-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OGeGFIXCZBCo0V+tdSAnv11r4L4H+5leHFiQU5/noaGemcD0/MFIMFUbHgdmJ5rQ ZNZhssApNdAHjyLXJ0jpPA== 0000004427-96-000006.txt : 19960326 0000004427-96-000006.hdr.sgml : 19960326 ACCESSION NUMBER: 0000004427-96-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19951229 FILED AS OF DATE: 19960325 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMDAHL CORP CENTRAL INDEX KEY: 0000004427 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 941728548 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07713 FILM NUMBER: 96537843 BUSINESS ADDRESS: STREET 1: 1250 E ARQUES AVE CITY: SUNNYVALE STATE: CA ZIP: 94088 BUSINESS PHONE: 4087466000 MAIL ADDRESS: STREET 1: 1250 E ARQUES AVE CITY: SUNNYVALE STATE: CA ZIP: 94088 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 1995 Commission file number 1-7713 A M D A H L C O R P O R A T I O N (Exact name of registrant as specified in its charter) Delaware 94-1728548 (State of incorporation) (I.R.S. Employer Identification No.) 1250 East Arques Avenue Sunnyvale, California 94088-3470 (Address of principal (Zip Code) executive offices) Registrant's telephone number: (408) 746-6000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of class which registered common stock American Stock Exchange, Inc. par value of $.05 London Stock Exchange per share Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x] 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 [ ] Aggregate market value of the registrant's common stock held by non-affiliates, based on the closing sales price on March 4, 1996: $ 559,068,501. Number of shares of common stock, par value of $.05 per share, outstanding as of March 4, 1996: 119,774,909. DOCUMENTS INCORPORATED BY REFERENCE The following documents are incorporated by reference in those parts of this Annual Report on Form 10-K as set forth below, but only to the extent specifically stated in such parts: (1) Portions of Registrant's Annual Report to Stockholders for the fiscal year ended December 29, 1995 (the "Annual Report") into Parts I and II; and (2) Portions of Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders scheduled to be held on May 2, 1996 (the "Proxy Statement") into Part III. PART I ITEM 1. BUSINESS General Amdahl Corporation ("Amdahl" or the "Company"), organized in 1970, provides large-scale, high performance, general-purpose computer systems and related storage products which are architecturally compatible at specific software and hardware interface levels with the basic functions of competing IBM systems. The Company also offers client-server computer and storage systems for the open systems marketplace. In addition, the Company provides equipment maintenance, professional and consulting services and software products for both the IBM compatible and open systems marketplace. Amdahl's customer base is diversified and includes large corporations, financial institutions, public utilities, government agencies and universities. Since its first product shipment of IBM compatible processors in June 1975, the Company has continued to introduce new and more powerful computer systems. In December 1991 Amdahl began initial shipments of the most current of these systems, the 5995M series. In 1994 Amdahl began delivery of the highest performance models in this series, its ten-way and twelve-way processors, as well as new models of storage products. In late 1993, the Company also began delivery of high performance servers for the open systems market pursuant to a reseller agreement with Sun Microsystems. The Company has announced its intention to begin delivery during the latter half of 1996 of its new IBM compatible mainframe systems, utilizing for the first time lower cost CMOS technology, as well as new IBM compatible storage systems. In addition to its computer and storage systems offerings, Amdahl offers maintenance and other related operational services, consulting and professional services and a variety of software products. During the first half of 1995, the Company acquired Dalworth Holdings, Inc., a provider of multi-vendor hardware maintenance services, as part of its plan to expand its maintenance and related operational services offerings. In August 1995, Amdahl and British Gas PLC formed a joint venture company, in which Amdahl holds a majority position, for the purpose of providing programming and other professional services to the public utility sector in the United Kingdom; and in November 1995, the Company completed the acquisition of DMR Group Inc. based in Montreal, Quebec, Canada, a major provider of professional and consulting services in a number of important international markets. Huron ObjectStar, a comprehensive applications development and production system, is the Company's principal software product. In late 1995 the newest version of this software was released and is intended to expand Huron ObjectStar's use and availability across a wide range of computing environments. In addition, the Company offers UTS, a Unix based operating system for IBM compatible mainframes, and the A+ family of performance and productivity tools intended primarily for the open systems environment. The Company is organized along lines of business consisting of its Enterprise Computing Group, including its compatible processor, storage, maintenance and other hardware related services operations; consulting and professional services (for which DMR Group Inc. is the principal operational unit); Antares Alliance Group which develops and markets Huron ObjectStar and other software applications and Open Enterprise Systems operations. The overall focus of this organizational structure is to enable the Company to offer to its primary customers a comprehensive set of product and service offerings which will meet their enterprise wide data processing requirements. The Company intends to continue to enhance the scope of these offerings and to enter into partnerships and alliances with other companies as a way of expanding its existing product offerings and developing new products and services. Until its professional services, Huron ObjectStar and open systems offerings are more fully developed, however, the compatible processor business, including its related maintenance service and storage components, will continue to be the primary source of the Company's revenues. Fujitsu Limited ("Fujitsu"), a major Japanese manufacturer of computer systems, telecommunications equipment and electronic components, owns approximately 43% of the Company's outstanding common stock and is of substantial importance to the Company in the areas of manufacturing and technical assistance and supply of subsystems and components. Fujitsu also manufactures the Company's principal storage products. In November 1993 Amdahl and Fujitsu entered into an agreement pursuant to which Amdahl and Fujitsu would participate in the joint development of the Company's next generation of compatible mainframes. Under the agreement, Fujitsu will undertake primary responsibility for the design and manufacture of these systems. Because of Amdahl's increased dependence on Fujitsu as its supplier of future large-scale compatible processors and Fujitsu's participation with the Company in certain other ongoing research and development activities, the ability to negotiate favorable pricing terms with respect to future product requirements and to maintain a satisfactory working relationship are important. Marketing The Company markets its products and services directly through its sales force to customers in the United States, Canada, Europe and Asia Pacific, through Fujitsu in Brazil, Japan, Malaysia and Spain and through other distributors in Indonesia, Saudi Arabia, Latin America and Korea. In 1995 approximately 42% of Amdahl's revenues were from international operations. The Company offers its products for sale and lease. For further information on leasing see "Note 4 - Equipment Leasing and Third Party Transactions" of the Annual Report. Service for Amdahl products is provided under service and parts warranty or separate maintenance agreements. For further information on warranties, see "Note 1 - Summary of Accounting Practices" of the Annual Report. While it may receive "letters of intent" and "orders" from potential customers for its large-scale systems, typically the Company does not have a firm contract with a customer until shortly before shipment. In addition, the Company in many cases will permit cancellation of an order without charge at any time until actual delivery, which is common practice in the industry. For these reasons, the Company does not believe indications of customer interest and "orders" constitute a firm "backlog" and believes that a disclosure of a value of unfilled orders is not a meaningful indicator of revenues nor material to an understanding of its business. Major Customer Information and Geographic Area Data The information under "Note 9 - Major Customer, Geographic Area, and Product Line Data" of the Annual Report is incorporated by reference. Competition The principal segment of the data processing industry in which the Company competes remains the highly competitive mainframe computer system and related storage products and services segment. Amdahl markets its products in competition with several major multinational companies with substantial resources. IBM is Amdahl's principal competitor and is dominant in this segment of the computer industry. Competition is based primarily on price and performance, product enhancements and new product development, and customer service and support. However, price/performance relationships can change as new models or enhancements to existing models are introduced and as prices change. The financial strength and long-term viability of the supplier are also important. IBM competitive actions in the large-scale computer market and related submarkets have historically taken the form of price reductions and shortened product life cycles. As a result, selling prices and residual values of large-scale computer systems have declined substantially over time. Moreover, because nearly all compatible mainframes operate under the control of IBM operating system software, the ability of IBM to extend favorable licensing terms to purchasers of competing IBM hardware systems frequently requires Amdahl to offer substantial discounts on its own systems in order to compensate for the effect of such licensing terms. Also, the continuing introduction by IBM of certain product modifications requires that Amdahl make comparable changes to remain fully compatible. The growth in the market for large-scale computers has been affected by rapid technological changes in recent years which have enabled smaller, less costly computer systems to compete for the development of application programs historically run in mainframe environments. The areas into which the Company has diversified its product, software and service offerings are also intensely competitive. Competitors include both highly specialized companies as well as fully integrated vendors such as IBM, Digital Equipment Corporation and Hewlett-Packard Company. New computer products, particularly in the open systems marketplace, are subject to rapid technological changes, short product life cycles, frequent product enhancements and price reductions. For software products, ease of use, product reliability, quality of technical support and product capabilities are important. Strength of distribution channels and brand name recognition are also of great importance. While the Company believes that it can compete successfully in its established and newer areas of business, each of the Company's businesses remains subject to inherent risks and uncertainties. The introduction of new hardware products is always subject to technological risks which can have a significant impact on product reliability and performance, as well as on the timing of when such products become available, notwithstanding planned or announced introduction dates. Moreover, the ability to deliver new products with their attendant functional capabilities can also impact product acceptance. Development of major software systems quite commonly is subject to schedule delays and it is not uncommon for product deficiencies and reliability problems to be recognized after product delivery to a number of installations. Product reliability problems, in the case of both hardware and software systems, can place added costs and burdens on existing support staff and can also adversely impact the completion of follow on projects. Organizations which grow through acquisitions or joint venturing arrangements with other companies may be unable to realize expected synergies which can adversely affect planned financial performance. Professional and consulting services organizations are highly dependent on the skill of their personnel and their ability to both retain such personnel and to experience high levels of utilization. Finally, the market for the Company's products and services can be subject to sudden and unexpected changes in demand due to actions of the Company's competitors as well as changes in general economic conditions which can often cause customers to defer or cancel major product acquisitions or project expenditures. For further discussion of competitive conditions, see "Management's Discussion & Analysis - Results of Operations and Factors That May Affect Future Operating Results" of the Annual Report. Manufacturing Amdahl manufactures its computers in Sunnyvale, California. Major subsystems and components used in its computers are manufactured by Amdahl as well as by Fujitsu. As part of prior years' restructuring programs, Amdahl has significantly reduced its manufacturing capacity, partly to address the less than expected levels of business in the large-scale mainframe market and in anticipation of greater dependence on Fujitsu for the supply of future mainframe products. Amdahl purchases under contracts with Fujitsu certain subassemblies and substantially all of its large-scale integrated semiconductor components and high-density printed circuit boards. Its primary products are manufactured by Fujitsu to Amdahl specifications. While the Company seeks to identify qualified second sources of supply and to maintain adequate inventories, it may have only one source of supply for certain critical components, and material interruptions in product shipments could occur if those components were unavailable for a period of time. In addition, if for a substantial period Fujitsu failed to deliver subassemblies, direct-access storage devices or certain other equipment as required under manufacturing agreements with Amdahl, or should Fujitsu fail to meet development or manufacturing schedules for future mainframe and storage products, serious interruptions to the Company's delivery schedules would occur, which would have a material adverse effect on the Company. The current supply agreements between Amdahl and Fujitsu generally provide for fixed U.S. dollar prices so long as the U.S.-Japanese currency exchange rate remains within a specified range. If the exchange rate fluctuates outside of this range, prices are to be adjusted pursuant to a formula under which Amdahl and Fujitsu will share equally any benefits or disadvantages. For further information regarding purchases from Fujitsu see "Note 2 - Relationship with Fujitsu Limited" of the Annual Report. Product Development The Company's future prospects depend upon its successful introduction of new products. During the last three years, the Company's product development costs, including amounts expended on development of both existing and new products, amounted to $149,610,000 in 1995 (excluding the write-off of purchased in- process engineering and development of $27,296,000), $203,241,000 in 1994, and $334,514,000 in 1993. However, as part of recent restructuring efforts, the Company has substantially reduced certain of its product development activities and expects that future product development expenditures will be considerably below those of recent years. The Company intends to rely, to a much greater degree than in the past, on strategic alliances, partnering arrangements and original equipment manufacturer (OEM) relationships for major new products or product components. Patents, Licenses and Related Matters Amdahl has an active program to file applications for and obtain patents in the United States and in selected foreign countries where a potential market for its products exists. The Company's general policy has been to seek patent protection for those inventions and improvements likely to be incorporated into its products or otherwise expected to be of value. While Amdahl believes that its patents and applications have value, it also believes that its competitive position depends on the technical competence of its development personnel and the ability to successfully enter into partnering or OEM agreements with outside suppliers. Amdahl and IBM are parties to an agreement pursuant to which each grants to the other nonexclusive worldwide licenses as to certain of each other's patents to be issued on patent applications having an effective filing date prior to January 1, 1998. Under the agreement, which supersedes prior agreements between the companies, Amdahl is licensed under substantially all IBM patents relating to computer systems and software, communications networks and related semiconductor technology, generally covering the planned products of the Company while IBM is licensed under substantially all Amdahl patents. For further information regarding IBM see "Management's Discussion and Analysis - Factors That May Affect Future Operating Results" of the Annual Report. The Company has also entered into licensing agreements with others and contemplates entering into additional license agreements under patents or know-how in the routine conduct of its business. Employees As of February 23, 1996, the Company had approximately 8,000 full-time employees. Executive Officers of Amdahl
