company forms alliances with major international
telecommunications equipment providers such as AT&T, Bell South, Motorola,
Northern Telecom, Ericsson, and Siemens AG as a means of accessing market
opportunities. With approximately 87% of the Company's fiscal 1995 net sales
generated from international sales, the Company has a worldwide sales and
service organization operating through 13 sales and service offices in nine
countries to address DMC customers' individualized geographic, regulatory and
infrastructure requirements.
INDUSTRY BACKGROUND
Over the past decade, there has been a significant increase in
worldwide demand for rapid, reliable, high-quality telecommunications equipment
for voice, data, facsimile, and video image information. This trend is expected
to continue. This demand has been fueled by changes in the regulatory
environment in many developed countries; technological advances, particularly in
the wireless communications arena; the rapid establishment of telecommunications
infrastructures in many developing countries; and the growth in private
communications networks. These developments have resulted in significant
worldwide construction of new telecommunications infrastructures.
MICROWAVE PRODUCTS
The Company's digital microwave radios consist of three basic
components: a digital modem for interfacing with digital terminal equipment, a
radio frequency ("RF") unit for converting a low frequency carrier signal from
the modem to a high frequency microwave signal, and an antenna to radiate
transmitting signals and capture receiving signals.
The Company manufactures digital microwave products that operate within
the 2, 6, 7, 8, 10, 11, 13, 15, 18, 23, and 38 GHz frequency bands. These radios
are used in point-to-point applications by cellular phone companies, telephone
operating companies, Fortune 1000 companies, utilities, and government and
military agencies.
CURRENT PRODUCTS
The Company currently offers several product families each of which is
designed to suit the requirements of specific telecommunications applications.
The principal product families are the Quantum Series, the M Series, the
SPECTRUM(TM) Series and the DMC Net(TM). The Quantum Series is designed
primarily to serve as the backbone of a customer's transmission network by
meeting all of that customer's medium-haul (20-60 miles) needs. The M-Series is
designed to meet a variety of short- to medium-haul (5-20 miles) customer needs,
while the SPECTRUM(TM) II Series is designed primarily as a microcell (under 5
miles) solution. In addition, the Company offers its NSL-15, In-Flight Phone and
LC radio products on a selective basis. Each of these product lines and the
Company's principal other products are described below.
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THE QUANTUM SERIES. This family of radios provides the Company with
access to markets requiring high performance transmission of medium to
high capacity signals over long distances and more difficult terrain.
The radio is designed to operate in the North American bands at 2, 6,
10, and 11 GHz, the International bands at 2, 7, 8, 13, 15 GHz and has
many features that ensure a high grade of transmission on long
paths or over water paths where microwave transmission can be impaired.
The typical deployment of the radio is in back haul transmission for
cellular networks in developing countries and for the private networks
supporting control of gas or electric utility operations. Development
of the Quantum Series products will continue in fiscal 1996 with the
planned addition of a higher capacity version (aggregate of 80 Mbit/s)
for international markets.
THE M SERIES AND M-SE SERIES. The M-Series has grown to be the
Company's biggest selling product todate. First introduced in 1989 at
18 GHz for the Northern American market, the platform has been
significantly expanded and enhanced to become the choice of new
cellular operators worldwide for cell site interconnections. Available
in 7, 8, 13, 15, 18, and 23 GHz band, this radio allows a common
product family to be used throughout an entire network even where
different frequency bands are necessary to meet licensing or path
distance requirements. The DMC-M Series is a low-to-medium capacity
digital microwave radio family of products that is used for
applications such as linking cell sites and connecting them back to
central switching locations. The DMC-M Series products are designed to
include user-convenient test features and built-in multiplexer options
to simplify the work of both the network designer and the network
operator. The high system gain of the DMC-M Series ensures reliable
operation on longer paths and in adverse weather conditions. The
Company expanded this product line to include the DMC M-SE Series of
products which provide more efficient use of spectrum space by
utilizing a more sophisticated digital modulation technique. As is the
case for many of the Company's products, a synthesized frequency source
is available, enabling an operator to easily change radio frequency in
the event of a system relocation or when installing spare parts,
resulting in reduced sparing costs and ease of system planning. Recent
focus has been on performance enhancements and cost improvements to
keep the product competitive. The M-Series has an excellent in service
reliability record in some of the worlds largest GSM networks.
THE SPECTRUM(TM) SERIES. The SPECTRUM(TM) product was conceived to
provide lower cost, short haul interconnections for cellular and
PCS/PCN applications. The Company initially launched the first
SPECTRUM(TM) product in 1991 with a version operating in the
millimeter waveband at 38GHz and targeted at the European PCN market.
The rapid growth in this market segment worldwide and the demand of
the operators and infrastructure suppliers has led to the second
generation of the SPECTRUM(TM) product which is broadened to cover all
the frequency bands typically utilized for low to medium capacity
transmission application. The SPECTRUM(TM) II contains design
enhancements over the Company's earlier products that make it a more
natural choice for the wireless network market (Cellular, PCS/PCN) as
well as the local access markets of new public telecommunications
operators (PTO). SPECTRUM II is designed for more rapid manufacture
and deployment allowing shorter lead times and lower installation
costs.
The completion dates for the release of SPECTRUM(TM) II products have
been delayed from the originally scheduled dates for various reasons
related to difficulties in design, development and manufacture of these
products. The delays resulted in the imposition on the Company of
substantial product discounts on Interim Equipment and related
costs in the fourth quarter of fiscal 1995 as provided for under the
E-Plus Supply Agreement as amended. The substantial discounts on
Interim Equipment resulted in negative margins for these sales, and
accordingly the Company has accrued these losses and other related
costs as of March 31, 1995. Currently the Company is awaiting E-Plus's
acceptance of the product in field tests being conducted. There is no
assurance that the customer will accept the results of the field tests.
If the field tests are not successfully completed, E-Plus may assess
additional substantial penalties and or cancel some or all of the
orders. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Factors That May Affect Future
Financial Results" incorporated herein by reference, "E-Plus Contract"
and "Manufacturing and Suppliers."
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OTHER PRODUCTS
The Company manufactures a number of other products some of which are
still supported because of their low cost, reliability and popularity
and others which are supplied uniquely to certain customers.
