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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]
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED JUNE 29, 1997 COMMISSION FILE NO. 0-14864
LINEAR TECHNOLOGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 94-2778785
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) DENTIFICATION NO.)
1630 MCCARTHY BOULEVARD 95035-7417
MILPITAS, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 432-1900
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of
the Registrant was approximately $5,468,491,200 as of September 8, 1997, based
upon the closing sale price on the NASDAQ National Market System reported for
such date. Shares of common stock held by each officer and director and by each
person who owns 5% or more of the outstanding common stock have been excluded in
that such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.
There were 76,482,395 shares of the Registrant's common stock issued
and outstanding as of September 8, 1997.
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Items 1 and 2 of Part I, Items 5, 6, 7 and 8 of Part II, and Item 14(a)
1. of Part IV incorporate information by reference from Exhibit 13.1 to
this Form 10-K which contains certain information included in
Registrant's Annual Report to Shareholders for the fiscal year ended
June 29, 1997.
(2) Items 10, 11 and 12 of Part III incorporate information by reference
from the definitive proxy statement (the "1997 Proxy Statement") for the
Annual Meeting of Shareholders to be held on November 5, 1997.
PART I
Item 1. Business
General
Linear Technology Corporation (together with its consolidated
subsidiaries, "Linear Technology" or the "Company") designs, manufactures and
markets a broad line of standard high performance linear integrated circuits.
Applications for the Company's products include telecommunications, notebook and
desktop computers, video/multimedia, computer peripherals, cellular telephones,
industrial, automotive and process controls, network and factory automation
products and satellites. The Company was organized and incorporated in 1981 by a
management team with significant experience in the design, manufacture and
marketing of linear circuits. The Company competes primarily on the basis of
performance, functional value, quality, reliability and service.
The linear circuit industry
Semiconductor components are the electronic building blocks used in
electronic systems and equipment. These components are classified as either
discrete devices (such as individual transistors) or integrated circuits (in
which a number of transistors and other elements are combined to form a more
complicated electronic circuit). Integrated circuits ("ICs") may be divided into
two general categories, digital and linear (or analog). Digital circuits, such
as memory devices and microprocessors, generally process on-off electrical
signals, represented by binary digits, "1" and "0." In contrast, linear circuits
monitor, condition, amplify or transform continuous analog signals associated
with physical properties, such as temperature, pressure, weight, light, sound or
speed, and play an important role in bridging between real world phenomena and a
variety of electronic systems. Linear circuits also provide voltage regulation
and power control to electronic systems, especially in hand-held battery powered
systems.
According to World Semiconductor Trade Statistics, worldwide monolithic
linear integrated circuit sales, estimated to be approximately $17 billion in
1996, represent approximately 13% of the total integrated circuit market. Linear
Technology competes primarily in the non-consumer segment of the linear IC
market, which was approximately 64% of the total monolithic linear IC market for
1996.
The Company believes that several factors generally distinguish the
linear integrated circuit business from the digital circuit business, including:
Importance of Individual Design Contribution. The Company
believes that the creativity of individual design engineers is of
particular importance in the linear circuit industry. The design of a
linear integrated circuit generally involves a greater variety and
less repetition of circuit elements than digital design. In addition,
the interaction of linear circuit elements is complex, and the exact
placement of these elements in the circuit is critical to the
circuit's precision and performance. Computer-aided engineering and
design tools for linear circuits are not as accurate in modeling
circuits as those tools used for designing digital circuits. As a
result, the contributions of a relatively small number of individual
design engineers are generally of greater importance in the design of
linear circuits than in the design of digital circuits.
Smaller Capital Requirements. Digital circuit design attempts
to minimize device size and maximize speed by increasing circuit
densities. The process technology necessary for increased density
requires very expensive wafer fabrication equipment. In contrast,
linear circuit design focuses on precise matching and placement of
circuit elements, and linear circuits often require large feature
sizes to achieve precision and high voltage operation. Accordingly,
the linear circuit manufacturing process generally requires smaller
initial capital expenditures, particularly for photomasking equipment
and clean room facilities, and less frequent replacement of
manufacturing equipment because the equipment has, to date, been less
vulnerable to technological obsolescence.
Market Diversity; Relative Pricing Stability. Because of the
varied applications for linear circuits, manufacturers typically
offer a greater variety of device types to a more diverse group of
customers, who typically have smaller volume requirements per device.
As a result, linear circuit
2
manufacturers are often less dependent upon particular products or
customers, linear circuit markets are generally more fragmented, and
competition within those markets tends to be more diffused. The
Company believes that competition in the linear circuit market is
particularly dependent upon performance, functional value, quality,
reliability and service. As a result, linear circuit pricing has
generally been more stable than most digital circuit pricing.
Less Japanese And Other Asian Competition. To date, Japanese
and other Asian firms have concentrated their efforts on the high
volume digital and consumer linear markets, as opposed to the high
performance end of the linear circuit market served by the Company.