The executive officers of the Company as of March 18, 1996 are as follows: Name Age Positions - ----- --- ---------- John C. Lewis 60 Chairman of the Board, Chief Executive Officer and President Linda T. Alepin 50 Vice President, Corporate Strategy David L. Anderson 48 Chief Technical Officer and Vice President, Enterprise Server Development Michael R. Carabetta 47 Vice President and General Manager, Open Enterprise Systems John C. Cavalier 56 President and Chief Executive Officer, Antares Alliance Group Pierre Y. Ducros 56 Chairman of the Board and Chief Executive Officer, DMR Group Inc. William F. Ferone 51 Vice President, Customer Services William Flanagan 56 Vice President and General Manager, Compatible Systems Charles E. Fonner 52 Vice President, Business Development Gregory R. Grodhaus 48 Vice President and General Manager, Enterprise Storage Systems Orval J. Nutt 55 Chief Marketing Officer and Vice President, Corporate Marketing Michael J. Poehner 49 Chief Operating Officer and President, DMR Group Inc. Anthony M. Pozos 55 Senior Vice President, Human Resources and Corporate Services Bruce J. Ryan 52 Executive Vice President, Chief Financial Officer and Corporate Secretary Ernest B. Thompson 59 Vice President and Controller David B. Wright 46 Executive Vice President, Enterprise Computing Group
Mr. John C. Lewis was appointed Chairman of the Board in 1987 and was reelected President and Chief Executive Officer on March 15, 1996. He was President of Amdahl from 1977, when he joined the Company, until 1987. He was the Company's Chief Executive Officer from 1983 until 1992. Ms. Linda T. Alepin joined the Company in 1978. She held positions of increasing responsibility within the Company until she was appointed Vice President of Market Development in 1989. She was appointed Vice President of Business Development in 1993. At the beginning of 1996 Ms. Alepin became Vice President of Corporate Strategy. Mr. David L. Anderson joined the Company in 1971 and was elected Vice President, Processor Product Management in 1987. In 1989 Mr. Anderson became Vice President of Advanced Systems and in 1992 became Vice President of Compatible Products Development. In 1993 he was appointed Vice President and General Manager of Compatible Systems, and at the beginning of 1996 became Chief Technical Officer and Vice President of Enterprise Server Development. Mr. Michael R. Carabetta joined the Company in 1994 as Vice President and General Manager of Open Enterprise Systems. Prior to joining Amdahl Mr. Carabetta worked at Digital Equipment Corporation, where he served as Vice President Finance and Administration, Business Systems from 1993 to 1994. He had previously been Group Manager at Digital Equipment Corporation. Mr. John C. Cavalier joined the Company in 1993 as Vice President and General Manager, Huron Sales and Development. In 1993 Mr. Cavalier became President and Chief Executive Officer of Antares Alliance Group. From 1990 through 1992 Mr. Cavalier was President and Chief Executive Officer of Bimillennium Corporation. Mr. Pierre Y. Ducros joined the Company in 1995 as Chairman of the Board and Chief Executive Officer of DMR Group Inc. He co-founded DMR Group Inc. in 1973. Mr. William F. Ferone joined the Company in 1978 and was elected Vice President of Customer Services in 1987. In 1988 he became Vice President of Unix Systems. Mr. Ferone was elected to the position of Vice President, Marketing, Open Systems Operations in 1990 and to the position of Vice President and General Manager of Customer Services 1992. At the beginning of 1996 he was appointed Vice President of Customer Services. Mr. William Flanagan joined the Company in 1973 and was elected Vice President of Manufacturing in 1985. In 1993 he became Vice President of Operations, Compatible Systems and in 1994 he was appointed Vice President, Business and Marketing, Compatible Systems. At the beginning of 1996 Mr. Flanagan became Vice President and General Manager of Compatible Systems. Mr. Charles E. Fonner joined the Company in 1979 and was elected Vice President of Systems Marketing in 1991. In 1992 Mr. Fonner became Vice President of Product Management and Marketing. At the beginning of 1996 he became Vice President of Business Development. Mr. Gregory R. Grodhaus joined the Company in 1995 as Vice President and General Manager of Enterprise Storage Systems. Prior to joining Amdahl, he was the President and Chief Executive Officer of IPL Systems, prior to which he served in a variety of roles at Memorex Telex Corporation. Mr. Orval J. Nutt joined the Company in 1976 and was elected Vice President of Corporate Marketing in 1986 and Vice President and General Manager of U.S. Operations in 1991. In 1993 Mr. Nutt became Vice President and General Manager of Worldwide Field Operations. At the beginning of 1996 he became Chief Marketing Officer and Vice President of Corporate Marketing. Mr. Michael J. Poehner joined the Company in 1992 as Vice President and General Manager, East Area, Office of Field Operations. In 1994 he became Vice President and General Manager of the Business Solutions Group and in 1995 he was appointed President of DMR Group Inc. From 1991 until Mr. Poehner joined the Company he served as Executive Vice President of North American Operations for Zenith Data Systems. Mr. Anthony M. Pozos has been Senior Vice President, Human Resources and Corporate Services since 1986. Mr. Pozos joined the Company in 1976 as Corporate Vice President, Industrial Relations, and in 1983 assumed responsibility for Corporate Services. Mr. Bruce J. Ryan joined the Company in 1994 as Senior Vice President, Chief Financial Officer and Corporate Secretary. At the beginning of 1996 he became Executive Vice President and retained his positions of Chief Financial Officer and Corporate Secretary. From 1993 through 1994 Mr. Ryan was Vice President of Industry Marketing at Digital Equipment Corporation, where prior to which he served as Vice President and Corporate Controller. Mr. Ernest B. Thompson joined the Company in 1978 as Controller. He was elected Corporate Vice President in 1980. Mr. David B. Wright joined the Company in 1987 as a regional Vice President of Sales. After being named Vice President of Commercial U.S. Sales in 1989 and Vice President and General Manager of European Operations in 1992, Mr. Wright was appointed Vice President and General Manager of Worldwide Field Operations in 1993. At the beginning of 1996 he became Executive Vice President of the Enterprise Computing Group. ITEM 2. PROPERTIES Amdahl's corporate headquarters is in Sunnyvale, California, as are its principal United States manufacturing, marketing, engineering and educational facilities. Of these facilities, Amdahl owns 339,678 square feet and leases 944,051 square feet. Amdahl also leases approximately 109 sales and service offices throughout the United States, Canada, Europe and Asia-Pacific. See also "Note 13 - Lease Commitments" of the Annual Report. An additional 37 locations have been added worldwide due to the acquisition of Dalworth Holdings, Inc. ("Dalworth") and DMR Group Inc. ("DMR"). Lease obligations assumed with the acquisition of Dalworth cover approximately 330,000 square feet in seven locations, including major sites in Texas, Illinois and England. Obligations assumed in the acquisition of DMR cover approximately 300,000 square feet of leased space, including major sites in Massachusetts; Melbourne, Australia; and throughout Canada. A 15,000 square foot owned facility in Belgium was also acquired with DMR. Restructuring actions, which began in 1993, caused certain Company facilities and properties to be under utilized. Included within this group of facilities and properties are 631,680 square feet of leased properties worldwide, the European headquarters in Dogmersfield Park, England (50,000 square feet), a facility in Rexburg, Idaho (5,819 square feet) and two buildings in San Jose (168,536 square feet). The 631,680 square feet of leased properties are subleased or offered for sublease. The Dogmersfield Park facility is being offered for sale. The Rexburg facility and San Jose buildings are leased to third parties. ITEM 3. LEGAL PROCEEDINGS Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY OWNERS Not Applicable. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information under "Note 15 - Common Stock Dividends and Price Range" of the Annual Report is incorporated by reference. ITEM 6. SELECTED FINANCIAL DATA The information under "Note 14 - Summarized Quarterly Financial Data" of the Annual Report is incorporated by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information under "Management's Discussion & Analysis" of the Annual Report is incorporated by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information contained in the following sections of the Annual Report is incorporated by reference: "Report of Independent Public Accountants," "Consolidated Balance Sheets," "Consolidated Statements of Operations," "Consolidated Statements of Cash Flows," "Consolidated Statements of Stockholders' Equity" and "Notes to Consolidated Financial Statements." ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable. PART III ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information under "Certain Information with Respect to Directors and Officers - Nominees to Board of Directors" and "Compliance with Section 16(a) of the Securities Act of 1934" in the Proxy Statement is incorporated by reference. Also refer to the item entitled "Executive Officers of Amdahl" in Part I of this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information under "Certain Information with Respect to Directors and Officers - Director Compensation" and "Executive Compensation" (but excluding the information under "Compensation Committee Report on Executive Compensation" and "Company Stock Price Performance") in the Proxy Statement is incorporated by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information under "Principal Stockholders" and "Certain Information with Respect to Directors and Officers - Security Ownership" in the Proxy Statement is incorporated by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information under "Certain Information with Respect to Directors and Executive Officers - Compensation Committee Interlocks and Insider Participation", "Certain Transactions" and "Loans to Executive Officers" in the Proxy Statement is incorporated by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)(1) Financial Statements Consolidated Financial Statements The following consolidated financial statements and related notes, together with the report thereon of Arthur Andersen LLP, independent public accountants, are incorporated by reference from the Annual Report: Consolidated Balance Sheets--December 29, 1995 and December 30, 1994. Consolidated Statements of Operations for each of the three years in the period ended December 29, 1995. Consolidated Statements of Cash Flows for each of the three years in the period ended December 29, 1995. Consolidated Statements of Stockholders' Equity for each of the three years in the period ended December 29, 1995. (a)(2) Schedules Supporting Consolidated Financial Statements Report of Independent Public Accountants on Schedules II Valuation and Qualifying Accounts and Reserves Schedules Omitted In accordance with the rules of Regulation S-X, the other required schedule is not submitted because (a) it is not applicable to or required by the Company or (b) the information required to be set forth therein is included in the consolidated financial statements or other schedules. (a)(3) Exhibits Exhibit Description ------- ----------- 2(a) Offer to Purchase Class A and Class B shares of DMR Group Inc. by Amdahl Canada Acquisition Inc. dated September 27, 1995 (incorporated by reference to Exhibit 2(a)to Form 10-Q for the fiscal period ended September 29, 1995) 2(b) Notice of Change and Variation dated October 19, 1995 to the Offers to Purchase Class A and Class B shares of DMR Group Inc. by Amdahl Canada Acquisition Inc. dated September 27, 1995 (incorporated by reference to Exhibit 2(b) to Form 10-Q for the fiscal period ended September 29, 1995) 2(c) Notice of Change and Variation dated November 1, 1995 to the Offers to Purchase Class A and Class B shares of DMR Group Inc. by Amdahl Canada Acquisition Inc. dated September 27, 1995 (incorporated by reference to Exhibit 2(c) to Form 10-Q for the fiscal period ended September 29, 1995) 3(a) Restated Certificate of Incorporation (incorporated by reference to Exhibit 3(a) to Form 10-K for fiscal year ended December 30, 1994) 3(b) Restated By-Laws (incorporated by reference to Exhibit 3(b) to Form 10-K for fiscal year ended December 30, 1994) Executive Compensation Plans and Agreements ------------------------------------------- 10(a) Amdahl Corporation 1994 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10(c) to Form 10-Q for fiscal period ended March 31, 1995) 10(b) Amdahl Corporation Long-Term Executive Incentive Performance Plan (incorporated by reference to Exhibit 10(b) to Form 10-Q for fiscal period ended March 31, 1995) 10(c) Amdahl Corporation Short-Term Executive Incentive Performance Plan (incorporated by reference to Exhibit 10(a) to Form 10-Q for fiscal period ended March 31, 1995) 10(d) Amdahl Corporation Officer Loan Program, as amended (incorporated by reference to Exhibit 10(c) to Form 10-K for the fiscal year ended December 30, 1994) 10(e) Amdahl Corporation Director Fee Deferral Election Plan, as amended (incorporated by reference to Exhibit 10(g) to Form 10-K for the fiscal year ended December 25, 1992) 10(f) Amdahl Corporation Deferral Election Plan, as amended (incorporated by reference to Exhibit 10(a) to Form 10-Q for fiscal period ended June 30, 1995) 10(g) Amdahl Corporation Corporate Officer Severance Guidelines (incorporated by reference to Exhibit 10(f) to Form 10-K for the fiscal year ended December 30, 1994) *10(h) Amdahl Corporation 1995 Chief Executive Officer Bonus Guidelines *10(i) Amdahl Corporation 1995 Bonus Program for Officers, Vice Presidents, Seniors and Keys, 10(j) Form of Restricted Stock Purchase Agreement under the Restricted Stock Plan (incorporated by reference to Exhibit 4(k) of Registrant's Registration Statement 33-54171, filed June 17, 1994) *10(k) Agreement with Named Executive Officer *10(l) Promissory Note with Named Executive Officer and Second Deed of Trust Securing the Note Other Material Agreements ------------------------- 10(m) Partnership Agreement dated June 21, 1993 between wholly owned subsidiaries of Amdahl and Electronic Data Systems Corporation (Portions of this exhibit are deleted pursuant to a request for confidential treatment) (incorporated by reference to Exhibit 10(y) to Form 10-K for the fiscal year ended December 31, 1993) 10(n) Joint Development Agreement between Amdahl and Fujitsu dated December 8, 1993 (Portions of this exhibit are deleted pursuant to a request for confidential treatment) (incorporated by reference to Exhibit 10(aa) to Form 10-K for the fiscal year ended December 31, 1993) 10(o) Loan Agreement between Amdahl and Fujitsu dated January 29, 1994 (incorporated by reference to Exhibit 10(c) to Form 10-Q for the fiscal period ended April 1, 1994) Additional Exhibits ------------------- *13 Annual Report to Stockholders for fiscal year 1995 (only those portions incorporated by reference) *21 List of Subsidiaries *23 Consent of Arthur Andersen LLP *24 Power of Attorney *27 Financial Data Schedule *Filed herewith (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended December 29, 1995. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES To Amdahl Corporation: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Amdahl Corporation's Annual Report to Stockholders incorporated by reference in this Form 10-K, and have issued our report thereon dated January 24, 1996. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed under Item 14 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 financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/Arthur Andersen LLP ---------------------- ARTHUR ANDERSEN LLP San Jose, California January 24, 1996
SCHEDULE II AMDAHL CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (in thousands) Additions Additions Balance Charged Charged Reserves at to Costs to Property of Balance Beginning and and Acquired Deduc- at end Of Period Expenses Equipment Companies tions(3) of Period Year Ended December 31, 1993: Doubtful Receivables $ 3,227 $ 1,009(1) $ --- $ --- $ 970 $ 3,266 Future Engineering ======== ========== ========= ======== ======== ======= Changes $ 86,004 $16,672(2) $ 967(2) $ --- $ 46,510 $57,133 ======== ========== ========= ======== ======== ======= Year Ended December 30, 1994: Doubtful Receivables $ 3,266 $ 2,080(1) $ --- $ --- $ 150 $ 5,196 Future Engineering ======== ========== ========= ======== ======== ======= Changes $ 57,133 $ --- (2) $ ---(2) $ --- $ 18,490 $38,643 ======== ========== ========= ======== ======== ======= Year Ended December 29, 1995: Doubtful Receivables $ 5,196 $ 656(1) $ --- $ 1,374 $ 1,262 $ 5,964 Future Engineering ======== ========== ========= ======== ======== ======= Changes $ 38,643 $ --- (2) $ ---(2) $ --- $ 35,342 $ 3,301 ======== ========== ========= ======== ======== ======= (1) Estimated uncollectible accounts receivable. (2) Estimated costs of future engineering changes for shipped and capitalized systems. (3) The deductions represent charges against the reserves for the purposes for which the reserves were established. Doubtful receivables deductions also include changes in estimates.