The 23 Classic is the current implementation of the Company's first
product which was originally designed and introduced in 1985. Its
simplicity, low cost and dependability generates modest on-going
business primarily with existing users. The 23 Classic finds
applications in private networks and is suited to emergency restoration
systems where its small size and low power consumption allow easy
transportation and compatibility with solar power systems.
The LC Series operates in the 23 GHz and 18 GHz bands, with up to 8T1
or 8E1 capacity. The 23 LC with 8E1 capacity provides a very economical
medium capacity transmission facility ideally suited for applications
not requiring high bandwidth efficiency.
The NSL-15 is a specialized radio operating in the 15 GHz frequency
band that is sold to military or other government users. With a
capacity of 2 megabits per second, the NSL-15 is built to very
stringent military specifications and is supplied to end-users both
directly by the Company and in partnership with NERA in Norway.
IFPC radios are specialized air-to-ground digital microwave radios
developed for the In-Flight Phone Corporation ("IFPC") for use on
commercial and general aviation aircraft. The IFPC radios are designed
to permit digital voice and data communications between airline
passengers and the ground- based public switched telephone network.
DMC Net(TM) is a network monitoring and control system designed to
manage a network of Company products from a single location. Network
management has become an essential part of the very large networks
being installed by cellular based telephone companies. DMC Net(TM)
allows customers to monitor equipment and path performance to detect
problems before they disrupt the network, and to dispatch repair crews
equipped with the correct spare parts and test equipment to make
repairs. Second and third trips can often be avoided, reducing costs
and maximizing network availability. DMC Net(TM) has in many cases been
integrated into an overall network management system, allowing the
monitoring of the status of a complete cellular system, including
microwave, UHF, power system and switching equipment. DMC Net(TM) can
be used with almost any mix of DMC products. In recognition of its
importance, the Company continues to invest development resources in
the expansion and improvement of DMC Net(TM).
PRODUCTS UNDER DEVELOPMENT
The Company's current product development efforts are principally focused on the
development of the following products:
QUANTUM(TM) . The Company is continuing product development
efforts in fiscal 1996 to enhance the QUANTUM(TM) product line. These
efforts are intended to provide higher capacity options and operation
in additional frequency bands. It is expected that the portion of the
Company's sales attributable to QUANTUM(TM) products will continue to
increase as a result of these product development efforts.
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SPECTRUM(TM) II. The Company is continuing substantial product
development efforts in fiscal 1996 to enhance and expand the
SPECTRUM(TM) II product line. These efforts are intended to provide
higher capacity options and operations in additional frequency bands.
DMC Net(TM). An improved version of DMC Net(TM) is under development.
The objective of this development is to allow the use of DMC Net(TM) on
networks comprised of several thousand radio terminals and to provide a
graphical user interface making DMC Net(TM) easier to operate.
There can be no assurance that the Company will be successful in
developing and marketing these products, that the Company will not
experience difficulties that could further delay or prevent the
successful development, introduction and sale of future products, or
that these products will adequately meet the requirements of the
marketplace and achieve market acceptance. See "Management's
Discussions and Analysis of Financial Condition and Results
Operations - Factors That May Affect Future Financial Results"
incorporated herein by reference.
MARKETING, CUSTOMERS AND APPLICATIONS
The Company markets its products across most sectors of the
telecommunications industry. A number of the Company's major customers are joint
ventures or consortiums whose members include Bell South, AT&T, Siemens AG,
Nokia Cellular Systems OY, and Ericsson. The principal market segment addressed
by the Company, and examples of applications within those markets, are set forth
below:
WIRELESS SERVICE PROVIDERS
Customers include cellular telephone companies and PCN/PCS
companies in the United States and abroad which use the Company's microwave
radios to connect cell sites and link them back to switching centers for
connection to the public switched telephone network. Cellular technology has
become the medium of choice in many developing countries where upgrading the
telecommunication infrastructure is an urgent priority. The Company believes
that a substantial majority of its products sold are used in cellular, PCN, PCS
or similar applications.
Typical of customers in this segment, Panafon, one of the
Company's Global Systems Mobile Communications ("GSM") cellular telephone
customers, is using the Company's products to interconnect cells and switching
equipment for a cellular telephone network being constructed to cover the major
metropolitan areas in Greece. E-Plus, a GSM cellular and PCN provider in
Germany, has ordered the Company's digital microwave equipment for a mobile
telecommunications network being created throughout certain regions of Germany.
TELEPHONE COMPANIES AND COMMON CARRIERS
Customers include domestic and foreign telephone companies and
long distance and inter-exchange carriers desiring to provide their customers
with a greater variety of services, including direct access to long distance
networks. Typical customer applications include trunking and local distribution.
PRIVATE NETWORKS
Customers include corporations, institutions, various agencies of
the United States and foreign governments and other organizations seeking
greater control over the cost and availability of their communications services.
Typical applications in this segment range from a single transmission link
connecting two buildings to complex major networks comprised of dozens of
microwave terminals.
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BANAMEX, a private banking institution, has established a private
network using the Company's products to connect several of the banks throughout
Mexico to facilitate the rapid communication of information.
The State of California uses the Company's products to
interconnect several data centers throughout California.
The following is a list of representative customers, for the past
three fiscal years, within each of the Company's principal segments:
- --------------------------
WIRELESS SERVICE PROVIDERS
- --------------------------
Panafon (Greece)
Comviq (Sweeden)
Advance Information System (Thailand)
Grupo Iusacell (Mexico)
Celumobil (Colombia)
Bell Cellular (Canada)
Cantel (Canada)
U.S. West New Vector
Airtouch
AT & T
Siemens AG
- -------------------------------------------
TELEPHONE COMPANIES AND COMMON CARRIERS
- -------------------------------------------
TELMEX (Mexico)
Impsat (Colombia/Argentina)
Regional Bell Operating Companies (USA)
British Telecom plc (United Kingdom)
Mercury Communications Ltd. (United Kingdom)
MCI
Bell of Canada
Piltel (Philippines)
- -------------------------
PRIVATE NETWORKS
- -------------------------
BANAMEX (Mexico)
Americatel (Colombia)
Bancomer (Mexico)
State of California
Seattle Post-Intelligence
CUSTOMER CONCENTRATION
The Company has historically relied upon major orders from a small
number of customers for a large portion of its net sales and these key customers
have changed from period to period. As of March 31, 1995, the Company's three
largest customers accounted for approximately 42% of the approximate $93.2
million backlog. For fiscal 1995, there were however, no customers that
accounted for 10% or more of the Company's net sales of $153.6 million. While
management considers the Company's relationships with each of its major
customers to be good, there can be no assurance that the Company's principal
customers will continue to purchase products from the Company at current levels,
if at all, and the loss of any one key customer could have a material adverse
effect on the Company's results of operations.