The Semiconductor Industry. The semiconductor industry is characterized
by rapid technological change, price erosion, cyclical market patterns,
occasional shortages of materials, capacity constraints, variations in
manufacturing efficiencies, and significant expenditures for capital equipment
and product development. Furthermore, new product introductions and patent
protection of existing products are critical factors for future sales growth and
sustained profitability. Although the Company believes that the high performance
segment of the linear circuit market is generally less affected by price
erosion, cyclical market patterns and significant expenditures for capital
equipment and product development than other semiconductor market sectors,
future operating results may reflect substantial period to period fluctuations
due to these or other factors.
Although the Company believes that it has the product lines,
manufacturing facilities and technical and financial resources for its current
operations, sales and profitability can be significantly affected by the above
and other factors. Additionally, the Company's common stock could be subject to
significant price volatility should sales and/or earnings fail to meet the
expectations of the investment community.
Products and markets
Linear Technology produces a wide range of products for a variety of
customers and markets. The Company emphasizes standard products to address
larger markets and to reduce the risk of dependency upon a single customer's
requirements. The Company targets the high performance segment of the linear
circuit market. "High performance" is characterized by higher precision, both
high power or micropower, higher speed, more subsystem integration on a single
chip and many other special features. The Company focuses virtually all of its
design efforts on proprietary products which, at the time of introduction, are
original designs by the Company offering unique characteristics differentiating
them from those offered by competitors. For fiscal 1997, sales of proprietary
products were approximately 93% of the Company's net sales.
Although the types and mix of linear products vary by application, the
principal product categories are as follows:
Amplifiers - These circuits amplify the voltage or output current of a
device. The amplification represents the ratio of the output voltage or current
to the input voltage or current. The most widely used device is the operational
amplifier due to its versatility and precision.
High Speed Amplifiers - These amplifiers are used to amplify signals
above 5MHz for applications such as video, fast data acquisition and data
communication.
Voltage Regulators - Voltage regulators control the voltage of a device
or circuit at a specified level. This category of product consists primarily of
two types, the linear regulator and the switch mode regulator. Switch mode
regulators are also used to convert voltage up or down within an electronic
system for power management.
Voltage References - These circuits serve as electronic benchmarks
providing a constant voltage for system usage. Precision references have a
constant output independent of input, temperature changes or time.
Interface - Interface circuits act as an intermediary to transfer
signals between or within electronic systems. These circuits are used in
computers, modems, instruments and remote data acquisition systems.
3
Data Converters - These circuits change linear (analog) signals into
digital signals, or vice versa, and are often referred to as data acquisition
subsystems, A/D converters and D/A converters. The accuracy and speed with which
the analog signal is converted to its digital counterpart is considered a key
characteristic for these devices.
Other - Other linear circuits include buffers, comparators,
sample-and-hold devices, and switched capacitor filters, which are used to limit
and/or manipulate signals in such applications as cellular telephones, base
stations, navigation system instrumentation and detection circuitry.
Linear circuits are used in various applications including:
telecommunications, notebook and desktop computers, video/multimedia, computer
peripherals, cellular telephones, industrial, automotive and process controls,
network and factory automation products and satellites. The Company focuses its
product development and marketing efforts on high performance applications where
the Company believes it can position itself competitively with respect to
product performance and functional value.
The following table sets forth, with respect to each of the market areas served
by the Company, examples of specific end applications of the Company's products.
4
Market End Applications/Products Example Product Families
- ------ ------------------------- ------------------------
----
Industrial Process Flow or rate metering |
Control Position/pressure/ |
temperature sensing and control |
Robotics |
Energy management |
Process control data communication |
Network and factory automation |
| Data acquisition products
| High performance operational
| amplifiers
| Interface (RS 485/232) products
| Instrumentation amplifiers
Instrumentation/ Curve tracers ------- Linear voltage regulators
Measurement Logic analyzers | Line drivers
EKG, CAT scanners | Line receivers
Multimeters | Precision comparators
Network analyzers | Precision voltage references
Oscilloscopes | Switched capacitor filters
Scales | Switching voltage regulators
Test equipment | Voltage references
Voltmeters |
|
|
Military/Space Communications |
Displays |
Firing control |
Ground support equipment |
Guidance control |
Radar systems |
Sonar systems |
Surveillance equipment |
Satellites ----
----
|
Telecommunications Cellular phones | DC - DC converters
Cells and basestations | V.35 transceiver
Pagers | High-speed amplifiers
Modems/fax machines | Line drivers
PBX | Line receivers
Global positioning systems | Low noise operational amplifiers
T1 telecommunication ------ Micropower products
High bit rate digital subscriber loop | Power management
Channel service unit/data service unit | Switched capacitor filters
| Voltage references
| Voltage regulators
| Data acquisition products
| Hot Swap controllers
___| Multi-protocol circuits
5
Market End Applications/Products Example Product Families
- ------ ------------------------- ------------------------
----
Computer/Data Communications/interface modems | Battery charging
Processing DC - DC converters | DC - DC converters
Disk drives | Data acquisition products
Notebook computers | Linear voltage regulators
Desktop computers | Line drivers
Monitors | Line receivers
Plotters ------ Micropower products
Printers | Precision operational amplifiers
Power supplies | Precision voltage references
Personal digital assistance systems | Switched capacitor filters
Battery chargers | Switching voltage regulators
Video/multimedia | PCMCIA power switching
_ __| Power management
Marketing and customers
The Company markets its products worldwide, primarily through a network
of independent sales representatives and electronics distributors, to a broad
range of customers in diverse industries. In certain limited geographical
markets the Company has direct sales staff. The Company sells to over 13,000
Original Equipment Manufacturer (OEM) customers, many of which purchase on an
individual purchase order basis, rather than pursuant to long-term agreements.