INDEMNIFICATION OF DIRECTORS AND OFFICERS For the purposes of complying with the amendments to the rules governing Form S-8 under the Securities Act of 1933, the Company hereby undertakes as follows: Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or controlling persons of the Company, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities registered on the Form S-8 Registration Statements identified below, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue. The preceding undertaking is hereby incorporated by reference to outstanding Registration Statements Nos. 33-55460 and 33-54171 of the Company on Form S-8. 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, on this 25th day of March, 1996. AMDAHL CORPORATION /s/ John C. Lewis --------------------------- JOHN C. LEWIS Chairman of the Board, Chief Executive Officer and President 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. Signatures Title Date - ---------- ----- ---- /s/John C. Lewis Chairman of the Board, March 25, 1996 - ------------------ Chief Executive Officer (JOHN C. LEWIS) and President (Principal Executive Officer) /s/Ernest B. Thompson Vice President and March 25, 1996 - --------------------- Controller (ERNEST B. THOMPSON) (Principal Accounting Officer) /s/Bruce J. Ryan Executive Vice March 25, 1996 - ----------------- President, (BRUCE J. RYAN) Chief Financial Officer and Corporate Secretary (Principal Financial Officer) Signatures Title Date - ---------- ----- ---- Keizo Fukagawa* Director - ------------------ (KEIZO FUKAGAWA) Michael R. Hallman* Director - ------------------- (MICHAEL R. HALLMAN) E. F. Heizer, Jr.* Director - -------------------- (E. F. HEIZER, JR.) Kazuto Kojima* Director - ------------------ (KAZUTO KOJIMA) Burton G. Malkiel* Director - -------------------- (BURTON G. MALKIEL) George R. Packard* Director - -------------------- (GEORGE R. PACKARD) Walter B. Reinhold* Director - --------------------- (WALTER B. REINHOLD) Takamitsu Tsuchimoto* Director - ----------------------- (TAKAMITSU TSUCHIMOTO) Signatures Title Date - ---------- ----- ---- J. Sidney Webb* Director - ------------------ (J. SIDNEY WEBB) *By: /s/Bruce J. Ryan Attorney-in-Fact March 25, 1996 ------------------ (BRUCE J. RYAN) EXHIBIT INDEX Exhibit Description - ------- ----------- 10(h) Amdahl Corporation 1995 Chief Executive Officer Bonus Guidelines 10(i) Amdahl Corporation 1995 Bonus Program for Officers, Vice Presidents, Seniors and Keys 10(k) Agreement with Named Executive Officer 10(l) Promissory Note with Named Executive Officer and Second Deed of Trust Securing the Note 13 Annual Report to Stockholders for fiscal year 1995 (only those portions incorporated by reference) 21 List of Subsidiaries 23 Consent of Arthur Andersen LLP 24 Powers of Attorney 27 Financial Data Schedule EX-10.H 2 Exhibit 10(h) AMDAHL CORPORATION 1995 CHIEF EXECUTIVE OFFICER BONUS GUIDELINES Architecture 1. Bonus can rage from 0 to 150 percent of salary earned during the year. Target bonus is 100 percent of salary at standard performance. 2. There are three independent components to bonus: a corporate profit element, a Line of Business revenue element and an "other" element. 3. Sixty-five percent of bonus (or 0 to 97.5 percent of salary) can be earned depending upon performance against the profit element. 4. Twenty percent of bonus (or 0 to 30 percent of salary) can be earned depending upon performance against the Line of Business revenue element. 5. Fifteen percent of bonus (or 0 to 22.5 percent of salary) can be earned depending upon performance against the other measures. 6. No bonus is earned under the profit component until 76 percent of the profit goal is achieved. 7. The Board may establish a minimum threshold of something other than 75 percent for a particular year if circumstances warrant such a modification. 8. Over-achievement of goals results in bonus greater than 100 percent of salary. 9. Maximum bonus is 150 percent of salary. Bonus Schedule Bonus Payable Under Bonus Payable under Percent of the Profit Element the Line of Business Plan Achieved as a percent of Salary Revenue Element as a percent of Salary 75 0 0 76 2.6 0.8 80 13.00 4.0 85 26.00 8.0 90 39.00 12.0 95 52.00 16.0 100 65.00 20.0 105 71.50 22.0 110 78.00 24.0 115 84.50 26.0 120 91.00 28.0 125 or higher 97.50 30.0 EX-10.I 3 Exhibit 10(i) AMDAHL CORPORATION 1995 BONUS PROGRAM FOR OFFICERS, VICE PRESIDENTS, SENIORS AND KEYS Principles: 1. Maintain a tiered approach to bonus plans to reflect market practice 2. Raise the threshold at which bonuses begin to be paid 3. Strengthen the link between performance and compensation by trending salaries towards the 50th percentile and targeting base salary plus bonus to the 75th percentile of the market 4. Increase the bonus opportunity to make possible greater variability in pay 5. Make pre-tax profit, operating income or other financial measures the determinant at target of 60 percent of bonus opportunity for Seniors and Keys and 80 percent for Vice Presidents and Officers 6. Make performance against other operational goals the determinant at target of 40 percent of bonus opportunity for Seniors and Keys and 20 percent for Vice Presidents and Officers 7. Persons managing or assigned to the various lines of business may earn 60 percent of bonus based on their units' operating income or other financial measures at target 8. Persons managing or assigned to the corporate functions may earn 60 percent of bonus based on corporate pre-tax income profit at target Bonus Eligible Population Approximately nine percent of the company's employees would be bonus eligible. These employees have been assigned to various levels of incentive participation based on competitive positioning and internal organization. Incentive Representative Bonus Plan Level Participants Range 2 Sr. Officers 0-100% & LOB GM's 3 Other Officers 0-75% & Senior VP's 4 Other VP's 0-60% 5 Seniors 0-30% 6 Keys 0-15% EX-10.K 4 Exhibit 10(k) Agreement with Named Executive Officer On August 3, 1994, the Compensation Committee of Amdahl Corporation (the "Company") authorized the Company to pay Bruce J. Ryan $45,000 per year, for 20 years, commencing at age 65. The Committee also authorized the vesting of Mr. Ryan's account under the Long-Term Executive Incentive Performance Plan at the rate of 7-1/2% per year. EX-10.L 5 Exhibit 10(l) NOTE SECURED BY SECOND DEED OF TRUST (Mortgage Loan) $300,000.00 September 27, 1994 Sunnyvale, California FOR VALUE RECEIVED, the undersigned, Bruce J. Ryan and Kathleen M. Ryan, husband and wife ("Makers"), promise to pay, jointly and severally, to the order of Amdahl Corporation ("Amdahl"), at its principal offices at 1250 East Arques Avenue, Sunnyvale, California, the principal sum of Three Hundred Thousand Dollars ($300,000.00), together with interest (from the date of this Note until the date of payment) on the unpaid balance at seven and five-hundredths percent interest (7.05%) per annum, compounded annually. Unless this Note is previously paid, forgiven or accelerated as specified in the terms hereinafter provided, the principal balance under this Note and all accrued interest shall be paid in full on September 26, 2000. This Note constitutes a portion of the unpaid balance of the purchase price of the real property defined in Section 1 of this Note, purchased by Makers and securing this Note. This Note shall be subject to the following terms and conditions: 1. Second Deed of Trust. This Note is secured by a Second Deed of Trust on the real property located at 14580 Clearview Drive, Los Gatos, California 95030, parcel number 409-29-020, executed the 27th day of September, 1994. 2. Payment Terms. On January 15, April 15, July 15 and October 15 of each year that this Note remains outstanding, commencing with January 15, 1995, the accrued interest through the first of that month shall be due and payable. 3. Application of Payments. Each payment shall be made in lawful tender of the United States and, except for the Annual Credit set forth in Section 4 of this Note, shall be credited first to accrued interest then due and payable and the remainder shall then be applied to principal. Prepayment of principal, together with all accrued interest, may be made at any time, without penalty, on or before September 26th of each year that this Note remains outstanding. 4. Annual Credit. So long as Makers are not in default of this Note or payment of this Note has not been accelerated pursuant to Section 5 of this Note then Amdahl shall credit Fifty Thousand Dollars ($50,000.00) toward the outstanding principal balance of the Note commencing September 26, 1995 and continuing on September 26th of each year that this Note remains outstanding. 5. Events of Acceleration. Payment of the unpaid balance of this Note (principal plus accrued unpaid interest to date) shall be subject to acceleration upon the following terms and conditions: A. At the election of Amdahl, or other holder of this Note, fifteen days (15) following the date Mr. Ryan shall for whatever reason cease to be an employee of Amdahl, then the entire unpaid balance of this Note shall become immediately due and payable. B. Upon the insolvency of Makers, the commission of any act of bankruptcy by Makers, the execution by Makers of a general assignment for the benefit of creditors, the filing by or against Makers of any petition in bankruptcy or any petition for relief under the provisions of the federal bankruptcy act or any other state or federal law for the relief of debtors and the continuation of such petition without dismissal for a period of fifteen (15) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of Makers, the entire unpaid balance of this Note shall become immediately due and payable. C. In the event the property described in Section 1 of this Note, or any interest therein, is sold, agreed to be sold, conveyed or alienated by Makers, or by operation of law or otherwise, the entire unpaid balance of this Note shall become immediately due and payable at the option of the holder of this Note. D. If default occurs in the payment of any installment under this Note when due, or in the event of violation or breach of any of the terms or conditions in the Second Deed of Trust securing this Note (attached hereto as Exhibit A), the entire unpaid balance of this Note shall become immediately due and payable at the option of the holder of this Note. Failure to exercise such option will not constitute a waiver of the right to exercise such option with respect to any subsequent default. 6. Collection. If action is instituted to collect this Note, Maker promises to pay, and shall be personally liable for all costs and expenses, including reasonable attorney's fees, incurred in connection with such action. 7. Waiver. Maker hereby waives notice of default, presentment or demand of payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this Note. 8. Usuary. All agreements, including this Note, between Makers and the holder hereof are expressly limited so that under no contingency or event whatsoever shall the amount paid or agreed to be paid to Amdahl for the use, forbearance or detention of the money advanced exceed the lawful highest rate permissible under the prevailing law. If fulfillment of any provision of this Note or any other agreement pertaining hereto at the time performance of such provisions be due, shall involve transcending the limit of validity prescribed by statute or which a court of competent jurisdiction may deem applicable hereto, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if for any circumstances Amdahl or the holder hereof shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would otherwise be excessive interest shall be applied to the reduction of the unpaid principal balance due under the Note and not to the payment of interest. This provision shall control every other charge for the use, forbearance or detention of money advanced or to be advanced hereunder. 9. Governing Law. This Note shall be construed in accordance with the laws of the State of California. MAKERS: /s/Bruce J. Ryan /s/Kathleen M. Ryan - ---------------- ------------------- BRUCE J. RYAN KATHLEEN M. RYAN SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS This Deed of Trust, made this 27th day of September, 1994, between Bruce J. Ryan and Kathleen M. Ryan husband and wife herein called TRUSTOR, whose address is 24580 Clearview Drive, Los Gatos, CA 95030 STEWART TITLE of CALIFORNIA a California corporation, herein called TRUSTEE, and Amdahl Corporation, herein called BENEFICIARY, Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE IN TRUST WITH POWER OF SALE, that property in SANTA CLARA County, California described as: SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF In the event the herein described property or any part thereof, or any interest therein is sold, agreed to be sold, conveyed or alienated by the Trustor, or by the operation of Law or otherwise all obligations secured by this instrument, irrespective of the maturity dates expressed therein, at the option of the holder hereof and without demand or notice shall immediately become due and payable. This deed of trust is second and subordinate to that certain deed of trust recorded concurrently herewith, executed by: Bruce J. Ryan and Kathleen M. Ryan, as trustor(s) in favor of Wells Fargo Bank, as beneficiary(ies), in the amount of $550,000.00. TOGETHER WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the right, power and authority given to and conferred upon Beneficiary by paragraph 10 of the provisions incorporated herein by reference to collect and apply such rents, issued and profits. For the Purpose of Securing: 1. Performance of each agreement of Trustor incorporated by reference or contained herein. 2. Payment of the indebtedness evidenced by one promissory note of even date herewith and any extension or renewal thereof, in the principal sum of $300,000.00 executed by Trustor in favor of Beneficiary or order. 3. Payment of such further sums as the then record owner of said property hereafter may borrow from Beneficiary, when evidenced by another note (or notes) reciting it is so secured. To Protect the Security of This Deed of Trust, Trustor Agrees: By the execution and delivery of this Deed of Trust, and the note secured hereby, that provisions (1) to (14), inclusive, of the fictitious deed of trust recorded under date, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, viz: COUNTY REEL IMAGE OR BOOK OR PAGE Alameda........ 2210 970 San Joaquin.... 3221 325 Santa Clara.... 8178 33 Sacramento..... 68-07-03 250 COUNTY REEL IMAGE OR BOOK OR PAGE San Francisco.. B-254 678 San Mateo...... 5497 162 Napa........... 789 977 Solano......... 1515 107 COUNTY REEL IMAGE OR BOOK OR PAGE Santa Cruz..... 1890 217 Monterey....... 563 919 Stanislaus..... 2227 312 COUNTY REEL IMAGE OR BOOK OR PAGE Marin......... 2223 30 Sonoma........ 2339 251 Contra Costa.. 