BACKLOG
The Company's backlog at March 31, 1995 was approximately $93.2
million, as compared with approximately $71.8 million at March 31, 1994. The
Company includes in backlog only orders scheduled for delivery within 12 months.
Because of the timing of orders, delivery intervals, customer and product mix
and the possibility of changes in delivery schedules and additions to or
cancellation of orders, the Company's backlog at any particular date may not be
representative of actual sales for any succeeding period. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
incorporated herein by reference.
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The Company's major contractual awards are often subject to the receipt
of firm orders, which in turn may be subject to many conditions including that
the equipment purchased be competitive in the telecommunications marketplace
with respect to technology, price, quantity, and other commercial concerns. In
addition, because the Company's major orders often require deliveries for
periods over 12 months, such products are subject to risks associated with
obsolescence due to rapidly changing technological advances. There can be no
assurance that the Company will be able to continue to provide competitive
products. See "E-Plus Contract".
E-PLUS CONTRACT
In November 1993, the Company entered into a Teaming Agreement (the
"E-Plus Teaming Agreement") with Siemens AG ("Siemens") to supply digital
microwave radios and network management software to E-Plus, a GSM cellular and
PCN operator in Germany whose partners include Bell South, a United States
company, Vodaphone plc, a United Kingdom company, and Thyssen and Veba, both
German companies. Concurrent with executing the E-Plus Teaming Agreement,
Siemens entered into a supply agreement with E-Plus (the "E-Plus Supply
Agreement") wherein Siemens agreed to act as the prime contractor for the
supply, installation and commissioning of certain digital microwave equipment
and related services to E-Plus. The Company and Siemens have agreed, under the
terms of the E-Plus Teaming Agreement, to divide responsibilities for
satisfaction of the E-Plus Supply Agreement. The Company's responsibilities to
Siemens under the E-Plus Teaming Agreement for the Company's portion of the
equipment and services generally correspond to Siemens' obligations under the
E-Plus Supply Agreement.
The Company is responsible for delivering approximately 80% of the
value of the equipment and associated services called for under the E-Plus
Supply Agreement. Siemens is responsible for providing all other services. Of
the Company's approximately $92.3 million in backlog at March 31, 1995,
approximately $15.6 million was attributable to the E-Plus Teaming Agreement.
The products forecasted to be delivered periodically are subject to the release
of confirmation orders from E-Plus. E-Plus is allowed to terminate any
confirmation order in whole or in part for justified reasons and, subject to
cure, E-Plus may terminate any confirmation order at its discretion without
liability if the Company/Siemens team commits a material breach of the
confirmation order.
E-Plus has agreed to purchase 100% of the microwave equipment it
requires for the regions of Frankfurt, Nurnberg, Karlsruhe and Munchen until the
end of 1997 from the Company/Siemens team. E-Plus's commitment to buy equipment
under the E-Plus Teaming Agreement is conditional upon the equipment purchased
being competitive in the telecommunications marketplace with respect to the
technology, software, hardware, support, price and other commercial concerns.
The E-Plus Teaming Agreement contains significant penalty provisions
for delays in the delivery of specified products. If a delay, attributable to
the Company/Siemens team, occurs in (i) the successful and satisfactory
completion of the system testing and integration of the Company's product into
the E-Plus network; (ii) the satisfactory completion of link testing of the
Company's products; or (iii) the delivery of any other items subject to the
contract, the Company/Siemens team could be subject to liquidated damages
assessed at up to 15% of the value of the undelivered portion of a confirmation
order. The E-Plus Teaming Agreement stipulates that the Company is responsible
for that portion of a penalty attributable to its contract share.
The E-Plus Teaming Agreement provides for delivery of the Company's 23
GHz M-Series and SPECTRUM(TM) I-38 series products as an interim solution (the
"Interim Equipment") until the Company's SPECTRUM(TM) II series equipment
("SPECTRUM(TM) II Equipment") is available. The Company commenced initial
shipments of the Interim Equipment in December 1993. The E-Plus Teaming
Agreement states that after the SPECTRUM(TM) II series equipment becomes
available, E-Plus may choose to either leave the Interim Equipment installed or
replace it with the SPECTRUM(TM) II equipment. In October 1994, the Company,
Siemens and E-Plus entered into an amendment to the E-Plus Teaming Agreement
under which the maximum percentage of Interim Equipment installed by February
28, 1995 that can be replaced with SPECTRUM(TM) II product free of charge will
not exceed 20% of the installed base. In addition, the amendment extended the
cutover date for the installation of the SPECTRUM(TM) II product to
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March 1, 1995. Delivery of Interim Equipment after this date will
result in substantial sales price discounts on the product and cause negative
margins on the sales. The Company also agreed to provide E-Plus certain
products and other equipment free of charge, and E-Plus agreed to waive
contractual liquidated damages related to the delayed delivery of the
SPECTRUM(TM) II product. As a result of this amendment, in the third quarter of
fiscal 1995 the Company recorded $11.4 million of revenue with nominal margins,
representing 80% of the Interim Equipment shipped through December 31, 1994.
The remaining 20% of Interim Equipment has not been recognized as revenue but
is carried as inventory and deferred revenue on the Company's balance sheet.
The Company makes an ongoing assessment of the obsolescence exposure related to
the Interim Equipment.
Acceptance tests of the SPECTRUM(TM) II product under the E-Plus
Teaming Agreement have not yet been completed. As a result of these delays, in
the fourth quarter of fiscal 1995 the Company recorded significant reserves for
losses on product discounts and other costs related to additional Interim
Equipment that the Company estimates will be ordered by E-Plus through the
anticipated date of final acceptance of the Spectrum II product. These reserves
contributed to the Company's lower margins and net loss of $5.0 million in the
fourth quarter.