The Company's two largest domestic distributors accounted for 26%, 20% and 23%
of net sales for fiscal 1997, 1996 and 1995, respectively. Distributors are not
end customers, but rather serve as a channel of sale to many end users of the
Company's products. No other distributor or customer accounted for 10% or more
of net sales for fiscal 1997, 1996 or 1995.
The Company has agreements with 18 independent sales representatives in
the United States and 2 in Canada. Commissions are paid to sales representatives
upon shipments either directly from the Company or through distributors. The
Company has agreements with 6 independent distributors in the United States, 2
in Canada, 18 in Europe, 3 in Japan, 2 each in Korea, Hong Kong and Taiwan, and
1 each in Singapore, South Africa, Philipines, India, Israel and Australia. The
Company's distributors purchase the Company's products for resale to customers.
Additionally, domestic distributors often sell competitors' products. Under
certain agreements, the Company's domestic distributors are entitled to price
rebates on inventory if the Company lowers the prices of its products. The
agreements also generally permit distributors to exchange up to 5% of purchases
semi-annually. See Note 1 of Notes to Consolidated Financial Statements
incorporated by reference to Exhibit 13.1 of this Form 10-K, which contains
certain information included in the Company's 1997 Annual Report to
Shareholders.
The Company's sales organization is divided into domestic and
international regions, with sales managers based at the Company's headquarters
and in the metropolitan areas of Boston, Philadelphia, Raleigh, Chicago, Dallas,
Los Angeles, Irvine, London, Stockholm, Dusseldorf, Munich, Stuttgart, Paris,
Singapore, Tokyo, Taipei and Seoul. The Company's products typically require a
sophisticated technical sales effort.
During fiscal 1997, 1996, and 1995, export sales were primarily to
Europe, Japan and Asia and represented approximately 49%, 52%, and 49% of net
sales, respectively. Because most of the Company's export sales are billed and
payable in United States dollars, export sales are generally not directly
subject to fluctuating currency exchange rates. A strengthening of the dollar in
relation to other currencies may, however, create pricing pressure. Although
export sales are subject to certain control restrictions, including approval by
the Office of Export Administration of the United States Department of Commerce,
the Company has not experienced any material difficulties relating to such
restrictions.
The Company's backlog of released and firm orders was approximately
$67.0 million at June 29, 1997, as compared with $65.3 million at June 30, 1996.
In addition to its backlog, the Company had $25.9 million of product sold to and
held by domestic distributors at June 29, 1997 as compared to $21.4 million at
June 30, 1996. Shipments to domestic distributors are not recognized as sales
until the distributor has sold the products to its customers. The Company
expects to ship virtually all of its backlog as of June 29, 1997 prior to June
28, 1998. The Company defines backlog as consisting of distributor stocking
orders and OEM orders for which a delivery schedule
6
has been specified by the OEM customer for product shipment. Although the
Company receives volume purchase orders, most such purchase orders are
cancelable by the customer without significant penalty. Lead time for the
release of purchase orders depends upon the scheduling practices of the
individual customer, so the rate of booking new orders varies from month to
month. The ordering practices of many semiconductor customers has shifted from a
practice of placing orders with delivery dates extending over several months to
the practice of placing orders with shorter delivery dates. Also, the Company's
agreements with certain distributors provide for limited price protection.
Consequently, the Company does not believe that its backlog at any time is
necessarily representative of actual sales for any succeeding period.
In the operating history of the Company, seasonality of business has
not been a material factor, although the results of operations for the first
fiscal quarter of each year are impacted slightly by customary summer holidays,
particularly in Europe.
The Company warrants that its products, until they are incorporated in
other products, are free from defects in workmanship and materials and conform
to the Company's published specifications. Warranty expense has been nominal to
date.
Manufacturing
The Company's wafer fabrication and manufacturing facilities are
located at its headquarters in Milpitas, California, and at its new wafer
fabrication plant in Camas, Washington. Each facility was built to Company
specifications to support a number of sophisticated process technologies and to
satisfy rigorous quality assurance and reliability requirements of United States
military specifications and major worldwide OEM customers. The Milpitas and
Singapore manufacturing facilities have received ISO9001 and ISO9002
certification, respectively.