5660 126 (which provisions, identical in all counties, are printed on the reverse hereof) hereby are adopted and incorporated herein and made a part hereof as fully as though set forth herein at length; that he will observe and perform said provisions; and that the references to property, obligations, and parties in said provisions shall be construed to refer to the property, obligations, and parties set forth in this Deed of Trust. The undersigned trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to him at his address hereinbefore set forth. For any statement regarding the obligations secured hereby, Beneficiary may charge the maximum amount permitted by law at the time of the request therefor. /s/ Bruce J. Ryan ----------------- BRUCE J. RYAN STATE OF CALIFORNIA ) COUNTY OF Santa Clara )ss. ) /s/ Kathleen M. Ryan By Bruce J. Ryan (attorney in fact) ------------------- KATHLEEN M. RYAN On September 27, 1994 before me, Donna J. Dickinson personally appeared Bruce J. Ryan personally known to me (or proved to me on the basis of satisfactory evidence)to be the person(s) whose name(s)is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Signature /s/ Donna J. Dickinson (notary seal ---------------------- affixed here) DONNA J. DICKINSON To Protect the Security of This Deed of Trust, Trustor Agrees: (1) To keep said property in good condition and repair; not to remove or demolish any building thereon: to complete or restore promptly and in good workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law: to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. (2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default or notice of default hereunder or invalidate any act done pursuant to such notice. (3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee: and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. (4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all incumbrance, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto: all costs, fees and expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any incumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. (5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. (6) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. (7) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. (8) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby. Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easements thereon: or join in any extension agreement or any agreement subordinating the lien or charge hereof. (9) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matter or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or person legally entitled there." Five years after issuance of such full reconveyance, Trustee may destroy said note and this Deed (unless directed in such request to retain them). (10) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues and profits including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default hereunder or invalidate any act done pursuant to such notice. (11) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee a written declaration of default and demand for sale and a written notice of default and election to cause to be sole said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof, any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the hereof all other sums then secured hereby; and the remainder, if any, to the person or persons entitled thereto. (12) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. (13) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devises, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and or neuter, and the singular number includes the plural. (14) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public record as provided by law, Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. REQUEST FOR FULL RECONVEYANCE To be used only when note has been paid. To STEWART TITLE OF CALIFORNIA, Trustee: Date: The undersigned is the legal owner and holder of all indebtedness secured by the within Deed of Trust. All sums secured by said Deed of Trust have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel all evidence of indebtedness, secured by said Deed of Trust, delivered to you herewith together with said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, the estate now held by you under the same. MAIL RECONVEYANCE TO: Do not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyances will be made. EXHIBIT "A" LEGAL DESCRIPTION ASSESSOR'S PARCEL NUMBER: 409-29-020 LOT TWENTY ONE (21), as shown on that certain Map entitled, "Tract 632 La Rinconada Knolls", which said Map was filed for record in the Office of the Recorder of the County of Santa Clara, State of California on August 27, 1951 in Book 34 of Maps, at page 21. EX-13 6 Exhibit 13 Management's Discussion And Analysis RESULTS OF OPERATIONS 1995 COMPARED TO 1994 REVENUES Total revenues decreased 7% and equipment sales decreased 23% or $247 million from the prior year. Equipment sales were 53% and 64% of total revenues in 1995 and 1994, respectively. Processor equipment sales decreased 22% due to a higher percentage of sales of 5995M processor upgrades than in 1994 and a significant decline in pricing experienced in the fourth quarter of 1995. Overall, 5995M prices declined 32% in 1995. Equipment sales of the older lines of mainframe computers also decreased. Revenues from storage product equipment sales decreased 59% in 1995 when compared to 1994 as a result of pricing and volume declines associated with delays in the introduction of new storage products. Equipment sales of high performance servers acquired under original equipment manufacturer (OEM) arrangements with Sun Microsystems, which were 10% and 3% of total equipment sales revenues in 1995 and 1994, respectively, increased 186% or $50 million from 1994 to 1995. Service, software and other revenues increased 21% or $124 million from the prior year and were 47% and 36% of total revenues in 1995 and 1994, respectively. The increase in revenues consisted of increased consulting and professional services revenues of $80 million, increased maintenance revenues of $26 million from a larger customer installed base, and increased software revenues of $30 million, of which $15 million was of a nonrecurring nature (see Note 2 to the Consolidated Financial Statements). DMR Group Inc. (DMR), which the Company acquired in November 1995, contributed $35 million to consulting and professional services revenues (see Note 3 to the Consolidated Financial Statements). Operating lease revenues decreased $12 million. 1995 revenues were favorably impacted by approximately $36 million by a weakened U.S. dollar, as international revenues denominated in foreign currencies translated into more dollars in 1995, when compared to 1994. GROSS MARGINS Gross margin as a percentage of revenues increased from 36% in 1994 to 37% in 1995. Gross margin on equipment sales as a percentage of equipment sales revenues increased from 32% in 1994 to 33% in 1995, due in part to lower manufacturing costs and a higher percentage of sales of 5995M processor upgrades, which yield better gross margins than sales of complete new systems. However, as a result of the severe 5995M price declines experienced in the fourth quarter of 1995, the Company charged cost of equipment sales for $26 million to reduce 5995M inventories to market value. In addition, gross margins on storage product sales were adversely affected by significant pricing declines. Gross margins on service, software and other revenues as a percentage of revenues decreased from 44% in 1994 to 41% in 1995, because consulting and professional services and multi-vendor maintenance services contributed a greater proportion of revenues in 1995 than in 1994, and these revenues generate lower gross margins than the Company's traditional maintenance revenues. OPERATING EXPENSES In the fourth quarter of 1995 the Company recorded a charge to operating expenses of $27 million to write off purchased in-process engineering and development associated with the acquisition of DMR that had no probable alternative future uses (see Note 3 to the Consolidated Financial Statements). Operating expenses in 1995 and 1994, excluding this charge, were 34% and 32% of revenues, respectively. Excluding the write-off of purchased in-process engineering and development, engineering and development expenses decreased $54 million or 26%, when compared to 1994, primarily due to the agreement with Fujitsu for the joint development of the next generation of IBM compatible systems. Marketing, general and administrative expenses increased $43 million or 13% in 1995 when compared to 1994 due to increased marketing efforts directed toward the Company's newer lines of business. INTEREST INCOME/EXPENSE AND INCOME TAXES Net interest income increased $24 million or 150% from 1994 to 1995 due to increased interest income from higher average cash and investment levels. The effective annual income tax rate increased from 7% in 1994 to 43% in 1995, due to the write-off of purchased in-process engineering and development discussed above and certain reserves for which no tax benefit was recognized in 1995, and the current mix of international and domestic income, which limited the Company's utilization of net operating loss carryforwards and deferred tax assets in 1995 when compared to 1994. RESULTS OF OPERATIONS 1994 COMPARED TO 1993 REVENUES In 1994, total revenues decreased 2% and equipment sales decreased 7% from the prior year. Processor equipment sales revenue declined 4% from 1993 to 1994 due primarily to a 46% decrease in revenues from equipment sales of the Company's older 5995A mainframe product line. However, revenues from equipment sales of 5995M systems increased 5% from 1993 to 1994 due to an increase in shipment volumes of approximately 59%, although when compared to 1993 these shipment volumes consisted of smaller processor configurations. The revenue generated from the increase in 5995M shipment volumes more than offset 5995M pricing declines of approximately 20% in 1994. The rate of price declines in 1994 was less severe than the declines experienced in 1992 and 1993, which the Company believes indicates an improved balance between supply and demand in the mainframe marketplace. Storage product sales decreased 24% from 1993 primarily due to price declines and, to a lesser extent, decreased shipment volumes as the Company began to transition to new products. Open systems equipment sales of high performance servers acquired under OEM arrangements with Sun Microsystems, which the Company began shipping in volume at the beginning of 1994, increased revenues in 1994, in part offsetting the declines discussed above. Service, software and other revenues increased 7% from the prior year, reflecting increased maintenance revenues from a larger customer installed base and to a lesser extent increased sales of Huron software licenses. The impact of fluctuations in foreign currency exchange rates on revenues was immaterial in 1994. [a bar graph entitled Gross Margins (Percent) is inserted next to the above text, indicating that the gross margins for 1993, 1994 and 1995 were 27%, 36% and 37%, respectively] GROSS MARGINS Gross margin as a percentage of revenues increased from 27% in 1993 to 36% in 1994. Gross margin on equipment sales as a percentage of revenues increased from 22% in 1993 to 32% in 1994, which primarily reflected lower production costs resulting from reductions in excess manufacturing capacity and other Company-wide restructuring actions begun in 1993 as well as a reduction in vendor component costs. In addition, cost of equipment sales in 1993 included the provision of $17 million (compared to no provision in 1994) for implementation of engineering changes to support IBM features on certain 5995M processors shipped during 1993. The lower manufacturing costs more than offset the pricing declines discussed above. Also, gross margins on service, software and other revenues as a percentage of revenues increased from 36% in 1993 to 44% in 1994, reflecting the cost reduction actions taken in the field service organization in 1993. OPERATING EXPENSES Operating expenses in 1994 and 1993, excluding 1993 restructuring charges of $478,000,000, were 32% and 41% of revenues, respectively. Engineering and development expenses decreased 39% from 1993 to 1994 due to cancellations and reductions in the scope of certain product development projects as well as other cost reduction benefits realized from the restructuring of operations (see Note 8 to the Consolidated Financial Statements). Engineering and development expenses also decreased due to the November 1993 agreement with Fujitsu for the joint development of the next generation of IBM compatible systems. The decrease in marketing, general and administrative expenses of 8% from 1993 to 1994 also reflected cost reductions from the restructuring of operations. [a bar graph entitled Operating Expenses* (Dollars in Millions) is inserted next to the above text, indicating that the operating expenses for 1993, 1994 and 1995 were $689 million, $531 million and $520 million, respectively. *Excluding 1995 write-off of DMR in-process engineering and development and 1993 restructuring charges] INTEREST INCOME/EXPENSE AND INCOME TAXES Net interest income increased $11 million or 188% in 1994 from the prior year, as decreased interest expense from lower average debt levels and increased interest income from higher average cash levels were partially offset by decreased interest income from lower levels of sales-type leases. The effective annual income tax rate decreased from 18% in 1993 to 7% in 1994, reflecting utilization of net operating loss carryforwards. FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS During the fourth quarter of 1995 the market for the Company's existing mainframe computer systems entered a product transition period marked by the announcement of new product offerings from both Amdahl and its competitors which are expected to become available during the second half of 1996. Product transition periods are traditionally characterized by decreased demand, resulting in accelerated price declines for existing products. Because the new products involve the use of lower cost CMOS technologies which will reduce the cost of mainframe computing to end users, these factors will be more acute during the current transition period as evidenced by the significant declines experienced in existing mainframe prices during the fourth quarter of 1995. Coupled with extremely aggressive competitive pricing pressures in many of the Company's principal accounts, this situation is expected to persist and will materially adversely affect operating results until the Company is able to deliver its new mainframe systems in volume in the latter part of 1996. In addition, market conditions for the Company's storage products are not expected to improve until Amdahl's newly announced storage product offerings are available in volume during the second half of 1996. Should any delays in current development schedules occur or should the new mainframe and storage product offerings fail to receive strong customer acceptance, the Company's future operating results will be further adversely affected. The Company expects its software, services and open systems businesses to improve during 1996 and to result in a higher percentage of the Company's overall revenues than in previous years. The degree of improvement will depend in major part on the Company's ability to rapidly complete the integration of its former professional services operations into the recently acquired DMR business structure; to generate strong customer acceptance of the newest version of the Huron ObjectStar software developed by the Amdahl/Electronic Data Systems joint venture, Antares Alliance Group; to continue the expansion of its new operational and multi-vendor maintenance service offerings; and to realize higher gross margins from sales of servers. However, it is unlikely that any improvements in these operations would be sufficient to offset any resulting declines in the Company's traditional mainframe and storage businesses if existing mainframe prices do not stabilize and if the Company fails to successfully