Continued delays in the acceptance of the SPECTRUM(TM) II product by
E-Plus could result in the imposition on the Company of additional product
discounts, penalties, and other related costs and/or the cancellation of
orders. To the extent that the SPECTRUM(TM) II product is delivered later than
currently scheduled, the Company's obligation to deliver substantially
discounted Interim Equipment could be increased. The Company's profitability in
fiscal 1996 will be affected by its ability to deliver in large quantities the
SPECTRUM(TM) II products which carry higher margins than the current product
line. See "Management's Discussion and Analysis of Financial Conditions and
Results of Operations - Factors that May Affect Future Financial Results:" and
Notes 2 and 9 of Notes to the Consolidated Financial Statements in the
Company's fiscal 1995 Annual Report, incorporated herein by reference.
The Company is working closely with Siemens AG and E-Plus to resolve
the remaining issues precluding acceptance. However, there can be no assurance
that the Company will be successful in securing E-Plus acceptance.
SALES AND SERVICE
The Company believes that a direct and continuing relationship with its
customers is a competitive advantage in attracting new customers and satisfying
existing ones. The Company offers its products and services principally through
its own sales and service organization. To closely monitor the needs of its
customers, the Company has designed a sales and service organization that
maintains 13 sales or service offices in nine countries. The Company has five
regional sales offices and service centers in North America located near
Seattle, Washington; Chicago, Illinois; Toronto, Canada; Atlanta, Georgia; and
San Jose, California, where the Company's North America sales organization is
headquartered. The Company also has sales and/or service centers in the United
Kingdom, Germany, Sweden, Mexico, Colombia, Singapore and the Philippines. In
addition, the Company uses independent agents, distributors and international
resellers worldwide in concert with its direct sales operation.
The Company considers its ability to create and maintain long-term
customer relationships an important component of its overall strategy in each of
its markets. The Company employs over 106 people in its sales and service
organization, approximately 70% of whom primarily support sales outside North
America. Sales personnel are highly trained to provide the customer with
assistance in selecting and configuring a digital microwave system suitable for
the customer's particular needs. The Company's service and customer support
personnel provide customers with training, installation, customer service and
maintenance of the Company's systems under contract. The Company generally
offers a standard two-year warranty for all customers. The Company provides
warranty and post-warranty services from its San Jose manufacturing location and
service centers in the United Kingdom and Canada.
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FOREIGN EXCHANGE/INTERNATIONAL SALES
Total international sales for fiscal 1995 and 1994 were 87.0% and 90.5%
of total net sales, respectively. The Company expects that international sales
will continue to account for the majority of its net sales in the foreseeable
future. The Company is subject to the risks of foreign currency fluctuations,
and the changing value of the dollar in relationship to foreign currencies could
negatively impact its operating results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 2 of Notes
to Consolidated Financial Statements incorporated herein by reference.
International operations and sales may also be adversely affected by the
imposition of government controls, export licensing requirements, restrictions
on the export of critical technology, political and economic instability, trade
restrictions, changes in tariffs and taxes, and general economic conditions,
including inflation.
RESEARCH AND DEVELOPMENT
The Company has a continuing program of research and development
directed toward the enhancement of existing products in response to customer
needs and the introduction of new products to broaden its product line.
Approximately 7.4%, or $11.4 million of the Company's net sales were invested in
research and development in fiscal 1995, compared to 8.0% of net sales, or $9.3
million, in fiscal 1994. The increase in research and development expenses in
fiscal 1995 from fiscal 1994 was due to increased development efforts on the
second generation SPECTRUM(TM) II products. The Company expects research and
development spending to increase because the Company believes that its future
performance will depend on its ability to continue to enhance its existing
products and to develop new products that meet market needs. There can be no
assurance, however, that the Company's product development efforts will result
in commercially successful products. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" incorporated herein by
reference.
MANUFACTURING AND SUPPLIERS
The Company's manufacturing operations consist primarily of final
assembly, test and quality control of materials and components. The
manufacturing process, performed at the Company's San Jose, California facility
consists primarily of materials management, extensive unit and environmental
testing of components and subassemblies at each stage of the manufacturing
process, final assembly of the terminals and, prior to shipment, quality
assurance testing and inspection of all products.
The Company's manufacturing operations are highly dependent upon the
delivery of materials by outside suppliers in a timely manner. The Company uses
local and offshore subcontractors to assemble major components and subassemblies
used in its microwave products. In the future, the Company expects to continue
to increase the extent to which outside suppliers and subcontractors provide
completed product components. The Company is reliant on the timely delivery of
certain key components to meets its manufacturing plan. In particular, the
development and manufacture of the Company's generation SPECTRUM(TM) II products
have been delayed due to among other things, component development and
associated delivery delays. The inability of the Company to develop alternative
sources of supply quickly and on a cost-effective basis could materially impair
the Company's ability to manufacture and deliver its products. There can be no
assurance that the Company will not experience component delays or other supply
problems.
Certain microwave integrated circuit subassemblies which are used in
all of the Company's microwave radio products, are supplied primarily by
Microelectronics Technology, Inc. ("MTI") of Taiwan. These subassemblies, which
are manufactured by MTI in Taiwan, form the nucleus of the RF Unit. The
Company's relationship with MTI commenced in March 1984, at which time the
Company and MTI entered into an agreement (the "Development Agreement") pursuant
to which MTI performed development engineering work for the Company. The
Development Agreement provides MTI with the right to manufacture up to 75% of
the Company's production requirements for microwave integrated circuit
subassemblies designed by MTI for the Company as long as MTI is able to meet
cost, quality and delivery standards available to the Company from other
sources. The Development Agreement also provides MTI with a right of first
refusal to manufacture certain of the Company's microwave products
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if the Company determines to subcontract the manufacturing of these products.
During the term of the Development Agreement and for a period of one year after
termination thereof, MTI may not design, develop, manufacture or cause to be
manufactured or sold, for other persons or companies who are, or may become,
competitors to the Company, any proprietary designs or components that are
similar to certain of the Company's products. The Development Agreement may only
be terminated by either party in the event of a breach by the other.
From time to time, the Company has experienced delays and other supply
problems with MTI, but such delays and other problems have not had a significant
impact on the Company's results of operations. To avoid any future problems
associated with delays, the Company has contracted for component and subassembly
parts from additional sources. The Company and MTI maintain a high level of
communication at all levels of their respective management to ensure that
production requirements and constraints are taken into account in each company's
respective production plans. The Company does not currently anticipate any
future delays or other supply problems with MTI, although there can be no
assurance in this regard.