The Company's new wafer fabrication facility located in Camas,
Washington commenced manufacturing operations in the second half of fiscal 1997.
The Camas wafer fabrication facility is used to produce six-inch diameter wafers
for use in the production of the Company's devices; the Company's Milpitas wafer
fabrication plant produces four-inch diameter wafers. The Company currently uses
similar manufacturing processes in both its Milpitas and Camas facilities. The
Company intends to expand the manufacturing capacity of the Camas facility as
needed to meet its future wafer requirements.
The Company's basic process technologies include high speed bipolar,
high gain, low noise bipolar, silicon gate complementary metal-oxide
semiconductor ("CMOS") and BiCMOS processes. The Company also has two
proprietary complementary bipolar processes. The Company's bipolar processes are
typically used in linear circuits where high voltages, high power, low noise or
effective component matching is necessary. The Company's proprietary silicon
gate CMOS processes provide switch characteristics required for many linear
circuit functions, as well as an efficient mechanism for combining linear and
digital circuits on the same chip. The Company's CMOS processes were developed
to address the specific requirements of linear circuit functions. The
complementary bipolar processes were developed to address higher speed analog
functions. The Company's basic processes can be combined with a number of
adjunct processes to create a diversity of IC components. The accompanying chart
provides a brief overview of the Company's IC process capabilities:
7
PROCESS CAPABILITIES
Process Families Benefit/Market Advantage Product Application
- ---------------- ------------------------ -------------------
P-Well SiGate CMOS General purpose, stability Switches, filters, data conversion,
chopper amplifiers
N-Well SiGate CMOS Speed, density, stability Switches, data conversion
BICMOS Speed, density, stability, flexibility Data conversion
High Power Bipolar Power (100 watts), high current Linear and smart power products,
(10 amps) switching regulators
Low Noise Bipolar Precision, low current, low noise, Op amps, voltage references
high gain
High Speed Bipolar Fast, wideband, video high data Op amps, video, comparators,
rate switching regulators
JFETS Speed, precision, low current Op amps, switches, sample and
hold
Rad - Hard Total dose radiation hardened All space products
Complementary Bipolar Speed, low distortion, precision Op amps, video amps, converters
CMOS/Thin Films Stability, precision Filters, data conversion
High Voltage CMOS High voltage general-purpose, Switches, chopper amplifiers
compatible with Bipolar
Bipolar/Thin Films Precision, stability, matching Converters, amplifiers
The Company emphasizes quality and reliability from initial product
design through manufacturing, packaging and testing. The Company's design team
focuses on fault tolerant design and optimum location of circuit elements to
enhance reliability. Linear Technology's wafer fabrication facilities have been
designed to minimize wafer handling and the impact of operator error through the
use of microprocessor-controlled equipment. In 1984, the Company obtained
Defense Electronics Supply Center (DESC) qualification to participate in high
reliability JAN38510 (class B) military business. In 1987, the Company received
Jan Class S Microcircuit Certification, which enables the Company to manufacture
products intended for use in space or for critical applications where
replacement is extremely difficult or impossible and where reliability is
imperative.
In 1993, the Company was certified to comply with the ISO9001
international quality standard. This certification covers the Company's design,
manufacturing and service organizations and is an important standard especially
in the European marketplace. In 1994, the Company received transitional approval
for MIL-PRF-38535 QML (Qualified Manufacturers Listing) from DESC.
Processed wafers are sent to either the Company's assembly facility in
Penang, Malaysia or to offshore independent assembly contractors where the
wafers are separated into individual circuits and packaged. The Penang facility
opened in October 1994 and services approximately two-thirds of the Company's
assembly requirements for plastic packages. Significant assembly subcontractors
used by the Company are Carsem(M) Sdn, Carsem Semiconductor Sdn and Unisem(M)
Sdn in Malaysia, Anam Industrial Co. and Team Pacific in the Philippines, and
IEPS in Bangkok. The Company also maintains domestic assembly operations to
satisfy particular
8
customer requirements, especially those for military applications, and to
provide rapid turnaround for new product development.
After assembly, most products are sent to the Company's Singapore
facility for final testing, inspection and packaging as required. Some products
are returned to Milpitas for the same back-end processing.
Linear Technology from time to time has experienced competition from
other manufacturers seeking assembly of circuits by independent contractors. The
Company currently believes that alternative foreign assembly sources could be
obtained without significant interruption. Foreign assembly is subject to risks
normally associated with foreign operations, including changes in local
governmental policies, currency fluctuations, transportation delays and the
imposition of export controls or increased import tariffs.
From time to time certain materials, including silicon wafers and
plastic molding compounds, have been in short supply. To date the Company has
experienced no delays in obtaining raw materials which have adversely affected
production. As is typical in the industry, the Company must allow for
significant lead times in delivery of its materials.