introduce its new mainframe and storage product offerings as planned. In July 1995, IBM terminated its Undertaking with the European Commission which IBM had entered into in 1984. The Undertaking called upon IBM to disclose interface specifications related to its System /370/390 mainframes to qualified competitors, including Amdahl. Since 1986 the Company has utilized specifications made available pursuant to the Undertaking in maintaining compatibility with new features and functions which IBM has announced from time to time. At the present time, the Company believes that IBM will continue its past practice of disclosing interface specifications. However, a failure by IBM to continue to disclose required information on a timely basis would require Amdahl to rely extensively on technically difficult reverse engineering procedures. In such a case, should IBM continue to introduce significant architectural changes to its System/390 mainframes, the ability of the Company's products to remain compatible in the future on a timely basis could be adversely impacted. The Company is unable to predict the extent to which this would negatively affect future operating results. The Company does not expect total operating expenses in 1996 to significantly change from 1995 levels. The Company expects that interest income will decrease due to lower average cash and investment levels in 1996 than in 1995 and that its effective tax rate will decrease in 1996 from the 1995 rate of 43% due to its ability to utilize deferred tax assets. In March 1995 the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (FAS 121). The Company will adopt this standard in the first quarter of 1996 and does not believe its adoption will have a material impact on its financial position or results of operations. FINANCIAL CONDITION DECEMBER 29, 1995 COMPARED TO DECEMBER 30, 1994 The Company's net cash position (cash and short-term investments net of short-term and long-term debt, excluding capitalized lease obligations) decreased by $80 million from December 30, 1994 to December 29, 1995. Cash, cash equivalents and short-term investments decreased $62 million, reflecting the use of $137 million (net of $3 million cash acquired) to finance the purchase of the outstanding shares of DMR (see Note 3 to the Consolidated Financial Statements). Receivables increased $10 million, primarily due to the acquisition of DMR. Inventories decreased $8 million, reflecting an end-of-life build up of 5995M inventories, offset by the $26 million write-down to market value. Net property and equipment decreased $65 million due in part to sales of buildings and retirements of production and data processing equipment and because depreciation exceeded capital spending in 1995. At December 29, 1995, the excess of cost over DMR's net assets acquired, net of accumulated amortization, was $107 million (see Note 3 to the Consolidated Financial Statements). The cash, cash equivalents and short-term investments balances as of December 29, 1995 included approximately $161 million currently invested outside the United States. Repatriation of these investments and cash would give rise to federal taxable income in the year of transfer, taxes for which have been provided. (See Note 12 to the Consolidated Financial Statements regarding foreign subsidiaries' earnings on which taxes have not been provided.) The Company's valuation allowance against worldwide operating losses, deferred tax assets, and tax credit carryforwards which may expire before the Company can utilize them decreased from $112 million at December 30, 1994 to $89 million at December 29, 1995. The Company believes sufficient uncertainty exists regarding the realizability of these items and accordingly has continued to provide a valuation allowance for them. Accounts payable to vendors other than Fujitsu increased $42 million, due in part to accounts payable assumed upon the acquisition of DMR ($17 million at December 29, 1995). Accounts payable to Fujitsu decreased $42 million, due to decreased purchases of materials. Accrued liabilities decreased $80 million due to decreased deferred maintenance revenues, reserves for future engineering changes, and accrued restructuring costs. Charges against accrued restructuring costs resulted in a decrease in the balance from $88 million at December 30, 1994 to $55 million at December 29, 1995 (see Note 8 to the Consolidated Financial Statements). At December 29, 1995 and at December 30, 1994, long-term debt (excluding capitalized lease obligations) was $86 million and $80 million, respectively, which included $80,000,000 outstanding under the Fujitsu loan agreement (see Note 7 to the Consolidated Financial Statements). [a bar graph entitled Inventories (Dollars in Millions) is inserted next to the above text, indicating that inventories for 1993, 1994 and 1995 were $511 million, $283 million and $275 million, respectively] LIQUIDITY The nature of the computer industry, combined with the current economic environment, make it very difficult for the Company to predict future liquidity requirements with certainty. However, the Company believes that existing cash and short-term investments, together with borrowings under its loan agreement with Fujitsu, will be adequate to finance continuing operations, investments in property and equipment, inventories and spare parts, and expenditures for the development of new products at least through 1997. The Company has no significant commitments with vendors other than Fujitsu (see Note 2 to the Consolidated Financial Statements). Subsequent to December 29, 1995, the Board of Directors authorized the Company to buy back up to $100,000,000 of the Company's common stock. [a bar graph entitled Net Cast* (Debt) (Dollars in Millions) is inserted next to the above text, indicating that Net Cast for 1993, 1994 and 1995 was $117 million, $611 million and $531 million, respectively. *Cash and short-term investments, minus total debt (excluding capitalized lease obligations)] Report Of Independent Public Accountants TO AMDAHL CORPORATION: We have audited the accompanying consolidated balance sheets of Amdahl Corporation (a Delaware corporation) and subsidiaries as of December 29, 1995 and December 30, 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 29, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amdahl Corporation and subsidiaries as of December 29, 1995 and December 30, 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 29, 1995 in conformity with generally accepted accounting principles. As discussed in Note 12 to the Consolidated Financial Statements, the Company adopted the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, in 1993. /s/Arthur Andersen LLP ---------------------- SAN JOSE, CALIFORNIA ARTHUR ANDERSEN LLP JANUARY 24, 1996
CONSOLIDATED BALANCE SHEETS December 29, 1995 and December 30, 1994 (Dollars in thousands) 1995 1994 ASSETS Current assets: Cash and cash equivalents $ 192,980 $ 358,006 Short-term investments 444,006 340,600 Receivables, net of allowances of $5,964 in 1995 and $5,196 in 1994 319,777 309,927 Inventories 274,813 283,081 Prepaid expenses and deferred tax assets 69,115 54,874 --------- --------- Total current assets 1,300,691 1,346,488 --------- --------- Long-term receivables and other assets 28,083 34,908 --------- --------- Property and equipment: Leased systems 37,937 30,238 System spares 379,797 384,685 Production and data processing equipment 327,051 410,557 Office furniture, equipment and improvements 173,691 156,195 Land and buildings 111,715 137,429 --------- --------- 1,030,191 1,119,104 Less - accumulated depreciation and amortization 757,523 781,465 ------- ------- Property and equipment, net 272,668 337,639 ------- ------- Excess of cost over net assets acquired, net of accumulated amortization of $692 in 1995 106,756 - --------- --------- $ 1,708,198 $ 1,719,035 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and short-term debt $ 22,026 $ 8,816 Accounts payable 111,871 69,603 Accounts payable - stockholder (Fujitsu Limited) 29,152 71,214 Accrued liabilities 431,600 511,706 ------- ------- Total current liabilities 594,649 661,339 ------- ------- Long-term debt - stockholder (Fujitsu Limited) 80,000 80,000 ------ ------ Long-term debt and liabilities 51,152 49,674 ------ ------ Deferred income taxes 48,573 51,767 ------ ------ Stockholders' equity: Common stock, $.05 par value Authorized - 200,000,000 shares Outstanding - 119,259,000 shares in 1995 and 116,636,000 shares in 1994 5,963 5,832 Additional paid-in capital 542,269 519,856 Retained earnings 370,995 342,468 Cumulative translation adjustments 10,932 8,861 Unrealized holding gains (losses) on available-for-sale securities 3,665 (762) ------- ------- Total stockholders' equity 933,824 876,255 --------- --------- $ 1,708,198 $ 1,719,035 ========= ========= The accompanying notes are an integral part of these financial statements.
Consolidated Statements Of Operations For the Three Years Ended December 29, 1995 (Dollars in thousands, except per common share amounts) 1995 1994 1993 REVENUES Equipment sales $803,567 $1,050,236 $1,132,447 Service, software and other 712,821 588,377 548,085 --------- --------- --------- 1,516,388 1,638,613 1,680,532 --------- --------- --------- COST OF REVENUES Equipment sales 540,541 716,144 881,528 Service, software and other 419,046 327,420 350,982 ------- --------- --------- 959,587 1,043,564 1,232,510 ------- --------- --------- Gross margin 556,801 595,049 448,022 ------- ------- ------- OPERATING EXPENSES Engineering and development 149,610 203,241 334,514 Marketing, general and administrative 370,771 327,917 354,939 Purchased in-process engineering and development 27,296 - - Restructuring costs - - 478,000 ------- ------- --------- 547,677 531,158 1,167,453 ------- ------- --------- INCOME (LOSS) FROM OPERATIONS 9,124 63,891 (719,431) ------- ------- --------- INTEREST Income 51,334 26,305 23,461 Expense (10,481) (9,942) (17,772) -------- ------- -------- 40,853 16,363 5,689 ------ ------ ------- INCOME (LOSS) BEFORE PROVISION FOR (BENEFIT FROM) INCOME TAXES 49,977 80,254 (713,742) Provision for (Benefit from) Income Taxes 21,450 5,450 (125,000) ------ ------ --------- Income (loss) before change in accounting principle 28,527 74,804 (588,742) Cumulative Effect of Change in Accounting Principle - - 8,746 ------ ------ --------- NET INCOME (LOSS) $28,527 $74,804 $(579,996) ======= ======= ========= EARNINGS (LOSS) PER COMMON SHARE Income (loss) before change in accounting principle $.24 $.63 $(5.17) Net income (loss) $.24 $ .63 $(5.09) Average outstanding shares and equivalents 120,383,000 118,909,000113,933,000 The accompanying notes are an integral part of these financial statements.
Consolidated Statements of Cash Flows For the Three Years Ended December 29, 1995 (Dollars in thousands) 1995 1994 1993 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR $358,006 $149,484 $173,012 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) 28,527 74,804 (579,996) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 108,552 132,864 209,612 Purchased in-process engineering and development 27,296 - - Restructuring charges - - 478,000 Deferred income tax provision (3,201) (7,083) (102,611) Loss (gain) on sales of assets (343) (8,524) 1,208 Change in assets and liabilities net of effects from purchase of DMR: (Increase) decrease in receivables 33,771 (2,384) 269,784 Decrease in inventories 30,391 271,872 221,454 (Increase) decrease in prepaid expenses and deferred tax assets (12,157) (1,781) 40,551 Decrease in long-term receivables and other assets 10,981 9,992 53,874 Increase (decrease) in accounts payable (13,407) 68,964 (150,914) Decrease in accrued liabilities (113,955) (49,774) (128,722) Decrease in long-term liabilities (11,853) (2,287) (10,070) -------- ------- -------- Net cash provided by operating activities 84,602 486,663 302,170 -------- ------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of available-for-sale short-term investments (376,503) (47,016) - Purchases of held-to-maturity short-term investments (287,067) (519,684) - Proceeds from sales of available-for-sale short-term investments 107,411 40,677 - Proceeds from maturities of held-to-maturity short-term investments 458,116 286,075 - Decrease in short-term investments - - 18,372 Payment for purchase of DMR, net of cash acquired (136,692) - - Capital expenditures: Leased systems (27,156) (18,200) (45,045) System spares (16,559) (8,584) (50,841) Other property and equipment (38,159) (40,841) (39,033) Proceeds from property and equipment sales 30,158 62,352 68,191 ------- ------- ------- Net cash used for investing activities (286,451) (245,221) (48,356) --------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in notes payable and short-term borrowings 11,070 2,521 (106,854) Long-term borrowings - 80,000 - Repayments of borrowings under revolving credit agreement - (130,000) (170,000) Sale of common stock and exercise of options 22,544 12,064 7,393 Dividends paid - - (5,676) ------ -------- --------- Net cash provided by (used for) financing activities 33,614 (35,415) (275,137) ------- -------- --------- Effect of exchange rate changes on cash 3,209 2,495 (2,205) ------- -------- --------- Net increase (decrease) in cash and cash equivalents (165,026) 208,522 (23,528) --------- ------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR $192,980 $358,006 $149,484 ======== ======== ======== Noncash investing and financing activities:transfers of Amdahl-manufactured systems from net property, plant and equipment to inventories were $17,423,000 in 1995 and $46,225,000 in 1994. The accompanying notes are an integral part of these financial statements.
Consolidated Statements of Stockholders' Equity For the Three Years Ended December 29, 1995 (Dollars in thousands, except per share amounts) UNREALIZED ADDITIONAL CUMULATIVE HOLDING COMMON PAID-IN RETAINED TRANSLATION GAINS STOCK CAPITAL EARNINGS ADJUSTMENTS (LOSSES) TOTAL BALANCE AT DECEMBER 25, 1992 $5,657 $500,574 $853,336 $11,549 $- $1,371,116 Sale of 1,439,269 shares, net of repurchases, of common stock under employee stock benefit plans 72 7,234 - - - 7,306 Income tax benefit arising from employee stock option plans - 87 - - - 87 Cash dividends ($.05 per share) - - (5,676) - - (5,676) Net loss - - (579,996) - - (579,996) Translation adjustments - - - (2,631) - (2,631) ------ ------- --------- -------- -------- --------- BALANCE AT DECEMBER 31, 1993 5,729 507,895 267,664 8,918 - 790,206 Sale of 2,057,964 shares, net of repurchases, of common stock under employee stock benefit plans 103 9,513 - - - 9,616 Income tax benefit arising from employee stock option plans - 2,448 - - - 2,448 Net income - - 74,804 - - 74,804 Translation adjustments - - - (57) - (57) Unrealized holding losses on available-for-sale securities - - - - (762) (762) ------- ------- ------- -------- -------- -------- BALANCE AT DECEMBER 30, 1994 5,832 519,856 342,468 8,861 (762) 876,255 Sale of 2,622,920 shares, net of repurchases, of common stock under employee stock benefit plans 131 17,513 - - - 17,644 Income tax benefit arising from employee stock option plans - 4,900 - - - 4,900 Net income - - 28,527 - - 28,527 Translation adjustments - - - 2,071 - 2,071 Unrealized holding gains on available-for-sale securities - - - - 4,427 4,427 -------- ------- -------- -------- -------- -------- BALANCE AT DECEMBER 29, 1995 $5,963 $542,269 $370,995 $10,932 $3,665 $933,824 ========= ======== ======== ======== ======= ======== The accompanying notes are an integral part of these financial statements.