COMPETITION
The short-haul and medium-haul transmission business is a specialized
segment of the telecommunications equipment market and is intensely competitive.
A substantial number of established and emerging companies offer a variety of
microwave, fiber optic and other transmission products for applications similar
to those of the Company's products. Many of the Company's competitors have more
extensive engineering, manufacturing and marketing capabilities and
substantially greater financial, technical and personnel resources than the
Company. The Company considers its primary competitors to be Alcatel, NEC,
California Microwave, Inc., P-Com, Inc. and the Farinon Division of Harris
Corporation. In addition, other existing competitors include L.M. Ericsson,
Siemens AG, Nokia, SIAE, and NERA. Some of the Company's largest customers could
develop the capability to manufacture products similar to those manufactured by
the Company. Existing and potential competition in the industry has resulted in
and will continue to result in significant price competition and pressure on
gross margins. The Company believes that competition in its markets is based
primarily on technological capability, performance, on-time delivery, price,
reliability and customer support. The Company's future success will depend upon
its ability to address the increasingly sophisticated needs of its customers by
enhancing its current products, by the development and timely introduction of
new products that keep pace with technological developments and emerging
industry standards, and by providing such products at competitive prices.
The Company often forms alliances, or teaming arrangements, with major
international telecommunications equipment providers as a means of increasing
the Company's ability to pursue these limited number of major awards each year.
These alliances are necessary for the Company where the customer requires a
single system provider with a variety of equipment and service capabilities, as
well as for financial strength. There can be no assurance that the Company will
be able to continue to develop such alliances, or that if such alliances are
developed, that such alliances will be successful.
PATENTS
The Company does not presently have any patents covering its products.
The Company believes that its success is not dependent on the ownership of
patents but rather on its innovative skills, technical expertise and timely
introduction of new products.
GOVERNMENT REGULATIONS
Radio transmission in the United States is controlled by federal
regulation and all microwave radio links installed in the United States, except
for those utilizing certain frequencies operating under FCC part 15 rules, must
be licensed by the FCC. Since microwave radios all share the same transmission
medium, the FCC requires that every prospective microwave radio licensee assure
that it will not interfere with the operation of any existing system. This
requirement, known as frequency coordination, must be satisfied before
permission for operation will be granted by the FCC.
Page 11
12
The FCC and similar foreign regulatory bodies require that the
Company's products comply with certain rules and regulations governing their
performance when operating within their jurisdiction. The Company has complied
with such rules and regulations with respect to its existing products. Any
delays in compliance with respect to future products could delay their
introductions.
In the United States, Federal deregulation, which allows common
carriers greater flexibility in establishing rates which may be charged for
common carrier services, is likely to continue to affect the relative cost
effectiveness of private telecommunications networks versus common carrier
telecommunication networks. Each state has jurisdiction over the common carrier
aspects of intrastate radio and wireline communications, and the nature of this
regulation varies widely among the states. Internationally, similar control over
rates charged to customers of common carriers is exerted by central governments.
User uncertainty as to future government regulatory policies may affect the
demand for private network telecommunications products, including the Company's
products.
In addition, radio transmission is subject to regulation by foreign
laws and international treaties. The Company's equipment must conform to
international requirements established to avoid interference among users of
microwave frequencies and to permit interconnection of equipment. In many
developed countries, the unavailability of frequency spectrum has historically
inhibited the growth of microwave systems. However, current regulatory efforts
by international regulatory authorities are directed at providing microwave
frequencies for new PCS. Equipment to support these services can be marketed
only if permitted by suitable frequency allocations and regulations.
LITIGATION
In connection with the six class action lawsuits alleging securities
law violations in fiscal 1994, the Company reached an agreement under which the
Company and its Directors would be released from any further liabilities. In
fiscal 1994, the Company recorded a charge to earnings for the settlement of the
litigation of $20.0 million, which included the settlement amount, certain
attorneys' fees, estimated interest and other costs related to the litigation.
The Company paid the settlement amount of the litigation and obtained the final
judgment and order of dismissal of the litigation in fiscal 1995 from the United
States District Court of Northern California.
DMC TELECOM (MALAYSIA) SDN BHD
In fiscal 1991, the Company expanded its presence in the Asia Pacific
market with the formation of DMC TeleCom (Malaysia) Sdn Bhd ("DMCT(M)"). The
Company's partners in this joint venture were two Malaysian companies. However,
in the third quarter of fiscal 1994, the Company wrote down its investment in
DMC Malaysia resulting in a charge to earnings of $7.0 million. The Company's
net investment in DMC Malaysia was $4.0 million which consisted of receivables
outstanding from DMC Malaysia of approximately $6.0 million at March 31, 1994,
reduced by a reserve of $2.0 million for deferred margin on sales to the joint
venture. The Company was also the guarantor of approximately $2.0 million of DMC
Malaysia indebtedness to a bank, which was due in July, 1994. This charge to
earnings took into account the full amount of the receivables, the guarantee of
indebtedness to the bank, anticipated legal fees, and other charges associated
with the anticipated liquidation of the joint venture less applicable reserves.
On December 23, 1994, the Company reached an agreement with the shareholders of
DMCT(M) related to the liquidation of the joint venture. The Company paid
approximately $2.1 million for its 45% share of the cost of liquidating the
joint venture, and received inventory and fixed assets valued at approximately
$600,000 and $300,000 respectively. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 7 of the Notes to
Consolidated Financial Statement of the Company's fiscal 1995 annual report
incorporated herein by reference.
Page 12
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EMPLOYEES
As of March 31, 1995, the Company employed 606 full-time and temporary
employees, including approximately 50 employees in the United Kingdom. None of
the Company's employees are represented by a collective bargaining agreement.
The Company's future performance will depend in large measure on its ability to
attract and retain highly skilled employees. The Company believes that it has
good relations with its employees and has never experienced a work stoppage.