Manufacturing of individual products, from wafer fabrication through
final testing, may take from ten to sixteen weeks. Since the Company sells a
wide variety of device types, and customers typically expect delivery of
products within a short period of time following order, the Company maintains a
substantial work-in-process and finished goods inventory.
Based on its anticipated production requirements, the Company believes
it will have sufficient available resources and manufacturing capacity for
fiscal 1998.
Patents, licenses and trademarks
The Company has been awarded 82 United States patents, and has filed 56
additional patent applications. Although the Company believes that these patents
and patent applications may have value, the Company's future success will depend
primarily upon the technical abilities and creative skills of its personnel,
rather than on its patents.
As is common in the semiconductor industry, the Company has at times
been notified of claims that it may be infringing patents issued to others. If
it appears necessary or desirable, the Company may seek licenses under such
patents, although there can be no assurance that all necessary licenses can be
obtained by the Company on acceptable terms.
In addition, from time to time the Company may negotiate with other
companies to license patents, products or process technology for use in its
business.
Government sales
The Company currently has no material U.S. Government contracts.
Competition
Linear Technology competes in the high performance segment of the
linear market. Competition among manufacturers of linear integrated circuits is
intense, and many of the Company's competitors, including Analog Devices, Inc.,
Motorola, Inc., National Semiconductor Corporation and Texas Instruments, Inc.,
may have significantly greater financial, technical, manufacturing and marketing
resources than the Company. The principal elements of competition include
product performance, functional value, quality and reliability, technical
service and support, price, diversity of product line and delivery capabilities.
The Company believes it competes favorably with respect to these factors,
although it may be at a disadvantage in comparison to larger companies with
broader product lines and greater technical service and support capabilities.
9
Research and development
The Company's ability to compete depends in part upon its continued
introduction of technologically innovative products on a timely basis. Linear
Technology's product development strategy emphasizes a broad line of standard
products to address a diversity of customer applications. The Company's research
and development efforts are directed primarily at designing and introducing new
products and, to a lesser extent, developing new processes and advanced
packaging.
As of June 29, 1997, the Company had 137 employees engaged in new
product design at its Milpitas facility. In addition, at fiscal year end, the
Company had 12 employees at its Singapore design center, 15 employees at its
Boston design center and 6 employees at its new Colorado design center opened in
fiscal 1997.
For the fiscal years 1997, 1996, and 1995, the Company spent
approximately $35.4 million, $31.1 million and $23.9 million, respectively, on
research and development.
Environmental regulation
Federal, state and local regulations impose various environmental
controls on the storage, use, discharge and disposal of certain chemicals and
gases used in semiconductor processing. The Company's facilities have been
designed to comply with these regulations, and the Company believes that its
activities conform to present environmental regulations. Increasing public
attention has, however, been focused on the environmental impact of electronics
manufacturing operations. While the Company to date has not experienced any
materially adverse business effects from environmental regulations, there can be
no assurance that changes in such regulations will not require the Company to
acquire costly remediation equipment or to incur substantial expenses to comply
with such regulations. Any failure by semiconductor companies, including the
Company, to control the storage, use or disposal of, or adequately restrict the
discharge of hazardous substances could also subject them to significant
liabilities.
Employees
As of June 29, 1997, the Company had 1,804 employees, including 136 in
marketing and sales, 372 in research, development and engineering related
functions, 1,226 in manufacturing and production, and 70 in management,
administration and finance. The Company's success depends upon a number of key
employees, the loss of whom could adversely impact the Company. The Company
believes that its future success will depend in large part upon its ability to
attract, retain and motivate highly skilled employees. In the San Jose/Silicon
Valley area, where the Company's principal facilities are located, competition
for such employees is intense.
The Company has never had a work stoppage, no employees are represented
by a labor organization, and the Company considers its employee relations to be
good.
Executive Officers of the Registrant
The executive officers of the Company, and their ages as of June 29,
1997, are as follows:
Name Age Position
- ---- --- --------
Robert H. Swanson, Jr........... 58 President, Director and Chief Executive Officer
Paul Chantalat.................. 47 Vice President Quality and Reliability
Paul Coghlan.................... 52 Vice President of Finance and Chief Financial Officer
Timothy D. Cox.................. 49 Vice President of North American Sales
Clive B. Davies................. 54 Vice President and Chief Operating Officer
Robert C. Dobkin................ 53 Vice President of Engineering
Sean T. Hurley.................. 59 Vice President of Operations
Louis Di Nardo.................. 38 Vice President of Marketing
Hans J. Zapf.................... 57 Vice President of International Sales
Arthur F. Schneiderman.......... 55 Secretary
10
Mr. Swanson, a founder of the Company, has served as President, Chief
Executive Officer and a director of the Company since its incorporation in
September 1981. From August 1968 to July 1981, he was employed in various
positions at National Semiconductor Corporation ("National"), a manufacturer of
integrated circuits, including Vice President and General Manager of the Linear
Integrated Circuit Operation and Managing Director in Europe. Mr. Swanson has a
BS degree in Industrial Engineering from Northeastern University.