Notes to Consolidated Financial Statements NOTE 1 SUMMARY OF ACCOUNTING PRACTICES Amdahl Corporation and subsidiaries (the Company or Amdahl) is a multinational company that provides large-scale, high performance, general-purpose computer systems, storage, software and communications products, and client-server hardware systems for the open systems marketplace. The Company also provides equipment maintenance, consulting and professional services. See Note 9 for information on revenues by classes of product and services and by geographic area. The Company's markets are worldwide and include the communications, banking, finance and insurance, services and government industries. USE OF ESTIMATES The preparation of finanical statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported components of results of operations during the reporting period. Actual results could differ from those estimates. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. Intercompany accounts and transactions have been eliminated. FISCAL YEAR The Company's fiscal year ends on the last Friday in December. As a result, 1995 and 1994 were each 52-week years, and 1993 was a 53-week year. TRANSLATION OF FOREIGN CURRENCIES The financial position and results of operations of the Company's non-U.S. subsidiaries are measured using local currency as the functional currency. Accordingly, all assets and liabilities are translated into U.S. dollars at current exchange rates as of the respective balance sheet date. Revenue and expense items are translated at the average exchange rates prevailing during the period. Cumulative translation gains and losses are reported as a separate component of stockholders' equity. Gains of $247,000 in 1995 and $81,000 in 1994 and a loss of $2,948,000 in 1993 resulted from foreign exchange transactions and were included in marketing, general and administrative expenses. REVENUES Revenues from equipment sales and sales-type leases are generally recognized when the equipment has been shipped, installed and financing arrangements have been completed. Revenues from operating leases are recognized over the term of the respective contracts. Service for Amdahl products is provided under service and parts warranty or separate maintenance agreements. The large-scale computer systems normally carry a oneyear service and parts warranty, and the storage and other products usually have shorter warranty periods. Where material, a portion of equipment sales revenue is deferred and recognized over the warranty period as service is provided. Following the warranty period, Amdahl provides maintenance service under separate contracts which typically can be terminated by the customer on ninety days notice. Revenues from maintenance contracts are recognized over the term of the respective contracts as service is provided. The Company accounts for software revenues in accordance with the American Institute of Certified Public Accountants' Statement of Position 91-1, Software Revenue Recognition. Revenues earned under software license agreements with end users are generally recognized when the software has been shipped, payment is due within one year, collectibility is probable, and there are no significant obligations remaining. FUTURE ENGINEERING CHANGES Amdahl's computer systems are architecturally compatible at specific software and hardware interface levels with the basic functions of competing IBM computer systems. The introduction from time to time by IBM of certain product enhancements requires that Amdahl make product changes to remain fully compatible. In addition, the Company periodically makes engineering changes to enhance the functionality of its products. The Company provides a reserve for estimated future engineering changes in connection with each sale. The reserve is intended to cover direct material, direct labor and manufacturing overhead associated with implementation of engineering changes. Amounts provided and charged to cost of equipment sales were $16,672,000 in 1993. No amounts were provided and charged to cost of sales in 1995 and 1994 because shipments made in those years were not expected to require future engineering changes. INVENTORIES Inventories are stated at the lower of cost (firstin, firstout) or market. Systems in process and finished goods include material, labor and manufacturing overhead. Yearend inventories consisted of the following:
1995 1994 (In thousands) Purchased materials $18,879 $45,561 Systems in process 168,322 135,408 Finished goods 87,612 102,112 -------- -------- $274,813 $283,081 ======== ========
Inventories contained components and assemblies in excess of the Company's current estimated requirements and were fully reserved at December 29, 1995 and December 30, 1994. Also, as a result of severe price declines in the fourth quarter of 1995, the Company charged cost of equipment sales for $26 million to reduce 5995M inventories to market value. Due to competitive pressures, it is reasonably possible that these estimates could change in the near term. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over estimated useful lives (or, for leasehold improvements and assets recorded under capital lease obligations, over the remaining lease terms or estimated useful lives, whichever is shorter) as follows:
YEARS System spares 5 Production and data processing equipment 3-15 Office furniture, equipment and improvements 3-20 Buildings 20-40
INTANGIBLE ASSETS Excess of cost over net assets acquired (goodwill) is amortized by the straight-line method over twenty-five years. The realizability of goodwill is evaluated periodically as events or circumstances indicate a possible inability to recover its carrying amount. Such evaluation is based on various analyses, including cash flow and profitability projections that incorporate, as applicable, the impact on existing lines of business. The analyses necessarily involve significant management judgment to evaluate the ability of an acquired business to perform within projections. Certain software development costs have been capitalized and amortized over the life of the product. At December 29, 1995 and December 30, 1994 software development costs that had been capitalized were immaterial. EARNINGS (LOSS) PER COMMON SHARE Earnings (loss) per common share have been computed based on the weighted average number of common and common equivalent shares outstanding. Common equivalent shares result from the assumed exercise of stock options which would have a dilutive effect in years where there are earnings. Primary and fully diluted earnings per common share amounts are substantially the same. NOTE 2 RELATIONSHIP WITH FUJITSU LIMITED At December 29, 1995, Fujitsu Limited (Fujitsu) owned approximately 43% of the Company's outstanding stock. The Company has entered into various transactions with Fujitsu, as follows: A. Amdahl purchases under contracts with Fujitsu certain subassemblies and substantially all of its large-scale integrated semiconductor components and high-density printed circuit boards. Its primary products are manufactured by Fujitsu to Amdahl specifications. The cost of computer equipment, subassemblies and spare parts purchased from Fujitsu and the amount included in cost of revenues for equipment sales were as follows:
COST OF PURCHASES REVENUES (In thousands) 1995 $282,913 $275,707 1994 $218,925 $374,224 1993 $434,732 $444,595
Amdahl was committed to purchase manufacturing material and other equipment from Fujitsu totaling approximately $51,000,000 at December 29, 1995. Prices for these manufacturing materials and other equipment are subject to adjustment if the U.S. dollar-Japanese yen exchange rate fluctuates outside of specified ranges. The Company has entered into hedging arrangements designed to protect against currency exchange risks associated with anticipated product purchases from Fujitsu in 1996. B. Under joint development efforts, Fujitsu supplies Amdahl with services and material related to the Company's development of current and future products, which resulted in charges to engineering and development expense of $2,399,000 in 1995, $6,443,000 in 1994 and $8,633,000 in 1993. In November 1993 Amdahl and Fujitsu entered into an agreement pursuant to which Amdahl and Fujitsu agreed to participate in the joint development of the Company's next generation of IBM compatible systems. Under the agreement, Fujitsu will undertake primary responsibility for the design and manufacture of these systems. In 1991 the Company entered into a cross-license agreement related to certain technologies in the Company's processor products, in which the Company agreed to pay Fujitsu up to $15,000,000 in royalties, to be remitted to Fujitsu as shipments occurred in 1992 and 1993. Amounts charged to cost of revenues related to this agreement amounted to $3,600,000 in 1993. There are no remaining commitments under this agreement. C. Fujitsu markets Amdahl's computer equipment in Brazil, Japan, Malaysia and Spain under distributorship arrangements. Sales in 1995, 1994 and 1993 by the Company of computer systems and complementary storage products to Fujitsu contributed $37,290,000, $38,682,000 and $28,162,000 to equipment sales and $17,190,000, $14,405,000 and $11,687,000 to gross margin, respectively. In the second quarter of 1995 the Company entered into a contract manufacturing agreement with HaL Computer Systems, Inc. (HaL), a wholly-owned subsidiary of Fujitsu, whereby Amdahl agreed to manufacture high end open system workstations for HaL. This agreement contributed $9,375,000 and $1,035,000 to equipment sales and gross margin, respectively, in 1995. In the fourth quarter of 1995 Fujitsu agreed to pay Amdahl $14,800,000 for the right and license to use certain software diagnostic tools developed by Amdahl and $1,000,000 for the right to market certain storage products in Japan. These amounts were recognized in the fourth quarter of 1995 as software revenue and equipment sales revenue, respectively. At December 29, 1995 and December 30, 1994 receivables included $35,795,000 and $21,097,000, respectively, from Fujitsu. D. In January 1994 the Company entered into an agreement with Fujitsu under which Fujitsu agreed to provide loans to the Company in an aggregate amount not to exceed $100,000,000. Such loans bear interest at a rate based upon the London Interbank Offered Rate. Any outstanding loan balance is payable to Fujitsu on January 28, 1997. As of December 29, 1995 and December 30, 1994, $80,000,000 in principal was outstanding under this agreement (see Note 7). Interest expense associated with the loan was $5,745,000 in 1995 and $4,238,000 in 1994 of which $958,000 and $987,000 was payable and was included in accrued liabilities at December 29, 1995 and December 30, 1994, respectively. NOTE 3 ACQUISITION OF DMR GROUP INC. On November 15, 1995 the Company acquired all of the outstanding shares of DMR Group Inc. (DMR), a multinational information technology consulting company, for $140 million. The acquisition was funded with existing cash. The results of DMR's operations have been combined with those of the Company since the date of acquisition. The acquisition was accounted for using the purchase method of accounting. Accordingly, a portion of the purchase price was allocated to the net assets acquired based on their estimated fair values. The fair value of tangible assets acquired and liabilities assumed was $60 million and $55 million, respectively. In addition, $27,296,000 of the purchase price was allocated to in-process engineering and development projects that had not reached technological feasibility and had no probable alternative future uses, which the Company expensed at the date of acquisition. The balance of the purchase price, $108 million, was recorded as excess of cost over net assets acquired (goodwill) and is being amortized over twenty-five years on a straight-line basis. The following table reflects unaudited pro forma combined results of operations of the Company and DMR on the basis that the acquisition had taken place and the related charge, noted above, was recorded at the beginning of the fiscal year for each of the periods presented:
1995 1994 (Dollars in thousands, except per common share amounts) Revenues $1,693,912 $1,857,880 Net income 20,783 38,777 Net income per common share $.17 $ .33 Shares used in computation 120,383,000 118,909,000
In management's opinion, the unaudited pro forma combined results of operations are not indicative of the actual results that would have occured had the acquisition been consummated at the beginning of 1994 or at the beginning of 1995 or of future operations of the combined companies under the ownership and management of the Company. NOTE 4 EQUIPMENT LEASING AND THIRD PARTY TRANSACTIONS The Company is the lessor of equipment under operating leases for periods generally less than three years. Certain operating leases contain provisions for early termination with a penalty or with conversion to another system. The cost of leased systems is depreciated to a zero value on a straight-line basis over two to four years. Accumulated depreciation on leased systems was $12,462,000 at December 29, 1995 and $14,119,000 at December 30, 1994. The Company also leases equipment to customers under sales-type leases as defined in Statement of Financial Accounting Standards No. 13, Accounting for Leases. The current portion of the net investment in sales-type leases is included in receivables and the long-term portion is included in long-term receivables and other assets. The components of the net investment in sales-type leases were as follows:
1995 1994 (In thousands) Minimum rentals receivable $8,020 $22,001 Estimated residual values of leased equipment (unguaranteed) 2,500 4,607 Less unearned interest income (1,116) (3,182) ------- ------- Net investment in sales-type leases $9,404 $23,426 ======= =======
Minimum rentals receivable under existing leases as of December 29, 1995 were as follows:
SALES-TYPE OPERATING (In thousands) 1996 $4,786 $14,272 1997 2,818 9,597 1998 402 3,062 1999 14 106 2000 - - Thereafter - - ------- -------- $8,020 $27,037 ======= ========