ITEM 2. PROPERTIES
The Company's corporate offices, and principal research, development
and manufacturing facilities are located in San Jose, California, in three
leased buildings aggregating approximately 160,000 square feet. The Company owns
20,000 square feet of office and manufacturing space in East Kilbride, Scotland,
1,500 square feet of which has been sublet for eight years. The Company also
leases four sales offices located throughout the North America and a 17,000
square foot customer service and marketing office in Coventry, England. The
Company believes these facilities are adequate to meet its anticipated need for
the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
See "Business - Litigation" and Note 7 and 8 of Notes to Consolidated
Financial Statements incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Page 13
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information regarding price range per share in the Company's 1995
Annual Report to Stockholders is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information regarding selected financial data from fiscal 1991
through fiscal 1995 in the Company's 1995 Annual Report to Stockholders is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information appearing under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the Company's
1995 Annual Report to Stockholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data in the
Company's 1995 Annual Report to Stockholders are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Page 14
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning directors and executive officers under the
caption "Election of Directors," "Board Meetings and Committees," "Security
Ownership of Certain Beneficial Owners and Management" and "Compliance with
Section 16(a) of the Securities Exchange Act of 1934" in the Company's Proxy
Statement for the Annual Meeting of Stockholders to be held on July 26, 1995
(the "Proxy Statement"), is incorporated herein by reference. In addition to
executive officers who are also directors of the Company, the following
executive officers are not directors:
Name Age Position
- -----------------------------------------------------------------------------------------------------------------
Mark A. Byington 43 Vice President, Engineering
Hal E. Edmondson 65 Vice President, Manufacturing
Timothy R. Hansen 34 Vice President, SPECTRUM(TM) Business Unit
Shaun McFall 35 Vice President, Corporate Marketing
John P. O'Neil 57 Vice President, Personnel
Graham J. Powell 48 Vice President, Worldwide Sales
Carl A. Thomsen 50 Vice President, Chief Financial Officer & Secretary
- -----------------------------------------------------------------------------------------------------------------
Mr. Byington has served as Vice President of Engineering from April
1989 to November 1990 and from January 1993 to present. During the interim
period of November 1990 to January 1993, Mr. Byington participated in the design
of the Company's SPECTRUM(TM) and QUANTUM(TM) radio products. From February 1984
to April 1989, Mr. Byington served as Senior Development Engineer and Director
of Digital Signal Processing in Engineering. From 1976 to 1984, Mr. Byington
held various positions at the Farinon Division of Harris Corporation. Mr.
Byington holds a BSEE degree from Stanford University.
Mr. Hal E. Edmondson joined the Company as Vice President of
Manufacturing in January, 1995. He was most recently the Corporate Vice
President of Worldwide Manufacturing for Hewlett Packard ("HP"). His tenure with
Hewlett Packard spans over 30 years of increasing responsibility in
Manufacturing at several HP divisions including the General Manager of the
Microwave Product Division. Mr. Edmondson holds a B.S. degree in Mechanical
Engineering from the University of Kansas and an MBA from Harvard.
Mr. Timothy R. Hansen was promoted to Vice President SPECTRUM(TM)
Business Unit in February, 1995. Prior to this promotion, he was Vice President
and Program Manager of the Spectrum Product line. He joined Digital Microwave
Corporation in August, 1984 as product line manager, and has held management
positions in marketing, planning, sales and order management. Mr. Hansen holds a
B.S. degree in Electrical Engineering from the University of Illinois, and a MBA
from UCLA.
Mr. Shaun McFall was promoted to Vice President, Corporation Marketing
in February, 1995. Prior to his promotion, he was the Director of Marketing. He
joined Digital Microwave UK operations in January, 1989 and has held several
management positions in Marketing. Prior to joining Digital Microwave, he worked
for GEC Telecommunication Ltd. in Germany, and Ferranti Ltd in Edinburgh,
Scotland. Mr. McFall holds a B.S. degree in Electrical Engineering from the
University of Strathclyde in Scotland.
Mr. John O'Neil joined the Company as Vice President of Human Resources
of the Company in May, 1993. Mr. O'Neil was Vice President of Personnel and
Administration of BEI Electronics, Inc., a defense electronics firm, from
January 1989 to April 1993. From 1987 to 1988 Mr. O'Neil was Human Resources
Vice President at C.P. National Corporation, a communication and energy company.
Mr. O'Neil holds a B.S. degree in Business Administration from the University of
San Francisco and a M.B.A. degree from Pepperdine University.
Page 15
16
Mr. Graham J. Powell was promoted to Vice President, of Worldwide Sales
in February, 1995. Prior to this promotion, he was Vice President for Sales in
Europe, Africa and the Middle East. Mr. Powell joined Digital Microwave in
Coventry, England in July 1990 as Vice President of Sales in the United Kingdom.
Previously he worked for GEC Telecommunications Ltd and was Group Marketing
Director for Vanderhoff plc. He holds a degree in Electrical Engineering from
Lanchester College.
Mr. Carl A. Thomsen joined the Company as Vice President, Chief
Financial Officer and Secretary in February, 1995. Prior to joining Digital
Microwave, he was Senior Vice President and Chief Financial Officer of Measurex
Corporation. Mr. Thomsen joined Measurex Corporation in 1983 as Corporate
Controller, was promoted to Vice President in 1986, to Vice President Finance in
1991, to Chief Financial Officer in 1992, and to Senior Vice President in 1993.
Mr. Thomsen holds a B.S. degree in Business Administration from Valparaiso
University and an MBA from the University of Michigan.
ITEM 11. EXECUTIVE COMPENSATION
The information included in the Company's Proxy Statement under the
captions "Compensation of Directors," "Executive Compensation and Other
Information," "Stock Options," "Option Exercises and Holdings" "Compensation
Committee Interlocks and Insider Participation" and "Employment and
Termination Arrangements" is incorporated by reference herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information is included in the Company's Proxy Statement under the
captions "Security Ownership of Certain Beneficial Owners and Management" and
"Employment and Termination Arrangements" is incorporated by reference herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Manufacturing and Suppliers." and Note 7 of Notes to Consolidated
Financial Statements of the Company's 1995 Annual Report incorporated herein by
reference.
Page 16
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following consolidated financial statements are contained
in the Company's fiscal 1995 Annual Report to Stockholders:
1. Consolidated Balance Sheets as of March 31,
1995 and 1994
2. Consolidated Statements of Operations for
each of the three years in the period ended
March 31, 1995
3. Consolidated Statements of Stockholders'
Equity for each of the three years in the
period ended March 31, 1995
4. Consolidated Statements of Cash Flows for
each of the three years in the period ended
March 31, 1995
5. Notes to Consolidated Financial Statements
6. Report of Independent Public Accountants
2. FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statement schedules for
each of the three years in the period ended March 31, 1994 are
submitted herewith:
II Valuation and Qualifying Accounts and
Reserves
Schedules not listed above have been omitted because they are not
applicable or required, or information required to be set forth therein is
included in the Consolidated Financial Statements, including the Notes thereto,
incorporated herein by reference.