Mr. Chantalat has served as Vice President of Quality and Reliability
since July 1991. From January 1989 to July 1991, he held the position of
Director of Quality and Reliability. From July 1983 to January 1989 he held the
position of Manager of Quality and Reliability. From February 1976 to July 1983,
he was employed in various positions at National, where his most recent position
was Group Manager of Manufacturing Quality Engineering. Mr. Chantalat received a
BS and an MS in Electrical Engineering from Stanford University in 1970 and
1972, respectively.
Mr. Coghlan has served as Vice President of Finance and Chief Financial
Officer of the Company since December 1986. From October 1981 until joining the
Company, he was employed in various positions at GenRad, Inc., a manufacturer of
automated test equipment, including Corporate Controller, Vice President of
Corporate Quality and most recently Vice President and General Manager of the
Structural Test Products Division. Before joining GenRad, Inc., Mr. Coghlan was
associated with Price Waterhouse & Company in the United States and Paris,
France for twelve years. Mr. Coghlan received a BA from Boston College in 1966
and an MBA from Babson College in 1968.
Mr. Cox was appointed Vice President of North American Sales in July
1991. From February 1991 to July 1991 he held the position of Director of
National Sales. From January 1990 to February 1991, and February 1983 to October
1987 he was employed at National where his most recent position was Director of
Northwestern Sales. From October 1987 to June 1989, he was Vice President of
Sales for Micro Linear. Prior to 1983, Mr. Cox was employed for seven years as
Vice President & Principal of Micro Sales Inc. Mr. Cox received a BSEE in 1970
from Valparaiso Technical Institute, Valparaiso, Indiana.
Dr. Davies has served as Vice President and Chief Operating Officer
since January 1989. From July 1982 to January 1989, Dr. Davies held the position
of Vice President of Quality, Reliability and Customer Service. From April 1971
to July 1982, he was employed in various positions at National, including Group
Director for Advanced Technology, Group Managing Director of the Singapore and
Hong Kong Manufacturing Operations and Business Director of Standard Linear
Integrated Circuit Operations. Dr. Davies received a B.Sc. (Honors) in Physics
in 1964 and a Ph.D. in Physics in 1967 from the University of Reading, England.
Mr. Dobkin, a founder of the Company, has served as Vice President of
Engineering since its incorporation in September 1981. From January 1969 to July
1981, he was employed in various positions at National, where his most recent
position was Director of Advanced Circuit Development. Mr. Dobkin has extensive
experience in linear circuit design. Mr. Dobkin attended the Massachusetts
Institute of Technology.
Mr. Hurley has served as Vice President of Operations since January
1989. From January 1973 to January 1989 he was employed in various positions at
National, most recently as Director of Linear Operations. Before joining
National, Mr. Hurley was Director of European Operations for Applied Materials,
Inc. Mr. Hurley received a B.S. in Chemistry in 1961 and an M.S. in Solid State
Physics in 1965 from the University of London.
Mr. Di Nardo was appointed Vice President of Marketing in January,
1997. Prior to this appointment he held the position of Manager of North America
Distribution since 1992. Previously he held several management positions in the
northeastern United States since joining the Company in 1988. From 1981 to 1988,
Mr. Di Nardo held several sales management positions in the mid-Atlantic states
area with Analog Devices, Inc. Mr. Di Nardo received a B.S. degree from Ursinus
College, Pennsylvania in 1981.
Mr. Zapf was appointed Vice President of International Sales in July
1991. From June 1982 to July 1991, he was Director of International Marketing
and Sales. From September 1972 to June 1982, Mr. Zapf was with Teledyne
Semiconductor where he held several management positions in Europe and the
United States including Vice President of Marketing and Sales. Prior to
September 1972, Mr. Zapf worked as a designer for Brown Boveri in Switzerland.
Mr. Zapf holds an MSEE degree from Zurich University.
11
Mr. Schneiderman has served as Secretary of the Company since September
1981. He is an attorney and a member of the law firm of Wilson, Sonsini,
Goodrich & Rosati, Professional Corporation, general counsel to the Company.
Item 2. Properties
In Milpitas, California, the Company owns the land and a building
totaling approximately 40,600 square feet used for its four-inch wafer
fabrication lines and adjunct support services. The Company leases two other
buildings in the same business complex: a 43,000 square foot building used for
testing, shipping and administration, and a 60,000 square foot building used to
house circuit design activities and regional staff. During fiscal 1996, the
Company purchased neighboring land and two buildings totaling approximately
57,000 square feet that it had previously leased. The Company demolished the
existing buildings and intends to construct a new administration building on
this land in fiscal 1998.
The Company occupies a 72,000 square foot manufacturing facility in
Singapore. Test and packaging operations are performed at this facility along
with certain design and product distribution activity. The Company has a 30-year
lease on the land where the plant is located that commenced in 1994, with an
option to extend for an additional 30 years.