In addition, during the periods presented, the Company sold certain equipment subject to operating leases and financed certain sales-type equipment leases and installment contracts with financing institutions (Third Parties). The Company sometimes agrees to perform certain services and obligations with respect to the equipment and related leases, such as general lease administration, invoicing and collection of rentals, payment of insurance and personal property taxes, maintenance services and non-priority remarketing of equipment that comes off lease. For these services and obligations, the Company generally receives its normal maintenance charges and a remarketing and administration fee. Many of the agreements with Third Parties provide the Company with residual rights in revenues, if any, derived from the equipment after the Third Parties have received a designated return. Equipment sales revenues arising from these transactions with Third Parties were approximately $48,000,000, $71,000,000 and $91,000,000 in 1995, 1994 and 1993, respectively. Note 5 FINANCIAL INSTRUMENTS The Company invests in a variety of financial instruments but does not hold or issue financial instruments for trading purposes. OFF-BALANCE SHEET FINANCIAL INSTRUMENTS The Company hedges certain portions of its exposure to foreign currency fluctuations through a variety of strategies and financial instruments, including the use of forward foreign exchange contracts and currency swap agreements. These contracts and swaps generally have maturities that do not exceed three months and two years, respectively. At December 29, 1995 and December 30, 1994 the Company had approximately $57,000,000 and $94,000,000, respectively, in notional principal of forward foreign exchange contracts outstanding. The Company had $20,000,000 of currency swap agreements outstanding at December 29, 1995 and December 30, 1994. The gains and losses associated with currency rate changes on forward foreign exchange contracts and currency swap agreements are recorded currently in income as they offset corresponding gains and losses on the foreign currency-denominated assets and liabilities being hedged. Therefore, the carrying value of forward foreign exchange contracts and currency swap agreements approximates their fair value, which was immaterial at December 29, 1995 and December 30, 1994. The Company enters into foreign currency options to protect against currency exchange risks associated with its probable anticipated, but not firmly committed, non-U.S. intercompany sales and with both inventory purchase commitments and probable anticipated inventory purchases from Fujitsu. Realized and unrealized gains and losses on such contracts and the associated cash flows that qualify as hedges are reported as components of the related transactions. These option contracts generally have maturities that do not exceed one year. At December 29, 1995 and December 30, 1994 the Company had approximately $80,000,000 and $40,000,000 in notional principal of purchased option contracts outstanding, respectively. The net income effect deferred on foreign currency option contracts represents the amount by which the carrying value of the option contracts exceeded their fair value and was immaterial as of December 29, 1995 and December 30, 1994. The Company enters into interest rate swap agreements to extend the effective duration of a portion of the Company's investments in available-for-sale debt securities and accrues the differential to be paid or received under the agreements as interest rates change over the life of the contracts. These agreements generally have maturities that do not exceed three years. Notional principal outstanding under these agreements at December 29, 1995 and December 30, 1994 was approximately $12,000,000 and $30,000,000, respectively. The fair value of interest rate swaps is the estimated amount that the Company would receive or pay to terminate the swap agreements at the reporting date, taking into account current interest rates. The fair value of interest rate swaps at December 29, 1995 and December 30, 1994 was immaterial. BALANCE SHEET FINANCIAL INSTRUMENTS Substantially all cash equivalents consist of investments in major bank time deposits, certificates of deposit and commercial paper with initial maturities of three months or less. Substantially all short-term investments consist of major bank time deposits, certificates of deposit, commercial paper and U.S. government securities which the Company intends to hold between three and twelve months. In January 1994 the Company adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (FAS 115). In compliance with the standard, the Company's investments in debt or equity securities which are available for sale are stated at fair value and investments which are held to maturity are stated at amortized cost. Adoption of FAS 115 did not have a material impact on the Company's financial position or results of operations. In November 1995 the Financial Accounting Standards Board issued a Special Report, A Guide to Implementation of Statement 115 on Accounting for Certain Investments in Debt and Equity Securities (Special Report). Concurrent with the issuance of the Special Report the Company reassessed the appropriateness of the classifications of its securities investments and reclassified all of its held-to-maturity securities to the available-for-sale category. Amortized cost of the securities transferred was $161,033,000 and the related unrealized gain was $225,000. At December 29, 1995 the Company's available-for-sale securities had contractual maturities of overnight to fifteen years and the average maturity was one year. The fair value of available-for-sale securities was determined based on quoted market prices at the reporting date for those instruments. At December 29, 1995 and December 30, 1994 the amortized cost basis, aggregate fair value and gross unrealized holding gains and losses by major security type were as follows:
AMORTIZED AGGREGATE UNREALIZED 1995 COST FAIR VALUE GAINS (In thousands) AVAILABLE-FOR-SALE SECURITIES Equity securities $2,582 $2,894 $312 Debt securities issued by U.S. Treasury and other U.S. government agencies 222,036 223,553 1,517 Debt securities issued by foreign governments 1,821 2,020 199 Corporate debt securities 283,877 285,285 1,408 Mortgage-backed securities 17,096 17,325 229 -------- -------- ------ Total investments in debt and equity securities $527,412 $531,077 $3,665 ======== ======== ======
AMORTIZED AGGREGATE UNREALIZED 1994 COST FAIR VALUE LOSSES (In thousands) AVAILABLE-FOR-SALE SECURITIES Equity securities $2,582 $2,345 $(237) Debt securities issued by U.S. Treasury and other U.S. government agencies 11,935 11,499 (436) Debt securities issued by foreign governments 1,821 1,809 (12) Corporate debt securities 6,145 6,125 (20) Mortgage-backed securities 10,024 9,967 (57) ------ ------ ----- 32,507 31,745 (762) ------ ------ ----- HELD-TO-MATURITY SECURITIES Debt securities issued by foreign governments 19,721 19,705 (16) Corporate debt securities 155,729 155,603 (126) Bank debt securities 417,592 417,010 (582) ------- ------- ----- 593,042 592,318 (724) ------- ------- ----- Total investments in debt and equity securities $625,549 $ 624,063 $(1,486) ======= ======== ========
In 1995 and 1994 proceeds from sales of available-for-sale securities were $107,411,000 and $40,677,000, respectively. Gross realized gains of $832,000 in 1995 and gross realized losses of $2,171,000 in 1994 were recognized on those sales and were included in marketing, general and administrative expenses. The Company used specific identification as the cost basis in computing realized gains and losses. At December 29, 1995 and December 30, 1994 the carrying value of notes payable, short-term debt and long-term debt approximated fair value because of the variable interest rate nature of these instruments. CONCENTRATIONS OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade receivables. The Company has cash investment policies that limit the amount of credit exposure to any one financial institution and restrict placement of these investments to financial institutions evaluated as highly creditworthy. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company's customer base and their dispersion across many different industries and geographies. NOTE 6 ACCRUED LIABILITIES
Accrued liabilities consisted of the following: 1995 1994 (In thousands) Payroll and vacation $125,482 $110,958 Restructuring costs (Note 8) 55,110 88,228 Income taxes 38,085 38,588 Deferred income 95,968 120,857 Future engineering changes 3,301 38,643 Other 113,654 114,432 ------- ------- $431,600 $511,706 ======== ======== NOTE 7 LONG-TERM DEBT AND LIABILITIES AND BANK CREDIT AGREEMENTS
Long-term debt and liabilities consisted of the following: 1995 1994 (In thousands) Long-term debt - stockholder (Fujitsu) (Note 2) $80,000 $80,000 Bank loans at DMR 7,444 - Capitalized lease obligations (Note 13) 19,856 20,414 Long-term liabilities 26,970 30,271 ------- ------- 134,270 130,685 Less current maturities 3,118 1,011 -------- -------- Long-term debt and liabilities $131,152 $129,674 ======== ========
Bank loans at DMR primarily consist of the outstanding balance on a $14,700,000 revolving term line of credit having an original maturity of five years and bearing interest at a rate based upon the Canadian Bankers' Acceptance Rate. The amount outstanding at December 29, 1995 matures in 1997 but may be extended under a two-year revolving period with the lender's authorization; at the end of the revolving period the amount outstanding may be paid over three years at the Company's election. The Company has credit agreements with a number of banks providing for short-term borrowings in U.S. dollars and various foreign currencies at varying interest rates. At December 29, 1995 and December 30, 1994, $18,908,000 and $7,805,000, respectively, was outstanding under these agreements. Interest paid on all borrowings was $10,460,000, $9,098,000 and $19,821,000 in 1995, 1994 and 1993, respectively. Long-term liabilities included deferred equipment maintenance revenues and long-term amounts accrued under the Executive Incentive Performance Plan. NOTE 8 RESTRUCTURING OF OPERATIONS In 1993 the Company began to restructure its worldwide operations in order to address the competitive conditions in the markets for large-scale computing systems, including pricing which declined at much greater than historical rates and reduced levels of demand. The restructuring consisted of a series of planned actions, including a reduction in the number of employees by approximately one-third, consolidation of offices and facilities and disposition of assets that were no longer required due to changes in product plans, reduction in manufacturing capacity by approximately 50%, and elimination of selected product development programs, as well as other expense reductions. In connection with these actions the Company recorded restructuring charges totaling $478,000,000 to operating expenses, $243,000,000 of which was recorded in the first quarter of 1993 and $235,000,000 of which was recorded in the third quarter of 1993. The majority of these actions were initiated by the end of 1994 and are expected to be completed in 1996. The 1993 restructuring charges reflected $298 million of noncash write-downs of recorded assets and $180 million of projected cash outflows and were comprised of several major components related to the planned actions. The provision for reduction of the workforce of approximately $120 million included severance and medical and other termination benefits for approximately 2,400 employees in manufacturing, development, service, sales, marketing and administrative functions. In 1995 the estimated reduction in the workforce increased to approximately 3,600 employees, approximately 80% of which had taken place at December 29, 1995. Approximately $200 million was provided for lease payments on idle facilities, write-downs of leasehold improvements, production, data processing and other equipment, and other expenses associated with the consolidation of offices and facilities throughout all principal geographic areas. Approximately $60 million was provided for write-downs of excess inventory resulting from reduced manufacturing capacity and changes in product plans, and $10 million was provided for vendor charges due to the cancellation of development programs. The provision for various other charges totaled $88 million and consisted of write-downs of leased systems and system spares as a result of changes in product plans and other costs associated with the restructuring actions. In the fourth quarter of 1995, the Company included a restructuring reserve totalling $2,272,000 in the allocation of the purchase price of DMR (see Note 3). Of the restructuring charges, at December 29, 1995 $55,110,000 remained in accrued liabilities and $24,158,000 remained as a reduction of inventories. The $55 million balance in accrued restructuring costs was comprised of approximately $42 million for the remaining reduction of the workforce and $13 million for closing excess facilities, all of which represents estimated future cash outflows. At December 30, 1994 $88,228,000 remained in accrued liabilities and $27,942,000 remained as a reduction of inventories. A summary of the restructuring activity is presented below:
(In thousands) 1993 provision $ 478,000 1993 activity: Non-cash write-downs of property, equipment and inventories (224,936) Reduction in workforce and other cash outflows (72,321) --------- Balance at December 31, 1993 180,743 1994 activity: Non-cash write-downs of property, equipment and inventories (11,113) Reduction in workforce and other cash outflows (53,460) -------- Balance at December 30, 1994 116,170 1995 activity: Restructuring reserve associated with the acquisition of DMR 2,272 Non-cash write-downs of property, equipment and inventories (17,004) Reduction in workforce and other cash outflows (22,170) -------- Balance at December 29, 1995 $ 79,268 ========
NOTE 9 MAJOR CUSTOMER, GEOGRAPHIC AREA, AND PRODUCT LINE DATA No single customer accounted for 10% or more of total revenues in 1995, 1994 or 1993. The Company's operations by geographical area for the three years ended December 29, 1995 were as follows:
UNITED ASIA PACIFIC ADJUSTMENTS 1995 STATES CANADA EUROPE & OTHER & ELIMINATIONS CONSOLIDATED (In thousands) Revenues: Customers $872,153 $52,731 $455,216 $ 136,288 $- $1,516,388 Intercompany 236,477 1,016 10,998 - (248,491) - ---------- -------- -------- ---------- --------- ---------- Total revenues $1,108,630 $53,747 $466,214 $136,288 $(248,491) $1,516,388 ========== ======== ======== ========= ========== ========== Income (loss) from operations $(24,390) $(23,563) $40,309 $1,641 $15,127 $9,124 Interest income, net 40,853 ------- Income before income taxes $49,977 ======= Identifiable assets $666,019 $202,484 $945,553 $56,118 $(738,903) $1,131,271 Corporate assets 576,927 ---------- Total assets $1,708,198 ==========
UNITED ASIA PACIFIC ADJUSTMENTS 1994 STATES CANADA EUROPE & OTHER & ELIMINATIONS CONSOLIDATED (In thousands) Revenues: Customers $955,090 $62,433 $506,526 $114,564 $- $1,638,613 Intercompany 241,468 (88) 7,428 - (248,808) - -------- ------- -------- --------- --------- ---------- Total revenues $1,196,558 $62,345 $513,954 $114,564 $(248,808) $1,638,613 ========== ======= ======== ======== ========== ========== Income from operations $49,908 $4,444 $3,256 $3,672 $2,611 $63,891 Interest income, net 16,363 ------- Income before income taxes $80,254 ======= Identifiable assets $663,205 $23,051 $681,193 $32,128 $(354,320) $1,045,257 Corporate assets 673,778 ---------- Total assets $1,719,035 ==========
UNITED ASIA PACIFIC ADJUSTMENTS 1993 STATES CANADA EUROPE & OTHER & ELIMINATIONS CONSOLIDATED (In thousands) Revenues: Customers $1,042,490 $50,540 $488,259 $99,243 $- $1,680,532 Intercompany 186,400 4,412 27,774 - (218,586) - ---------- ------- -------- ------- --------- ---------- Total revenues $1,228,890 $54,952 $516,033 $99,243 $(218,586) $1,680,532 ========== ======= ======== ======= ========== ========== Income (loss) from operations $(502,594) $(5,949) $(190,410) $3,275 $(23,753) $(719,431) Interest income, net 5,689 ---------- Loss before income taxes $(713,742) ========== Identifiable assets $983,405 $33,259 $763,273 $59,057 $(393,128) $1,445,866 Corporate assets 226,321 ---------- Total assets $1,672,187 ==========
The Company's operations are structured to achieve consolidated objectives. As a result, significant interdependencies and overlaps exist among the Company's operating units. Accordingly, the revenue, operating income (loss) and identifiable assets shown for each geographic area may not be indicative of the amounts that would have been reported if the operating units were independent of one another. Intercompany sales and transfers of manufacturing materials and finished systems between areas are accounted for based on established intercompany sales prices. Operating income (loss) is revenue less related costs and direct and allocated operating expenses, excluding interest and, for all areas except the United States, the unallocated portion of corporate expenses. United States operating income (loss) is net of corporate engineering and development and administrative expenses. Canada's 1995 operating loss includes the write-off of purchased in-process engineering and development and Canada's 1995 identifiable assets include the excess of cost over net assets acquired related to the acquisition of DMR (see Note 3). Corporate assets include assets maintained for general purposes, principally cash equivalents and short-term investments. The Company operates in the large-scale computer system and related storage and communications products segment of the data processing industry. Revenues for similar classes of products or services within this one business segment for the most recent three years are presented below:
1995 1994 1993 (In millions) Processor equipment sales $622 $802 $837 Storage product equipment sales 83 203 268 Server equipment sales 77 27 - Communications and other product equipment sales 21 18 28 ----- ----- ----- Total equipment sales 803 1,050 1,133 ----- ----- ----- Maintenance revenues 475 449 423 Consulting and professional services revenues 148 68 65 Lease revenues 18 30 28 Software revenues 72 42 32 ---- ----- ----- Total service, software and other revenues 713 589 548 ---- ----- ----- $1,516 $1,639 $1,681 ====== ====== ======
Note 10 CAPITAL STOCK There are 200,000,000 authorized shares of common stock, par value of $.05 per share, of which 119,259,000 shares were issued and outstanding as of December 29, 1995.