3. EXHIBITS
The Exhibit Index begins on Page 22 hereof.
(b) No reports on Form 8-K were filed by the Registrant during the
quarter ended March 31, 1995.
(c) See Item 14 (a) 3 above.
(d) See Item 14 (a) 2 above.
Page 17
18
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.
Date: June 28, 1995.
DIGITAL MICROWAVE CORPORATION
By: /s/ Richard C. Alberding By: /s/Clifford H. Higgerson
- --------------------------------- --------------------------------
Richard C. Alberding Clifford H. Higgerson
Co-Chief Executive Officer Co-Chief Executive Officer
Page 18
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Digital Microwave
Corporation do hereby constitute and appoint Richard C. Alberding, Clifford H.
Higgerson and Carl A. Thomsen, and each of them, the lawful attorney and agent
or attorneys and agents with power and authority to do any and all acts and
things and to execute any and all instruments which said attorneys and agents,
or either of them, determine may be necessary or advisable or required to enable
Digital Microwave Corporation to comply with the Securities and Exchange Act of
1934, as amended, and any rules or regulations or requirements of the Securities
and Exchange Commission in connection with this Form 10-K Report. Without
limiting the generality of the foregoing power and authority, the powers include
the power and authority to sign the names of the undersigned officers and
directors in the capacities indicated below to this Form 10-K report or
amendment or supplements thereto, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents or either of them, shall do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney
as of the date indicated opposite his name.
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 as indicated.
Signatures Signing Capacity Date
- -----------------------------------------------------------------------------------------------------------------------
/s/ Richard C. Alberding Co-Chief Executive Officer, Director, June 28, 1995
--------------------- (Principal Executive Officer)
Richard C. Alberding
/s/ Clifford H. Higgerson Co-Chief Executive Officer, Director, June 28, 1995
---------------------- (Principal Executive Officer)
Clifford H. Higgerson
/s/ Carl A. Thomsen Vice President, Chief Financial Officer & Secretary June 28, 1995
---------------------- (Principal Financial and Accounting Officer)
Carl A. Thomsen
/s/ William E. Gibson President, DMC Telecom and Director June 28, 1995
----------------------
William E. Gibson
/s/ Jack M. Gill Director June 28, 1995
----------------------
Jack M. Gill
/s/ Billy B. Oliver Director June 28, 1995
----------------------
Billy B. Oliver
Page 19
20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To: Digital Microwave Corporation:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in Digital Microwave
Corporation's Annual Report incorporated by reference in this Form 10-K, and
have issued our report thereon dated May 8, 1995. Our audits were made for the
purpose of forming an opinion on the basic consolidated financial statements
taken as a whole. The schedule listed in item 14a(2) is the responsibility of
the Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects the
consolidated financial data required to be set forth therein in relation to the
basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
San Jose, California
May 8, 1995
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21
SCHEDULE II
DIGITAL MICROWAVE CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In thousands)
- ------------------------------------------------------------------------------------------
Balance at Charged to Balance
Beginning of Costs and Deductions/ at End
Description Period Expenses Write-off of Period
- ------------------------------------------------------------------------------------------
Year Ended March 31, 1995
Allowance for
doubtful accounts $3,240 $276 $2,103 $1,413
Year Ended March 31, 1994
Allowance for
doubtful accounts $3,067 $300 $ 127 $3,240
Accrued restructuring
charge $ 617 $ 89 $ 617 --
Year Ended March 31, 1993
Allowance for
doubtful accounts $2,430 $650 $ 13 $3,067
Accrued restructuring
charge $1,546 $ -- $ 929 $ 617
Page 21
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
3.1 Restated Certificate of Incorporation (incorporated by reference
to Exhibit 3.1 to the Company's Registration Statement on Form S-1
(File No. 33-13431) (reference is also made to Exhibit 4.2).
3.2 Amended and Restated Bylaws. (incorporated by reference to Exhibit
3.2 to the Company's Annual Report on Form 10-K for the year ended
March 31, 1993.)
4.1 Form of Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Company's Annual Report on Form 10-K for the
year ended March 31, 1988).
4.2 Rights Agreement dated as of October 24, 1991 between the Company
and Manufacturers Hanover Trust Company of California, including
the Certificate of Designations for the Series A Junior
Participating Preferred Stock (incorporated by reference to
Exhibit 1 to the Company's Current Report on 8-K filed on November
5, 1991).
10.1+ Digital Microwave Corporation 1984 Stock Option Plan, as amended
and restated on June 11, 1991. (incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form 10-K for the
year ended March 31, 1991).
10.2+ Form of Installment Incentive Stock Option Agreement (incorporated
by reference to Exhibit 28.2 to the Company's Registration
Statement on Form S-8 (File No. 33-43155).
10.3+ Form of installment Non-qualified Stock Option Agreement
(incorporated by reference to Exhibit 28.3 to the Company's
Registration Statement on Form S-8 (File No. 33-43155)).
10.4* Private Label Agreement dated January 16, 1990 between the Company
and the Network Systems Division of American Telephone & Telegraph
Company. (incorporated by reference to Exhibit 10.4 to the
Company's Annual Report on Form 10-K for the year ended March 31,
1990).
10.5 Lease of premises located at 170 Rose Orchard Way, San Jose,
California (incorporated by reference to Exhibit 10.5 to the
Company's Annual Report on Form 10-K for the year-ended March 31,
1991).
10.6 Lease of premises located at 130 Rose Orchard Way, San Jose,
California. (incorporated by reference to Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the year ended March 31,
1991).
10.7 Lease of premises located at 110 Rose Orchard Way, San Jose,
California. (incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the year ended March 31,
1991).
10.8 Microelectronics Technology, Inc. Stock Purchase Agreement dated
as of March 9, 1984 (incorporated by reference to Exhibit 10.8 to
the Company's Registration Statement on Form S-1 (File No.
33-13431).
10.9 Microelectronics Technology, Inc. Development Agreement dated as
of March 9, 1984 (incorporated by reference to Exhibit 10.8 to the
Company's Registration Statement on Form S-1 (File No. 33-13431).