In 1994, the Company opened a 55,000 square foot assembly plant in
Penang, Malaysia. The Company has a 60-year lease on the land where the plant
was constructed.
During fiscal 1996, the Company completed construction of a new 60,000
square foot facility on land it owns in Camas, Washington. This facility is used
to fabricate six-inch wafers. Manufacturing operations commenced at this
facility in the second half of fiscal 1997.
The Company leases design facilities located in Colorado Springs,
Colorado and the metropolitan area of Boston, Massachusetts. The Company also
leases sales offices in the areas of Boston, Philadelphia, Raleigh, Chicago,
Dallas, San Jose, Los Angeles, Irvine, London, Stockholm, Dusseldorf, Munich,
Stuttgart, Paris, Tokyo, Taipei and Seoul. See Note 3 of Notes to Consolidated
Financial Statements incorporated by reference to Exhibit 13.1 of this Form 10-K
which contains certain information included in the Company's 1997 Annual Report
to Shareholders.
Item 3. Legal Proceedings
The Company is involved in various legal actions arising in the
ordinary course of business. While the outcome of such matters is uncertain, the
Company believes that these matters will not have a material adverse effect on
the Company's financial condition or results of operations.
Item 4. Submission of Matter to a Vote of Security Holders
Not applicable.
12
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The information required by the Item is incorporated by reference to
the section entitled "Quarterly Results and Stock Market Data" of Exhibit 13.1
to this Form 10-K which contains certain information included in the
Registrant's 1997 Annual Report to Shareholders.
Item 6. Selected Financial Data
The information required by the Item is incorporated by reference to
the section entitled "Selected Financial Information/Five-Year Trend" of Exhibit
13.1 to this Form 10-K which contains certain information included in the
Registrant's 1997 Annual Report to Shareholders.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by the Item is incorporated by reference to
the section entitled "Management's Discussion and Analysis of Results of
Operations and Financial Condition" of Exhibit 13.1 to this Form 10-K which
contains certain information included in the Registrant's 1997 Annual Report to
Shareholders.
Item 8. Financial Statements and Supplementary Data
Consolidated Financial Statements of Linear Technology at June 29, 1997
and June 30, 1996 and for each of the three years in the period ended June 29,
1997, the report of Ernst & Young LLP, independent auditors, thereon and
unaudited quarterly financial data for the two year period ended June 29, 1997
are incorporated by reference to Exhibit 13.1 of this Form 10-K which contains
certain information included in the Registrant's 1997 Annual Report to
Shareholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
13
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this item for the Company's directors is
incorporated by reference to the 1997 Proxy Statement, under the caption
"Election of Directors," and for the executive officers of the Company, the
information is included in Part I hereof under the caption "Executive Officers
of the Registrant."
Item 11. Executive Compensation
Incorporated by reference to the 1997 Proxy Statement, the section
titled "Executive Compensation."
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference to the 1997 Proxy Statement, the section
titled "Record Date and Voting Securities" and the section titled "Security
Ownership."
Item 13. Certain Relationships and Related Transactions
Not applicable.
14
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K
(a) 1. Financial Statements
The financial statements listed in the accompanying Index to
Consolidated Financial Statements are filed as part of this Annual
Report.
2. Schedules
The financial statement schedule listed in Item 14(d) is filed
as part of this Annual Report.
All other schedules are omitted since the information required
by the schedule is not applicable, or is not present in amounts
sufficient to require submission of the schedule, or because the
information required is included in the Consolidated Financial
Statements and notes thereto.
3. Exhibits
The exhibits listed in Item 14(c) are filed as part of this
Annual Report. Each compensatory plan required to be filed has been
indicated in Item 14(c).
(b) Reports on Form 8-K.
None
(c) Exhibits
3.1 Articles of Incorporation of Registrant, as amended.(1)
3.3 Bylaws of Registrant, as amended.(3)
10.1 1981 Incentive Stock Option Plan, as amended, and form of Stock Option
Agreements, as amended (including Restricted StockPurchase
Agreement).(*)(5)
10.11 Agreement to Build and Lease dated January 8, 1986 between
Callahan-Pentz Properties, McCarthy Six and the Registrant.(2)
10.25 1986 Employee Stock Purchase Plan, as amended, and form of Subscription
Agreement.(*)(4)
10.35 1988 Stock Option Plan, as amended, form of Incentive Stock Option
Agreement, as amended, and form of Nonstatutory Stock Option Agreement,
as amended.(*)(8)
10.36 Form of Indemnification Agreement.(3)
10.45 Land lease dated March 30, 1993 between the Registrant and the
Singapore Housing and Development Board.(6)
10.46 Land lease dated November 20, 1993 between the Registrant and the
Penang Development Corporation.(7)
10.47 1996 Incentive Stock Option Plan, form of Incentive Stock Option
Agreement and form of Nonstatutory Stock Option Agreement.(*)(9)
10.48 1996 Senior Executive Bonus Plan.(*)(9)
15
13.1 Certain information included in the Registrant's Annual Report to
Shareholders for the fiscal year ended June 29, 1997.