As of December 29, 1995 the Company had reserved shares of its common stock for the following purposes: DESCRIPTION SHARES RESERVED 1994 Stock Incentive Plan- Stock options outstanding 6,875,167 Stock options and restricted stock available for grant 5,061,549 Employee Stock Purchase Plan 1,825,216 ---------- 13,761,932 ==========
Subsequent to December 29, 1995 the Board of Directors authorized, subject to stockholder approval, an increase of 5,000,000 shares in the number of shares issuable under the Employee Stock Purchase Plan. There are 5,000,000 authorized shares of Preferred Stock, par value of $1 per share. This stock, if issued, will carry liquidation preferences and other rights, as determined by the Board of Directors. As of December 29, 1995 no Preferred Stock had been issued. Subsequent to December 29, 1995 the Board of Directors authorized the Company to buy back up to $100,000,000 of the Company's common stock. Note 11 EMPLOYEE STOCK OPTION AND BENEFIT PLANS Under the Company's stock option plans, options generally become exercisable in cumulative annual installments beginning one year after the date of grant, are fully exercisable after four or five years and expire after ten or fifteen years. Options are granted to non-employee directors under the Automatic Option Grant Program. On December 29, 1995 options for 3,113,761 shares were exercisable at prices ranging from $4.72 to $18.88 per share. Activity in the Company's option plans excluding restricted stock is summarized as follows:
SHARES OPTION PRICES Options outstanding at December 25, 1992 6,574,270 $.38- $20.75 Granted 9,681,672 4.72- 8.19 Exercised (39,231) .38- 7.03 Expired or canceled (5,480,498) .38- 20.75 ---------- ------------ Options outstanding at December 31, 1993 10,736,213 4.72- 18.88 Granted 391,477 5.50- 10.06 Exercised (935,302) 4.72- 8.19 Expired or canceled (1,196,626) 4.72- 16.56 ----------- ------------- Options outstanding at December 30, 1994 8,995,762 4.72- 18.88 Granted 377,359 9.13- 12.88 Exercised (2,032,203) 4.72- 8.69 Expired or canceled (465,751) 4.72- 18.88 ----------- ------------ Options outstanding at December 29, 1995 6,875,167 $4.72- $18.88 =========== ============
As of December 29, 1995, the Company had 198,579 shares of restricted common stock outstanding with certain officers and key employees under the 1994 Stock Incentive Plan. These shares carry certain restrictions on transferability, which will lapse over periods as determined by the Board of Directors at the time of award. The difference between the fair market value at the date of grant and the purchase price of the shares (generally, $.05 per share) is recorded as compensation expense ratably over the period from the date of grant to the date the restrictions lapse. Under the Employee Stock Purchase Plan, the Company's employees, subject to certain restrictions, may purchase shares of common stock at a price per share that is the lesser of 85% of the fair market value as of the first day or the last day of each three month purchase period. The Company has a capital accumulation plan available to all its North American employees to which it contributes based on its profits. The Company also has a savings plan for domestic employees whereby it matches 25% of employee contributions up to specified limits. In addition, under the Executive Incentive Performance Plan, amounts up to 2% of income before taxes are accrued for selected key employees instead of their participation in the capital accumulation plan. Approximately half of the award vests over the following four years and the remainder vests over a service period of up to twenty years. The total cost of these plans charged to operations was $10,303,000 in 1995, $9,025,000 in 1994 and $3,705,000 in 1993. NOTE 12 INCOME TAXES Income (loss) before taxes and the provision for (benefit from) income taxes were comprised of the following:
1995 1994 1993 (In thousands) Income (loss) before taxes: Domestic $18,104 $65,941 $(488,628) Foreign 31,873 14,313 (225,114) ------- ------- ---------- $49,977 $80,254 $(713,742) ======= ======= ========== Provision for (benefit from) income taxes: Federal- Current $25,804 $20,531 $(47,378) Deferred, net (12,918) (4,895) 6,578 -------- ------- --------- 12,886 15,636 (40,800) -------- ------- --------- State- Current 4,328 (7,284) (4,253) Deferred, net (2,328) 8,484 5,466 -------- ------- --------- 2,000 1,200 1,213 -------- ------- --------- Foreign- Current 6,291 (744) (5,090) Deferred, net 273 (10,642) (80,323) -------- ------- -------- 6,564 (11,386) (85,413) -------- ------- -------- Net tax provision (benefit) $21,450 $5,450 $(125,000) ======== ======= =========
The effective income tax provision (benefit) differed from the statutory federal provision due to the following (prior year amounts have been reclassified to conform to current year presentation):
1995 1994 1993 (In thousands) Statutory federal tax provision (benefit) $17,492 $28,089 $(249,810) State tax provisions, net of federal tax benefit 1,300 780 780 Foreign losses in excess of available benefits 15,563 4,199 15,483 Unutilized deductible temporary differences - - 105,075 Change in valuation allowance (22,486) (40,484) - Foreign subsidiaries' earnings taxed at rates in excess of the statutory federal rate 235 8,750 94 Write off of purchased in-process engineering and development 9,554 - - Other (208) 4,116 3,378 ------- ------ --------- Net tax provision (benefit) $21,450 $5,450 $(125,000) ======= ====== ========== Net effective tax rate 43% 7% 18% ----- --- ----
Net income taxes of $26,050,000 were paid by the Company in 1995, and net income tax refunds of $12,340,000 and $16,000,000 were received by the Company in 1994 and 1993, respectively. The components of the net deferred tax liability at December 29, 1995 and December 30, 1994 were as follows:
1995 1994 (In thousands) Deferred tax liabilities: Taxes on foreign income $(18,520) $(39,926) Depreciation (26,173) (31,059) Other (12,450) (9,524) --------- --------- Total deferred tax liabilities (57,143) (80,509) --------- --------- Deferred tax assets: Reserves 84,594 126,682 Revenue timing 20,860 - Net operating loss and credit carryforwards 40,423 50,074 -------- ------- 145,877 176,756 Valuation allowance (89,367) (111,853) -------- --------- Total deferred tax assets 56,510 64,903 ------- --------- Net deferred tax liability $(633) $(15,606) ======= =========
No tax benefit was recorded for losses other than recoverable taxes or future taxable income from the reversal of deferred items. The valuation allowance at December 29, 1995 and December 30, 1994 provided reserves against worldwide operating losses, deferred tax assets, and tax credit carryforwards which may expire before the Company can utilize them. The Company believes sufficient uncertainty exists regarding the realizability of these items and accordingly has continued to provide a valuation allowance for them. In the first quarter of 1993 the Company adopted Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. The adoption of this standard changed the Company's method of accounting for income taxes from the deferred method to an asset and liability method. The cumulative effect of this change in accounting reduced the net loss in 1993 by $8,746,000 or $.08 per share. Cumulative undistributed earnings of foreign subsidiaries for which no United States income or foreign withholding taxes have been recorded, because such earnings are expected to be reinvested indefinitely, amounted to $105,200,000 at December 29, 1995. The Company provides in full for United States income taxes on the earnings of foreign subsidiaries not considered indefinitely invested outside the United States. At December 29, 1995 the Company had foreign net operating loss carryforwards of $25,600,000 which will expire at various dates from 1999 through 2003 and $39,400,000 which can be carried forward indefinitely. In 1994 the Company agreed to certain adjustments proposed by the Internal Revenue Service (IRS) related to the Company's 1983 through 1986 tax years, which resulted in net operating loss and credit carryforwards, previously utilized in 1987, being reordered to the 1983 through 1986 tax years. In the third quarter of 1994 the Company paid $32,000,000, including interest, to cover the deficiency created by the audit adjustments. In the fourth quarter of 1994 the IRS issued a notice of deficiency to the Company for disputed items related to the 1983 through 1986 tax years, the most significant of which related to the treatment of system spares. The proposed tax deficiency totals approximately $40,200,000 and would carry interest through December 29, 1995 of approximately $78,000,000. If paid, the tax and interest would give rise to a deferred tax asset of approximately $51,000,000, subject to the recognition criteria of FAS 109. State income taxes payable as a result of the proposed tax deficiency would be approximately $15,700,000, net of federal income tax benefit. In the first quarter of 1995 the Company filed a petition in the United States Tax Court contesting the proposed deficiency. Management believes the Company possesses strong factual support for its treatment of system spares and will vigorously defend its position. In the opinion of management, the final resolution of the proposed deficiency will not have a material adverse impact on the Company's financial position or results of operations. The IRS field audit of the Company's 1987 through 1990 tax years is in progress. NOTE 13 LEASE COMMITMENTS The Company leases a substantial portion of its principal facilities under capital lease agreements extending through the year 2008. Capitalized facilities leases totaling $32,995,000 and $31,347,000 with accumulated amortization of $24,176,000 and $22,098,000 were included in the land and buildings classification on the balance sheets at December 29, 1995 and December 30, 1994, respectively. The lease agreements provide for renewal options extending the lease terms beyond the initial terms in five-year increments. The Company also leases certain equipment and sales and service facilities under operating leases. The minimum lease commitments as of December 29, 1995 were as follows:
CAPITAL OPERATING LEASES LEASES (In thousands) 1996 $4,095 $37,066 1997 3,694 29,284 1998 3,368 23,195 1999 2,600 17,048 2000 2,602 14,107 After 2000 18,344 29,296 ------ ------- Total minimum lease commitments 34,703 $149,996 ======== Less imputed interest (9.25% to 13.74%) (14,847) -------- Present value of minimum lease commitments (Note 7) $19,856 ========
Minimum obligations have not been reduced by minimum rentals of $1,549,000 and $15,840,000 receivable in the future under noncancelable subleases of capital leases and operating leases, respectively, as of December 29, 1995.
Rental expense charged to income was as follows: 1995 1994 1993 (In thousands) Minimum rent $37,701 $38,768 $47,376 Less sublease rent (6,276) (4,073) (2,423) ------- ------- ------- $31,425 $34,695 $44,953 ======= ======= =======
NOTE 14
SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED) First Second Third Fourth Year (In thousands, except per commonshare amounts and amounts in note below) FISCAL QUARTER AND YEAR 1995 Revenues $371,526 $378,666 $350,016 $416,180 $1,516,388 Gross margin $145,315 $148,271 $142,469 $120,746 $556,801 Income (loss) before taxes $26,394 $33,642 $25,707 $(35,766) $49,977 Net income (loss) $20,594 $26,242 $20,057 $(38,366) $28,527 Net income (loss)per common share $.17 $.22 $ .17 $(.32) $.24 FISCAL QUARTER AND YEAR 1994 Revenues $378,791 $396,909 $364,210 $498,703 $1,638,613 Gross margin $129,069 $140,514 $138,145 $187,321 $595,049 Income before taxes $7,110 $13,166 $15,493 $44,485 $80,254 Net income $7,110 $12,516 $14,293 $40,885 $74,804 Net income per common share $.06 $.11 $ .12 $.34 $.63 Note: Fourth quarter 1995 results of operations included charges of $27,296,000 or $.23 per share to write off in-process engineering and development at DMR Group Inc. and $26,000,000 or $.22 per share to reduce inventories to market value.
NOTE 15 COMMON STOCK DIVIDENDS AND PRICE RANGE (UNAUDITED) DIVIDENDS Dividends declared per share for the most recent five years were $.05 in 1993 and $.10 in 1991 and 1992. No dividends were declared or paid in 1995 or 1994. Payment of future dividends will be dependent upon the Company's earnings, capital requirements, financial condition and other factors. MARKET PRICE The common stock is listed on both the American and London Stock Exchanges. The following table sets forth, for the periods indicated, the range of high and low sale prices on the American Stock ExchangeComposite Transactions, as reported by The Wall Street Journal.
1995 HIGH LOW First Quarter $12 1/4 $9 7/8 Second Quarter $13 5/8 $10 1/2 Third Quarter $11 3/4 $8 5/8 Fourth Quarter $10 3/4 $8 1/8 1994 HIGH LOW First Quarter $7 3/8 $5 1/2 Second Quarter $7 7/8 $5 3/8 Third Quarter $10 1/4 $5 1/4 Fourth Quarter $11 1/8 $8
At December 29, 1995 there were approximately 20,000 holders of record of Amdahl common stock. EX-21 7 Exhibit 21 Office of the Corporate Secretary Amdahl Corporation December 1995 AMDAHL CORPORATION SUBSIDIARIES JURISDICTION SUBSIDIARY - ------------ ---------- Australia Amdahl Australia Pty. Ltd. Australia Amdahl Imports Pty. Ltd. Australia Amdahl Pacific Services Pty. Ltd. Australia Amdahl Superannuation (Australia) Pty. Ltd. Australia Antares Alliance Group, Australia PTY Limited Australia DMR Group Australia Pty. Ltd. Australia DMR Group Development Pty. Ltd. Australia Emsys International Pty. Ltd. Australia Qadrant International Pty. Ltd. Australia RailTek Australia Pty. Ltd. Austria Amdahl Computersysteme Gesellschaft m.b.H. Belgium Amdahl Belgium S.A./N.V. Belgium DMR Group (Belgium) S.A.-N.V. Bermuda Amdahl Ireland Limited Bermuda Amdahl Middle East Operations Limited California Amdahl Asia, Inc. California Amdahl Capital Corporation California Amdahl Finance Corporation California Amdahl International Corporation California Amdahl International Sales Corporation California Amdahl International Services Corporation California Amdahl Investment Corporation California Amdahl North Atlantic, Inc. California Amdahl Pacific Basin Operations, Inc. California Amsub Inc. California Amtemp, Inc. Canada 2638-6193 Quebec Inc. (APSI) Canada Amdahl Canada Limited Canada Amdahl Canada NRO Inc. Canada Amdahl Communications Inc. Canada Antares Alliance Group Canada Limited Canada DMR AMS Inc. Canada DMR Group (Europe) Inc. Canada DMR Group Inc. Canada DMR Quebec Inc. Canada The IT Macroscope Inc. Delaware Amdahl Federal Service Corporation Delaware Antares Alliance Group Delaware Antares Alliance Group, Europe, L.L.C. Delaware Antares Alliance Group Holdings, Inc. Denmark Amdahl Danmark Computer Systems A/S France Amdahl France S.A. France Group DMR S.A. Germany Amdahl Deutschland GmbH Hong Kong Amdahl (China) Limited Ireland Amdahl Ireland Limited Italy Amdahl Italia S.p.A. Malaysia Amdahl Asia Services SDN BHD Malaysia DMR Group Malaysia SDN BHD Massachusetts DMR Group, Inc. Netherlands Amdahl Europe B.V. Netherlands Amdahl Nederland B.V. Netherlands Antilles Amdahl Overseas Capital Corporation N.V. New Zealand DMR Group New Zealand Limited Norway Amdahl Norge A/S South Africa Amdahl South Africa (Pty) Limited Switzerland Amdahl (Schweiz) AG Texas Bridging Solutions Corporation Texas C. E. Services, Inc. Texas Dalworth Holdings, Inc. United Kingdom AG Solutions Limited United Kingdom Amdahl Communications Systems Limited United Kingdom Amdahl International Management Services Limited United Kingdom Amdahl (U.K.) Limited United Kingdom C E Services (Europe) Limited United Kingdom DMR Group Limited United Kingdom Landmark Communications Systems Limited EX-23 8 Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our reports included (or incorporated by reference) in this Form 10-K into the Company's previously filed Registration Statement Nos. 33-55460 and 33-54171 on Form S-8. /s/Arthur Andersen LLP ---------------------- ARTHUR ANDERSEN LLP San Jose, California March 21, 1996 EX-24 9 Exhibit 24 AMDAHL CORPORATION POWER OF ATTORNEY The undersigned directors of Amdahl Corporation, a Delaware corporation, do hereby appoint Bruce J. Ryan, Corporate Secretary of the Corporation, their lawful attorney and agent for signature with power to execute the Corporation's Annual Report on Form 10-K filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. The power granted herewith includes the power and authority to sign the names of the undersigned directors to any and all amendments filed to the Annual Report. Each of the undersigned hereby ratifies and confirms all that said attorney and agent shall do pursuant to this power. 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 February 8, 1996. /s/Keizo Fukagawa /s/George R. Packard - ----------------- -------------------- KEIZO FUKAGAWA GEORGE R. PACKARD /s/Michael R. Hallman /s/Walter B. Reinhold - --------------------- --------------------- MICHAEL R. HALLMAN WALTER B. REINHOLD /s/E.F. Heizer, Jr. /s/Takamitsu Tsuchimoto - ------------------- ----------------------- E.F. HEIZER, JR. TAKAMITSU TSUCHIMOTO /s/Kazuto Kojima /s/J. Sidney Webb - ---------------- ----------------- KAZUTO KOJIMA J. SIDNEY WEBB - ---------------- -------------------- JOHN C. LEWIS E. JOSEPH ZEMKE /s/Burton G. Malkiel - -------------------- BURTON G. MALKIEL EX-27 10
5 1,000 YEAR DEC-29-1995 DEC-29-1995 192,980 444,006 325,741 5,964 274,813 1,300,691 1,030,191 757,523 1,708,198 594,649 86,121 0 0 5,963 927,861 1,708,198 803,567 1,516,388 540,541 959,587 547,677 0 10,481 49,977 21,450 28,527 0 0 0 28,527 0 .24
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