10.10* Agreement dated July 17, 1990 between the Company and In-Flight
Phone Corporation. (incorporated by reference to Exhibit 10.10 to
the Company's Annual Report on Form 10-K for the year ended March
31, 1991).
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23
10.11 Form of Indemnification Agreement between the Company and its
directors and certain officers (incorporated by reference to
Exhibit 10.16 to the Company's Registration Statement on Form S-1
(File No. 33-13431).
10.12* Technology Transfer & Marketing Agreement dated October 2, 1987
between Microelectronics Technology Inc. and the Company
(incorporated by reference to Exhibit 10.17 to the Company's
Annual Report on Form 10-K for the year ended March 31, 1988).
10.13* Business Agreement dated August 28, 1987 between Sungmi Telecom
Electronics Co., Ltd. and the Company (incorporated by reference
to Exhibit 10.18 to the Company's Annual Report on Form 10-K for
the year ended March 31, 1988).
10.14* Technical License Agreement dated August 28, 1987 between Sungmi
TeleCom Electronics Co., Ltd. and the Company (incorporated by
reference to Exhibit 10.19 to the Company's Annual Report on Form
10-K for the year ended March 31, 1988).
10.15 Agreement of Purchase and Sale of Stock dates as of March 29, 1989
between Optical Microwave Networks Inc. and the Company
(incorporated by reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the year ended March 31, 1989).
10.16 Agreement of Purchase and Sale of Stock dated as of March 30, 1989
between the Company and Microelectronics Technology, Inc. (Taiwan)
and Microelectronics Technology, Inc. (USA) (incorporated by
reference to Exhibit 10.21 to the Company's Annual Report on Form
10-K for the year ended March 31, 1989).
10.17 Shareholders' Agreement of Optical Microwave Networks Inc. dated
as of March 30, 1989 (incorporated by reference to Exhibit 10.22
to the Company's Annual Report on Form 10-K for the year ended
March 31, 1989).
10.18 License Agreement dated as of March 30, 1989 among the Company,
Optical Microwave Networks, Inc., Microelectronics Technology,
Inc. (Taiwan) and Microelectronics Technology, Inc. (USA)
(incorporated by reference to Exhibit 10.23 to the Company's
Annual Report on Form 10-K for the year ended March 31, 1989).
10.19 Shareholders' Agreement of DMC TeleCom (Malaysia) Sdn.Bhd .dated
as of February 9, 1991. (incorporated by reference to Exhibit
10.19 to the Company's Annual Report on Form 10-K for the year
ended March 31, 1991).
10.20 Technology Transfer Agreement dates as of February 9, 1991 between
the Company and DMC TeleCom (Malaysia) Sdn. Bhd. (incorporated by
reference to Exhibit 10.20 to the Company's Annual Report on Form
10-K for the year ended March 31, 1991).
10.21* Teaming Agreement dated November 20, 1991 between DMC TeleCom U.K.
Ltd. and AT&T Network Systems Deutschland GmbH. (incorporated by
reference to Exhibit 10.21 to the Company's Annual Report on Form
10-K for the year ended March 31, 1992).
10.22 Loan and Security Agreement dated June 25, 1992 between the
Company and CoastFed Business Credit Corporation. (incorporated by
reference to Exhibit 10.22 to the Company's Annual Report on Form
10-K for the year ended March 31, 1992).
10.23 Accounts Collateral Security Agreement dated June 25, 1992 between
the Company and CoastFed Business Credit Corporation.
(incorporated by reference to Exhibit 10.23 to the Company's
Annual Report on Form 10-K for the year ended March 31, 1992).
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24
10.24 Letter of Credit Collateral Agreement dated June 25, 1992 between
the Company and CoastFed Business Credit Corporation.
(incorporated by reference to Exhibit 10.24 to the Company's
Annual Report on Form 10-K for the year ended March 31, 1992).
10.25 Letter Agreement dated June 23, 1993 between the Company and
CoastFed Business Credit Corporation (incorporated by reference to
Exhibit 10.25 to the Company's Annual Report on Form 10-K for the
year ended March 31, 1993).
10.26* Product Acquisition Agreement dated as of September 23, 1992
between the Company and Microelectronics Technology, Inc.
(incorporated by reference to Exhibit 10.26 to the Company's
Annual Report on Form 10-K for the year ended March 31, 1993).
10.27* Product Acquisition Agreement dated as of December 28, 1992
between the Company and Microelectronics Technology, Inc.
(incorporated by reference to Exhibit 10.27 to the Company's
Annual Report on Form 10-K for the year ended March 31, 1993).
10.28* Teaming Agreement dated as of November 16, 1993 between the
Company and Siemens AG (including the Supply Agreement dated
November 16, 1993 between Siemens AG and E-Plus Mobilfunk GmbH).
(incorporated by reference to Exhibit 10.29 to the Company's
Annual Report on Form 10-K for the year ended March 31, 1994).
10.29 Amendment to Loan Documents between the Company and CoastFed
Business Credit Corporation dated as of July 28, 1994
(incorporated by reference to Exhibit (1) to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.30 Amended and Restated Accounts and Inventory Collateral Security
Agreement between the Company and CoastFed Business Credit
Corporation dated as of July 28, 1994 (incorporated by reference
to Exhibit (2) to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994.).
10.31 Loan Agreement dated October 28, 1994 (incorporated by reference
to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1994).
10.32 Agreement on Exchange of Interim Equipment dated October 27, 1994
(incorporated by reference the Company's Quarterly Report on Form
10-Q for the quarter ended December 31, 1994).
10.33+ Digital Microwave Corporation 1994 Stock Incentive Plan.
(incorporated by reference to the Registration Statement on Form
S-8 filed with the Commission on October 17, 1994).
10.34 Loan and Security Agreement dated March 21, 1995 between the
Company and Bank of the West.
10.35 Amendment to Security Agreement dated March 31, 1995 between the
Company and Heller Financial, Inc.
13.1 Annual Report to Stockholders.
21.1 List of subsidiaries. (incorporated by reference to the Company's
1994 Annual Report on Form 10K for the year ended March 31, 1994).
23.1 Consent of Independent Public Accountants.
24.1 Power of Attorney (included on page 19 of this Annual Report on
Form 10-K).
27.1 Financial data schedule
+ Management Contract or Compensatory Plan or Arrangement.
* Confidential treatment of certain portions of this exhibit has
been requested.
Page 24