21.1 Subsidiaries of Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors. (see page 21)
24.1 Power of Attorney. (see page 18)
27.1 Financial Data Schedule.
(d) Financial Statement Schedule filed as a part of this Annual Report is
listed below:
Schedule
Number Description
- ------ -----------
II Valuation and qualifying accounts.
- --------------------------------------------------------------------------------
(Footnotes to Item 14 (c))
(*) The item listed is a compensatory plan of the Company.
(1) Incorporated by reference to identically numbered exhibit filed in
response to Item 14(a)(3) "Exhibits," of the Company's Annual Report on
Form 10-K for the fiscal year ended July 2, 1995.
(2) Incorporated by reference to identically numbered exhibits filed in
response to Item 16(a), "Exhibits," of the Registrant's Registration
Statement on Form S-1 and Amendment No. 1 and Amendment No. 2 thereto
(File No. 33-4766), which became effective on May 28, 1986.
(3) Incorporated by reference to identically numbered exhibit filed in
response to Item 6, "Exhibits and Reports on Form 8-K," of the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
October 2, 1988.
(4) Incorporated by reference to identically numbered exhibit filed in
response to Item 6, "Exhibits and Reports on Form 8-K," of the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990.
(5) Incorporated by reference to identically numbered exhibit filed in
response to Item 6, "Exhibits and Reports on Form 8-K," of the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 30, 1990.
(6) Incorporated by reference to identically numbered exhibit filed in
response to Item 14(a)(3) "Exhibits," of the Registrant's Annual Report
on Form 10-K for the fiscal year ended June 27, 1993.
(7) Incorporated by reference to identically numbered exhibit filed in
response to Item 14(a)(3) "Exhibits," of the Registrant's Annual Report
on Form 10-K for the fiscal year ended July 3, 1994.
(8) Incorporated by reference to identically numbered exhibit filed in
response to Item 6, "Exhibits and Reports on Form 8-K," of the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
October 2, 1994.
(9) Incorporated by reference to identically numbered exhibit filed in
response to Item 6, "Exhibits and Reports on Form 8-K," of the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 29, 1996.
16
LINEAR TECHNOLOGY CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
(Item 14(a)1)
Page Reference to
Exhibit 13.1
Consolidated balance sheets at June 29, 1997 and June 30, 1996 E13.1-7
Consolidated statements of income for each of the three
years in the period ended June 29, 1997 E13.1-6
Consolidated statements of shareholders' equity for each of
the three years in the period ended June 29, 1997 E13.1-9
Consolidated statements of cash flows for each of the three
years in the period ended June 29, 1997 E13.1-8
Notes to consolidated financial statements E13.1-10 to
E13.1-15
Report of Ernst & Young LLP, independent auditors E13.1-16
The Consolidated Financial Statements listed in the above index are
hereby incorporated by reference to Exhibit 13.1 of this Form 10-K which
contains certain information included in the Registrant's Annual Report to
Shareholders for the year ended June 29, 1997.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LINEAR TECHNOLOGY CORPORATION
-----------------------------
(Registrant)
By: /s/ Robert H. Swanson, Jr.
------------------------------
Robert H. Swanson, Jr.
President and Chief
Executive Officer
September 22, 1997
POWER OF ATTORNEY
Know all persons by these presents, that each person whose signature
appears below constitutes and appoints Robert H. Swanson, Jr. and Paul Coghlan,
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Report on Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Robert H. Swanson, Jr. /s/ Paul Coghlan
- -------------------------- ----------------
Robert H. Swanson, Jr. Paul Coghlan
President and Chief Executive Vice President of Finance and Chief
Officer (Principal Executive Financial Officer (Principal Financial
Officer) and Director Officer and Principal Accounting Officer)
September 22, 1997 September 22, 1997
/s/ David S. Lee /s/ Thomas S. Volpe
- ---------------- -------------------
David S. Lee Thomas S. Volpe
Director Director
September 22, 1997 September 22, 1997
/s/ Leo T. McCarthy /s/ Richard M. Moley
- ------------------- --------------------
Leo T. McCarthy Richard M. Moley
Director Director
September 22, 1997 September 22, 1997
18
SCHEDULE II
LINEAR TECHNOLOGY CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Additions
Balance at Charged to Balance at
Beginning Costs and End of
of Period Expenses Deductions(1) Period
--------- -------- ------------- -------
Allowance for doubtful accounts:
Year ended July 2, 1995 ............ $550 $181 $ 3 $728
==== ==== ==== ====
Year ended June 30, 1996 ........... $728 $ 60 $ 12 $776
==== ==== ==== ====
Year ended June 29, 1997 ........... $776 $ 30 $ 3 $803
==== ==== ==== ====
(1) Write-offs of doubtful accounts.
19